Indonesia has seen its deforestation rate decreasing over time. In the past, production of commodities ¾ notably oil palm plantations ¾ was accused of causing deforestation. But many activities remain to be carried out to ensure that reduced deforestation is permanent. At the same time, major commodity producers have committed to reducing their deforestation impacts in varying degrees. The “no-deforestation, no-peat, no-exploitation” (NDPE) commitment by major palm oil companies is an example. At the same time, in the case of palm oil, small holders make up for a major share of oil palm plantations, controlling more than 40 percent of the plantations, but with less than optimal productivity. Propensity to (illegally) open new plantations remains rather high, and as such illegal deforestation remains high.
Landtrace / Landcoop is a tool currently being developed by Landscape Indonesia and HARAToken to trace supply chain of commodities from the farms all the way to the end buyer. It consists of two key components: mapping for all plantations, including smallholders, and tracing of all transactions from the farms to the end buyers. The platform is developed utilizing blockchain technology to benefit from its ultra-decentralized management and as such allows for data management be controlled entirely by data owners, inherent architecture for traceability, and a good balance between privacy and transparency of data sharing. It is to be piloted in the District of Siak in Riau, Indonesia, to include 10,000 small holders in 2020 and continued with all farms including the 53,000 or so smallholders in 2021. The pilot, that is to be carried out in cooperation with smallholder farmers, mills, and traders, is expected to show a proof of concept of the Landtrace.
Landtrace / Landcoop will secure sustainable financing through the premium price that traceable commodities can gain from the market. It is expected that there will be sufficient amount of resources to be used to support the smallholders to be more productive by providing training of good agricultural practices, better inputs such as seeds, pesticides, and fertilizers, and some additional resources to provide low-cost lending to farmers. The use of the funds will be governed by farmers’ cooperatives.