There is a steady demand for natural rubber around the globe, especially from the tyre industry. One quarter of the world's natural rubber comes from Indonesia. However, the production of the raw material in this Asian country is often associated with serious ecological and social challenges. For example, there is a risk that large areas of forest will be cleared for the cultivation of natural rubber, because the low yields per unit area do not ensure a reliable income for the farmers. Natural rubber is often sourced from scattered, independent producers who live in remote areas. Most of them work without guidelines for sustainable rubber cultivation and it is difficult to reach them with advisory and training services. They supply their raw material to local traders who sell the rubber to processing companies. This means that the influence of the purchasing companies on the smallholders is limited. In addition, the companies are not in a position to measure the quantities of raw rubber delivered in relation to the production area in order to detect any discrepancies.
To ensure transparency in the supply chain, the project partners implemented the following measures, among others, in the pilot region in the district of Kapuas Hulu on Borneo between 2018 and 2020, with a total project volume of 400,000 euros:
- Establishment of a digital traceability system from smallholder operations in Indonesia to further processing and tyre production in Germany.
- Development of a catalogue of measures for environmentally and socially compatible rubber production with complete avoidance of deforestation.
- Training of farmers in sustainable rubber growing practices, with the aim that they will subsequently pass on their knowledge.
As part of the project, Continental contributed its expertise in international supply chains as well as employee know-how. GIZ consulted with experts on the ground and liaised with local communities and decision-makers.
With the successfully established pilot project, we are jointly ensuring greater transparency and making a significant contribution to securing the livelihoods of the smallholders involved in the project.
The digital traceability system makes it possible to include only sustainably managed producers in the supply chain. The valuable experience Continental is gaining in this project will allow the company to successively expand transparency within its natural rubber supply chains. Education and digitalisation can make important contributions to making supply chains sustainable. Together with its partners in Borneo, the premium tyre manufacturer is demonstrating that this can be achieved in the natural rubber sector. The increased product quality translated into a higher selling price of the rubber. This, as well as higher yields, contributes to improving the incomes of smallholders, and also reduces the pressure on the remaining natural forests.
develoPPP Classic is aimed at medium-sized and large companies that want to invest sustainably in a developing or emerging country and expand their operational activities locally. Suitable projects receive technical and financial support of up to two million euros in public funding.