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Role of Private Sector in

Improving Information for


Smallholders
THE CARGILLS WAY
Janaki Kuruppu
Cargills (Ceylon) Ltd

Cornell International Workshop


on Agriculture Education and Information Systems
Zambia, 2007
SRI LANKA

Island Nation in the Indian Ocean, tropical


weather throughout year, wet and dry
zones, fertile soil
19.8 million people
15.6% youth
72 % live in rural Sri Lanka
Per Capita Income US$ 1355
19% live below the poverty line
GDP Growth of over 7% led by Service
sector
Agriculture sector contributes 17% of GDP
and employs 33% workforce

Source: Dept. of Census and Statistics


Cargills (Ceylon) Limited
since 1844
(A 100% Sri Lankan company
no connection to Cargil USA).
Largest Food Company in Sri Lanka
Engaged in Modern Retail, Manufacturing and Restaurants
Unique backward integration model with strong presence
in Rice, Fruit, Vegetable, Dairy and Livestock sectors
The Cargills Way
We are present in 19 of the 22 districts
We source all fresh produce directly from a 10,000
strong farmer network
80% of our 5000 strong work force are from rural
Sri Lanka
70% of our team is below the age of 25
Cargills Case Study 1

Fresh Produce Backward


Integration
Close to the
Farmers:
Islandwide
Collection
centres
Our Out Grower Network
Collection Center Qty in MT No. of
Farmers
Thambuttegama 2000 500
Nuwara Eliya 1800 800
Bandarawela 1000 700
Norochchelai 1350 100
Dehiattakandiya/ Ambilipitiya 1500 2000
Hanguranketha 750 750
Gampaha/ Kalutara 3000 1000
Dairy Project 20000 ltrs 4500
Rice Project 1500
Total 11,850
Agri Business Human Resources Development
Our Agribusiness Team
Headed by Snr Agriculture consultant, Snr. Dairy consultant
Snr Managers from agriculture, livestock and dairy
Agriculture graduates heading the depots and at Executive
level at head office
Over 140 graduates hired in 2007 alone, majority qualified
in agriculture
25 field officers and 300 outgrower staff who work as
agriculture extension officers

12,000 farmers reached through 9


collection centres, 3 factories,
2 central warehouses, 4 regional
packing and storing depots
Results
Currently, 40% of the countrys agriculture produce
is wasted due to:

Conventional packaging
Lack of market orientation by farmer
Inferior quality produce
Uncertainty of returns to the farmer
Market dominated by the middlemen

At Cargills we have managed to reduce this to 5%


by addressing exactly the above issues
Results - Benefits to the farmer

Better price
Guaranteed market
Technical know how
Financial assistance
Free from
middlemen
Results - Bridging the Gaps

A win-win for Farmers and Consumers


Cargills gives farmers a guaranteed purchasing price
20% higher than the generic market model and a lower
price to the consumer
Extract from Production Resources in Lagging Regions,
World Bank Report : Case Study- Sri Lanka, June 2007
Extract from Production Resources in Lagging Regions,
World Bank Report : Case Study- Sri Lanka, June 2007
Our Consumer Promise:
Cost of Living Reduction
Cargills Case Study 2
Cargills Rice Project
Cargills Rice Project Model

Sri Lankans staple diet is rice and on average a


Sri Lankan consumes 250g of rice per day.
We are almost self sufficient in rice in terms of
quantity.
However, the paddy farmer in Sri Lanka is still
suffering with low quality of living standards and
economic instability.
Cargills studied the process and identified the problem areas.
Rice still remains a commodity with unbranded rice contributing to over
50% of sales even in supermarkets.
There has been no significant effort towards value addition in production
nor in marketing.
The farmer is not sufficiently aware of market trends or consumer
demands, the millers and everyone else in the chain does not see the
opportunity in producing high quality rice.
They are not convinced to take the risk of producing new varieties, or
investing in technology for quality enhancement due to lack of market.
Cargills Rice Project Model
Over 1500 paddy Rice Millers association
farmers of SL with over
from all major 200 members
geographic regions Cargills:
Overall
Coordinator

Rice Research Institute Cargills supermarket


and Chain and mass
Post Harvest Institute of market distribution
Technology channel for sales
and marketing

Ministry of Agriculture
And
University of Peradeniya
Cargills Rice
Main objective
To increase overall national rice consumption, while also
providing a nutritious carbohydrate source to Sri
Lankans.

Specific objectives
To boost paddy farming by giving a fair and fixed price and training
on quality processes and there by improve quality of life paddy
farmers.

To improve the rice quality standard and production capacities and


there by provide a sustainable wheat substitute to the country.

To facilitate food security by import substitution of wheat


Cargills Case Study 3

Cargills AgInfo & Knowledge System


Cargills AgInfo & Knowledge System
The Concept
A centralized Information Management System through a
two-way information transfer network between the farming
community and the market.

