Eliminating Payment Delay in a Commodity Supply Chain

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Dan Iancu

Topic: Sustaining Smallholders and Rainforests by Eliminating Payment Delay in a Commodity Supply Chain - It Takes a Village

Speaker: Dan Iancu, Stanford University

Abstract: Millions of poor smallholder farmers produce global commodities, often through illegal deforestation. Multinational commodity buyers have committed to halt illegal deforestation and improve farmers' livelihoods in their supply chains. We propose a profitable way to do so, motivated by field research in Indonesia's palm oil industry. Currently, farmers suffer from delay in payment by processors, and buyers expensively attempt to avoid sourcing from illegally-deforested land by monitoring individual farmers. Instead, we propose that buyers reward all farmers in a village by eliminating payment delay if no production occurs on illegally-deforested land in the village. Using field data, dynamic programming and game theory, we show how eliminating payment delay improves productivity and profitability for farmers, processors and buyers, and how village-level incentives best halt illegal deforestation.

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Moderator: Christina Nikitopoulos Sklibosios, University of Technology Sydney

Date: Wednesday, 2nd June 2021
Time: 5-6 pm (Australian Eastern Standard Time)
Venue: This is on online Zoom webinar.

Seminar protocols:

  • The webinar will run for 45 minutes, followed by a 15 minute Q&A session.
  • There will be a moderator for each seminar event, who will facilitate communication and resolve any technical issues.
  • Participants can use the chat facility or raise their had to ask questions during the presentation. The moderator will then alert the speaker at the appropriate time and either ask the questions raised or unmute the participant so they can ask the question directly to the presenter.

Co-ordinator: Harry Scheule

Enquiries: Duncan Ford

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