EMMA Report 5 Critical Markets Rice,Milking cow,Skill Labour,Ground nut and Financial Sercices
1.
2. Study conducted by
Oxfam GB
Published in
May 2012
Technical Team and Contributors
Gregory Matthews, Neavis Morais, Saviriappu Thevathas, Sinniah Kokularajah, Anusha Ratnayake,
E. Marianeasam, Rajaratnam Raj Kumar, S. Juvanendran, Gemunu Wijesena, S. Fawzardeen, T. Senthees,
P. Perinpakumar,TharmaratnamParthipan,NadarasaPusharaj,NishantySivakumaran, AjithWeerasinghe,
Rajesh Dhungel, Sinnathamby Raguraamamurty, Karthika Tharmalingam, Paramanathapillai Seran.
Published by
Oxfam GB
8, Kinross Avenue
Colombo 04
Sri Lanka
.
3.
4. About the EMMA report
EMMA (Emergency Market Mapping and Analysis) is a rapid market analysis approach designed
to be used in the short-term aftermath of a sudden-onset crisis. It is premised on the rationale that a fuller
understanding of the most critical markets in an emergency environment enables key decision makers
(donors, NGOs, government policy makers, etc.) to consider a broader range of responses based on
market realities. The methodology used for this study adapted the standard EMMA approach to the post-
con�lict and resettlement context of northern Sri Lanka, but nevertheless followed closely the EMMA 10-
step process, including a focus on key critical market systems and a combined gap, market and response
analysis. Comparison to a baseline market system was not used in this analysis. Due to the duration of the
con�lict, and the signi�icant changes in the market environment, reference to a pre-displacement market
system is not possible or appropriate. Instead, market maps illustrate the market system as it is currently
functioning and in certain cases, how it is anticipated to function in the future.
The EMMA team was made up of 17 members from four organizations – Oxfam GB (lead),
Danish Refugee Council (DRC), Oxfam Australia (OAU) and NGAGDO (a local NGO) – and four external
consultants - two value chain specialists, a �inancial systems specialist and one lead facilitator providing
overall technical support for the market analysis and reporting. Six of the team members were EMMA-
trained prior to this assessment. In addition, a four-day training in the EMMA tools and methodology
was provided for ten people – two for each of the �ive market systems - prior to the start of �ieldwork.
The EMMA team was divided into �ive sub-teams, and each sub-team was responsible for analyzing one
critical market system. The assessment took place from 1-18 May, including seven days of desk-based
secondary research and EMMA refresher training in Colombo, and 11 days of �ield work in Kilinochchi
and Mullaitivu districts, Northern Province, Sri Lanka. The �ieldwork portion of the assessment collected
primary data using focus group discussions with farmers’ organizations and consumer households, and
semi-structured key informant interviews with key market actors, government of�icials, and market
service providers.
Five critical markets were selected for this study using a three-step approach during the EMMA
refresher training and �ieldwork preparation phase prior to the start of data collection. Market selection
focused on identifying those market systems that were most critical for ensuring survival, for promoting
and protecting livelihoods, and for ensuring income for the target population. First, a long list of critical
market systems was generated for each of the three primary livelihood groups in the two target districts
(wage labour, agriculture, and �ishing). These lists were then prioritized based on how critical each
market is for the food security, livelihood, and income needs of each livelihood group. In total, a long-
list of 84 market systems for wage labour, agricultural and �ishing livelihood groups was prioritized
into 21 market systems. Those prioritized include: red rice, coconut oil, dhal, bicycles, mammoty (hoe),
farm labour, �ishing labour, construction labour, cassava, wheat �lour, eggplant, corrugated tin sheeting,
kitchen utensils, sugar and tea, canned �ish, chili, coconut, brinjal, tomato, okra and transitional shelter
materials. These 21 markets were then ranked according to six criteria to determine which markets were
most appropriate for each livelihood group. The criteria used for ranking were:
1. The market is related to signi�icant or urgent need;
2. The market system is affected by the emergency;
3. The market system �its the agency mandate;
4. Seasonal factor and timing are appropriate;
5. The market system is consistent with government or donor plans; and
6. Programming options in the market system are likely to be feasible.
5. The high-ranking market systems were then compared across the three livelihood groups and there were
several market systems that overlapped, being critical for multiple livelihood groups. The five highest-
ranking different market systems were deemed to be the most critical for the target population and
selected for this study.
The five critical markets examined by this EMMA study are: red rice – supply market; groundnuts –
income market; credit services – supply market; masonry labour – income market; and milking cow –
supply market.
The EMMA report is structured into five separate chapters. The red rice market system is
discussed in Chapter One where the focus is on the capacity of the red rice market system, constraints for
the target population to meet their needs and appropriate interventions to support the target population.
Further, a series of recommendations are provided to strengthen the red rice supply market system in the
two districts and to ensure consumers have sufficient availability and access to red rice now and in the
future. Chapter Two analyses the capacity of the external market (still within Sri Lanka) to meet the need
of the target population for milking cows, the constraints they face in accessing milking cows, and actions
thatcanbetakentoimproveaccessibilitytocows.Baseduponthisanalysis,recommendationsareprovided
to expand the capacity of the market system for milking cows so that resettled households can expand
their income earning opportunities in dairy. Chapter Three has focused on three key areas of the market
system for credit services: credit providers in the study locations; challenges faced by the local population
to access credit; and opportunities that exist to open-up access to credit. The report recommends actions
to re-capitalize community-based organizations active in financial lives of households; to improve the
organizational capacity building of cooperative organizations, using financial literacy workshops/
training as a tool to link households with financial institutions; and advocacy for changes in the collateral
and loan structure requirements of the formal banking system. Chapter Four analyzes the capacity of
the market for masons to fulfill the demand for labour within the construction industry (to construct
households in the resettled areas), and recommends appropriate interventions to increase the supply
of local masons for the construction sector. The chapter concludes with a series of recommendations to
promote and reform the vocational training opportunities currently available for the masonry sector, and
to link these institutions with chief masons for advanced on-the-job training opportunities. Chapter Five
spells out the main issues faced by the local population with respect to groundnuts – how to maximise
their production and the potential of the market to absorb an increased supply if farmers in Kilinochchi
and Mullaitivu reach their production potential in groundnuts. Recommendations have been provided to
address the constraints in the groundnut market system that currently limits the potential for groundnut
as an income source for rural households in Kilinochchi and Mullaitivu.
6. Executive Summary
The final stages of the war, in 2009, displaced nearly 300,000 people, mostly from the districts
of Kilinochchi and Mullaitivu. The return and resettlement process began in the latter part of 2009.
Preliminary relief interventions by the Government of Sri Lanka and various aid agencies have helped
the returnees to restart their lives and livelihood activities. Despite this support, however, numerous
assessments that have been carried out in the northern districts reveal that the returnees still face
enormous challenges in terms of the lack of food security, high poverty levels and the lack of access
to the means of production, which greatly hampers recovery and livelihood development. Moreover,
the lack of access to markets prevents recovery of income generating livelihood of the returnees. It is
apparent that the answer to most of the questions relating to post-conflict livelihood recovery relies on
the understanding of the different market systems that play a critical role in the lives of the returnees.
The study undertaken by Oxfam GB, under the DRC consortium project with Oxfam Australia,
used the EMMA methodology to examine five market systems of critical importance to the population
of Kilinochchi and Mullaitivu: red rice, masonry, credit, groundnut and milking cows. These market
systems were identified through careful consideration of their impacts on two important parameters:
food security and income generation. As such, red rice was considered the most important market for
food security and other markets were selected for their importance in terms of income generation or
livelihood expansion.