Objective
Improve and strengthen the economic stability of the
farmers through organized cultivation based on
scientifically forecasted market demand.
Improve the quality, variety and quantity
Strategy
Give farmers a source to access the latest information
on market demand and price trends
Educate the farmers by providing knowledge and
advisory services on Soil, Fertilizer, Seeds, Irrigation,
credit etc.
Cargills AgInfo & Knowledge System
Project Modules

Farmer Registration Module


Forecasting Module
Order Forecasting
Crop Forecasting
Price Controlling Module
Farmer Offers
Harvest Monitoring Module
Order Distribution Module
Payment Module
Cargills AgInfo & Knowledge System
Project Module Integration
Farmer Registration Module
Appearance of the Registration System
Front-ends
System Login

Different Menu Items to Select


Appearance of the Registration System
Front-ends
Appearance of the Registration System
Front-ends
Appearance of the Registration System
Front-ends
Appearance of the Registration System
Front-ends
Modes of Information Transfer
First stage is a web based system
connecting over 140 Cargills outreach
points. Implementation started.
A pilot through mobile phones being
discussed
A locally transmitted TV/ radio network
project being implemented.
Profiling the Sri Lankan Farmer
Farmer Demographics
Almost 30% in the 20-40 age group indicates a growing
occupation
Farmer Income

Farmer Age

Age Group %
Less than 20 1.2
20-41 29.6
41-60 51.6
Over 61 17.6

Cont
Access to Basic facilities

Over 62% having access to mobile phones and 95% access to electricity, shows
potential for new technology
Source of information about Agriculture
Mostly needed information
Credit information Marketing Information
8% 26%

No need information
11%

Information about Agro


chemical and fertilizer
4%

Information about Post


Harvest operation
5% Livestock Information
5%

New varieties, Seeds &


New technology on Planting Material
Agriculture 3%
6%
Crop cultivation
Pest & Disease control information
9% 23%
Marketing Information Livestock Information
New varieties, Seeds & Planting Material Crop cultivation information
Pest & Disease control New technology on Agriculture
Information about Post Harvest operation Information about Agro chemical and fertilizer
No need information Credit information
Preferred Source of Agriculture Information for future

Ag.Inputs No idea about


sales center the source other methods
4% 4% 4%

Neighbour
Farmers T.V, Radio, News
2% Papers,internet
and Telephone
25%
Community base
Organization
8%

Training
Programme Government
22% Extention officers
31%
T.V, Radio, News Papers,internet and Telephone Government Extention officers
Training programme Community base organization
Neighbour Farmers Ag.Inputs sales center
No idea about the source other
methods
Women Empowerment/ Involvement
In the Cargills model, women are
involved in the last segment of the
chain: in value addition.
Ie. In packing houses, quality
control functions
Their ability to give attention to
detail has been a success factor
Women are also involved in market
information gathering and price
monitoring work.

CBO models in Sri Lanka has shown


that women have better administration
capabilities and more commitment to
care about the sustainability of projects
World bank examples in water,
electricity and other basic
infrastructure projects managed by
CBOs
How can we take this forward?
There is a youthful, futuristic generation that is interested
in taking farming and agriculture forward in Sri Lanka.

They are open to and positive towards new technology


and information based approach to the sector.

However, if we are to use very high tech methods, a lot of


hand holding, grooming and mind set change needs to be
done.

We conclude that rather than just providing information


(which will be a first step anyway), there is a need for
leadership and Agri-Entrepreneurship development.
The Future
as Cargills sees it.
Cargills Agri Business University-
Rationale
To develop rural agriculture and bridge regional
deficiencies there is a clear need for a

Shift from Agriculture to Agri-Business


Movement towards modern technology,
systems and processes.
Orientation towards global-market opportunities
and challenges

It is therefore necessary to develop


professionals in Agri-Business sector
empowered with academic excellence and
practical know-how in the spheres of agriculture
and business management.
Why Us?
Cargills has consistently drawn on market-based
mechanisms to create positive change in all domains.
Specifically livelihood empowerment to bridge socio
economic deficiencies between regions.

The Albert A. Page Institute of Food Business was


conceptualized by Cargills to address
- Unemployment and Under-employment
- Short fall in profession-oriented skills among rural youth
- Upgrade stature of agriculture related professions

Next level- Building professionals geared with advanced


academic, technical and technological know-how to
challenge global issues inter-related to poverty and food
security.
Cargills Agri Business University

MBA in Agribusiness

Partnered by US Universities

Vision: To be a globally recognized model Agri-Business


School/ University which builds the next generation of
Agri-Entrepreneurs.

Objectives:
- Develop productivity, profitability and sustainability
in Agriculture sector
- Add value to Agriculture-based professions
- Positively impact rural-agriculture based poverty
- Build the next-generation of skilled change-makers
to challenge all global issues inter-related to poverty
and food security.
How are Cargills AgInfo & Knowledge
Initiatives going to be different to others?
It is an inclusive model developed by the users for the users.

It is a bottom up and not a top down approach

The request/ demand for it came from the first kilometer level

The stakeholders at all stages of the chain are involved from inception
to final implementation. Research institutes, universities and academic
institutions are all involved for design inputs and the client is the farmer!
which a first for Sri Lanka!
How are Cargills AgInfo & Knowledge
Initiatives going to be different to others?
Since the end user is involved from inception, they get familiar with the
high technology delivery methods.

The agri extension officers get involved in teaching the farmers to fish
rather than giving them fish. They can put their knowledge to much
better use of collection of content and enhancing their careers too.

It is part of the business and not another CSR project for the farmer (to
sell and develop his products) and for Cargills. Hence long term
commitment and sustainability.
The Future..
Cargills is taking the Lead Role only

After successful implementation of the first stage is over, the project will be
opened to anyone in SL. Discussions already on with the following parties.

Vidatha centers (project incubation centers set up by the Ministry of


Science and Technology to promote innovation, over 200 centres)

Nanasala centers (another project of the same ministry to improve internet


and computer usage. Over 500 centres)

Other marketers, other institutes who can contribute, benefit from the
information. Replication of similar value chain models for the benefit of the
agriculture sector in Sri Lanka or anywhere else in the world.
Ayubowan
May you have long Life!