Business

Co-creating solutions at the grass root to make a difference for dairy farmers 4 451

              Sri Lanka’s smallholder dairy farmers are at the heart of the local dairy industry and an integral part of the nation’s rural economy. 

              This 300,000 strong farmer base supplies 90% of the nation’s local milk – and has the potential to greatly improve their yield of high-quality milk and thus their own income levels, driving a positive impact to the socio-economic landscape of rural Sri Lanka. 

Focused training and development to improve milk yield and quality:

As a dairy co-operative from New Zealand, Fonterra continues to work hand-in-hand with smallholder dairy farmer families, communities, and other partners to create a thriving local dairy industry, having invested over Rs. 3.7Bn into strengthening its local dairy value chain. 

 Managing Director of Fonterra Brands Sri Lanka and Indian Sub-Continent Ms. Vidya Sivaraja explains that as a dairy co-operative at heart, the company is committed to making a tangible difference by sharing expertise and best practices. 

“We have invested in focused training and development initiatives with our farmers centred around the right herd, right feed and right business model to increase milk yield and quality. Our pioneering Training and Demonstration Farm in Pannala opened in 2016 to help us amplify the impact of these initiatives.”

Over the years, Fonterra has trained over six thousand farmers across the nation at its Pannala Training and Demonstration Farm and has welcomed over a thousand visitors from the government, universities, and other institutions.

Co-creating solutions at the grassroots:

In addition to the above programmes in place, Fonterra commenced an initiative to co-create and implement specific solutions together with its dairy farmers through its ‘Dairy Discussion Groups’, organised at the grass root. These solutions were geared to improve milk quality and yield through practical training, the provision of fodder and farming equipment and a workable cost-effective business model.

The solutions being implemented are in line with the imperatives called out by the President’s National Policy Framework. At the centre is the small holder dairy farmer – a focus that has been echoed by the Chairman of the Presidential Task Force for Economic Revival and Poverty Eradication. 

At Fonterra’s Pannala Training and Demonstration Farm, fodder is grown and distributed to neighbouring farmers in the vicinity

Ms. Vidya Sivaraja hands over grass cutting equipment to a Fonterra dairy farmer at a September Dairy Discussion Group.

“Good insights come from the grass root. Such consultations have been valuable in co-creating solutions to help improve milk quality and yield,” says Vidya. “Our discussions only prove that our country is rich in resources, talent and ingenuity. We are committed to championing this potential in line with the nation’s priorities.” 

Dairy farmers participate in Dairy Discussion Group series kicked off by Ms. Vidya Sivaraja and her team.

Fonterra dairy farmer Mr. Dharmashri Thennakoon, one of the beneficiaries of the fodder and equipment distribution programme stated, “The Dairy Discussion Group was a valuable learning experience and we will be able to apply these learnings on-farm. I was very appreciative that this was followed with the provision of grass cutting equipment. We hope Fonterra continues to host discussions such as this in the future where we can all grow together and find solutions as a community.” 

Mr. Indra Jayasinghe, a Fonterra dairy farmer from Kuliyapitiya says, “At a time where accessibility and costs of feed is a challenge, getting extra fodder from Fonterra helped me sustain my operations.”

Global co-operative, local footprint:

Fonterra touches the livelihoods of over 250,000 people across the country through its operations, including traders, retailers, distributors, agents and farmers.

Since 1997, Fonterra Brands Lanka has been collecting Sri Lankan milk for its local dairy portfolio of set and stirred yogurts, drinking yogurts, and fresh and flavored milk. To preserve the quality of this milk, Fonterra has also invested in milk chilling, collecting, and processing infrastructure with pioneering technology that can help define future milk quality standards for the nation. 

The company has also recently accelerated its export efforts of value-added dairy, in alignment with the vision and the imperatives set out by the Presidential Task Force for Economic Revival and Poverty Eradication.

Amongst the many initiatives in place to grow our nation’s local dairy industry, multi-stakeholder collaboration and co-creation of solutions is a refreshing approach, bringing farmers, dairy companies, industry groups and the government together to make a difference. 

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The Looming Fashion Industry 0 670

By: Chantal D.

What’s Shaping Sri Lankan Fashion Industry?

Global Interconnection:

The diffusion of global brands across all fashion verticals has transformed our outlook towards the quality of apparel that we like to invest in. Fast fashion international brands are focusing on making trends and runway fashion available to the mass audience at accessible prices. This has also made a huge impact in the Sri Lankan fashion industry since it is important to keep up with the global trends in this highly competitive market.

However, more niche brands are coming up with high-quality products keeping their price point in mind with the idea of introducing and maintaining international standard quality and styles.

 

Affordable Luxury, Value for Money:

Fashion trades are now no more looking for highly expensive products to stand out, they are rather a price and “re-use” conscious to ensure they get maximum bank for their buck.

Most customers prefer versatile pieces which last long and can be paired in multiple ways.