The key questions adopted in this study included: who are the actors in the respective markets;
what are the gaps in the demand and supply; what are the major constraints affecting returnees’ access
to these markets; how access to these markets could be improved; and what specific support can be
provided to improve access to the market. The study adopted primarily a qualitative approach. Household
interviews, focus group discussions and key informant interviews are the specific tools deployed to collect
data in the field. Five teams were formed and each team was responsible for collecting data relating to
a specific market system. The teams also developed the market chain map of each market system to
identify the constraints and possible responses that could improve the situation.
The analysis of the groundnut market shows that current levels of production in both Kilinochchi
and Mullaitivu is only a small fraction of the potential, and the national demand for groundnuts is sizable
enough to absorb massive increases in production. Although there is good potential for the cultivation
of groundnuts as a cash crop, the study identified several barriers in this market system that currently
prevent market expansion - low availability of quality inputs, lack of irrigation and storage facilities and
the lack of working capital.
The analysis of the credit market system found that there is a wide array of credit options
available to households in the two districts. However, access to these opportunities is dependent on
a variety of criteria including how well established a household is in the community, membership in
different community and cooperative groups, previous creditworthiness, current asset holdings and
connections to neighbours or community officials.
The analysis of the masonry market focused on housing construction due to the relative ease
of quantifying demand for housing due to government and aid agency support for housing schemes and
owner-driven housing programmes. However, the analysis does recognize that the demand for masonry
7. labour from the non-housing segment of the industry is significant and attempts to understand
how these construction projects will influence the masonry market system. The study finds that the
masonry market system is functioning fairly well. Due to an insufficient supply of masons from Kilinochchi
and Mullaitivu, a large number of masons and masonry workers have migrated from other districts to fill
the demand for skilled labour. This outside presence and the anticipated large demand in non-housing
construction suggests that there are ample opportunities for local workers to engage in the masonry
market system as unskilled workers, semi-skilled workers or as skilled masons.
The analysis of the market for milking cows shows that the supply of cross-breed cattle is very
low throughout Sri Lanka and is not sufficient to meet the replacement needs of the total population in
order to reach pre-conflict milk production levels. Government policies seeking milk self-sufficiency at
the district level effectively limits the movement of cows across district boundaries, which significantly
constrains the market system from meeting the high demand for crossbreed cows.
The analysis of the red rice market system shows that Kilinochchi and Mullaitivu districts
produce a net surplus of red rice, and send roughly 50% of this production to neighbouring districts
that have lower levels of production. As a result, the supply in Kilinochchi and Mullaitivu is sufficient to
meet the needs of the local population, but consumers face limited ability to access this supply due to
their low purchasing power. Other factors such as capacity constraints of the local institutions such as
cooperatives, lack of storage facilities and the lack of land availability also influence market access in this
sector.
Based upon the analysis of these five market systems, the report makes a number of
recommendations for policy and programmatic interventions that should support the newly returned
population in their efforts to improve their household food security and income. The recommendations
link relief and rehabilitation with development and are focused on ways to develop critical market
systems, and thereby livelihoods opportunities, in a longer-term sustainable manner. It is hoped that
both government and non-government agencies, practitioners, policy-makers and donors will consider
the main findings of this report in the design and implementation of future policies and programmes for
the north of Sri Lanka.
8. ACTED Agency for Technical Cooperation and Development
ALDL Agro Livestock Development Loan
AP&H Department of Animal Production & Health
BOC Bank of Ceylon
CBO Community based Organization
EMMA Emergency Market Mapping Analysis
FAO Food and Agriculture Organization
FCS Fisheries Cooperative Society
FFCS Federation of Fisheries Cooperative Societies
FO Farmers Organization
GA Government Agent
GIZ Gesellschaft für Internationale Zusammenarbeit
GN Grama Niladhari
GoSL Government of Sri Lanka
HNB Hatton National Bank
IDP Internally Displaced People
ILO International Labor Organization
LIBCO Livestock Breeders Cooperative Society
LKR Lankan Rupees
MT Metric Tonne
NAITA National Apprentice and Industrial Training Authority
NCRCS New Comprehensive Rural Credit Scheme
NGO Non-Government Organization
NHDA National Housing Development Authority
NLDB National Livestock Development Board
OJT On Job Training
PAMP The Poverty Alleviation Micro-finance Project
PIN People in Need
PTF Presidential Task Force on the Development and Security of Northern Province of
Sri Lanka
TCCSU Thrift and Credit Cooperative Societies Union
UNDP United National Development Program
VDO Village Development Organization
VT Vocational Training
WFP World Food Programme
WRDS Women Rural Development Society
Acronyms
9.
10. Chapter 1 11
1.1 Rice Market System 11
1.2 Target population 11
1.3 The Market System 12
1.4 Key findings 18
1.5 Recommendations 21
1.6 Response Options Framework 24
Chapter 2 27
2.1 Milking Cow Market System 27
2.2 Target population 27
2.3 The Market System 28
2.4 Key findings 33
2.5 Recommendations 36
2.6 Response Options Framework 39
Chapter 3 43
3.1 Credit Services Market System 43
3.2 Target population 43
3.3 The Credit Market System 45
3.4 Key findings 52
3.5 Recommendations 55
3.6 Response Options Framework 57
Chapter 4 59
4.1 Masonry Labour Market System 59
4.2 Target population 59
4.3 The Market System 60
4.4 Key findings 63
4.5 Recommendations 71
4.6 Response Options Framework 73
Chapter 5 75
5.1 Groundnut Market System 75
5.2 Target population 75
5.3 The Groundnut Market System 76
5.4 Key findings 79
5.5 Recommendations 82
5.6 Response Options Framework 86
Table of Content
11. S.N. Table Page
1.1 Analysis of Red Rice Need and Local Production 19
1.2 Recommendations Rice Market System 22
1.3 Response Options Framework 24
2.1 Cattle Production in Mullaithivu and Kilinochchi District 28
2.2 Total Milk Production Per Day in Mullaithivu 32
2.3 Milking Cow (Cross Breed) Requirements for Mullaithivu and Kilinochchi Districts 33
2.4 Recommendation Milking Cow Market System 37
2.5 Response Option Framework 40
3.1 Approximate Population Group Representing Different Livelihood System 43
3.2 Sources and Conditions of Credit 51
3.3 Response Options Framework 57
4.1 Housing Status in Kilinochchi and Mullaithivu 63
4.2 Housing Contribution Needs and Present Supply and Demand 64
4.3 Common Infrastructure Construction Kilinochchi and Mullaithivu District 67
4.4 Recommendations Credit Services Market System 72
4.5 Response Options Framework 73
5.1 Ground Nut Market System Actors 78
5.2 Target Group Ground Nut Producers and Gaps 80
5.3 Recommendations for Ground Nut Market System 83
S.N Figures Page
1.1 Seasonal Calendar Red Rice Cultivation in Kilinochchi and Mullaithivu 12
1.2 Red Rice Market System Map 13
2.1 Seasonal Calendar Milking Cow Market System 28
2.2 Milking Cow Market System Map 29
3.1 Credit Services Market System Map 44
4.1 Seasonal Calendar for Masonry Market System 60
4.2 Masonry Market System Map 61
5.1 Seasonal Calendar for Ground Nut in Kilinochchi and Mullaithivu 76
5.2 Ground Nut Market System Map 77
5.3 Response Framework Map for Ground Nut Market System 87
List of Tables
List of Figure
12. 11Emergency Market Mapping and Analysis Sri Lanka
1.1 Rice Market System
RedriceistheprimarystaplefoodconsumedbyhouseholdsinNorthernSriLanka.InKilinochchi
and Mullaitivu district, red rice paddy is widely cultivated to keep for farmer’s own consumption and to
sell in neighbouring districts where red rice production is not as strong. Although this assessment has
found that the majority of the population of Kilinochchi and Mullaitivu produce enough red rice to meet
their own consumption needs, there is a significant group of households without access to land who rely
on the market to meet their red rice food needs. This market analysis seeks to better understand the
availability of red rice in local markets for net consumers and any constraints facing the market system
in delivering an adequate supply of red rice to those households who need it.
