Introduction

The SEI-PCS model for Indonesian palm oil uses both discount factors and a forcing factor to account for the complexities of the supply chain. The former are used to encourage prefential sourcing where supply chain links are likely, while the latter is used to penalise deviation from an expected pattern where supply chain links are known.

This sensitivity analysis considers 8 discount factor scenarios and 3 force factors. We begin by analysing the variation that results from a change in the forcing factor.

Forcing factors

The forcing factors range from 100,000,000 to 1,000,000,000,000. These values are sufficiently high that the results show very little variation, as can be seen below:

Discount factors

The 8 discount factors tested here are as follows:

Scenario Traceability Company Group
Baseline 30 50 70
High traceability 10 50 70
High company 30 30 70
High group 30 50 50
Low traceability 50 50 70
Low company 30 70 70
Low group 30 50 90
Extra high traceability 1 50 70

The values given in the table are the proportions by which the costs are multipled. For instance, the cost of sourcing from a group owned mill under the baseline scenario is 70% of the total.

Variation across the scenarios is like so:

It should be noted that the type of mill connection given here is always the strongest possible link (traceability -> company -> group). While some scenarios give parity to two types of connection the ranking never changes.

Results vs traceability reports

The plot below shows the percentage of traceability report connections that are included in the results per major exporting group: