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Blockchain, 5G, and Palm Oil; Integrating Industry 4.0 Into The Palm Oil Industry

The twentieth-century mechanistic revolution is slowly transitioning into a twenty-first-century trajectory seeking to integrate components of the so-called Fourth Industrial Revolution or 'Industry 4.0'. Worldwide, national developments are set to revolutionise their manufacturing and production industries by working with the Internet of Things, cloud computing, data integration and other technological advances within their systems to bring forth this new era for business practice. 

With its attractiveness for increasing production efficiencies, invigorating innovation whilst cutting costs and keeping profit margins high, Industry 4.0 can also push for sustainability within systems by reducing inputs of energy, resources and labour whilst bringing higher quality outputs with less environmental repercussions.

In essence, integrating Industry 4.0 is a way of enhancing business productivity whilst mitigating environmental costs, with the palm oil industry being no exception to this.

Domestic and international consumer demands in the global palm oil market are an important factor for growing many developing economies in Africa, South America, and Southeast Asia by offering opportunities for employment, income and foreign direct investments.

This is particularly relevant to Indonesia and Malaysia which alone account for 85% of the world's total palm oil production.

Yet such nations have faced large international pressures over recent years to cut their losses and address the environmental damage caused by palm oil cultivation such as forest clearance, greenhouse gas emissions and pollution; all key drivers of climate change and biodiversity loss.

This uncertain state for the palm oil industry has meant some businesses are starting to embrace the traits of Industry 4.0 as a way of appealing to consumer demands and sliding into a twenty-first-century smooth supply chain.

In Malaysia, for example, acute labour shortages and inefficient harvesting times have negatively affected the nation’s economy. In response, Malaysian Authorities are digitalising the sector by applying 5G. This will allow plantation owners to anticipate expected palm oil supplies, locate where harvests need to be made, where and when fertilisers are needed and the costs of it all, as well as administer ‘real-time’ analytical data to shorten management structures.

Similar trends are occurring in Indonesia where technology-based interventions are being inserted to forward transparency within the sector and trigger moves toward a sustainable palm oil market. Visions for blockchain technology have been reviewed – named the Palm-Oil-Block (POB) – as a move towards greater collaboration amongst stakeholders in the supply chain.

Implementing POB not only improves the traceability of sustainable palm oil through digitising techniques like geo-tagging, tracing supplier details, and land permits but also helps to minimise the ‘network of power’ or distances between the producer and consumer as a catalyst for spurring sustainable consumerism.

Embracing Industry 4.0 in the palm oil supply chain will allow key producer and exporter nations to bring about economic growth by maintaining their market competitiveness and trade without sustainability issues.

Still, integrating the technology associated with Industry 4.0's advancements has its challenges mainly because of the so-called ‘digital divide’ which includes lags in digital equipment, the gulf in knowledge and other socio-cultural factors hindering its embracement.

Efforts to increase digital literacy and develop relevant and locally attuned telecommunication infrastructures, for example, can help to bridge the digital divide and bring about its abundance of benefits including business profitability, maintaining tradition with internet progression, and ultimately supporting the longevity of the palm oil industry as it remains one of the most important and ubiquitous vegetable oils in the world.

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