Specifically, this market analysis will consider three key analytical questions regarding the red
rice market system:
a) What is the capacity of the red rice market system to meet the need of the target population?
b) What are the constraints for the target population to meet their needs for red rice after
resettlement?
c) What are appropriate interventions to support the target population to meet need for red rice
after phase out of food aid?
1.2 Target population
This analysis is focused on the conflict-affected and resettled population in Kilinochchi and
Mullaitivu districts in the Northern Province of Sri Lanka, totaling 300,000 people. Red rice is the primary
staple food for the population of Mullaitivu and Kilinochchi districts, and as such, this paper analyzes the
red rice market system as a supply market which is critical for the food security of consumers in the two
targeted districts. As per information gathered from the Department of Agriculture and the Department
of Agrarian Development, 51,110 households, the majority of the population of the two target districts,
are farming households producing red rice. These households cultivate an average of 3 acres of paddy
land during the main rainy (maha) season (see seasonal calendar below) and can have annual household
red rice needs through this one harvest alone. In general, households with productive paddy land produce
more than their household food needs during the rainy / maha season.
Those households who rely on the market to purchase red rice to meet their staple food needs
are either landless or lack access to sufficient land to produce enough red rice for their household needs.
This group of consumers represents a specific focus for this analysis. This group includes those resettled
families of Kilinochchi and Mullaitivu districts who currently depend solely on local market supplies for
red rice as well as the families that are yet to be resettled and who will begin to rely on the red rice market
system for food in the coming months. The former, constituting 11,456 households1, received food aid
for the first nine months after resettlement, but this assistance has ended and the households are now
expected to meet their own consumption needs. However, they still lack the land, income, and/or assets
to cultivate enough to meet their own consumption needs.
Chapter 1
13. 12 Emergency Market Mapping and Analysis Sri Lanka
The latter group, constituting 2,950 households, is currently still located in displacement camps.
Once resettled, they will receive a food aid package which includes 50kg of white rice per month for
a period of nine months. However, the assessment has shown that even food aid recipients are active
participants in the red rice market system. White rice provided as food aid is widely traded with millers
and traders for red rice, often at a very high loss (1.5 kg of white rice will trade for 1kg of red rice),
meaning that households receiving food aid are still engaging in the red rice market system and reliant
on its functioning to meet their food needs.
Figure 1.1 - Seasonal calender Red rice cultivation in Kilinochchi and Mullaitivu
(Key : Yala season cultivation which accounts for only 40 % of main season rice; X: Maha season which is main season rice;
M: Men; W: Women; H:High and L:Low)
Source: District GAs office in Kilinochchi and Mullaitivu
1.3 The Market System
The market map below is a visual depiction of the red rice market system in Kilinochchi and
Mullaitivu districts. It depicts the linkages and functioning of the market as it currently is, including key
constraints affecting the market system. Notably, the market identifies the relative quantities of red rice
traded between different actors and the prices. The following sections analyze how this market currently
functions to meet the food needs of those households dependent on the market to supply sufficient
amounts of red rice for consumption.
Acttivity Food or Income Source Who? J F M A M J J A S O N D
Land preparation M/W X
Direct sowing M
Transplanting M/W
Weeding/Fertilizer application W
Harvesting M/W
Selling red paddy M
Rainfall
Drought
Employment – Locally (mainly paddy season) M/W
Employment outside-casual labour MW
Paddy supply in the market
Price of red paddy
Vegetable cultivation at highland
Cropping pattern (saline soil)
X
X
X
X
X
X
X
X
X
X
X X X
H
Redpaddy
H
X X X X
L
L
L
L
X
X
X
Fallow
15. 14 Emergency Market Mapping and Analysis Sri Lanka
Cooperatives Prior to displacement, cooperatives provided inputs and credit at
small scale to producers, and purchased paddy at a guaranteed price to sell
to local consumers and to outside markets. Six cooperatives in Kilinochchi
Farmers As per the information provided by District Agrarian Services the
total number of red rice producing farmers in both districts is 51,110, which
comprises almost 84-85 per cent of the total number of households. Red
rice farmers are the only source of red rice in the district, and produce a
significant surplus during the main maha season and the dry yala season.
During the maha season, farmers cultivate an average of 3 acres (with paddy
landholding range from 1 – 25 acres per household) and are able to meet
their own red rice seed and cereal needs as well as sell a large portion of
their harvests through cooperatives, directly to millers, and to middlemen.
Ingeneral,one-halfofanacreissufficienttoproducetheredriceforfarmers’
own consumption, as well as enough seed for the next season. Even keeping
this seed for their own use, most paddy farmers manage to sell about 80%
of their red rice production, either in the local market or in markets in other
districts.
During the yala season, when irrigation is required for production,
only about 40% of the land area is cultivated and the majority of the paddy
produced is sold to middlemen from Jaffna and Vavuniya where demand
for red rice is high because it is not cultivated in those districts in yala
season. The high demand in Jaffna coupled with a lack of paddy storage
facilities in the target districts and farmer’s debt compels farmers to sell
their produce immediately after harvest at lower prices than what is
guaranteed by the government. Cooperatives are the mechanism through
which the government purchases red price at guaranteed prices, however
in Kilinochchi and Mullaitivu these cooperatives are organizationally weak
and lack the capacity to purchase large quantities from producers. Red rice
cultivation involves the entire family, with men primarily responsible for
land preparation and irrigation, while women are involved in weeding and
harvesting.
Red rice production has long been the traditional type of rice
grown and preferred for consumption; however with the opening of the
market access in the north following the end of the conflict, some producers
are switching to white rice production for sale outside the districts. There
is some worry among producers and officials that this shift to white rice
production for sale outside the target districts, although and limited to a
small land area, may expand and reduce production of red rice, which is
preferred locally.
Description of the Market Chain Actors
16. 15Emergency Market Mapping and Analysis Sri Lanka
currentlypurchasepaddyatagovernment-setguaranteedprice(payslightly
higher than middlemen), but their capacity to trade paddy is significant
limited. In addition to struggling to re-start activities following the conflict,
and having low financial capacity, most cooperative properties, including
office buildings, warehouses / storage facilities, trucks and other packing
and transportation equipment, were destroyed or lost. Cooperatives in
Kilinochchi are currently purchasing 1,400 to 3,000 kg per farmer, limited
to their members only (prior to 2008, cooperatives purchased 3,000 kg of
red rice from both members as well as other farmers). The cooperatives in
Mullaitivu are yet to recover and to start trading rice. They are focusing on
trading other food items and fuel as they have higher demand and benefit
from economies of scale compared to red paddy. The Dept. of Agrarian
Development is providing interest free loans to the cooperatives for
purchasing paddy from producers at the guaranteed price, but cooperatives
do not have sufficient capacity to take advantage of the credit opportunity
and to manage large-scale purchasing, storage and sales of paddy.
