World Change Starts With Rice

World Change Starts With Rice

Sri Lanka
Organization type: 
nonprofit/ngo/citizen sector
Budget: 
$10,000 - $50,000
Project Summary
Elevator Pitch

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

Rice, the only gluten-free major cereal, is the most important food source in the world and is the staple food in almost every developing country. Yet rice cultivation is almost exclusively a small-holder activity, with plot sizes averaging 1 hectare or less. Sri Lankan small-holder rice farmers are trapped by insufficient scale, and impoverished and ignored for generations by the perverse incentives of national food security, which demanded breeding for conditions alien to most traditional paddy lands, under costly high-input conditions in larger plots. Starting with heirloom rice varieties best-suited to smallholder farmers, Rural Returns is working with rural communities to develop unique products and services with which to increase their own incomes and fund their own development
About Project

Problem: What problem is this project trying to address?

Rural Returns’ first-stage portfolio consists of 9 smallholder communities, with a total of 660 paddy farming families (average individual holdings <1ha). Women’s participation averages 30%, with a range from 22%-55%. Youth participation, where documented, averages 10%, ranging as high as 12.5%. The 9 communities are located in the North-Western (3 groups), Central (3 groups) and formerly conflict-affected Eastern Provinces (3 groups). Candidates in the second- and later-stage pipeline are located in the Uva (arguably the poorest), Southern, and formerly conflict-affected Northern Provinces. Rural Returns engages with strong, cohesive, democratically elected and well-managed community groups as platforms for sustainable growth. We also seek other community organizations with long-standing local connections, be they local or international NGOs, dedicated civil servants or companies with significant presence. These partners provide more local presence and knowledge, and support Rural Returns and our partner communities in local capacity building. Our earliest partner community is in Kuliyapitiya, in the North-Western Province, where 3 members started organic cultivation in 2003, quickly growing to 22. Particularly entrepreneurial and dynamic, the group saw the value in partnering with Rural Returns to break out of a model where companies pay for and own the costly Organic and Fair Trade certifications that Rural Returns will help the community finance for themselves. The group today numbers over 50, and 22 members’ production is dedicated to Rural Returns.

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

Our innovation addresses the largest segments of Sri Lanka’s rural poor and post-conflict communities. Rural Returns has developed, tested end-to-end and proven a logistical and economic model for connecting groups of otherwise highly diffuse, micro-scale producers in such a way that their production is of sufficient scale, uniformity of quality and reliability, to enable them to connect with markets appreciative of and willing to pay for such products. We are reviving a centuries-dormant rice export industry, by growing value-added crops for higher-end markets with an increasing appetite for exotic grains and willing to support environmentally friendly cultivation and sustainable industries. Heirloom varieties better suit smallholder rice farmers’ conditions and resources losing out to competition with farmers in conditions suited to commodity varieties. Sri Lanka is home to over two thousand indigenous rice varietals boasting diverse tastes, nutritional and therapeutic values, aromas and colors. Several feature in Ayurvedic therapies. We help communities build up their capacities through forward contracts, financing seeds and certifications, training and capacity building. By making communities financially independent we enable them to undertake community-centered development, collectively identifying and addressing their own needs, ultimately investing in their own otherwise prohibitively expensive Organic and Fair Trade certifications and value-addition such as milling and packaging, for which we are setting up community-owned rice processing companies
Impact: How does it Work

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

<a href=www.ruralreturns.org>Rural Returns</a> (RR) brings in the missing elements needed to help groups of small-holder farmers break out of poverty. We empower groups of smallholder rice farmers to harness the power of markets, breaking out of an impoverishing policy framework’s restrictive choice set by leveraging creatively their knowledge and resources. RR overcomes scale by aggregating diffused production volumes. RR injects the capital and takes on the risk that farmers cannot afford to before and during cultivation, at harvest and in processing and sales. During processing, RR ensures high and uniform quality. To clients, RR provides the professional, reliable counterpart necessary to build a sustainable, mutually beneficial partnership with. Most importantly, RR connects to and builds the sustainable markets able and willing to pay for the fair value of the exotic, highly differentiated heirloom rices RR's partner communities produce. Rural Returns sets up the marketing channels to enable market forces to operate. We provide much-needed competition for paddy at the farm gate, empowering farmers to bargain for a fairer share of value-chain profits, pushing prices up to levels sustainable for farmers AND traders and consumers. [video:http://youtu.be/JakY5UCOUSQ?hd=1]
About You
Organization:
Rural Returns (Guarantee) Limited
About You
First Name

Chari

Last Name

Ratwatte

About Your Organization
Organization Name

Rural Returns (Guarantee) Limited

Organization Country
Country where this project is creating social impact
How long has your organization been operating?

