Palm Oil Industry Pain Points

Goals

To understand the pain points and issues facing palm oil producers, processors/refiners, and traders in order to develop a new software product that can address the pain points of companies in the palm oil supply chain.

Early Findings

Some of the current pain points and issues faced by the palm oil industry include:

Weak Certification Schemes

  • While there are numerous sustainable cultivation certification schemes in the palm oil industry, each with a wide range of requirements, their implementation systems are weak. "The criteria and indicators relating to certified plantations and mills are often insufficiently strict to meet the objectives and requirements" of Roundtable on Sustainable Palm Oil (RSPO), International Sustainability & Carbon Certification (ISCC), Roundtable on Sustainable Biomaterials (RSB), or the Rainforest Alliance. In addition, the certification inspections carried out by independent auditors are also inconsistent.
  • Sustainability certifications usually entail significant investment making it difficult for palm oil producers, particularly smallholders, to fulfill their commitment to sustainable palm oil production.

Declining Oil Extraction Rate (OER)

  • One of the problems faced by companies in the oil palm industry is the declining oil extraction rate (OER). In 2017, the average oil extraction rate in Malaysia decreased to 19.7% compared to 20.2% in 2016.

Vast Production of Waste and Residue

  • The palm oil industry and palm oil mills generate an enormous amount of waste. In fact, oil accounts for merely 10% of the biomass while the remaining 90% is biowaste.
  • Improper handling of this biowaste can potentially lead to "environmental and health concerns, as it can contribute to eutrophication, pollution, and any other type of disturbances for both aquatic and terrestrial life."

Pests and Diseases

  • Pest attacks and diseases pose a major threat to oil palm cultivators and can significantly decrease the crop yield.
  • "In Johor Bharu, Malaysia, defoliation by bagworm and Limacodids cause losses in the crops yield over 4 tonnes of fresh fruit bunches (FFB) per acre with 50% defoliation, at 4 to 6 months after the attack. In another study conducted in Sabah, Malaysia, S. nitens was reported to reduce the production of FFB (27 tonnes per acre) during 30 months with 60% defoliation. In Indonesia, the yield loss was up to 70% in the first year after defoliation and can increase up to 90% in the following year. In an Indian survey from 1995 to 2002, Acria sp. was reported to cause a 29% yield reduction in the first year, 31% in the second year, and 21% in the next consequent year."
  • These pest attacks can be suppressed using biopesticides and biological control methods.

Summary of Findings

  • In the initial hour of research, we were able to find some issues and pain points faced by the oil palm industry related to sustainability certifications, low production, pest attacks, and waste generation.
  • We were also able to find one pain point faced by smallholders in the industry.

Research proposal:

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