Middlemen
Around300middlemenareregularlyinvolvedinsupplyingredrice
to millers in Kilinochchi, Mullaitivu, Jaffna, Vavuniya and to a lesser extent
to Colombo. As per the middlemen almost 50 % of the red rice production
in the target area goes to markets outside Kilinochchi and Mullaitivu, the
majority to Jaffna followed by Vavuniya and Colombo. The vast majority
of the 50% that remains in Kilinochchi and Mullaitivu is handled by local
mills. Yala season production in Jaffna is very low compared to Kilinochchi
and Mullaitivu, and as such, farmers get a higher price for their yala season
production. The prices paid to producers by middlemen range from LKR
23-24/Kg for Maha season and 25-28/Kg for yala season red rice. Farmers
prefer selling to middlemen because they do not need to transport paddy to
market,butmiddlemenpayLKR3-4/kglessthanthemarketvalueforpaddy,
except where the farmers’ organization are strong. 100% of middlemen are
men.
Miller
124 rice mills are operating in both the districts2
with varying
capacities. The millers are the main actors who are processing rice at
the local level and maintaining a steady supply throughout the year. The
millers store paddy and process according to the demand and sell milled
rice to retailers and, to a lesser extent, directly to consumers. There is
coordination among the millers and they actively transport rice from mills
with surplus supply to those mills with low supply and high demand. The
millers, however, can also hold paddy temporarily to influence prices, but
this practice appears to be fairly limited due to the large number of milling
actors in the market system. Both women and men are involved during the
milling process and the business, with men responsible for the milling and
machinery while women manage the sales and business aspects.
2
Source: District GA Offices in Kilinochchi and Mullaitivu Statistical handbook, 2010
17. 16 Emergency Market Mapping and Analysis Sri Lanka
Retailers Retailers are the primary source of milled red rice and other
household supplies to the majority of the consumers. Almost all the retailers
sell multiple commodities for household requirements rather than selling
only red rice. The majority of the retailers are suffering from debt, borrowed
to purchase rice and other commodities, while their volumes of sales have
decreased. Income and sales are lower than in the last few years because of
market imbalances. The sales price of red rice has decreased as supply has
risen (production has increased - more people have resettled and there is
more productive land available due to demining) but demand has remained
weak – primarily due to the low purchasing power of local households.
Retailers have adapted by selling red rice in small quantities, but also in 10
and 50 kg bags at a relatively cheaper price. Due to the unavailability of cash
at the household level, most consumers purchase in very small quantities to
meet their daily/weekly requirement. Food aid also depresses the volume
of red rice sales for retailers.
Description of Key Infrastructure, Inputs and Market Services
Storage &
Warehousing
Community and cooperative-level storage facilities are important
in ensuring a regular supply of rice to the local market. Almost every
red rice producer sells his or her paddy immediately after harvest to
middlemen at a price lower than the guaranteed price. Big landlords with
more than 10 acres of land store their paddy to sell with higher price at the
beginning of the yala season when demand from Jaffna increases. A lack
of storage infrastructure limits cooperatives’ abilities to purchase rice at
the guaranteed prices and to support their farmer members. Almost all the
cooperative-owned warehouses have been destroyed during the conflict,
but some of them in Killinochchi have been rehabilitated with the support
of aid agencies, particularly ILO and FAO.
Irrigation Irrigation is one of the major constraints for red paddy production
in yala season. There is high demand for the yala season red paddy in Jaffna
and farmers are paid LKR 1-3 more during this season than in the Maha
season. Increasing yala season production would also help in increasing
supply in the local market during November-December. Several small and
medium scale irrigation schemes have been completely/partially damaged
during the conflict. Major irrigation sources in Killinochchi are under repair
or fully functional; however of about 50 minor tanks, 25 are completely
non-operational. This lack of irrigation severely limits the yala-season
production and supply of red rice (and income for farmers).
18. 17Emergency Market Mapping and Analysis Sri Lanka
Land Land is critical as it is the main resource for improving economic
opportunities for the target group and increase the red rice supply during
scarce months. Access to land entitlement will also support access to credit
for efficient supply of red rice.
Description of the Market Environment
Aid agencies The World Food Program (WFP) is currently providing a full
food ration, including white rice as the main staple, to recently resettled
households for the first 6 to 9 months following resettlement. Households
frequently exchange the food aid rice for red rice at local mills and retail
shops, at a significant loss in quantity. Normally 1.5 kg food aid white rice
is exchanged for 1 kg of red rice. The beneficiaries consider food aid white
rice to be of a lower quality than local red rice, and complain that the food
aid rice is not easy to digest. Larger families (>4 members) cannot afford
the quantity loss when exchanging white rice for red, and thus consume the
food aid rice. According to retailers, food aid enabled the price of red rice
to remain stable, but the costs of transportation still increased as a result
of increases in fuel and labour costs. Similar complaints were heard from
millers and middlemen.
Lack of
economic
opportunities
and credit
services
As the target consumers produce very little of their own red rice,
merely ensuring production and the supply of red rice to the market may not
be effective to fulfill the household need for red rice by the landless. These
households have very little purchasing power and limited access to credit
to start-up income generating activities, which constrains their ability to
meet their food needs and limits market function – retailers face greater
debt burdens because red rice sales are slow, which may limit retailers
from stocking sufficient red rice to meet the needs of target population.
Presidential
Task Force
(PTF):
A high level Task Force (PTF) lead by the President of Sri Lanka has
been formed to oversee relief, recovery and development interventions in
the Northern Province. The recovery and development approach espoused
by the PTF guides the direction of interventions in the post-conflict north,
including policies on agricultural development and market support.
19. 18 Emergency Market Mapping and Analysis Sri Lanka
Price
regulation
The Government of Sri Lanka (GoSL) annually fixes a guaranteed
price for red paddy as well as red rice - currently set at LKR 28 for paddy and
LKR 60 for processed red rice. The GoSL does not buy the product but gives
interest free loans to cooperatives to buy red paddy from farmers. However,
only a few cooperatives have benefitted as they have limited storage and
milling capacity. None of the actors interviewed with the exception of the
cooperatives, mentioned that the price paid to farmers for paddy was equal
or more than the guaranteed price, except in the case of yala season. The
farmer organizations exist in most of the communities but most of them do
not have capacity to bargain for a fair price.
Demining and
handover of
cultivable land
cultivatable lands are still under the control of SL army. Large
portions of land have still not been demined. The demining process should
be accelerated to expedite the resettlement process and the resettled
families should have land entitlement.
1.4 Key findings
Gap Analysis
Thelocalmarketisprovidingsufficientproductiontomeetthestaplefoodneedsoftheconsumers
in Kilinochchi and Mullaitivu districts. Both Kilinochchi and Mullaitivu produce enough red rice to meet
the demand from the two districts by cultivating red paddy in two seasons, except in villages where factors
such as salinity and the lack of irrigation limits production to only during the Maha season. Despite the
high levels of production, November and December are critical periods for the target population. During
this time period, prices rise by LKR 4-5 per kg due to low red rice supply in neighbouring districts, and
purchasing power is also very low because there are less labour opportunities during this time of year
period and thus less household income.
The table below demonstrates the overall production surplus in the red rice market system in
Kilinochchi and Mullaitivu districts. 51,110 farming families in both the districts produce around 260,000
MT and 120,000 MT of red rice in the maha and yala seasons respectively. Around 50% of the total
red rice produced in the two districts is supplied to Jaffna, Vavuniya and Colombo. Around 20-25% of
the total production (95,000 MT) is consumed by the producers for household food requirement and
a further 10,500-11,000 MT is used as seed paddy. Hence, around 72,800 – 75,000 MT of red paddy,
equivalent to 47,320 to 51,000 MT milled rice (according to millers and cooperatives, the milling yield
ranges from 65-69%, depending on the paddy variety and moisture content) is available in the local
market annually.