1‐5 years

The information you provide here will be used to fill in any parts of your profile that have been left blank, such as interests, organization information, and website. No contact information will be made public. Please uncheck here if you do not want this to happen..

Innovation
What stage is your project in?

Operating for 1‐5 years

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

Chari: My family has a generations-long history of service. Growing up, family holidays were field trips to the youth- and livelihood development programs my father created and ran as a civil servant. Service is also a key tenet of the global Scout Movement, which played a huge part in shaping my worldview. These two influences made it an easy decision to take on the key issues retarding development in my home country and around the world.

DC: I landed at Stanford University as a Civil and Environmental Engineer expecting to graduate and work in the U.S. long enough to enable my return to tackle Sri Lanka's pressing environmental needs. However my exposure to policy and planning issues in the School of Engineering, and to Social Entrepreneurship in the wider campus, challenged me to create a self-sustaining social venture tackling global problems. I was an easy well when my childhood friend Chari knocked on my door with a plan to change rural poverty in Sri Lanka and then the world.

Chari, having seen the exotic branding associated with such mundane things as coffee, soon harked back to the heirloom rice his great aunt often served back home in his ancestral village, and was convinced such Sri Lankan products could not only compete easily but also provide an opportunity for their producers. We started discussing the idea in January 2009. Teams of Chari's Business School classmates contributed in classes on Social Entrepreneurship and Building Innovative Brands.

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

Rural Returns (Gte) Ltd posted a gross surplus (profit) in its first full year of operations, ending March 31 2011. This is one of the strongest indicators that Rural Returns can successfully and sustainably bring a market-oriented solution to helping rural smallholder communities break out of poverty. The number of smallholder farmers with whom we entered into contract cultivation agreements doubled within that one-year period, as did the acreage of paddyfields.

Metrics include the number of partner communities and families; increase in family incomes; increase in profits/family over baseline ; farm gate prices; acres cultivated organically and certified; yields per acre; reinvestments by community groups; new order volumes; new community groups and farmers in our pipeline; processing quality measures; sales volumes and growth.

Farm families working with us saw on average a direct two-fold per-acre <b>income</b> increase. Most importantly however, due to lower input costs and because Rural Returns enables farmers to internalize the profits from milling and packaging, per-acre <b>net profits</b> are <b>four times</b> greater than with conventional varieties.

Finally, on the all-important market end, Rural Returns is building its distributor relationships in the U.S., boosted by high-profile clients such as the TEDx Silicon Valley 2011 event, Stanford Dining, Schwab Executive Dining, BeOn Superfoods, Essential Living Foods, and Country Sun Natural Foods.

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?

Rural returns has proven its business model and operational model, and has attracted sufficient farmer communities for rapid production expansion. Working with farmers outside Sri Lanka is one expansion path. The U.S. was a beachhead market that helped climb the export learning curve. We are now turning to the equally large E.U. market, building a local market for stability, while growing the U.S. market.

Several identified sectors are compatible with our mission and competencies. These include value-added agricultural products such as other ancient grains; agro-tourism building on community partnerships; and working with rural communities along coastal fishery and conservation zones. More urban areas include an e-waste re-purposing concept; child-safety motorcycle helmet exchange etc.

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

A short-term hurdle is the large increase in working capital needed to build the amounts of ready-reserve stock needed to sustain a rapid expansion in sales. Due to the company’s very young age, we have partnered with more established organizations to overcome the credibility gap and reassure funders about our depth of experience and reach.

A longer-term hurdle is ensuring a sufficiently large and agro-ecologically diversified production base of partner communities to ensure uninterrupted and resilient supplies. Rural Returns has worked towards this from inception, meeting and settting up relationships with many more farming communities and organizations than medium-term needs require. This portfolio of communities represents a prioritized pipeline of communities. Rural Returns works with communities towards their eventual entry into full production. Our next two communities await contract cultivation decisions based on upcoming order flow.

Most important at every step is ensuring adding new sales partnerships with growth potential. Rural Returns is closing a deal with the largest U.S. importer of specialty rice. Our pipeline of orders includes two of the best-known large U.S. high-end grocery stores at intermediate discussion stages, and the largest local supermarket chain. Several distributors with high-profile food-service and retail clients stock our rice, a key hurdle for market presence. Our E.U.-based partner NGO is setting up channels there, apart from our independent relationships with European food-industry players. We are also looking to India as a regional market.

Tell us about your partnerships

Rural Returns’ partnerships can be categorized broadly into the areas of Production, Technical and Sales.

