Technology is changing all the major industries with an unprecedented pace. The question will be always: is it for good or ill? I prefer to think for the better, so that I await enthusiastically and prepare myself for this big shift. In this article, I present my views on how The Fourth Industrial Revolution will transform the Palm Oil Industry in four main components: Plantation, Mill, Sustainability, and Markets. I meant to cover three mega trends in this Technological Revolution: Hardware, Data, and Biology.
Whether you like it or not, it is very likely to happen, and the question now is: who will be the next leader in Palm Oil Industry? A future oriented group? An entire nation with a progressive view on? Bear in mind that technology is a key element when it comes to David & Goliath business stories.
From a Plantation perspective
In an industrial era, or even worse in a post-industrial, the land – so called “agriculture” – is left as something of minor technification whereas all the attention is drawn by the factories or mills in this case. Nonetheless, it is already proven fact that the bulk of Oil Palm is actually produced in the plantation itself. Moreover, it is widely known that any kind of improvement or upgrade at the mill can bring no more than 15% of efficiencies in terms of CPO (Crude Palm Oil) extraction, whereas technology deployment in the plantations can boost the CPO production up until 50% so far. Indeed, the disparity of Tons of Fresh Fruit Bunches per hectare (t FFB/ha) is huge among countries with different socioeconomic backgrounds. I will explore hereafter how to achieve this sort of massive improvement.
technology deployment in the plantations can boost the CPO production up until 50%
Big Data & Internet of Things (Internet of Farming)
Big Data will lead vast changes in what we know today as an Oil Palm Plantation. Furthermore, the first term that is required to coin is Profit per Tree (PPT), whereby Corporations will look at the trees as production units and will count them as part of their asset inventory rather than number of hectares. Currently, the yield per hectare is a common practice due to its practicality to carry the numbers handy, as we are by nature reductionists. However, the average yield hides marvelous opportunities for improvement since a couple of sick/unhealthy trees “underperforming” might be covered up by the whole average.
Put it another way, if we assume 10% of the Palm Trees are “underperforming” – hundreds at local scale and millions at global scale – then we are leaving big money, and food of course, on the table. Therefore, in the near future, Palm Trees will be adorned with small sensors (hardware) which will carry an ID tag and equipped with the ability to store a huge amount of data as a kind of “clinical history” including info, but not limited to, date of planting, GPS location, production, fertilizer dosage & frequency, irrigation, pollination time, events, etc. Imagine a cloud-based healthcare system for trees with preventive and corrective actions, making pinpoint reports for the Agronomists where they will have ample information and suggestions to make informed decisions and take care of those trees in need. Needless to say, that agronomic KPIs will change dramatically.
Nowadays it is possible to monitor whether a Palm Tree is healthy, or it has a deficit of Potassium (K), Magnesium (Mg) or Nitrogen (N) by simply snapping photos of a palm leaf with one’s smartphone as the researcher Maria Alejandra Culman Forero from the Center of Excellence and Adoption on the Internet of Things - CEA-IoT has developed. Addittionally, small sensors now allow Agronomists to monitor soil moisture, soil pH, soil salinity, among others; which can be easily integrated in platforms like Mirsaad developed by Qoudra. In addition, weather stations must be required to be installed throughout the plantation to monitor the Temperature, Humidity, Wind, Sunlight, and Precipitation. Big Data & Machine Learning will integrate granular data, providing valuable information and suggestions to make informed decisions, to do changes, predict harvest, CPO production & market prices, as well as envisage the best time to replant, and the least busy moments for Mill Maintenance (downtimes). As it happens, precipitation (quantity and season) is a pivotal factor for FFB, and with big data it will be possible to predict the harvest size based on the precipitation and other variables stored in the data log.
Furthermore, Drones usage is just around the corner. Agribotix, indeed, have developed its own Turnkey Agriculture Drone Solutions, integrating FarmLens technology for an overall, accurate, and precise scan of the crop. In their own words: “now it is possible to program a flight to survey until 160 Ha with few clicks”. Without a shadow of a doubt, this technology will be very soon available and fully adapted for Oil Palm Plantation, as Poladrone seems to be working very hard on. Hardware and data collection devices will modify abruptly the information gathered so far in the plantation.
Collaboration & Data Mining
Palm Oil Mill Industry stands out from others due to its low collaboration, perhaps because of remoteness or some other factors that are beside the point of this article. That ought to be past history if corporations want to survive to dramatic changes I will present later on under market section. That being the case, collaboration will be required to maximize efforts in data collection and information usage. Combined Intelligence will process the data shared by all the Palm Tree growers in Farming Network Platforms with the ultimate goal of having more fine and precise information to face challenging and changing situations. With this kind of collaboration, it will be easier to cope with microclimate changes (multiple reasons) and its consequences. For instance, when growers’ data are interconnected from several regions in Southeast Asia, Africa and Latin America or globally for that matter; market price prediction will be much easier & accurate, and hence, decisive decisions will rest on the shoulders of executives. Just imagine for a moment, if all the May and October rain pours down in July and one has the power to forecast market prices accurately.
