Members of the Small Organic Farmer Association (SOFA) are small-scale farmers who grow tea, spices and vegetable crops for the market and for home consumption. Most of the smallholdings are on land which was formerly a state-run tea plantation located near the town of Gampola, around 40 minutes drive from Kandy. Bio Foods is a commercial company that processes and exports organic agricultural products such as tea and spices supplied by small-scale farmers’ organisations. It was instrumental in setting up SOFA and establishing their organic conversion programme. Bio Foods’ philosophy is to work in partnership with its suppliers to support the economic and agricultural development of the farmers’ organisations and their communities.

Background

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SOFA was born out of the vision of one man, Dr Sarath Ranaweera. He spent eight years working as an Experimental Officer with the Technical Division at the Sri Lanka Tea Research Institute where he learnt about organic agriculture. He later worked as a freelance consultant in tea processing and gained a post graduate degree at the Faculty of Food Science and Technology, University of Peradeniya.

In 1993, Dr Ranaweera’s passion for organic agriculture led him to set up Bio Foods (PVT) Ltd, a company that processes and exports organic teas and spices and provides technical support to its suppliers. Its mission is to work with disadvantaged farmers to produce a range of quality organic products for export, at the same time contributing to the socio-economic development of the farmers’ agricultural communities.

During visits to tea estates Dr Ranaweera observed that small-scale farms in Sri Lanka’s mid-country had been abandoned or neglected because of the poor prices or lack of demand for mid-grown tea compared to the more prized low- and high-grown teas. The scattered, vulnerable farmers had been exploited by middlemen who paid low prices for their unprocessed green leaf. Negative experiences with other companies and non-governmental organisations whose business schemes came to nothing left the farmers distrustful of businesses and institutions which approached them with promises of better times.

Dr Ranaweera identified and approached a group of these farmers with his plan to set up a partnership project in which Bio Foods would support their conversion to organic production, expand production and improve the quality of their tea. Bio Foods also guaranteed to purchase their entire green leaf production for processing into green and black tea, thus virtually ensuring increased incomes. Not surprisingly, the plan initially met with little enthusiasm. Dr Ranaweera then set about identifying and recruiting potential farmer leaders who could help convince the other farmers of the viability of his plan. Eventually, in 1997, the farmers were mobilised into a coherent group and divided into farmer societies, known as blocks, according to geographical location.

Four difficult years later, the farmers were enthusiastic and confident about the partnership. Bio Foods had leased a local abandoned tea processing factory; the company’s agricultural extension officers had helped increase tea production and trained the farmers in organic agricultural practices; the farmers had formed organic farmer societies and received assistance to improve their families’ socio-economic development; progress had been made in diversifying into spices and other cash crops and establishing alternative income generating schemes. The tangible results could be seen by neighbouring farmers, many of whom have applied to join the 553 farmers now taking part in the project.

A new landmark was passed in September 2005 when SOFA supplied the peppercorns for the launch of Steenbergs Organic Black Pepper, the UK’s first Fairtrade certified spice. Their range of Fairtrade certified spices includes white pepper, turmeric, cinnamon, ginger, nutmeg and cloves.

Fairtrade partnership

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Bio Foods was registered as a Fairtrade exporter in 1997 and SOFA certified as a Fairtrade producer organisation in 1998. Their products are available in the UK in Teadirect’s Earl Grey Tea, Organic Green Tea with Cinnamon, and Organic Green Tea with Lemongrass, Equal Exchange Organic Ceylon Green Tea Bags, and Steenbergs Organic Black Peppercorns.

Fairtrade price and premium
Unlike coffee and cocoa, there is no international market price for tea. This is because there are many different types and qualities of tea, all sold at regional auction centres at different prices. Accordingly, the Fairtrade price for tea is negotiated between buyer and seller, based on the local auction price, and must at least cover the costs of production. Bio Foods ensures this by issuing a quote price to buyers according to the quality of the tea in question and national market prices, and averages prices across different tea qualities according to demand levels.

Bio Foods pays SOFA members a high flat price of Rs29/kg compared to Rs17-20kg paid by local middlemen for (non-organic) green leaf. Rs15 is paid on collection and Rs10 is paid at the beginning of the month at branch society meetings. This ensures the farmers meet regularly to exchange news and ideas and strengthens the bond between the members. A further Rs6/kg is paid to SOFA for transport and admin costs. The Uva producers receive Rs45/kg for their high-grown tea.

SOFA members have difficulty putting money aside during the year so, at their suggestion, the remaining Rs4/kg is paid directly into a SOFA savings account and paid out at the end of the year (1st April) to pay for New Year Festival celebrations.

