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Sri Lankan small farmers turn profitable with organic tea, ‘Fair Trade’ label

ECONOMYNEXT – Bio Foods (Pvt) Ltd., company set up by a Sri Lankan tea scientist, is helping marginalised farmers use organic cultivation techniques to develop niche products using the ‘Fair Trade’ label, an international conference on social enterprise was told.

Most of the company’s earnings from exporting products to overseas buyers go to small farmers who supply the raw material, said Prasad Rathnayake, deputy general manager of Bio Foods.

“We annually give them $2.4 million for their raw materials – 75 percentt of our total annual turnover we give back to farmers as the raw material price we pay,” he told the forum on ‘Social Enterprises and SMEs for Sustainable Development and Poverty Reduction’.

The firm was founded in 1993 by Dr. Sarath Ranaweera, chairman of Bio Foods, who had worked at the island’s Tea Research Institute.

“He (Ranaweera) saw mid country tea lands becoming less productive, farmers facing problems, their livelihoods become problematic,” Rathnayake explained.

To address the problem, Ranaweera started working with farmers in Gampola in Kandy, in the central hills, using organic agricultural techniques to improve their land productivity.

Later the farmers were federated into one group called the Small Organic Farmers’ Association (SOFA).

Using his tea processing skills, Ranaweera developed green leaf into niche products of made tea and started exporting.

“After 23 years, we are working with 10,000 farmer families,” Rathnayake of Bio Foods told the forum on social enterprises, businesses that use profits to achieve social goals like generating employment and reducing poverty rather than purely for private rewards.

It was organized by Lanka Social Ventures in partnership with Oxfam, National Enterprise Development Authority, British Council, Good Market and VEGA BIZ+, Lanka Impact Investors Network and Social Enterprise Lanka. 





Bio Foods now works with two main producer organisations – SOFA and the Marginalized Organic Producers’ Association, called MOPA, referring to ‘marginalized’ small and medium scale producers who find it difficult to get a justifiable price for their produce without going through a middleman.

“We source mainly through these farmer organisations,” said Rathnayake. “We are also doing spices, coconut, traditional paddy, fruits. All agricultural products are processed at our seven factories and mainly exported to Europe and the United States.

Bio Foods now has over 50 buying partners and all products are organic and Fair Trade labelled.

“The Fair Trade premium is going back to the farmers – on the prices we pay for the raw materials,” said Rathnayake. 

Bio Foods is registered under the Fairtrade Labeling Organization, known as FLO, and was awarded the “Best Small Organic Farmer Group in Asia” in 2014 by the FLO.

Ranaweera  also won the first ever “World’s Fairest Fairtrader Award” in 2014 ffor his work with small farmers, and the next year the Presidential Awards 2015 or the ‘Highest value added Exporter – Organic products sector’.
(COLOMBO, Jan 27, 2016)

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