Harvest Mechanization will always be a sensitive topic as to whether corporations and governments must protect employment or substitute labour for machines and robots. I do not want to get across as ruthless or sanctimoniously moral, so I prefer to leave that discussion open for another good occasion.
Getting back to robotics, Fruit Pickers Robots with telescopic booms will co-exist peacefully with orangutans, elephants, among other beautiful creatures in the plantations. These robots will be equipped with continuous track (caterpillar track), built-in GPS with pre-loaded harvest routes, weight scale, and so on. Harvest Data will be uploaded instantly to a cloud-native platform from which all the information will be centralized and integrated with other devices such as weather stations, Palm Trees sensors, pictures, etc. Altogether, the information collected by different devices will be an ideal tool for Agronomists and State Controllers, and of course, an extraordinary source for management KPIs.
Needless to mention, Palm Oil Industry is a biological based business, reason why Biology and Ecology are always big words in terms of production. I will only touch here Biology very briefly though.
Genetically Modified Organism (GMO) food is perhaps the greatest villain in biotechnology with a high public rejection rate. Nevertheless, things seem to be changing, and today Genetic Modification (Gene Editing) such as CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) is gaining momentum with a decent approval among scientists and public overall. The Innovative Genomics Institute – IGI – led by an exceptional team of forward-thinking scientists including CRISPR innovators such as Jennifer Doudna, PhD, is devoting a big deal of effort in finding breakthroughs on biomedicine, agriculture, microbiology, technology, and society. Even though the IGI does not work currently on Oil Palm, they have developed CRISPR-Cas Enzymes which allow crops to withstand drought, infections and other devastating conditions. This is a great opportunity for Molecular Biology Labs working on Oil Palm to join the efforts of IGI and seek for research collaboration.
Personally, I would love to see Gene Editing for Oil Enhancement (less land, more food) and Biomass Production (more energy sources). It perhaps sounds counter-intuitive, but the beauty of this, is to suffice needs according to different scenarios; whether you need more CPO or you need more Biomass for Bioelectricity.
From a Mill perspective
As mentioned earlier, we are highly accustomed to think that factories or mills must be more high-tech than fields and plantations. As discussed above, nothing can be further from the truth and what is imperative now is to fine-tune both in order to maximize the efforts. Naturally, mills have immense opportunities to be re-design in terms of interoperability.
The likelihood of having Smart Factories or Smart Kilang/Pabrik (for their names in Malay and B. Indonesia), is very high. However, the real question here is, whether people is ready to go after it or they will wait patiently until the wise market force them to implement it (to be discussed later on under market section). Mills around the world are distinguished by being small kingdoms of their kings. Nevertheless, change is tailgating and speaking loudly; and let me quote the brilliant Eric Hoffer: “In a time of drastic change it is the learners who inherit the future. The learned usually find themselves beautifully equipped to live in a world that no longer exist”.
Scales, sterilizers, strippers, digesters, presses, clarifiers, decanters and dryers will be interconnected altogether, providing real information in real time for Mill Managers and/or Process Engineers.
Interoperability will be the operation as usual. Scales, sterilizers, strippers, digesters, presses, clarifiers, decanters and dryers will be interconnected altogether, providing real information in real time for Mill Managers and/or Process Engineers. WhatsApp Management will be soon replaced by process platforms, reporting performance, giving suggestions and connecting with technical teams for remote support or maintenance.
For those working at the Mill side, please don’t panic. I do not think Industry 4.0 will take all the jobs at the mill, at least not those process related. Process people will have more freedom to respond and act independently, as now they can make informed decisions, prevent problems and solve those urgent problems popping up. Mill Managers will work closely with GMs, and must be required to collaborate with Estate Controllers, other Mill Managers of the same group, and providers (please refer to Service Management 4.0). It goes without saying that the current skills and abilities in the staff will not match the future reality, that is the true risk for employment security. On the other hand, it is much easier to train current staff in the new skill-set-demand than staffing from scratch. Position and assignation changes, based on skills and adaptability, will blow minds away.
Let’s imagine for a moment, a steam service per hour or per t FFB rather than buying only a boiler. The boiler will be fully automated with pre-loaded troubleshooting routines which varies depending on the spot situation, such as pressure drop, ash removal, chimney emissions compliance, among others. Boilermen will get assistance from the boiler maker technical HQ and must collaborate with other Boilermen under the same group to build the knowledge faster. This kind of services are utility-driven and, as in this example, its ultimate target is to keep the steam always available for the mill regardless. As another example, mechanical decanters (tricanters for instance) can be fully monitored from HQ providing always the spare parts on time, informing the routine and scheduled maintenance, keeping up the history of the equipment, etc. These are only two examples for the sake of exemplification, now oneself can name all the options.
