Developing communities through sustainable sourcing

“I earned about Rs 503,200 last year and this enabled me to open a fixed deposit at a bank, which is a huge strength to me and my family,” said K G Douglas, a Vanilla farmer from Nawalapitiya Watekedeniya. “I have even donated a computer to a school in the area,” he said, proving that the standard of living of vanilla farmers has improved tremendously as a result of John Keells’ ongoing sourcing initiative in the village.

Vanilla is just one of the many ongoing sustainable sourcing initiatives undertaken by the John Keells Group, the initiative has been recognized as a mechanism that not only helps develop a company’s supply chain and increase productivity, but also enhances customer-supplier relations and enables mutual growth.

The initiative consists of many projects such as Ceylon Cold Stores PLC’s ginger and vanilla out-grower programs, the dairy production and treacle project, Keells Foods Products PLC’s purchase guarantees of pork, chicken and assistance in the expansion of local, mechanized, de-boned meat, and JayKay Marketing Services (Pvt) Ltd’s sourcing of a variety of high and low country vegetables from farming families in Thambuttegama (North Central Province) and Nuwara Eliya (Central Province). With the farmers being the pivotal factor in these initiatives, the initiative not only increases their income but also facilitates technical assistance and vital access to markets.

The sustainable sourcing of ginger from local farmers was initiated by Ceylon Cold Stores PLC (CCS) about eight years ago to facilitate the guaranteed purchase of ginger locally, while enabling the company to get better quality raw material. The initiative also helped to progressively eliminate the importing of ginger. Commencing in Hatharaliyadde and Poojapitiya, this initiative was later extended to areas such as Dawulugala, Danture and Ankumbura in the Kandy and Kurunegala Districts, based on its success. While 80 farmers were involved initially, the total farming community involved in the initiative at present amounts to around 250. While the company has about 80 percent of the market share in the country’s ginger beer market, the entire ginger requirement for products such as Elephant House Ginger Beer and sliced dried ginger rhizome is now obtained from these farmers.

“I have earned Rs 612,541 during the last year and also purchased a tractor which is immensely helpful to my work,” said Susantha Premathilake, a successful ginger farmer from Poojapitiya, demonstrating the success of the initiative.

Vanilla is yet another sustainable sourcing product for CCS and the raw vanilla pods used for Elephant House vanilla ice creams are sourced entirely from local farmers. With CCS owning around 65 percent of the vanilla ice cream market at present, the project was primarily initiated to eliminate the need to import vanilla oleo resin which is used to manufacture the vanilla flavour, used in almost all CCS’s popular ice creams such as Vanilla, Fruit and Nut and Pani Cadju. Around 2500 farmers are involved in the project.

V K D U Kapurukotuwa, from Baddegama, is one of the many successful Vanilla farmers. “Not only did I earn an impressive amount during the last year, I have also bought 1 acre of land and planted cinnamon,” he said illustrating the success of the project.

Keells Foods Products PLC (KFP), which has about 60 percent of the market share for processed meat, and has been involved in successful sustainable sourcing initiatives for products such as pork and chicken, has introduced yet another initiative in September 2010. The project involves the sourcing of selected vegetables and the entire requirement of spices needed for products in the Krest range which is done through sustainable integrated farmer communities. Close to 142 farmers from several districts such as Matale, Kandy, Nuwara Eliya, Kurunegala and Kegalle are dedicated to supplying their produce to KFP, with the entire initiative being coordinated by a society set up under the Kandy Vanilla Growers Association.

KFP also continues its successful sustainable sourcing initiative of chicken. While the product is supplied by four main suppliers, 3500 farmer families are involved directly in the initiative while yet another 3000 families are involved indirectly. Having been involved in the pork industry for many years, KFP has also helped around 30 farmers develop better levels of farming, while the initiative has also improved the standard of living of the farmers tremendously. A stable purchase price for the produce is ensured despite the frequent market fluctuations, while the farmers are supported technically and financially to improve production.

JayKay Marketing Services (Pvt) Ltd’s (JMSL) sourcing of vegetables for Keells Supermarkets takes place solely through local farmers. The initiative began in August 2005, with the collection of vegetables taking place through a collection centre at Thambuttegama, with the assistance of the Mahaweli Authority, with a view of procuring products direct from the farmers. Over 35 farming families are involved in the initiative of cultivating a variety of low country vegetables. To handle the demand for upcountry and exotic vegetables and fruits, a second collection centre in Nuwara Eliya was also opened about two and half years ago.

Aligned with the Millennium Development Goal of Poverty Alleviation and multiple principles of the United Nations Global Compact - both global initiatives supported by the John Keells Group - these Sustainable Sourcing initiatives of the Group are also in line with its vision of strategic CSR which facilitates a win-win situation for all stakeholders that are impacted.

While these initiatives continue to boost agricultural activity in numerous villages and raise the standard of living in diverse communities, they undoubtedly facilitate business opportunities to increase quality, reduce costs while giving products the all-important edge in an increasingly competitive market.