Palm oil giant highlights value of supply chain insights for future success
GAR has achieved global supply chain traceability of 96% of its palm oil sources, which is of great significance for the agribusiness industry as it is the second largest integrated company of palm oil in the world and supplies palm oil to many major food and beverage brands.
“Times have changed and today consumers are very careful about what goes into their food, leading to manufacturers being very keen to have information to provide them with sustainability and traceability credentials,”Anita Neville, GAR’s sustainability and communications manager, said FoodNavigator-Asia.
“Especially when it comes to palm oil, we all know how important sustainability has become for the industry as a whole, and in fact, there can be no sustainability without traceability – that’s just ‘by implementing a traceability capability and being able to convey that information that companies have confidence in what they buy, who they buy it from and dare to make sustainability claims with confidence.
“That’s why GAR took it upon us to make this investment, to create a team to work on implementing traceability in our supply chains, to make sure we get that trust.”
As the company manages over 500,000 hectares of palm oil plantations as well as hundreds of thousands of third-party suppliers, including smallholder farmers, this was no small feat.
“Trust was also a challenge in implementation, especially when it came to convincing smallholder farmers, as they wondered what our motivations were, what was in it for them and if it could be used against them because everything was very new to them, so the only way was for us to do it ourselves first and lead by example,”Neville said.
“Many consumers or those outside of the palm oil supply chain tend to feel that to achieve scale it is quite easy to just use technology as a solution – but it is much more than that. We also thought so at first, but when we did our tests, we realized that it was not enough to have the technology itself, many other factors must be taken into account, such as do the farmers know how to use it, how can they take the tools into the field, what happens if it rains and the measuring equipment is waterproof, etc.
“There was also a strong need to train the farmers because not only was it brand new to them, many had no experience with items that were so dear to them, and they were more worried about spoiling them and destroying them. have to pay back or were embarrassed to admit their lack of knowledge.
“These are all things that we’ve had to figure out with our own farmers on our own plantations so that we can translate that throughout the supply chain, and so we’ve had to make the necessary investments, whether that’s in terms of of equipment or labor, but this was crucial because traceability is a strong business driver in an era when consumers are more demanding on the ingredients of finished products, which leads food companies, our customers, to become more demanding on the origin of their raw materials [and] be prepared to pay more competitive prices or sign larger contracts”.
Additionally, Neville also pointed out that collaborations with partner brands on traceability are very important when it comes to implementing technology.
“We are working with companies such as Mars and Fuji Oil to vet smallholder farmers in the Acheh region to map plantations, implement best practices and accelerate their readiness for sustainability certification,”she says.
“We have worked with big brands like Nestlé and Hershey on previous projects and we realize that working with these brands is very important to the process. They can be involved all the way through the supply chain to the end user, and their investments go a long way towards introducing the technology which for us is a web platform and mobile app that enables to information of being comments on limits, operations, sustainability criteria, average yield, etc.
For brands, the benefits of traceability are also increasingly important at a time when the sustainability of palm oil has become a major issue.
“Over the past three to four years, one of the main benefits we’ve heard from brands about is that it’s definitely helped them not get caught up in surprise claims from environmental NGOs or other dissidents. , and helped them monitor things more closely so they could make sure any real issues can be resolved [and others can be refuted]”,Neville added.
“For example, before this, an NGO could simply accuse a company of being responsible for this deforestation or this fire along the supply chain because the company had purchased palm oil from a certain location in Indonesia – and the company wouldn’t be able to confirm or deny because they didn’t have that intimate knowledge of the supply chain.
“Today, traceability technology has given them that knowledge and they will be able to confirm if they are aware of the issue, have reached out or are investigating, or if everything is okay and the charge is wrong.”