Some industry thought leaders are already talking about the slow pace of the industry and how it needs an urgent generational change to leave conservatism and old practices behind. I argue that the only way to attract younger minds is through a thorough revamping of the industry.
From a Sustainability perspective
Sustainability and Certifications
There have been several initiatives going back and forth regarding sustainability in Palm Oil, just to name some of them: Clean Development Mechanism (CDM), Water Footprint, Carbon Footprint, ISSC, Circular Economy etc. Unfortunately, most of them have failed to serve the purpose to create a sustainable industry for edible oil and biodiesel. In my view, those failed because they focused too much on pushing sanctions on the mills’ side, instead of creating consumer awareness and a real market for sustainable Palm Oil.
Certifications and green labels will no longer be used
Certifications and green labels will no longer be used when QR (or others) are implemented. End consumer and food processor will be able to trace back the whole value chain from the plantation itself to the factory, or to the shelf in the supermarket. That might sound complicated, but it is only a matter of time to have all the activities of the chain integrated and reporting online to make it feasible. Many people will doubt that big corporations will do a full disclosure of their value process; however, it will be more a market demand than a generosity from businesses. Let’s imagine for a short while a typical lot number represented by a QR code that allows the person who scans it to go back to all the steps of the value chain with information associated such as: type of harvest (i.e. manual, mechanized, robotized), environmental abnormalities (i.e. forest fires, biodiversity decline), labour abnormalities (i.e. minors working, unfair contracts), water & carbon footprint (i.e. providing industry and region average and best practices), particular matter emissions, etc. Either the end-user or the factory policies will determine whether to buy that product based on their own assessment of the good (refer to market section).
“Biodiversity” so far has been only understood as an animal protection, more specifically orangutans protection. However, Biodiversity plays a bigger role than just nice sentiments towards tender creatures. Biodiversity must be studied properly, with a rigorous scientific inventory over time which covers species richness, population density, and diversity as such. Naturally, Palm growing activities will affect the diversity of the former forests or cultivable land, although the collaboration through Network Farming Platforms (described in the plantation section) will ease the understanding of best practices which foster an ecosystem stability.
From a Market perspective
Markets will demand full transparency which, in turn, would entail more complex price structures; or the creation of premium and inferior markets to meet different requirements. In my view, there are only end-users for edible oils and markets for food factories and biodiesel plants, which are subject to increase their demands in terms of a sustainable Palm Oil.
No food processor or palm oil refinery will want to take any chances with a Palm Oil of uncertain origin and hence, end up with the product beautifully displayed at the shelf with low or no sales.
It is a big opportunity for those groups which want to add more value to their commodity, and likewise satisfy the demands of their buyers who seek to cater more exigent markets. Getting back to traceability, mentioned in the Sustainability section, end-users either of edible oil or food goods will determine whether they buy the product at the supermarket (or online) shelf based on their expectation and demands on the Palm Oil source. No food processor or palm oil refinery will want to take any chances with a Palm Oil of uncertain origin and hence, end up with the product beautifully displayed at the shelf with low or no sales.
On the other hand, it is also a terrible landscape ahead for those who do not want to go the extra mile, since they will experiment more commodity price fluctuation and price penalties on their products. It should be clear that these good practices will be embraced first by those who are after premiums. Consequently, it will evolve into the normal practice of the industry, as the market is global and highly competitive.
Trading companies will need also to re-think themselves in order to bring more value to their current customers. With the adoption of technology, the trend for the buyers is to go directly to the source, which represents a threat to those traders who are not prepared for a market change.
My final thoughts
To summarize, the Palm Oil Industry will face massive changes in the years to come across four components of the productive process: Plantation, Mill, Sustainability, and Markets. It is, however, impractical to predict if all the trends & changes mentioned in this article will certainly come about and the time for them to occur. Nevertheless, the likelihood to happen are extremely high as those proposed here follow the global trends for the Fourth Industrial Revolution which already have a big impact upon different industrial process. In my personal opinion, the biggest changes for the Palm Oil Industry will take place in the plantations with IoT, Big data, Regional & Global Collaboration, Robotics and Gene Editing.
I am very eager to see the early adopters of this technological change in the industry, and at the same time, I am very intrigued by the new players who will change abruptly the rules of business as usual in the Palm Oil Industry. Some questions going around in my mind are: is this the chance for Africa to take off and lead the market? Will Indonesia and Malaysia still be battling against low cost labour in neighbour countries, or will they take a decisive and determined step towards technology? Is Latino America ready to compete?
I would love to hear from people from different specialties of agribusiness, especially from the Palm Oil Industry around the globe. Do you agree? Are you more optimistic or pessimistic about these changes?