The Fairtrade price paid for black peppercorns is €2.11/kg. This is a farm gate price, paid directly to the farmers. By comparison, the average world price was around €1.65/kg in 2004. This is the price received by the exporting organisation which must deduct its costs before paying the farmers.

When Bio Foods sells tea and spices to the Fairtrade market it receives an additional premium of €1.00/kg for tea and €0.08 for peppercorns. The money is paid into the bank account of the SOFA welfare society, which was set up for that purpose, and is reserved for agreed business, social or environmental development projects. An elected committee, in which both genders are fairly represented, discusses and decides which projects the premium will be invested in.

Premium-funded projects
The Fairtrade premium has been invested in a wide range of projects that strengthen the capacity of the organisation, improve incomes and bring social benefits to members’ families and the wider community. Decent, stable incomes are extremely important in this area where less than 10% of local people have permanent, full-time jobs. Most are involved in temporary work on short-term contracts of a week or 10 days or earn what they can in the informal sector. Local unemployment is around 30% and the situation is particularly bad for young people. Good jobs are hard to find even for those with a good education who migrate to Colombo and other urban areas.

Projects funded by the Fairtrade premium include:

• The purchase of 20 cows and 20 goats for distribution to farmers, with Bio Foods paying for an additional 23 cows. The animals are kept for commercial milk production to generate extra income. The milk is taken to collection centres in 2-10 litre containers, depending on production levels. Any unwanted calves must be given to other members and cannot be slaughtered. The cow dung is crucial to organic agriculture as it forms the basis of the organic compost used to fertilise the tea bushes and other crops.
• Organic awareness raising programme: there is a constant need to educate and reinforce organic practices.
• Many of the tea bushes are old and unproductive. The premium has been used to provide new tea plants to replace them as well as to infill the land to increase production. Permitted fertilisers are also provided.
• Building of basic collection centres where tea and spices can be kept clean and dry while waiting for transport to the factory.
• A small loans fund has been established. Loans are taken out to start up small businesses such as growing turmeric and other spices which can then be sold to Bio Foods who also provide agricultural training. Some members buy quantities of loose peanuts or tea which they pack and sell locally. 
• Loans can also be taken out for house repairs (e.g. new corrugated iron roofing sheets), home improvement/extensions and to pay for farming equipment (pruning knives, forks etc).
• Women’s programmes such as making reed baskets as packaging for ‘up-market’ tea exports. 
• Dolomite programme – individuals quarry the mineral, found locally, and sell it to SOFA to add to organic compost to improve soil pH. 
• Purchase of roofing sheets, tables and chairs. These are loaned out to members to erect temporary structures for wedding parties, festivals, funerals etc. which previously had to be hired from private contractors. When not on loan, members store and use the tables and chairs in their homes.
• Construction and repair of small lanes around the farms to make transport easier – this benefits the whole community.
• Tea Research Institute training: 23 farmers have been sent on a tea farm management course to learn about drainage systems, plant health and protection from disease etc.
• Planning for future development: 30 young farmers have been funded to attend a training programme in organic agriculture, leadership skills, and how to organise a branch society.
• One-off donations to poorer members struggling with specific problems such as healthcare or older people who can’t afford housing costs, e.g. 69-year-old Piyadasa received Rs5,000 for urgent roof repairs.
• Computer course: 24 young people, all farmers’ children, are given computer training in the SOFA office by a private tutor. They can call in to the office during the week to practice. This is provided free, whereas a similar college programme would cost Rs5,000. This is a big help in job seeking, and when competent they can repay the favour by helping out with clerical work.
• Future plans: SOFA will cost a student support programme to see if there are sufficient funds to help parents keep children in school. Schooling starts at 5 and is basically free. Sri Lanka operates an O-level and A-level educational system but there is no age restriction so students can attend class up to age 20 or older until they get the required qualifications or grades. The local school is 3-4km away so parents have to pay for bus fares and lunches, as well as some books and equipment. This means many students have to leave school purely for financial reasons and to contribute to the family’s income.
  

SOFA Structure and Production
SOFA has 553 members with a total of more than 1,500 family members. In some cases the whole family is employed in their fields; around 135 members are women farmers who work the fields while their husbands go out to work; a further 15 are widows who run their own farms. Membership will increase when those in conversion to organic production become certified.

New members are welcomed and are given support by Bio Foods’ agricultural extension programme to obtain organic certification. SOFA is open to all farmers, regardless of ethnic origin or religion. The majority are Sinhalese (75%) but Tamils (25%) are regularly elected to the board and the groups mix socially and visit each others temples.