Production partnerships are relationships with strong, long-standing farmer organizations with whom we work to aggregate sufficient production to overcome the volume hurdle that our innovation addresses.

Technical partnerships include organizations with expertise and experience in agricultural aspects, as well as civil sector organizations able to work with, or already working with, our partner communities. The state Department of Agriculture through officials at many levels in the agricultural extension, research and policy areas support our work actively and enthusiastically. The premier semi-governmental research organization, which has already conducted relevant research in post-harvest and alternative products, works closely with Rural Returns, which also sponsors work identified as having strategic value. Non-Governmental Organization (NGO) partners include ICEI, Overseas, World Vision, Sewa Lanka, the Farmer Federation for the Conservation of Traditional Seeds and Agri-Resources. These organizations work in the same communities as Rural Returns, and play an essential role in building communities’ human and organizational capacities as well as complementing technical support provided by Rural Returns and the state.

Sales partnerships include strategic engagements with influential chefs, bloggers and “foodies” impressed by our products and excited by their social value, as well as food importers, distributors, retailers and food-service organizations aligned with our value proposition.

Explain your selections

The 2009-2010 Social Innovation Fellowship awarded by the Stanford Center for Social Innovation provided $120,000 in quarterly disbursements linked to pre-agreed milestones over the Fellowship year. This figure supported the bulk of the expenses during the Fellowship period as well as some months thereafter, thanks to conservative fiscal management. Support from immediate family has helped Rural Returns ride out short-term operating shortfalls. However, financing the rapid expansion needed to achieve sustainable higher volumes requires working with more innovative, risk-tolerant funding sources aligned with the spirit and cognizant of the scope of our potential.

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

Rural returns has proven its business and operational model, has attracted sufficient farmer communities for rapid production expansion, and the buyers needed to drive its vision.

The key area of work in the next 3 years is to aggressively reach and exceed the volumes required for the heirloom rice sector to surpass break-even. This is possible within a 1-1.5 year timeframe, but will require sufficient seed working capital to overcome initial financing challenges. Within the rice project, potential beneficiary communities exist throughout the country. We have identified 3 regions around which to base logistical and value-addition planning and investments with the support of equity investors and support programs led by IFAD, the Central Bank of Sri Lanka, and other similar funders.

We routinize and modularize our work and the competencies needed. This will help us expand locally into other complementary or completely new sectors, as well as prepare us to work in other geographies with communities facing challenges similar to our Sri Lankan partner communities.

Rural Returns regularly monitors and is gradually developing other sectors compatible with our mission and competencies. These include other value-added agricultural products; agro-tourism and handicraft projects building on existing community partnerships and leveraging existing logistical and infrastructural arrangements; and working with rural communities along fishery and conservation zones. More urban areas include an e-waste re-purposing concept; child-safety motorcycle helmet exchange etc.

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

PRIMARY

Restricted access to new markets

SECONDARY

Lack of visibility and investment

TERTIARY

Lack of efficiency

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

We help communities identify unique differentiated products or services to rise above harmful competition with larger, more efficient producers. We provide competition at the farm gate, empowering farmers to bargain for a fairer share of value-chain profits, gradually pushing prices up to levels sustainable for farmers AND traders. We help communities build up capacities through forward contracts, seed financing and certifications, training and capacity building. By making communities financially independent we enable them to undertake community-centered development, collectively identifying and addressing their own needs, financing their own otherwise prohibitively expensive Organic and Fair Trade certifications and investing in value-adding activities such as milling and packaging.

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

SECONDARY

Repurposed your model for other sectors/development needs

TERTIARY

Grown geographic reach: Multi-country

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

Rural Returns’ immediate priority is to finance a rapid growth in production capacity to reach sustainable order volumes over the financial year ending march 31st 2012. The total expense required to reach net break-even volumes is U.S. $240,000. This involves expanding our work to the already-identified and prioritized communities primed for our production expansion effort.

As the heirloom rice sector surpasses break-even, we will expand into other agricultural and rural industries complementary to our existing partnerships and competencies.

Growing our reach to other countries includes not only establishing our products in other markets, but also adapting and applying our learnings to other countries with industries sharing many fundamentally similar issues.

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

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

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

The State continues to have the widest network for identifying, advising and working with needy communities. Department of Agriculture officials enthusiastically and actively support our work from the field level to research and policy.

The State is also heavily involved in research and academia as the largest funder and provider. Academics and students work with us through internships and proposing collaborative research.

NGO partners work in the same communities as us, and play an essential role in building communities’ human and organizational capacities as well as complementing technical support provided by Rural Returns and the state.

The private sector provides advice, logistical support, introductions to partner communities, and channels for our products to reach markets.