View from the Top: A Palm Oil Case Study on Data, Analytics, and Standards

 

 

The session at the Singapore FinTech Festival explored the complexities of the palm oil industry, the role of emerging technologies in ensuring sustainability, and the implications of regulations like the EU Deforestation Regulation (EUDR). The discussion revolved around balancing technological innovation, policy, and financial inclusion while considering the challenges faced by small and medium-sized enterprises (SMEs) and smallholders. 

Key Takeaways: 

1. Regulatory Challenges and Perspectives 
  • The EUDR aims to prevent deforestation-linked products from entering the EU, with a focus on traceability and product verification. However, implementation challenges have led to delays, causing mixed reactions among industry stakeholders. 
  • Carolyn Lim from Musim Mas highlighted the complexities of meeting EUDR requirements, such as the lack of unified concession boundaries in Indonesia and the limitations imposed by national sovereignty over data. Despite these hurdles, companies like Musim Mas have invested significantly in traceability and sustainability efforts. 

2. Technological Innovations in Monitoring 
  • Professor Sang-Ho Yun from the Earth Observatory of Singapore (NTU) explained the capabilities of Synthetic Aperture Radar (SAR) technology. SAR can penetrate clouds and capture data day and night, making it invaluable for monitoring deforestation, even in challenging weather conditions. 
  • The technology can produce high-precision maps that detect ground changes, which are crucial for monitoring deforestation in the palm oil supply chain. However, while the satellite data itself is free, processing and analytics require significant investment. 

3. Financial Inclusion and SME Empowerment 
  • Gladys H. Morales Guevara from IFAD emphasized the need to equip small-scale farmers with affordable and accessible tools to comply with regulations. She stressed the importance of combining financing with capacity-building initiatives and the need for a governance framework to address issues like land tenure rights and data privacy. 
  • Yip Shue Heng from MUFG Bank discussed the importance of digital and financial literacy among smallholders. He highlighted MUFG’s approach of co-creating educational workshops and developing a consent-based, closed-loop digital wallet to improve traceability and reduce perceived financial risks, thereby enabling fairer interest rates for smallholder financing. 

4. Data, Privacy, and Trust 
  • The panellists underscored the importance of building trust among smallholders. Data privacy and ownership are significant concerns, with farmers often feeling overburdened by repeated data requests from different organisations. The solution lies in harmonising data collection and ensuring that smallholders benefit from sharing their information. 
  • The use of digital wallets and verifiable credentials was proposed as a way to formalize the informal sector and make smallholders more bankable and eligible for sustainable financing. 

Conclusion: 
The panel concluded that the path to a sustainable palm oil industry lies in collaboration among governments, private companies, and international organizations. Technological advancements like SAR can provide critical data, but the analytics need to be made more affordable and accessible. The success of sustainability initiatives will depend on balancing regulatory demands, technological capabilities, and the economic well-being of smallholders. 


Speakers:

  • Carolyn Lim, Senior Manager, Corporate Communications, Musim Mas Group
  • Gladys H. Morales Guevara, Global Head of Innovation, United Nations International Fund for Agricutural Development (IFAD)
  • Prof. Sang-Ho Yun, Director, Remote Sensing Lab @ EOS, NTU Singapore
  • Yip Shue Heng, Head of Asia Digital Strategy, MUFG Bank, Ltd.

Moderator:

  • Pamela Mar, Managing Director, Digital Standards Initiative, International Chamber of Commerce

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