SINGAPORE -- Singapore-based commodity trader Olam International is tapping digital technology as it seeks to become a more sustainable agricultural trader.
Olam has launched AtSource, a digital dashboard that provides food manufacturers with sustainability information about suppliers of raw materials. This includes information on suppliers' environmental footprint such as greenhouse gas emissions data, as well as measures taken by farmers to prevent deforestation, their management of fertilizer use, responsible labor practices and farm productivity.
The company plans to eventually digitize the information of all of the 4.7 million farmers in its supply chain, the vast majority of whom are small farmers in emerging markets. "Using this information, we can drive meaningful improvements through the supply chain from farm to customer," Sunny Verghese, group chief executive of Olam, said in a press release.
AtSource forms part of Olam's digitization initiative, whereby the company is trying "to disrupt the [agricultural] industry before being disrupted", Verghese said at a press conference on Tuesday. Using the Olam Farmer Information System, the agricultural conglomerate has been building a database of farms and farmers worldwide to help boost their productivity.
The initiative to capture information across the extended supply chain is "a huge and costly task," Verghese said. It is, however, a necessary investment, as pressure has been increasing on consumer brands and major commodity companies, such as Olam, to be socially and environmentally responsible. Olam is the world's largest supplier of cashews and the leading processor of cocoa.
In late 2016, the U.S.-based environmental activist group Mighty Earth accused Olam of promoting deforestation in Gabon, Africa, to develop palm plantations and of buying unsustainably produced palm oil in Southeast Asia. Olam defended its practices, but the episode resulted in a drop in its share price. Olam has since accelerated its sustainability efforts. In Gabon, it is working to make all of its palm plantations certified by the Roundtable on Sustainable Palm Oil, a global certification body promoting good practices in the palm oil industry, by 2021.
With AtSource, Olam aims to cover all 50 products that the company handles by 2025. In the initial stages, however, its coverage is limited to cocoa and cashews from Ivory Coast, coffee from Brazil and Vietnam, and onions and garlic from the U.S.
Palm oil is not being included in the initial stages. Traceable sourcing of palm oil is particularly challenging due to the complexity of its supply chain, the company said. Part of the sourcing is done through third parties, making it harder to trace the actual producers, who tend to be small-scale farmers.
Olam is offering the AtSource service via three tranches to its customers. The most basic, "entry level," service will be provided free of charge, while more detailed information and tailored solutions will be chargeable.