Create Employment Opportunities for War Affected Youth & Women by Developing Agro Processing Enterprises in North of Sri Lanka

Create Employment Opportunities for War Affected Youth & Women by Developing Agro Processing Enterprises in North of Sri Lanka

Sri Lanka
Organization type: 
for profit
Budget: 
$50,000 - $100,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

The most pressing and formidable challenge facing by the world today is the alleviation of poverty and hunger. Developing countries, 70-75% of the poor and hungry live in rural areas and depend, directly or indirectly, on agriculture for their livelihoods. This project is proposing new approach to change above context creating more employment opportunities by promoting and increasing efficiency & effectiveness of agro processing enterprises. This business model is based on collectivization and common branding concepts which help to create better market positioning for small-scale farmers and producers. This model is consist with range of business development services including technology transferring, entrepreneurship development, quality improvement and providing of market information

About Project

Problem: What problem is this project trying to address?

The target group of the REN model is rural scattered small scale farmers and producers. Over 90% of the produce of farmers is selling as raw materials at a lower price. Agro processing and value addition is playing insignificant role in income generating and providing of employment in rural areas. The traditional farming and processing activities are not attracting younger generation and unemployment rate of the youth and women are at a higher rate. Over 60% of the economy in target areas is depending on agriculture activities while 50% of the workforce is also employed in agriculture sector. Although, small scale agro processing enterprises can play vital role in providing of employment opportunities for above groups they have difficulty accessing markets due to issues related to technology, infrastructure, transportation and policy environment. Same time, globalization has increased competition faced by small agro producers, creating an environment that is increasingly unfavourable for them. Lack of access to markets, limiting factors to maintain sustainable relationships with markets, lack of technical assistance to develop and diversify products, lack of government incentives, low professionalism, and limited scale of operations has contributed to high production cost, less competition, and low stability in a highly competitive market environment. Small scale farmers are typically have low investment capacity, have low bargaining power in the immediate markets they deal with and have poor awareness of wider market opportunities that could increase their profits.

Solution: What is the proposed solution? Please be specific!

The project idea is to enable agro-producing enterprises to overcome barriers they face by linking them to input-output markets to operate as private entities and increase the financial viability of those enterprises. With the financial stability and access to new markets the sustainability of those enterprises assures and generates more employment opportunities for youth and women in the area. In that sense, this is a market led approach to generate employment opportunities and develop the rural economy. This model is incorporating social and environmental aspects to the agro processing enterprises by deviating from traditional business model which has only economic targets. In southern of Sri Lanka this model has tested under normal business environmental conditions and gained good results & impact. Testing this model under post conflict situation where most of the market chains and systems are not functioning properly is innovative and would contribute new lessons to the field. This approach is innovative by its nature, which challenges the existing practices of knowledge transfer commonly used by BDS providers, as it promotes the concept. The project while trying to adapt existing mechanisms and systems in the country, in consultation with rural producers and market actors will develop “community-based hubs” decentralizing the centralized processes along the market chain to ensure their produce/products reached the expected level of markets while reducing losses and costs of storage.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

• Organize awareness programs to introduce proposed model for small-scale farmers/ producers, government agencies, CBOs, NGOs and private sector • Select entrepreneurs, potential agro processing sub sectors organized them as cluster or groups. • Assessment of existing production and farming practices and methods, potential for value additions, potentials to create employment opportunities and develop action plans for each enterprise. • Conduct training session on participatory business planning, develop detailed business plan for each enterprise • Conduct technical knowledge transferring programs targeting women and youth to introduce appropriate processing methods and practices • Transfer required knowledge for product diversification and value additions based on the findings of market studies • Develop business management knowledge, entrepreneurship skills of selected beneficiaries and assure the sustainability • Conduct market studies, on going market research targeting the above producers’ products and use that information in capacity building programs and product marketing • Develop capacities of selected enterprises on quality assurance, labelling, packaging and product marketing • Develop marketing materials to promote the products of above agro processing enterprises • Link above enterprise with Rural Enterprise Network (REN) to get the access for wider market opportunities and business development services • Organize and participate for promotional events, trade fairs to promote above products • On going follow-up and technical assistance in adaptation of new technologies
About You
Organization:
Rural Enterprise Network
About You
First Name

Nilantha

Last Name

A

About Your Organization
Organization Name

Rural Enterprise Network

Organization Country

, WE

Country where this project is creating social impact

, NO

How long has your organization been operating?

More than 5 years

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Innovation
What stage is your project in?

