A supporting hand from the govt. to uplift dairy farming
The Ministry of Public Enterprise Development, together with the Regional Development Bank (RDB), the Ministry of Rural Development, the Ministry of National Policies & Economic Affairs, the private sector main milk providing corporates and other relevant parties have initiated a project through which 1000 dairy farmers will be given financial support along with soft skills, technical support and a value chain to further improve their enterprise and uplift their way of life.
Following the postwar period, public investment in Sri Lanka was propelled forward owing mainly to the massive infrastructure projects that took place within the country. However, since the majority of the funding came through foreign loans with a commercial interest, it is an expensive model. During the period from 2010 to 2015, there as been 7% to 8% growth in the economy, largely contributed to be the construction sector.
Recognizing that the construction sector alone cannot sustain the growth of the country, the government seeks to strengthen the country’s growth model, thereby attracting foreign direct investment to the country. Kabir Hashim, Minister of Public Enterprise Development, cited political stability, good governance and ease of doing business as key components that attract foreign investors. “The government believes that growth can’t be only spurred on by foreign direct investment; there must be national growth,” the Minister stated.
Despite possessing an export driven economy, Sri Lanka’s national growth has declined in the past years and consumers have turned to imported commodities. With the Prime Minister’s vision to expand the national growth through strengthening rural growth via the ‘Grama Rajya’ concept- establishing income generating projects in villages to help national productivity- the Ministry of Enterprise Development has taken a zealous role in supporting local industries as the key ministry in charge of the financial sector. Minister Hashim commended the RDB for their role in uplifting the Sri Lankan grassroot level. “Regional Development Bank has not only supported the dairy sector itself, but they have also been supporting the paddy farming,” he said. He acknowledged that one challenge facing national growth is accessibility to finance.
However, finance is not the only variable in improving growth. “There are other ingredients that you need to put into this,” the Minister went on to say, stating that the Ministry decided to take a lead in the endeavour and speak with the financial institutes and request their support to fund the agriculture based productions, local productions and SME entrepreneurs through the ministry.
The Ministry initially developed a concept targeting building an average of 1000 young entrepreneurs per district. The pilot project was carried out in the Kegalle District jointly by the private and state sector and identified the segments where young entrepreneurs hope to excel at.
The project will be carried out on a sectoral basis, and initially will be focused on the dairy farming as about 75% of the country’s dairy needs are supplied by imports. Due to a project carried out by the United States Agency for International Development (USAID) in the northern and north-central provinces, where dairy farmers with an average of 6 heads of cattle has improved their monthly income to Rs 100, 000, the ministry has identified areas that need to be addressed.
The model funded by the USAID not only brought in access to finance, but provided soft skills to the farmers, so that they would be able to manage their income prudently, as well as technology given by the Ministry of Rural Development, aid agencies and other entities. The model also taught the farmers to produce their own fodder as due to land limitations, Sri Lanka does not have enough grazing land. The farmers were also linked to the main milk providing companies in the private sector, who supplied the necessary technical support and signed buyback agreements, thereby completing a value chain.
“Giving money alone is not successful,” said the Minister, who acknowledged that his duty is to restructure the state owned enterprises. “But we think, that with the financial sector under us, this is a national development effort and that it is time Sri Lanka’s productivity goes up, Sri Lanka’s local industry goes up,” he said.
The project would initially focus on 1, 000 farmers throughout the island. If successful, the yield would increase by 60, 000 liters a day.
The project is a partnership between the public and private sectors. The market
would take the lead in selecting, mentoring and linking the farmers, while the banks and public institutes would provide the technical input and support. A joint steering committee from the public and private sector would monitor the progress of the farmers.
The project would then move into other areas like spices, and the Minister also stated that it will focus on linking small companies with high end production companies through backwards integration.
The Ministry of Primary Industries in New Zealand has offered their support, technology and system, which will help to identify where to conduct the training for the farmers. The pilot project will focus on 5-10 farmers.
Speaking of the cattle needed for the project, the Minister stated that adequate heads of cattle might be scarce in Sri Lanka, in which case, cattle may be brought in from New Zealand, Pakistan and India. Crossbreeding is also a possibility to make the cattle more localized.
“What had already been done by the USAID showed that the yields reached by the cattle we have used are already on par with international standards,” Hon. Minister Hashim stated. With better feeding techniques, better management techniques, knowledge to keep the cattle healthy, the production will increase. “It’s about bringing a lot of experts together and creating the environment,” the Minister stated.
The Minister thanked Minister P. Harrison of the Ministry of Rural Development and Niroshan PereraDeputy Minister of the Ministry of National Policies & Economic Affairs for their support in this endeavour.
The RDB has played a large role in uplifting the grassroot level of the country. In 2013, the bank has disbursed Rs 7.8 Mn in funds to the dairy sector, Rs 120 Mn in 2014, Rs 190mn in 2015, and in the first and second quarter of 2016, has disbursed Rs 178 Mn. RDB also offers low interest rates, a practice that the Minister commended, stating that otherwise, farmers would seek the aid of money lenders at exorbitant interest rates.
“RDB’s initiative is really good,” said the Minister, “it is one of the key banks in Sri Lanka”. He also commended the other banks’ SME departments, which have also come aboard, giving their assistance for the project.
The Minister concluded by saying, “This is keeping in line with the Prime Minister’s vision of developing the national productivity”.