Mr. Ranjit PAGE, Cargills (Ceylon) Ltd, Sri Lanka

Award on the theme of Innovative Finance, for linking small farmers directly to markets

Cargills mission is to serve the rural community set priorities to link small farmers to local and global markets. Cargills (Ceylon) PLC is the only large scale retailer in the world with a full fledged rural smallholder network fashioned along the concepts of fair trade. Its guaranteed markets, price mechanism, technical and technological support to the small holder, role of credit risk guarantor coupled with training and development makes the Cargills model one of the most successful corporate driven strategies of Sustainable Development. This model has being highly appraised by World Bank and Bill Gates Foundation as a Role Model for Sustainable Development which has being fully developed and tested in Sri Lanka. Cargills believes that these lessons and experiences can be effectively taken into other markets to drive rural development in other regions. We can replicate Cargills Model in others countries and regions.

Problems addressed were the following:

• 40% of the vegetable and fruits production went waste due to conventional packaging/transporting
• 20-30% of the value paid by the consumer goes to the middleman
• Both human and physical and also financial resources available for rural development are heavily underutilized
• Technology required for development available but not reachable or adaptable to the grass root level
• Unaffordable prices to customer, uncertain supply, poor quality, low productivity, etc..
• Dependency on the middleman
• No markets for produce
• Poverty

The main features of the Cargills Outgrower System are the following:

• The Grower is customer oriented and secured (Market Driven Produce)
• The Sponsor achieves his own objectives by creating opportunity to uplift living standards of the Farmer
• The Company is assured of a steady, timely supply of quality produce at a very competitive price
• Sustainable Development through sustainable incomes to the farmers
• Meeting the needs of the Farmer and Buyer
• To ensure reliable supply with the assistance of input finance arrangements
• Farm-gate selling vs. factory-gate buying
• Up front payment to farmers vs. standard credit payment
• Buy the required quantity at required quality supplied just in time.(crop planning)
• Highest possible price to Farmer and lowest possible price to Consumer

The implementing stages of the solution were the following:

• Working with the farmers to make the produce market driven
• Helping them to cultivate year round to make them sustainable in their incomes
• Introducing new products to different areas
• Taking the challenge to free the farmer from middlemen
• Better price with a guaranteed market for the farmers
• Providing technical know how through regular visits