Continental Tire Japan is looking to utilize the PROJECT TREE blockchain initiative to source natural rubber for its AllSeasonContact tires.
The initiative is owned by ITOCHU – a company that runs a rubber processing plant based in Indonesia and Kwik Fit in the UK. The latter deals with car maintenance and tire fitting.
ITOCHU has been working on its sustainability initiative since December 2021. Tires from PROJECT TREE are sold at a premium price and the money is used to supply farm smallholders with training, fertilizer, and farm tools.
The Indonesian rubber processor employs blockchain to track where the rubber was obtained and to figure out which tires were made using rubber from PROJECT TREE. The raw material is traced through procurement and retail sales.
About 60% of the rubber used globally comes from Indonesia and Thailand. About 70% of this rubber goes into tire production. About 85% of the output thrives on plantation agriculture.
Kwik Fit started running trials with Pirelli tires before adding Continental tires and Hankook tires. Customers knew about the price premium for PROJECT TREE tires and still exceeded sales expectations. Kwik Fit projects to accrue about 150,000 sales this year.
Training farmers plays an important role in rubber production. Rubber trees take up to six years to produce usable latex and by that time, demand has already exceeded supply.
This calls for additional land for tree planting which is sometimes cleared illegally. Education helps farmers to increase yields from their current land without planting new trees.
In the past, Continental used blockchain to share data with autonomous vehicles and a money market project in partnership with Commerzbank. ITOCHU supported another sustainability prototype backed by blockchain by investing in Farmer Connect – a coffee traceability startup.