IPB Expert: “Blockchain” Can Be Developed In Palm Oil Industry
The development of “blockchain based smart contract” in palm oil industry can benefit smallholders. It will create price transparency based on the quality and quantity of the offered products.
JAKARTA — Dr Taufik Djatna, an expert and lecturer of agriculture engineering at Bogor University of Agriculture (IPB), said that the technology of “blockchain” which is still dominated by financial and banking sector can be also developed for agriculture, especially in the palm oil industry.
“The development of ‘blockchain based smart contract’ in palm oil industry can benefit smallholders. It will create a price transparency based on the quality and quantity of offered products, so that smallholders can get the best prices from their selling of fresh fruit bunches (FFB),” he said in a press release issued by IPB recently.
He pointed out that the “blockchain” is a system of database based on internet that has identical data character saved in many locations and “immutable”, so that it cannot be edited and deleted, but only added.
One “block” is connected cryptographically to the previous and after the “block”, while the “smart contract” can be considered as an agreement between two sides in the form of computer code that is run within the network of blockchain, so that it is saved in the public database and cannot be changed.
With the “blokchain”, the cooperatives or traders will get accurate and reliable information from smallholders. It will increase confidence to buy FFB from smallholders whose data is provided through the “blockchain”.
According to him, the palm oil mills as the downstream industries that received the FFB can conduct a quick traceability on the quality of the FFB, so that they can optimize the quality of their crude palm oil (CPO) production.
Through the application of the information system integrated with the facility of “blockchain” based on “smart contract”, smallholders, cooperatives or other smallholder institutions can use data of prices, quality and transactions within the supply chain properly and validly.
The transaction data that will become the source of digital identity of palm oil will be later connected with electronic wallet (e-wallet) of each smallholder for the payment process that is executed by the “smart contract”.
As of now the use of “blockchain” in Indonesia is still in small scale and limited to the specific financial products. But actually, the technology has other potential applications for the government and public services, which need transparency and security of information.
In the agroindustry sector, there have been some initiatives to apply the “blockchain” technology. It ranges from the mechanism of collecting profile data of smallholders and commodity which is implemented with the use of “blockchain” technology and traceability technology to find the origins of certain substances in certain products or commodities and the halalness of products along the supply chains and logistic system by using the “blockchain”.
Besides, buyers can find out that the products they purchased have already complied with all prevailing regulations and standards, so that prices and payments of palm oil products will be in line with the quantity and quality of products they received.
The IPB expert of supply chain risk management and data mining said that the development of “blockchain” based on the “smart contract” in the palm oil industries will also make the mechanism of palm oil shipment more transparent due to the application of standard that is set in the palm oil industry.
He said that during the ongoing outbreak of Covid-19 pandemic, the application of the information infrastructure based on automation system is very important. The automation system can be applied through standard regulations in the facility of “smart contract” within the “blockchain”.
“The smart contract will reduce human intervention in the business process within the system. It also has the capability of automatic audit so that contracts and works that should be conducted by users can be completed more quickly and efficiently,” he said.
The technology of “blockchain based smart contract” in palm oil industries in Indonesia is expected to be able to become one system that will hugely benefit all palm oil players in Indonesia.
“With the application of transparent system like the blockchain, all palm oil players can do their businesses fairly, no manipulation, and comply with the already set standards. By inputting right and valid data, the players will help create a palm oil governance that is reliable and transparent, and beneficial for all stakeholders of palm oil industry,” said Taufik Djatna.
Source: antaranews.com | Image via orissa-international.com