Operating for more than 5 years

Share the story of the founder and what inspired the founder to start this project

The REN concept came from Practical Action’s constant observations that access to markets and marketing information was lacking in rural micro-business interventions. The REN model addresses these gaps, providing marketing-related services to increase market access for poor small-scale producers. The issues face by the small scale farmers and producers can divide in to three categories. 1. Capacity- poor ability to deal with dynamic markets, poor quality, technology gaps, 2. Business environment-individuals have little strength, geographically dispersed, low profile 3. Services- poor access to market information, BDS not catered to rural poor producers. The REN model has developed based on above context and its’ main activities has designed to revolutionize the situation. Today, REN has substantial experience helping producers organize as groups, product quality improvement, access market information and improve market linkages mainly via a common brand exclusively focused on products crafted by Sri Lanka’s small-scale producers. Producers under this project that meet REN quality targets and other guidelines become members of the network with input through REN’s Board. Monies generated from REN sales are reinvested with the member communities REN works with. Now REN is in expanding of its member network to north of Sri Lanka where need assistance to re-establish livelihood of war affected communities.

Social Impact
Please describe how your project has been successful and how that success is measured

The success of this model has to be evaluated at two levels; those are member enterprises level and Producer network (Rural Enterprise Network) level. To measure the success REN has used Business Development Services- Performance Measurement Framework (BDS-PMF) which is presently use in small enterprise development

1. Employment Creation - In average each small enterprise has generated 5 employment opportunities, totally REN has generated 500 direct employment opportunities
2. Profitability of Business - 70% of member enterprises reached to the level of breakeven or profitable
3. Market growth- Currently dealing with 23 ex porters, 3 super market chains, 2 hotel chains, 5 ayurwedic shops and 35 small shops
4. Product Range/ Value addition- Over 90% of the member enterprises added at least 1 new products to their product range
5. Economic well being of employees- Employees are earning 120USD to 150USD per month which is enough to manage their expenses

REN is using three income streams to generate its revenue; those are product sales income, BDS selling income and partnerships and collaborations with other organizations. During the stages of setting up the network REN was totally dependent on external funding, but after organizing the ground level gradually its focus converted to the sales income. In the year 2004 and 2005 over 75% of the revenue was generated through partnerships and collaborations and from 2006 this trend began to change. Accordingly, from 2006 onwards over 40% of the income generated through product sales while BDS selling contributed by over 10%

How many people have been impacted by your project?

101-1,000

How many people could be impacted by your project in the next three years?

1,001-10,000

How will your project evolve over the next three years?

Over next three years period REN will give main attention to expand its member network especially targeting the conflict affected producers and farmers in North of Sri Lanka. The expansion of network would target to re-establish and develop micro and small scale agro and food processing industries located in conflict affected areas. The capacity of women and disadvantaged youth will develop during this process to take the opportunities of the sector. Accordingly, underutilized resources available in the conflict affected areas will use for effective economic activities. Action will be taken to expand REN marketing network to capture more market opportunities in USA and EU countries where it believed to be more demand for REN products.

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

Finding resources for the expansion process would be the main barrier the project will face. To overcome this challenge we already started discussion with government development programs and potentials funders to incorporate our ideas to their plans. The next challenge is how we would assure the sustainability of this project beyond the project period. As explained, after developing the capacities of agro processing enterprises those will link with Rural Enterprise Network (REN) which can provide required services beyond the project period. REN will cover the cost of their services through the 15% sales margin they are keeping through the sales. In addition to that REN will provide its’ expertise to the other development project in cost recovery basic which would be a good income stream for the network.
Market competition for small scale producers’ products also a challenge that net project has to face in future. Especially, large scale companies are sending their products to the market at a low price due to economic of scale they have. To face this competition the project would differentiate its’ REN branded products by using social and environmental objectives of the organization. Same time, as a marketing strategy REN will promote its products as pure, natural and traditional products to gain advantage in high end markets.
Political influences and instability also identified as a barrier to implement this kind of project in war affected areas of Sri Lanka. To address this issue the project will aware local and national level political authorities about the project and already have a plan to get government departments and agencies support to implement project activities at ground level which would help to minimize the conflict at the field level.

Tell us about your partnerships

Practical Action as the founder, is partnering with REN to provide further support to expand REN network to North of Sri Lanka. Especially, they will provide further guidance and technical support to increase REN producers’ network. As already Practical Action is working in North of Sri Lanka, they will assist REN to organize ground level and identify potential project beneficiaries. Accordingly, Practical Action support will come as financial and in-kind assistance.

