Rice is nice. Sometimes I like it too much and go into a rice coma. It also makes me fat if I eat the recommended Sri Lankan dosage (1 part fish, 2 parts vegetable, 18 parts rice). Besides that, rice is great.
Rice policy, however, is rife with political nonsense and impoverishing misalignment. For most small land-holders it’s not terribly profitable and they remain one flood away from destitution. Rural Returns is a company run by Charitha Ratwatte, a Stanford social innovation fellow (interview), who is supporting the cultivation of higher value heirloom rice. I had some once. It’s pretty good.
Here’s an email interview with him. He’s speaking at Refresh Colombo today and they’re launching their Ayu Rice brand tomorrow at the BMICH.
How does Ayu Rice compare to regular sambar or basmati in terms of price for the consumer?
Ayu Rice sells at the same price bracket as specialty “modern” rice varieties including Basmati, which command higher prices because they are perceived to taste better than commodity varieties. However Ayu Rice not only tastes better, our varieties are also better for you, and they provide employment and opportunity to Sri Lankan smallholder farmers (Due to peculiarities in how and in what conditions they grow, heirloom varieties are best suited to smallholder production – also the sector most desperately in need of new solutions).
Ayu Rice cannot sell for the same price as what I call commodity Samba or red rice, due to inherent agro-economic factors. Heirloom rice varieties are centuries old. As they pre-date the 1970’s Green Revolution which focused on increasing yields, heirloom varieties are lower-yielding. This means that you have to pay a higher price per kilogram for the economics to work.
Ayu Rice provides great value for money because they have retained all the best qualities that made rice central to our culture, and that were lost in the rush to higher yields. Heirloom varieties are tastier (even more than the modern high-end varieties, I’d argue). They are more nutritious and healthy – higher protein, iron, vitamin and fiber contents, lower Glycemic Indices (making them far better for diabetics than the modern varieties)
How does Ayu Rice compare in terms of profitability to the farmer?
With the right structure and correct marketing (which are what Rural Returns focus on), Ayu Rice can and does significantly increase farmers’ net profits – under the specific conditions we take care to ensure. Working with us, smallholder paddy farmers outside high potential districts – I must stress the very specific conditions (which still encompass three million people and 500,000 acres of land) – can double their overall income per acre, and increase net profit per acre by as much as four times. This comes from the higher price we pay per kilogram of paddy, as well as heirloom rice varieties’ much lower requirements in terms of input.
As I said before, heirloom rice varieties do not yield as much as modern “improved” varieties in the ideal, high-input conditions modern varieties were bred for. However those ideal conditions exist in only five of the twenty-five districts, which despite many inefficiencies and market distortions, can, and in seven of the last ten years, have produced enough rice to feed the whole country.
Which begs the question, then why do people in every other district also insist on cultivating rice? They’re doing so less productively (very often at a loss), and just messing up the market for the efficient cultivators in the five so-called “High Potential” districts.
The answer is complex. Part of it is that old, food-security-focused and populist regulations prevent anyone owning paddy fields from growing any other permanent crop, building on that land, selling it, or even leaving the field fallow(!). That land can be taken away by the government, and given to someone else. This means that people pretend to cultivate their land, not paying much attention and minimizing time, effort and expense, leading to a vast under-utilization of resources at national level.
Another part of the issue is that owning paddy lands and cultivating them is a point of pride deeply embedded in our culture. I know people (from many different economic strata) who cultivate their paddy lands because their parents or grandparents refuse to eat rice bought from an outside source. Rice lies at the very heart of our culture, yet by boxing in and paupering the paddy farmer we have degraded the industry and devalued our heritage. By opening up new opportunity and demonstrating how land can be used productively as well as productively, we want to revive the local agricultural sector, maybe even returning to the much-talked about “peradiga dhaanyagaraya” of old.
Is this product for export? What rice products do you export?
We must export rice to achieve the volumes and prices needed to help a large enough section of the population to make a difference and create a sustainable industry. This launch of Ayu Rice begins with the local market however, to build a local base as well as to give Sri Lankans the opportunity to savour an important part of our heritage and to east, tastier, healthier rice than many knew was possible(!)
At the price we must sell at, with many Sri Lankans still eating rice or rice-flour based products at all three meals, we could never achieve sufficient volumes of rice to help a very large number of farmers. On the other hand, foreign consumers already pay prices for good-quality rice that, with our focus on a farmer-friendly value chain, enable us to pay a fair price to the farmer. I must also say that foreign consumers are also much more receptive to the health benefits they receive, as well as to the social value they contribute to, by paying prices that more accurately value the taste, health value and social benefits of the rice they eat.
What do you mean your intention is to go out of business?
We are a non-profit, non-stock company set up to achieve a specific purpose – alleviate poverty. Therefore our aim has to be to drive ourselves out of business!
Rural Returns is getting in at the ground floor of the creation of a new industry, and driving the agenda to ensure that the industry’s equilibrium from the outset fairly compensates the primary producer – the farmer. Our intervention is particularly needed in this industry because the primary producers are poorly organized, not highly market-aware smallholder farmers with limited access to capital, technology and markets.
Our methodology is to connect and work with pre-existing, strong groups of smallholder farmers (or groups we know are getting there in partnership with experienced NGOs), and build up these groups. Rural Returns helps the farmer groups invest in their own milling and packaging capabilities, because this is where the majority of profits lie, and then buys the finished product from the groups. The plan is to keep working along our already long pipeline of candidate communities, building them up, getting them to the point where they can be more independent of us and letting the market take over. Some day, sooner rather than later I hope, we would have worked through our pipeline of 650,000 farm families, and found that we have created an industry that can exist stably without Rural Returns.
By then we may have moved on to a few other projects addressing other populations (most are still just a glimmer in my eye), but we’ll work through those too at some point. On that day, I’ll send you an invitation for our Going Out of Business celebration!
Rural Returns is launching their Sri Lankan marketing brand, “Ayu Rice” (TM), at the Sirimavo Bandaranaike exhibition hall (BMICH grounds) August 26-28th, 10am to 8pm. They are in Stall 24 in the AgBiz section (the exhibition is held jointly with ProFoods/ProPack).