The red rice consumption requirements of the target population fit well within these levels of
red rice availability, meaning the local market is capable of meeting the full red rice needs. According
20. 19Emergency Market Mapping and Analysis Sri Lanka
to the Department of Agriculture around 15-16% of the families do not have sufficient land for paddy
cultivation. Therefore around 14,000-15,000 families depend on the local market to meet their red rice
consumption needs. Additionally, focus group discussions revealed that an average household with four
members requires 1.5 kg of red rice daily, making the total annual need for red rice to be 7,500 to 8,000
MT.
Target Group
Number of
Households in
Need
Household
Need
Other aid
received
Total
requirements
from the
market
Total
available in
the market
Families
receiving
food aid
and market-
dependent
households
to meet food
needs
14,406 (2950
to be resettled
and 11456
landless
depending on
local market
supplies)
7,779 – 8,644
MY
(45-50 Kg /
month /
household)
720 MT Food
Aid Rice
7,059 – 7,924
MT
47,320-51,000
MT
Table 1.1- Analysis of Red Rice Need and Local Production3
5
Both focus group discussions conducted during this assessment as well as the previous EMMA of rice markets in northern Sri
Lanka (see Meissner, Laura. Emergency Market Mapping & Analysis (EMMA) Report: Rice Market System, Northern Province,
Sri Lanka. USAID/OFDA, March-April 2011) reports roughly 30% of households depend on labour market, predominantly
agricultural labour during the paddy season.
Household Income Gap
ACTED and PIN estimate that the monthly household cash requirement to meet household
needs ranges from LKR 13,701 to 16,220, and that of this income 44-59% is spent on food4
. Focus
group discussions conducted during this EMMA estimated that LKR 2,250 – 2,500 per month was spent
on red rice alone. The main sources of income for landless households to meet these needs is through
agricultural labour5
, and wages range from a minimum of LKR 600-750/day to LKR 1,200/day for skilled
labour. Provided a labourer is fully employed 20 days a month at the minimum wage range of 600-750/
day, monthly earnings will range from 12,000 to 15,000, only partially within the range necessary to
meet household needs. Additionally, the estimate of 20-days of work per month is likely to be overly
optimistic. It does not take into account factors such as the seasonal nature of agricultural labour or
the time needed for families to rebuild their own homes and resettle themselves, both of which suggest
that actual employment is much less than 20-days per month throughout the year. For women-headed
households, this situation is even worse as the daily wages paid to women are about 50% those paid
to men for the same work, meaning that female-headed households cannot meet the minimum income
requirements for food and livelihood needs.
3
Source: Analysis of EMMA study
4
ACTED and People in Need (PIN). Expenditure Patterns of Cash-for-Work versus Non Cash-for-Work Households within a Food
Security Context. June 2011
21. 20 Emergency Market Mapping and Analysis Sri Lanka
Market Analysis
Although red rice production is sufficient for the needs in the district, the market is facing
several key constraints that are limiting how well it can function to meet the needs of target consumers.
These constraints on market functioning are listed below.
A. Household Purchasing Power: The target population’s reliance on inconsistent wage labour,
particularly agricultural labour, is a constraint on the landless households’ ability to access the red
rice market system. There is ample supply of rice, but without the necessary income on a consistent
basis accessing sufficient quantities of rice to meet household needs is challenging, particularly
during November and December when prices increase (due to the high demand from Jaffna and
the neighbouring districts) and labour opportunities are limited. Many households are in debt
to retailers, from whom they purchase rice on credit and are unable to repay. Retailers too face
reduced income and slower turnover of their stock, making it difficult to repay their supplier credit
and restock.
B. Cooperatives – Prior to the end of the conflict, cooperatives bought large quantities of rice at
guaranteed prices from producers and sold this to millers and consumers at competitive prices,
often slightly less than retail. However, these cooperatives are currently struggling to re-establish
themselves following the conflict, and have lost personnel, management capacity, funds, trucks and
transportation equipment, and storage facilities. Without this capacity, cooperatives are currently
functioning at a very low level and cannot function as a reliable buyer or seller at the same scale.
Cooperatives are currently selling only very little to consumers, and buying a fraction of the pre-
conflict quantities of paddy from producers.
C. Warehousing and storage: Almost all the cooperative-owned warehouses were destroyed during the
conflict, severely limiting the ability of the cooperatives to function as a government subsidized
buyer and seller of rice. Some cooperative warehouses have been reconstructed with support of
aid agencies in Killinochchi, and are currently functioning at full capacity; however there are many
more which have not been restored.
D. Land availability: Some cultivatable land is still undergoing mine clearance. This limits further
growth of red rice production and could have long-term consequences for the supply of red rice in
the market. Further, sea water intrusion in the agricultural land is limiting red rice production only
during maha season, making ground water inappropriate for irrigating paddy fields due to high
levels of salinity. The impacts of such deterioration of paddy land were observed in Killinochchi
district.
E. Food Aid: Food aid is influencing the market system by effectively reducing the demand for red rice
and possibly contributing to a shift in dietary patterns away from red rice. Despite the significant
surplus supply of red rice in the target areas, the less preferred white rice continues to be imported
into Kilinochchi and Mullaitivu as food aid. Food distributions reduce the need for households to
rely on the market for food, dampening the livelihood and business opportunities for local retailers.
Additionally, the long duration of households consuming food aid rice (up to several years for those
families who have not yet been resettled and remain in the IDP camps) has the potential to change
dietary patterns and further reduce the demand for red rice.
22. 21Emergency Market Mapping and Analysis Sri Lanka
Anticipated functioning of the market system in the future?
For the most part, the market system is anticipated to continue exceeding the red rice market
needs of the local consumers, and serve as a net red rice exporter to other districts where red rice is
in demand. However, many farmers and officials worry about declining production in Kilinochchi and
Mullaitivu due to a variety of factors including lack of sufficient livestock to naturally fertilize the land,
very little red rice varietal improvements since the start of the conflict, and a small but potentially
growing shift to white rice production for sale outside the districts. Although red rice yields may decrease
in the long-term without further developments, this is expected to be offset by new lands coming under
cultivation as land is demined and resettled households re-start cultivation. There is a slight possibility
that as food aid is completely phased out prices for red rice will rise and demand from the market
increases, but food aid currently represents such a small percentage of the current market supply that
the impact of its phase-out may be negligible. Overall, market prices for red rice will likely stay stable over
the coming years.
Gender Analysis
Both men and women are engaged in red rice cultivation, but the paddy sector has traditionally
been dominated by male members of the family from generation to generation. Men normally do planting
whereas female involvement is high only during the weeding periods and during post-harvest activities
like drying, rice pounding and milling at very small scale. Despite this work, women are paid only 50
per cent of the normal wage rate for men. Throughout the red rice supply chain, the various actors are
predominantly men, except for a small number of women involved in the retailing business. Women
have limited control over income and in most of the cases men decide on how to spend the income. For
these reasons, women-headed households face particular difficulties in meeting their household food
needs through wage labour in paddy fields. This access to financial resources is further limited by male
control over farmers’ organizations as well as the traditional land entitlement process which endows
male household members with land ownership. Involvement in the farmers’ organizations and land title
are the prerequisites for accessing soft loans offered by various financial institutions as well as subsidized
inputs from the Department of Agrarian Services, meaning that many women and in particular female-
headed households face very tight financial and credit constraints.