Cont..

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LankaQR Reshaping the Digital Payment Landscape of Sri Lanka 0 343

The world is ever evolving and advancing towards a digital eco-system. With that, digital banking will play a crucial role in increasing efficiency and convenience in this fast moving world. It also has the ability to increase financial inclusivity, and motivate engagement in economic activity. Therefore, the development and promotion of a digital payment eco-system should be at the fore-front of a developing country.

The Central Bank of Sri Lanka named 2020 as “The Year of Digital Transactions”, understanding the importance of enriching the digital payments ecosystem. The Central Banks has taken a giant leap forward in the digital payments spectrum introducing LankaQR, a national QR payment technology.

BiZnomics spoke to the Director for Payments and Settlements at the Central Bank of Sri Lanka, Dharmasri Kumaratunge, to find out more on how LankaQR empowers the digital payments eco-system of Sri Lanka, making it a nationwide experience.

What was the setting that led up to LankaQR?

Sri Lanka is gradually transitioning into a digitalised economy. In this transition process, the Central Bank of Sri Lanka set out to champion a digitalised national payments system in order to streamline financial inclusivity and a less-cash society. The Central Bank recognizsed the lack of low-cost, secure digital payment methods for Sri Lanka’s small and medium merchants and the general public. We identified QR technology to be the most viable solution for this problem, while also realizing the importance of having one interoperable national QR code, taking in to account the experiences of other countries. Therefore, the Central Bank together with LankaClear (Pvt) Ltd., which is the national payment infrastructure provider, and banks came together and developed an interoperable national QR code standard, under the name of LANKAQR. The LANKAQR is a national QR code standard, whereby all payments made using the LANKAQR code that comply with the LANKAQR standard, enables customers to pay instantly from their bank accounts into a bank account of a merchant, who may be a customer of any other bank.

Walk-us through what QR technology is and how LankaQR works?

A QR code (which stands for ‘Quick Response’) is a form of barcode that is comprised of a matrix of dots. It can be scanned using a QR scanner or a smartphone with a built-in camera. Once scanned, software on the device converts the dots within the code into numbers or a string of characters, which would form a command based on the purpose of the QR code. For example the QR code received by merchants, when scanned, will command the device to initiate the digital payment to the relevant merchant, confirming the payment information.
All licensed banks, licensed finance companies and licensed operators of Mobile Phone-Based E-Money Systems, who offer QR Code based payment solutions, are required to onboard merchants onto LankaQR. This enables money to be transferred between any two financial institutions, thereby increasing efficiency.
The merchant will be provided a sticker with their own unique QR code, which can confirm payment information. Now the merchant is able to accept digital payments through a mobile phone. The customer is simply required to scan the code through their mobile phone camera. This will allow them to make a payment to that merchant through the payment app of any bank that they are currently using.

How will QR technology lead us towards a less cash economy while empowering the small merchants?

The spread of the COVID-19 virus has made the general public more aware of the risk of viruses spreading through the exchange of notes and coins. Further, the cost of issuing new currency to the economy stands at an estimated Rs.3.2 billion yearly, excluding processing charges/storage and destruction of money. These factors along with the need to increase efficiency in payments makes a less cash society a priority for a developing nation.

Our data shows there are over 23 million debit cards and 1.8 million credit cards in use, however there are only 83,000 Point of Sales (POS) machines being used in the entire island. The high cost of these POS systems and high Merchant Discount Rates (MDR) creates a barrier for small merchants to enter into the digitalizsed payment network, and they are forced to transact in cash. Currently a POS machine costs between Rs.50,000 to Rs.70,000, and Merchant Discount Rate vary between 2% to 3.5%, on top of which there may be an monthly rentals.

However since QR technology uses a simple sticker there is no initial cost for the merchant to enter the payment network. The Central Bank has also regulated the Merchant Discount Rate charged by banks at 1%, making it much more attractive compared to traditional POS systems. As a further incentive for merchants, we reduced the MDR down to 0.5% for 2020 and are hoping to further hold that rate for the first half of 2021.

The Central Bank has also decided that payments made to Government entities, such as water and electricity bills will not be charged the MDR. We believe LankaQR will empower small and medium scale merchants’ , making sure they are not left behind as Sri Lanka becomes digitalised.

How has the Central Bank spread awareness on the digital payments eco-system?

It has been identified that the awareness and usage of digital transactions is very low in Sri Lanka. Currently, Sri Lanka has a highly cash-based economy. Although the literacy level of the country is high, financial literacy is comparatively low. Even though the mobile phone penetration is high in Sri Lanka, the use of the mobile phones for digital payments is low. Further, the wasting of time and money by way of waiting in queues, travelling to cities/bank branches/particular shops for making payments such as utility payments, government payments etc. could has been observed. Furthermore, employees of financial institutions are not aware of their own products, and are not knowledgeable on the use of existing facilities to make digital transactions.