Improving livelihoods through cooperatives - ILO LEED project in Northern Sri Lanka

News | 27 September 2017
A member of Vavuniya North Fruit Growers’ Cooperative Society and her family
Since 2010, the ILO has worked with cooperatives in the Northern Province of Sri Lanka through the Local Empowerment through Economic Development (LEED) project aiming at poverty reduction, sustainable job creation and peace building for vulnerable groups in conflict-affected populations in the region. The project has been working to revitalize the cooperative sector as a key means for mobilizing local population for collective action and improving their livelihood opportunities. Two cooperative experiences reflecting on the project’s impact and ways forward are presented below. ILO LEED project has created employment opportunities for the vulnerable households, developed loan repayment and saving schemes, and built capacities of cooperatives to enhance earning. It further aims to expand its field level activities to other districts and divisions.

Fishermen’s Cooperative Society of Iranaimathanagar

Fishermen catching blue crabs
The Fishermen’s Cooperative Society of Iranaimathanagar (FCSI) currently has 380 members and sells 350 kg of blue crabs per day and 100 tons annually. Back in 2010 right after the civil conflict, fishermen and the FCSI were facing numerous challenges. Not only did they lose their fishing boats and gears but they had to sell their products at unfair prices to the middlemen. Also many of fishermen owed loans to the middlemen.

In order to bypass the middlemen and increase fishermen’s income, the FCSI negotiated with the middlemen and agreed on a 50-50 solution: 50% of the produces would be sold to the middlemen while the rest would be directly purchased by the FCSI until the loans are settled. Fishermen started selling their produce at a fairer price to the FCSI and repaying the loans. The immediate cash they received with the improved price helped the FCSI to increase their membership base. The Poonakary Fishermen’s Coop Society Union (PFCSU), a representative body of 16 fishermen cooperatives in the region, helped FCSI in receiving loans from other organizations in order to complete the repayment of the unsettled loans within a year. The PFCSU also has been instrumental in promoting mutual learning among the fishermen cooperatives or negotiating with governments on issues like illegal poachers.

From 2012 the FCSI started a compulsory saving scheme. For every kilo that is sold by the fishermen to the FCSI, 20 Sri Lankan Rupees is deducted from the sales. Half of them is diverted to the saving accounts of the fishermen while the other half goes to the account of the FCSI. With this pool of money, the FCSI provides interest-free loans and supports different community development activities (e.g. scholarships for local students, funds for monthly gathering and events among local communities, donation for households with people with disabilities).

Furthermore, in 2012 the FCSI partnered with the Taprobane SeaFoods (Pvt) Ltd and established a crab processing factory which has processed 456 tons of crab meat and generated overall income of 31 million Sri Lankan Rupees (≒US$ 205,000) since establishment. Today, the factory employs more than 70 workers most of whom are women from local villages. In order for them to balance their work with their household duties, the factory offers flexible working hours.

Vavuniya North Fruit Grower’s Cooperative Society

North South Fruit Processors Limited, which is a joint venture formed by the Vavuniya North Fruit Growers’ Cooperative Society (VNFGCS) and the CR Exports Pvt Ltd., exports around 1500 tons of Red Lady Papaya annually. Through the sale of Red Lady Papaya and other produce, the joint venture netted 120 million Sri Lankan Rupees (≒US$ 794,000) worth of sales in 2016 alone. Red Lady Papayas are grown by 350 members of the cooperative, who are all small scale farmers from the region.

When the LEED project first started, the two major challenges were the mobilization of farmers for collective action and provision of technical inputs for farmers. With the support from government institutions, the project team identified farmers and suitable locations for agricultural production. Upon discussion with the relevant partners it was decided that establishing a cooperative was the most viable and suitable option to formalize collective action. With the support from the ILO, the VNFGCS was established and begun to orient its members how to grow papayas. Having a membership status of the VNFGCS improved the farmers’ chances to receive loans for agricultural practices and to enter into business with exporters from the South of the country. Furthermore, the members received comprehensive technical inputs from government institutions (e.g. soil testing, quality control of seeds, water irrigation, etc.).

In the conflict-affected North, establishing a partnership with organizations in Southern Sri Lanka was considered a significant breakthrough. The LEED project team met with more than 10 exporters in the South including with CR Exports, the largest fruit and vegetable exporter of Sri Lanka to establish mutually beneficial partnerships. As a result, North South Fruit Processors Ltd, a joint venture with the CR Exports, was established in 2012 where VNFGCS owns 55 per cent of the shares. The partnership with CR Exports has helped the cooperative members to obtain market information and know-how and to overcome preconceptions towards people and institutions from Southern Sri Lanka.

Moreover, the VNFGCS has supported small scale farmer members through various collective efforts including;
  • Providing direct pick up service logistics of collecting and transporting the produce from the farmers to the processing and packing shed;
  • Stabilizing market prices by managing production surplus with farmers;
  • Engaging in crop disease prevention with government institutions and raise awareness among members;
  • Launching product diversification programmes to minimize loss from drought, blight or crop diseases; and
  • Providing compulsory saving schemes for members.

Recently the LEED project introduced the concept of Fairtrade certification to the VNFGCS to benefit farmers through Fairtrade minimum and premium prices or improved access to foreign markets. The cooperative made regular contacts with the members to monitor their progress to meet Fairtrade standards and had auditors visit the farmers. When areas of further improvement identified by auditors, the cooperative provided technical assistance for that. In February 2017, the cooperative received the Fairtrade Certification by FLOCERT for the Red Lady Papaya as the first organization to receive such certification for Red Lady Papaya in South Asia and the Pacific. The cooperative is observing the impact and will consider whether to obtain certification for other produce as well.

Through the cooperative many of the farmers were able to improve their livelihoods, make savings and possess greater purchasing power. The cooperative is now aiming to increase their membership by additional 150 households and will continue to pave the way for other cooperatives in the North to contribute towards peace and reconciliation.
Papaya farm