1.5 Recommendations
Based on the market capacity and the functioning of the market system, this analysis has
identified several key opportunities for programmes and policies to improve the delivery of red rice to
landless and recently resettled consumers, and thereby improve food security.
Both direct and indirect interventions are necessary to improve household access and ensure
continued availability of red rice. Direct support is recommended to increase consumer household’s
purchasing power using cash transfers, to improve income-generating opportunities through skill-
building and supporting homestead production such as gardens or poultry as a food and income source.
Supporting the diversification of livelihoods options for the newly resettled population should increase
their purchasing power and thereby their access to red rice in the local market.
23. 22 Emergency Market Mapping and Analysis Sri Lanka
Indirect interventions targeting market actors are recommended to improve the functioning
of farmers’ cooperatives, to repair storage facilities that were damaged during the conflict and to repair
irrigation infrastructure. Storage facilities in particular were identified as an intervention that could
ensure access to red rice for the target group (households dependent upon the market supply of red
rice for consumption) at a lower price since storage facilities would motivate farmers to trade red rice at
the guaranteed price. Additionally, this analysis shows the need to advocate for equal wage payments to
women as well as a shift in food aid programming to cash or voucher transfers instead of imported food
aid.
Recommended
Response
Effect on market
system and target
group
Key risks and
assumptions
Timing and
feasibility
Remark
Cash for
work (small
scale disaster
mitigation
structures and
irrigation repairs)
Increases financial
access to red rice,
promotes buying
from local retailers,
and increases yala
season red rice
supply through
improved irrigation
infrastructure
Possibility of
inflation
Highly feasible
and appropriate
for June-August
Source of income
for target group
and support to
production
Cash for income
generation
training and input
support
Improve financial
access to red rice
and other household
needs and support
skill-building for
income generating
activities.
All trained
beneficiaries
may not adopt
acquired skill
Highly feasible
preferably prior
to termination
of food aid.
Immediately
for families not
receiving food aid
currently
Source of income
Rehabilitation
of cooperative
warehouses /
storage facilities
Steady supply of
red rice; enables
cooperatives to
link with and
take advantage
of government-
subsidized loan
programmes for
buying paddy
The warehouse
may be used for
other purposes by
the cooperatives
High (to be
completed by the
harvest of maha
season i.e January
2013)
Indirect response
Table 1.2 - Recommendations Rice Market System
24. 23Emergency Market Mapping and Analysis Sri Lanka
Replace in-
kind food aid
by a cash or
voucher transfer
programme
to meet food
requirement for
the families yet to
be resettled
Promotes local
market system and
improves access to
preferred food items
The local traders
and cooperatives
agree to supply on
negotiated price
Highly
feasible before
resettlement
Survival needs
Support for
homestead garden
and poultry
production
(seeds, poultry
and tools)
Possible to decrease
spending on some
food from market
and to increase
income generation
opportunities
All beneficiaries
for the
intervention can
allocate time
High, immediately Livelihood needs
Advocacy for
equal wage rate
for men and
women
Increases household
income to meet
food and livelihood
needs, particularly
important for
female-headed
households.
Men may be
reactive unless
they realize the
benefits at HH
level
Highly feasible
and immediately
Livelihood needs
25. 24 Emergency Market Mapping and Analysis Sri Lanka
1.6 Response Options Framework
The response options framework is an EMMA tool to document the brainstorming process used
in identifying the best response recommendations based on the market system. The table below contains
the long list of ideas and concepts considered by the market analysis team when thinking through the
most appropriate responses for the red rice market system.
Response Option Advantages Disadvantages
Feasibility
(High, low,
medium and
why?) and
timing (short,
medium,
long-term)
Stakeholders
Cash for work
(small scale
disaster mitigation
structures)
Choice to fulfill their
immediate needs
Inflation
High for short
term (June to
August)
Govt., aid
agencies, I/
NGOs
Cash for training for
income generation
training and input
support
Increased financial access
to red rice
High
Immediately
before
terminating
food aid
Department
of Agriculture,
Department
of Agrarian
Development
Rehabilitation
of cooperative
warehouses
•Fair price to farmers and
continuous supply of
red rice
•Opportunity for cash for
work
Does not
guarantee fair
price to the
target group
High (to be
completed by
the harvest of
maha season
i.e January
2013)
Department of
Agriculture
Rehabilitation of
cooperative rice
mills
• Break monopoly of
millers
• Rice bran as a by-
product for livestock
Less friendly
to the
environment
Low (prior
to harvest
season)
Farmers
Organizations,
Department of
Agriculture
Conditional cash
grant to repay debt
The consumers can repay
their debt and have easy
access to red rice from
retailers and millers
The
intervention
may increase
defaulters in
long run
Medium (Prior
to termination
of food aid)
Govt, aid
agencies, I/
NGOs
Table 1.3 - Response Options Framework
26. 25Emergency Market Mapping and Analysis Sri Lanka
Voucher transfer
for families to be
resettled
• Promote local market
system
• Improve access to
preferred food items
• Target group has been
using food voucher at
the distribution point
Quality control
may be tedious
High
(immediately
after
resettlement)
Govt, aid
agencies, I/
NGOs
Support for
homestead food
production (seeds,
poultry and tools)
Help meet the household
food demand and promote
economic activities
High
Immediately
Govt, aid
agencies, I/
NGOs
Advocacy for
distribution of public
land to landless
families
The target groups can
produce red rice for their
household requirement
The issue may
be politicized
Low
Long term
(After the
situation gets
stable)
Rehabilitation of
small scale irrigation
facilities (reservoir
tanks and channels)
• Increase yala season
cultivation to supply red
rice in scarce months
(Nov-Dec)
• Allow opportunity for
cash for work
As there is
huge demand
in Jaffna
the paddy
produced in
yala season
may not be
available for
target group
Medium
Immediately
before the
yala season
planting
season (June
2012)
Govt, aid
agencies, I/
NGOs
Motivate aid
agencies to mobilize
locally produced red
rice for food aid
Reduce aid agencies cost
of importing rice and
target group get local rice
as per their preference
Increase in
demand may
increase price
of red paddy
High
Immediately
Paddy
Marketing
Board, Farmers
Organization
Lobby to create
enabling working
environment for
agencies
More funding
opportunities to help
recovery
Agencies with
diverse interest
might influence
local people
towards their
agenda
Medium
Immediately
Department of
Labour
Ensure access to
market information
system (MIS)
This will help regulate
price and fair trade
Medium
Before harvest
season
(January 2013)
Extension
Services
Advocacy to expedite
the demining
process
Improved target group’s
access to land
Low
Immediately
27. 26 Emergency Market Mapping and Analysis Sri Lanka
Advocacy for equal
wage rate for men
and women through
cash for work
program (offering
rate which reflects
market rate)
Increase income of
women by up to 50%
High
Immediately
Department
of Labour, aid
agencies/I/NGO
Conditional
cash grant for
rehabilitation of
house
Expedite the resettlement
process
Low
After demining
Advocacy to
compensate loss
of cultivable land
due to military
encroachment
Ensure access to
cultivable land
Low
Immediately
28. 27Emergency Market Mapping and Analysis Sri Lanka
Chapter 2
2.1 Milking Cow Market System
Milk production is a rapidly growing industry in the Northern Province of Sri Lanka. Since the
conflict ended, many new private sector and semi-governmental actors have moved into the areas of
dairy development such as milk collection and establishing processing centres. Milk production has long
been a source of food and secondary income in the northern districts, but the arrival of businesses such
as Nestle, Milco and others has raised the interest and profile of milk production as an income earning
strategy. This is increasing demand for higher yielding crossbreeds that can produce three-times the daily
milk production of the local cow varieties. This market analysis focuses specifically on the availability and
supply of cross-breed milking cows to meet the demand for farmers seeking to both replace their cattle
lost during the end of the conflict and to expand livelihood options through milk production. This study
on the milking cow market system should serve as a useful complement to other studies that are being
commissioned into the milk production market system (e.g. forthcoming UNDP report).