SOFA produces a total of approximately 800 tonnes of green leaf a year which is processed by Bio Foods into around 175 tonnes of made tea, 75% of which is green tea and 25% black tea. Each smallholding is 0.6 hectares (1.5 acres) in size, on average. Half is given over to tea and yields around 1,000kg/ha of green leaf a year. Most of the blocks are on land that was previously a tea estate that had been run by the government following the nationalisation of the tea industry in 1975. By the 1980s the government acknowledged that the estate was inefficient and losing money and began a dismantling process which included handing over half or one acre plots to those estate workers who wanted to become smallholders.

The entire estate has now been sold off or abandoned in line with the government’s land reform programme. This included the re-privatisation of the tea industry in the 1990s when the operation of large, viable estates was handed over to 22 private management companies. Some SOFA members who were previously employed on the estate still need to work as labourers on neighbouring private estates to make ends meet.

Tea provides up to 100% of the farmers’ income from their farm, depending on what other cash crops they grow. Most farmers also work as labourers in tea plantations, on construction sites or in factories to supplement their income.

The newly-formed Wewekelle/Bathgodde block of 90 smallholders joined SOFA in March 2004. They are located around 100km from Gampola in Uva province which is classified as a high-grown tea producing area. The Wewekelle members are former employees of a failed plantation who now each rent a 0.4 hectare (1 acre) plot of the plantation on which they exclusively grow tea.

Farms using this type of production are traditionally known as forest gardens and are abundant in semi-tropical flora and teeming with wild life. Although the land was previously operated as a plantation, much of the dense natural forest survives, with crops grown on partly-cleared plots.

Tea bushes dominate the farms but, unlike the tea monoculture on conventional plantations, they are intercropped with a host of different plants, grown for a variety of uses. Coffee, cloves, pepper vines, vanilla, ginger, turmeric, lemon grass, and citronella are grown mainly as cash crops; medicinal herbs include the neem tree, known as 'the village pharmacy' because of its many healing properties, whose extracts are made into a non-toxic insecticide; other plants attract or repel particular insects; trees and shrubs such as eretrina and vativera provide shade from the sun and protection from rain, or are planted as low hedges to prevent soil erosion. Chillies, beans, tomatoes and brinjal (aubergine) are among the vegetables grown for home consumption and for sale at local markets.

All farmers are committed to maintaining their individual organic compost heaps which are fundamental to the entire organic system. Farmers receive an initial incentive payment of Rs750 from Teadirect’s support programme to purchase new tea plants or other plants to improve or extend their farms. SOFA also receives support for its producer support programme from Oxfam Sri Lanka via Oxfam UK.

Each tea bush is plucked every 7-10 days, extending up to 14 days during the dry season in February and March. Traditionally only the new shoots, ‘two leaves and a bud’, are plucked. The plucked green leaf is carried to a collection point then transported by lorry to the factory where it is processed into made tea. This must be done as soon as possible on the same day as the tea is picked because the quality of the tea quickly deteriorates when it is exposed to heat and humidity.

The farmers’ houses are located on their individual smallholdings and vary in size and design, according to the owner’s resources. Most have two bedrooms and some have recently been extended. They all have electricity while water is collected from springs or wells and often has to be boiled during the rainy season.

The cost of organic certification is expensive. At first Bio Foods paid, then in 2002 SOFA members voted to pay it themselves as part of their process of reducing their dependence on Bio Foods. The idea is to recoup the fee by charging Bio Foods a slightly higher price – this puts the relationship on a more business-like footing, empowers SOFA and in time should contribute to SOFA’s profits. Unfortunately SOFA didn’t have sufficient funds in 2003 so had to ask Bio Foods to pay. They intend to revert to paying themselves in 2004 if finances allow.

SOFA’s management committee is composed of 39 members elected by farmers from the 13 blocks or branch societies plus the president, Mr Bernard Ranaweera who is seconded from Bio Foods. With co-operation and guidance from Bio Foods, they formulate the organisation’s general policies and development plans. SOFA currently rents a small office outside Gampola and hopes to build its own office in 2004/05. It employs eight full time staff and gives priority to children of members when recruiting.

Bio Foods
Bio Foods now operates six similar projects with tea, spice and herb growers. It has built a brand new processing factory which opened at the end of 2003 where organic tea and spices are processed and packed for export. This generates value added income as well as giving employment to local people, particularly unemployed youngsters.

Bio Foods sells directly to European importers of Fairtrade and organic products who Dr Ranaweera has cultivated during his many marketing trips abroad. Organic and green teas are a tiny segment of the tea market and are exempted from government legislation that requires tea to be sold at auction.

Fairtrade Foundation 2008

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