With the arrival of the EU Deforestation Regulation (EUDR), there has been a lot of focus on the importance of the first mile. In other words, the smallholders or commodity farmers responsible for arguably the most important piece of the puzzle – “the source”.
However, countries, including Malaysia and Indonesia, feel that the EU is not taking into consideration the work that has been done to end deforestation, and fear the new requirements set by the EUDR (satellite imagery, and digital mapping, for example) will be impossible for the small farmers to meet.
So what is the solution? Working closely with cooperatives or collectives. A number of commodities whose supply chains need to comply with EUDR – coffee, palm oil, rubber, cocoa – rely on cooperatives more so than commodities such as timber. This presents a slightly different challenge for those seeking traceability across such supply chains.
“There is increasing global demand for these commodities, however many small farmers do not have access to the Internet or ability to produce products at this increased scale. As a result, cooperatives have stepped in to supply these products in large volumes – prioritising fair pricing and quality checks – but often without having to show exactly where it came from. However, this means that these farms and cooperatives have grown in size without ever having to consider implementing improved due diligence processes to prove they aren’t contributing towards illegal deforestation. This is where companies like iov42 come in.” – Adam Grant, Sustainable Markets Specialist at DoubleHelix and Envirosense
Now that these regulations exist, cooperatives are having to reevaluate the information they need from smallholders to comply with EUDR, as well as look to see how these farmers can benefit from increased traceability by being able to see what actually happens to their product once it is shipped globally.
It is important that cooperatives (and smallholders) understand what information they now need to provide, and what exactly traceability solutions like Interu can enable. But alongside meeting regulations, this increased traceability can also help with things like:
- Identifying and tracking the source of a product
- Showcasing the authenticity of a product
- Meeting the requirements of fair trade initiatives and ethical sourcing programmes
- Responding quickly to product recalls or safety concerns
- Enhancing transparency within the supply network
This last point is becoming increasingly important for consumers, who want to know the story behind their purchase. And improved traceability can help to build stronger trust between smallholders, cooperatives, retailers and consumers.
Our use of Smart Assets can play a significant role in building trust, due to the introduction of “commitments and expectations”. This, combined with the automated record keeping, expedites real-time visibility into the movement of commodities across the supply network. In turn, this facilitates secure and transparent exchanges, and enables secure data sharing and collaboration among supply network participants.
By leveraging the capabilities of smart assets through the use of our digital solutions along with the other benefits from our purpose built distributed ledger technology (DLT) solution outlined in our blog post, cooperatives can streamline their traceability efforts, enhance supply network visibility, and promote collaboration among stakeholders.
If you work for a cooperative, please get in touch. We would love to speak with you and learn the best ways to make regulation compliance as efficient for you as possible and understand your challenges.