Specifically, the milking cow market system analysis will seek to answer three key analytical
questions:
a) What is the capacity of external market (still within Sri Lanka) to meet the need of the target
population for milking cows?
b) What constraints does the target population face in accessing milking cows?
c) What actions can be taken to improve the target group’s access to milking cows?
The target population for this analysis is the conflict-affected and resettled population in
Kilinochchi and Mullaitivu districts, Northern Province, Sri Lanka, totaling 230,800 people. There are
three main livelihood patterns taking place in these districts, mainly fishing, agriculture and wage labour.
Approximately 20% of this population (over 13,761 farmers) engages in livestock raising as a significant
livelihood strategy, and as such, cattle (milking cows in particular) are a major livelihood asset.
The entire target population was displaced from their homes at the end of the conflict in 2009,
and most lost all livelihood assets, including livestock. Cattle were abandoned during displacement
and, left alone, they moved randomly through the districts. When the return programme started, some
farmers were able to re-capture their herds or benefitted from a FAO cattle redistribution programme.
However, these livestock holdings are still very small relative to pre-displacement herd sizes (see table
2.1) and many households did not recover any livestock at all. As a result, the target population is
relying heavily on the milking cow market system to restock their cattle and to restart livestock-based
livelihoods. Additionally, with the end of the conflict in the north private companies began collecting milk
and demand for milk skyrocketed, making intensive milk production a profitable livelihood activity.
2.2 Target population
29. 28 Emergency Market Mapping and Analysis Sri Lanka
No District Cross breed Local Breed
Cross breed in
2011
Cross breed in
2007
Local breed in
2011
Local Breed in
2007
1 Mullaitivu 865 1,344 77,135 120,000
2 Kilinochchi 500 1,000 34,500 54,000
1,365 2,344 111,635 174,000
As such, resettled farmers are increasingly seeking to replace their lost herds with cross breed
varieties that yield more milk. Additionally, the utility of cattle has shifted from the primary importance
as draft power to a source of income in the form of milk production and sales. The seasonal patterns of
the milking cow-based livelihood systems are illustrated in the following seasonal calendar:
Table 2.1- Cattle Population in Mullaitivu and Kilinochchi Districts
(Current & Reference year)
Source: Government Animal Production and Health Department Statistics from Kilinochchi and Mullaitivu, 2007 and 2011
Factors Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Price of milk cow HIGH STABLE MODERATE
Supply / Quantity of cows LOW HIGH
Employment - cattle
management
HIGH LOW MODERATE
Disease outbreaks MODERATE HIGH
Fodder availability HIGH LOW MODERATE
Flooding HIGH
Droughts HIGH
Capital Investment HIGH HIGH
Figure 2.1 - SEASONAL CALENDAR MILKING COW MARKET SYSTEM
2.3 The Market System
Themilkingcowmarketsystemischaracterizedbyaseriesofprivateandgovernment-supported
breeders working through the livestock cooperatives, middlemen and aid agencies to deliver cows to
dairy farmers. This movement of cows is supported by a series of credit providers and extension support
services, as well as by laws and regulatory bodies that govern (in effect restrict) the transportation of
milking cows between districts. The map below is a visual depiction of the milking cow market system in
Kilinochchi and Mullaitivu districts.
31. 30 Emergency Market Mapping and Analysis Sri Lanka
The Market Chain
• Private sector companies: There are four private companies that breed milking cows in Sri Lanka,
none of which are located in the targeted districts. These companies are located in Anuradhapura,
Polanaruwa and Kurunagale districts and supply cross breed milking cows island-wide. These
companies both breed their own cows as well as purchase animals from other districts, and
contract with farmers to raise the cows until productive age. When cows are ready for sale, the
companies sell their cattle through middlemen to farmers. The current price for Jersey-Shakiwal
crossbreed milking cow is LKR 60,000 to 75,000, including the cost of transport and certification
for shipping across district boundaries (LKR 2,500), compared to 30,000-45,000 in 2007. Currently
these companies are operating at a very low capacity relative to the demand they are getting
for orders. Customers are demanding up to 350 cows per month, but the companies are able to
provide a maximum of 70 cows per month and rarely reach that level of supply. For most of the
year, the private sector actors can only supply a small number of cows. Several companies have
begun importing cross-breeds cows from Pakistan and India, but the import tax, associated costs
of importation, and potential for livestock to not adapt well to the Sri Lankan environment means
that imported cows are very expensive and a riskier investment for farmers.
• NLDBFarms:TheNationalLivestockDevelopmentBoard(NLDB)farmsareattachedtothegovernment.
Currently, the NLDB farms are focusing their efforts on increasing milk production in the districts
in which they are located, in accordance with the government objectives to promote district-level
milk self-sufficiency by 2016. The farms are located in Anuradhapura (1 farm), Polonnaruwa (1
farm) and Kurunagale (2 farms), and as such, these farms are providing cows only to these districts.
NLDB supply to Kilinochchi and Mullaitivu is completely disrupted.
• Contract farmers-LIBCOs: Roughly 200 individual contract farmers in the adjacent districts have
registered under the LIBCO (Livestock Breeders Cooperative Societies), which is attached with the
Cooperatives Department. These societies are getting technical support from the Department of
Animal Production and Health. The LIBCO has an exemption from the certification process needed
to move livestock from one district to another, and the cooperative uses this exemption to assist
farmers to purchase cows from breeders outside the district (mainly from Jaffna) contracted
directly with the LIBCO cooperative. They have the capacity to provide 200 milking cows annually.
The LIBCOs then provide these cows to individual farmers at the community level. However, since
the permit restrictions have gone into effect, LIBCOs have also begun cooperating with aid agencies
to supply milking cows to the target population through various agencies. The LIBCO societies
were disrupted during the displacement, and in many areas these local-level societies have either
not yet been reconstituted or are functioning at a low capacity.
• Private cattle breeders: There are a limited number of private cattle breeders in the adjacent districts
outside the target area, and there are no cattle breeders in the target area. The private cattle
breeders provide cattle directly to the farmers and sometimes they provide through LIBCOs as
well. The identified private cattle breeders are able to provide 50 per breeder annually.
• Government, UN, International NGOs, Local NGOs programmes: During the recovery stage of
resettlement,anumberofagencieshavebecomeinvolvedinthedairysectorandhaveprovided1,000
cross breed milking cows to meet the demand after resettlement. This includes the government-
32. 31Emergency Market Mapping and Analysis Sri Lanka
sponsored Dairy Village programme recently started in the target areas by the Animal Production
and Heath Department (AP&H) working through LIBCO to provide cattle, inputs and services as a
comprehensive package for 20 cattle farmers at a time in one village. Once the first annual cycle
is completed, the next 20 farmers will be selected in the same or neighbouring communities, with
the same volume. The composition of the assistance is 50% grant and 50% is farmer contribution.
The linkages between breeders, LIBCOs, aid agencies and the target population is dotted to indicate
that this is a new supply channel for milking cows since resettlement began.
• Middlemen: The middlemen collect the cross breeds from cattle breeders and private companies
outside the target districts and sell them to farmers. Often the middlemen have influence that
have enabled them to obtain transportation permits to move cattle from the outside districts. Many
cross breeds are sold through this channel annually, representing a significant source of cross breed
cows for dairy farmers.
