READY-TO DEPLOY SUPPLY CHAIN PLATFORM TO COMPLY WITH THE PROPOSED EU REGULATION TO MINIMIZE DEFORESTATION AND FOREST DEGRADATION

INTRODUCTION TO THE POLICY

?THE EU POSITION?

The European Union's draft law banning the import and export of six core agricultural commodities from areas of vulnerability have long-term repercussions on the functioning of the free market. The underlying premise of the draft law has been the belief that ending deforestation is a necessary condition to achieve net zero greenhouse gas emissions. The draft proposal has been the European Commission's answer to the COP26, where leaders from over 100 countries convened to delegate on pressing issues of climate change and sustainability, and is a part of the European EU Green Deal that strives to mitigate EU's impact on climate change. Since its announcement in November 2021, the proposal has created quite a stir among the EU market stakeholders and its external collaborators.?

?The EU Council's position on the draft law is based on responsibility sharing and 'walking the talk by mitigating their global carbon footprint and impact on pollution and biodiversity loss. As hinted earlier, the draft proposal is a part of the larger European Green Deal that aims to reduce the EU's impact on climate change. The six agriculture goods encompassed within the policy include beef, soya, palm oil, coffee, cocoa, and timber. They account for 19 percent of the imports into the European market, and the proposed regulation will potentially reduce the European consumer demand detriments on the world's most vulnerable forests.

?Proposals for a European Union policy on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation have been put forward by the European Parliament and the Council of the European Union (EU) is at the first reading stage and the EU council adopted is negotiating position on 28th June 2022. The proposal, in simple words, is all about compelling companies to pinpoint the exact location of the land where a product was grown or harvested.?

?THE POSITION OF TRADERS AND OPERATORS?

?The proposed regulation will be applied to operators and traders of the said agricultural commodities on the EU market. By operators, we mean any person or agency that places the relevant commodities on the EU market or exports them from the market for commercial purposes. Likewise, traders are defined in the EU context as legal or natural persons in the supply chain (other than operators) who export or import relevant commodities to or from the EU market. The industry group that includes operators and traders opine that tracing the exact origin of the six agricultural goods – cocoa beans, coffee, soy, palm oil, beef, and timber is a near impossible task and will require colossal investments, which may be too far-fetched for the contemporary industry groups.?

?The European Union has made geolocation and traceability two core requirements of the proposal, which means –

?·??????Mapping farms with exact GPS coordinates

·??????Correlating the same against evidence of deforestation via satellite image

·??????Making on-field investigations to assess the situation

·??????Tracing products digitally from farms to factories

·??????Putting in place deforestation risk assessment and mitigation measures

?Industry groups firmly assert that the proposal’s implementation is too far-fetched and unrealistic because tracing the exact plot of land where palm oil or other products are grown is challenging, owing to the very nature of the goods. Typically, when it comes to palm oil it is sourced from many different smallholders and estates and then processed in an oil mill. As such, the same batch of palm oil could contain fruits from regions designated as vulnerable to deforestation and otherwise.?

?Large swathes of industry associations, feed manufacturers, vegetable oil makers, and oil traders argue that even if some estates/plantations do achieve traceability and comply with the crux of the regulation, the collection of geolocation data of smallholders and cooperatives faces serious technical, logistical, legal, and governance challenges that companies alone cannot tackle. Moreover, the broader sentiment echoed by the industrial groups is that everyone should bear the tangible cost of sustainability certifications.?There is no digital collaboration between various palm oil stakeholders due to lack of digitization in the supply chain.

HOW CAN DIBIZ HELP??

The call of the industry groups to relax the regulation has met with virulent criticism from NGOs that traceability is a key to the scheme's success, and technologies do exist to materialize the envisaged proposal. Well, it is, in fact, true that technology solutions do exist to help operators, traders, and companies comply with the EU draft and steer clear of penalties. One marvel of modern science that can bring the scheme to fruition is DIBIZ.?

DIBIZ is a collaborative, reliable, and flexible platform that offers users value at each level of the supply chain. By creating an interlinked ecosystem with the entirety of the supply chain, DIBIZ fosters real-time geospatial traceability down to the block level in a plantation. By using DIBIZ , every company can find the precise source of the product with a click of the mouse. The four?pillars that make DIBIZ the optimal solution for manufacturers importing from and exporting to the EU are:

·?Trade Document Digitization: It is a known fact that the palm oil industry stakeholders like estates, smallholders & oil mills have minimal or zero digital systems to monitor their production, operational and supply chain activities.?DIBIZ aims to provide a low cost digitization platform for these stakeholders to prepare for digital collaboration?

·?Traceability – DIBIZ is a platform that renders automatic traceability for sustainable sourcing, regulatory compliances, and food security and reduces counterfeits.

· Geospatial Analytics – It enables the optimization and improvement of orders premised on factors like location-based inventory optimization, reallocation, and prioritization. Users get precise location data with contextual analysis across the supply chain, empowering operators and trades to maximize revenue and enhance flexibility.

·?Gateway to Blockchain Networks – DIBIZ provides a one-stop solution to connect to multiple Blockchain networks catering to multiple business operations like logistics, cross-border trade networks, trade, financing, and much more.

·?Supply Chain Analytics – Finally, DIBIZ allows manufacturers to leverage insights from supply chain data with relevant and actionable information at their fingertips. The platform helps companies save hundreds of person-hours spent on manual data collection and increases the response speed so that manufacturers can focus on higher-value tasks like communicating with customers and other stakeholders.?

CONCLUDING THOUGHTS?

Operators and traders import to the EU market have 12 months to comply with the aforesaid draft proposal. DIBIZ serves as a foolproof solution for manufacturers in such a hurried scenario. It is a high-performance platform especially attuned to enhancing traceability and providing fast geospatial data of commodities at all strands of the supply chain to manufacturers and companies.

Further to this, according to an EU document seen by Reuters , products manufactured using forced labour or those imported into the European Union are going to be banned according to the new draft rules. The draft clearly states that the law applies to products for which forced labour has been used during any stage of harvest, extraction, production, and manufacture. A database is set to be created with the list of geographic locations where the risk of using forced labour is at a critical level. DIBIZ, as a transparent marketplace for ethical sourcing management, helps the stakeholders, the Government and the public to have a clear-cut view of the entire supply chain process - right from where the raw materials are derived till the final delivery of the finished goods.