WEST KALIMANTAN, Indonesia—Continental A.G. is using digital technology to help trace the supply chain of natural rubber from hundreds of farmers in Indonesia, a move that verifies the material is sustainable and brings higher prices.
The project, in conjunction with the German Federal Ministry of Economic Cooperation and Development (BMZ) makes the supply chain—from cultivation to finished goods—transparent through the use of electronics.
It's a first-of-its-kind effort that helps farmers sell their output for significantly higher prices thanks to sustainable cultivation and better technology, Continental said.
Continental, along with creating a digital supply chain, also teaches farmers to use sustainable cultivation techniques that increase surface yields and extend the use of trees.
The digital supply chain provides documentation for the entire process through a pilot project in West Kalimantan that began in 2018. About 450 farmers have been involved.
Work allows documentation of all steps in the supply chain with a "digital traceability system," Continental said.
Farmers receive sustainable cultivation training, including instruction on how to cut trees to obtain as much rubber as possible for a longer period of time.
"The project helps us a lot. For example, we were taught how to cut the tree from left to right at an angle of 30 to 40 degrees. Many veins of the rubber tree run this way," said one local farmer in a BMZ video promoting the program. "If we cut them that way, we can hit them immediately and so more latex leaks out."
The digital traceability system gives information about those efforts that allows the supply chain to be evaluated.
Production areas are mapped through use of GPS, and raw rubber deliveries and sales are documented in the system when they are transported to the warehouse.
The system also compares the quantity of rubber delivered from production areas to help ensure rubber from illegally deforested areas is not included.
This is especially important because rubber farmers have looked to compensate for declining revenues in rubber production, BMZ said in the video. This can include expansion of production that can cause rainforest land to be cleared.
"Strengthening local smallholder farmers is one contribution to a possible solution. If they earn enough money from their rubber cultivation, nature conservation and economic development will succeed," the German government agency said.
"The creation of sustainable and traceable supply chains is an integral part of our comprehensive sustainability strategy at Continental. As part of the pilot project in Indonesia, which has been successfully established with the BMZ, we are able for the first time to seamlessly trace a rubber supply chain from cultivation and further processing to our tire plant in Germany," Christian Koetz, head of the tires business area for Continental, said in a statement.
"In doing so, we are working together to ensure greater transparency and make a significant contribution to securing the livelihood of the small farmers involved in the project. Our goal is to gradually expand electronic traceability within our natural rubber supply chains, thereby contributing to the global improvement of sustainability in the natural rubber sector."
Gerd Mueller, federal development minister for Germany, said in a statement that "we need a rethink in the global economy to better protect people and nature."
"Through sustainable cultivation methods and a digital traceability system, we are helping to stop the destruction of nature and improve the incomes of small local farmers," he said.
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