REN has already build contacts with government agencies and department to get their involvement for the success of this project. Accordingly, Department of Agriculture, Palmyra Development Board and Industrial Development board will joint with REN to implement this project. For an example already Palmyra Development board has agreed to take over R&D part for Palmyra products and help REN. In addition to that “Vidatha” program of Ministry of Science & Technology and “Gemidiriya” program of Ministry of Economic Development agreed collaborate with REN to implement this new initiative

The private sector network of REN including super market chain and exporters agreed to give more orders for REN branded products. Some of the private sector companies have agreed to invest their CSR funds to develop agro processing enterprises in North of Sri Lanka.

Explain your selections

Mainly, REN is getting finance to implement its project activities from three income avenues. Those are Product sales margin, consultancy income and funding by collaborating with other funders and organizations. Today, REN is financing nearly 25% of its project expenses though the mark-up of products sales while consultancy income is contributing for another 25% of annual project expenses. Mainly, REN is covering rest of the expenses through donor funding or by partnering with other organizations.

As Business Development Service Provider or consultant REN has range of services including product quality improvement trainings, Business development training (business plan development, management coaching), marketing for micro business, packaging & labeling and technology transferring trainings which generate funds to implement REN project activities.
In addition, since 2004 REN has been providing expertise to implement various donor funded projects by partnering with other organizations. According to that during the period of last four years REN has provided its’ expertise to implement renewable energy for Rural Economic Development project (RERED), Tsunami Rebuilding program of Practical Action, Telefood program of FAO, Market Access Project (funded by CIDA), STRESS project (funded by CIDA & DIFID) and North East Costal Community Development Project (funded by ADB). Mainly, REN has used above opportunities to expand its member network and improve the institutional capacities.

How do you plan to strengthen your project in the next three years?

To strengthen the project REN has incorporated below mentioned activities in to its business plan. Increase production volume of existing members by upgrading technologies, offer REN membership for new producers and link with REN, find new markets for small scale produces’ products, linking with private sector organization, universities to get new technologies, Connecting with government program to expand supplier base. Increase marketing and capacity building budget by 10% during next three years period.

To assure the sustainability of the program REN has a plan to give more focus to increase sales income by increasing member network and reduce the dependency on external funding. In addition to the sales income, REN will give more focus to increase income of REN Business Development Services (BDS) during the coming years. REN will fine-tune the curriculum of existing services range and will introduce new service range considering market needs. Marketing campaign will be planned in order to promote REN BDS range and find new customers. With those changes and marketing campaign REN is expecting 15% growth of REN BDS income during next three years period REN, as an organization who has concern on bio-diversity and climate changes of the earth more attention will pay to promote environment friendly processing practices among its members. Cost effective renewable energy sources will be introduced to its members for processing. Organic production capacities will increase by absorbing more organic producers to the network.

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

Lack of skills/training

SECONDARY

Lack of efficiency

TERTIARY

Restricted access to new markets

Please describe how your innovation specifically tackles the barriers listed above.

The project has identified above issues as critical points for success of small- scale agro processing enterprises and creation of employment opportunities. To increase the efficiency of small-scale agro processing enterprise the project will upgrade existing processing technologies and practices. Capacity building programs also will increase the efficiency of those agro processing enterprises. The youth and women who suppose to joint with above agro processing enterprises will train on agro processing technologies which finally help them to find jobs. Lack of market access also identified as a barrier for the development of small scale enterprises. To cater with this issue the project will carry out market studies and transfer those information to rural level.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

Influenced other organizations and institutions through the spread of best practices

SECONDARY

TERTIARY

Leveraged technology

Please describe which of your growth activities are current or planned for the immediate future.

Next three years plan REN has given priority to expand its network to war affected communities in Northern part of Sri Lanka. Already, we have submitted proposal for to find resources for this expansion and organizing ground level. Influencing other organizations by sharing best practices also a one strategy REN is following and prioritize to build collaborations with others. Case studies and other marketing material are using to reach that objective and planed to develop video on REN works. Technology is also a one key area that REN has main attention which has direct link with market access. In proposed expansion REN will promote agro processing technologies in war affected areas which will help to increase efficiency of micro enterprises and create new employment opportunities

Do you collaborate with any of the following: (Check all that apply)

Government, Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

REN is partnering with government departments and development projects to get access for their client base and get recognition for our works. NGOs and INGOs are helping REN to by providing resources to set-up community level micro enterprises and develop their capacities where REN has to invest more resources. Technology service providers are working with REN to upgrade agro processing technologies of micro enterprises in rural areas and developing and testing of new processing methods and practices. Universities are assisting REN in research and development activities, especially; they are providing technical expertise in new product development, product testing and verification of quality issues