• Cattle Farmers: Cattle farmers are divided into two categories on the market map, those raising
crossbreeds and those raising only local cattle breeds. The dotted line indicates that an increasing
number of farmers are re-stocking with cross breeds and are entering the crossbreed farmer box.
Together, the two types of farmers are demanding access to crossbreed cows to improve their
milk production and livelihood opportunities. Some cattle farmers in Mullaitivu and Kilinochchi
are raising crossbreeds for their own use. Due to the significant demand for milk, many farmers
increase their cow herds by reproducing their own cattle. There are over 13,700 cattle farmers in
the two target districts, of which 764 own high-yielding cross breed varieties of cow.
The Market Environment
• Movement limitations – the most significant constraint on the milking cow market system is the
certification process required to move cattle from one district to another. Very recently the
Ministry of Livestock Development declared a policy of district-level milk self-sufficiency, and set
an objective for the target districts to increase milk production by 60% by 2016. Because cattle
populations throughout the north are very low relative to this ambitious target, the government
requires a certificate of approval from the district authorities to transport cattle across district
boundaries. Due to the high demand for cows in each district to meet the milk production targets,
very few permits for transport are approved.
• Milk market: The high demand for raw milk is driving more farmers to engage in milk production
and to demand more efficient, higher-yielding crossbreed varieties of cows. This milk is
being demanded both by the local population for consumption as well as by private and semi-
governmental corporations seeking to process milk and sell as value-added products, mainly milk
powder. Since the conflict ended, milk companies, particularly Nestle, MILCO, and Kothmole have
entered the northern districts and are purchasing large quantities of milk from local producers.
These consumers are currently demanding over 40,000 litres of milk per day, of which nearly 70%
goes to local consumption. Nestle, MILCO and Kothmole each command about 20%, 7% and 3%,
respectively, of the milk produced locally, and each are seeking to increase their market shares (see
Table 2.2, below). Due to this increasing market demand for raw milk from the target districts,
there is vast potential to increase production. Many new farmers are attempting to enter dairy
production, and resettled dairy farmers are attempting to restock their herds lost during the
conflict. These efforts have created a large demand for milking cows.
33. 32 Emergency Market Mapping and Analysis Sri Lanka
Table 2.2 - Total Milk Production per day in Mullaitivu
Market Actors for Milk Quantity Units
Nestle 8,400 Litre
MILCO 3,000 Litre
Kothmale 600 Litre
Local consumption 27,295 Litre
Total Milk Production 39,925 Litre
Source: Department of Animal Protection and Health
Market Inputs, Infrastructure, and Services
Credit facilities: Several institutions offer loan schemes to farmers for expanding their dairy livelihoods.
For example, the People Bank has a scheme to provide credit of up to LKR 40,000 to cattle farmers
while giving 6 months grace period to repay without interest. However, farmers are not rapidly
taking up these opportunities, to a certain extent because they are not familiar with the scheme,
but to a much greater extent because farmers struggle to meet some of the basic criteria which are
required to qualify for the loan. For example, in some instances farmers must demonstrate that
they have a proper shed for cattle rearing, an ample source of water and the capacity to manage
the cattle. Providing this investment upfront before accessing credit is difficult for many resettled
households who are also struggling to house and feed themselves.
Infrastructure: At the household level, many cattle farmers do not have the basic infrastructure such
as a cattle shed and sufficient water sources necessary to manage and support high-yielding cattle
varieties. Additionally, although the demand for milk is very high and there is significant public
and private investment going towards dairy facilities, many areas of the target districts are still
without the necessary infrastructure for milk collection and processing, including buildings, roads,
transport networks, electricity and cooling facilities.
Extension Services: There is a limited number of department staff to provide extension services,
with many of the positions remaining unfilled for long periods of time. The extension services
department does not have the facilities or staff to assist the target population with the management
and rearing of milking cows.
Pasture: Access to pasture land is a persistent problem for many communities in the target districts.
There are large portions of land that still needs to be demined in order for cattle farmers to access
pasture.
LIBCOs: The LIBCO societies serve a dual function in this market system, as both a key component of the
market chain (as described above) as well as a support function for dairy farmers and the entire
market chain. In addition to supplying cows, the LIBCOs offer a series of services to dairy farmers,
connecting them to credit opportunities, supporting expansion of milk collection and processing
services etc. Because of this dual role, the LIBCOs are an element of both the market chain as well
as the infrastructure and support services components of the market map.
34. 33Emergency Market Mapping and Analysis Sri Lanka
2.4 Key findings
Gap Analysis: Milking Cows required by the target population
The analysis below quantifies the number of crossbreed cows required by the target districts
in order to reach pre-displacement milk production levels, as measured during a stable reference year
(2007).Becausetotalmilkproductionismadeupofbothcrossbreedandlocalvarietiesofcowswhichyield
different quantities of milk, a comparison of total milk produced is used instead of comparing numbers of
each variety. The total milk production gap estimated for the current year (2011) is then converted into
the number of crossbreed cows necessary to bring the target areas back to 2007 production levels.
In reality, the demand for milk today is much higher than 2007 levels because of the rapid
increase in private sector corporations purchasing raw milk from Kilinochchi and Mullaitivu districts,
a market factor that was not present during the 2007 reference year. As such, the actual demand for
milking cows is likely to be higher than estimated with a recent UNDP analysis of the milk market system
suggesting that the gap between supply and demand for milk is widening annually6
. In addition, although
this analysis focuses on replacement of milking cows with crossbreed varieties which offer improved
livelihood options for farmers, it is very likely that a portion of the milking cow gap selected here will be
met by increases in local cow herd sizes.
6
UNDP and CEFE NET Market Analysis of the Dairy Sector: Opportunities and Challenges
Table 2.3- Milking cow (crossbreed) requirements for Mullaitivu and
Kilinochchi Districts 7
7
Government Animal Production and Health Department Statistics from Kilinochchi and Mullaitivu, 2007 and 2011
District
Reference Year
(2007)
Current year (2012)
Milk
Production
Deficit
Required
number
of cross
breeds
Agency
distribution/
Individual
Purchases8
Cross
Breed
Cow Gap
Milking
Cows
(Local +
Cross)
Quantity
of milk
/ day
(litres)
Milking
Cows
(Local +
Cross)
Quantity
of milk
/ day
(litres)
Kilinochchi
District
13,750 28,575 8,750 18,038 10,538 1,673 312 1,361
Mullaitivu
District
30,336 62,117 19,498 39,925 22,192 3,541 1,100 2,441
Total 44,086 90,692 28,248 57,963 32,730 5,214 1,412 3,802
8
Individual purchases reported by LIBCOs who facilitate purchases of crossbreed cows from outside the district.
35. 34 Emergency Market Mapping and Analysis Sri Lanka
Milk production estimations are based on government statistics of local and crossbreed variety
cattle holdings in the target districts in 2007 and 2011, average daily milk yield per type of animal (6.3
litres/day crossbreed, and 2 litres/day local variety), and other factors including the proportion of cattle
that are female, proportion of females producing milk etc.
This analysis shows that in order to reach pre-displacement levels of milk production, a rather
conservative target given the significant rise in sourcing of raw milk from the target districts by large
food businesses, over 3,800 crossbreed cattle are needed. If this production level is to be met using
local varieties, three times this number of cows is needed. As a result, there is significant demand in
the milking cow market system for crossbreed cattle, but the market is also severely constrained and at
present cannot meet this demand.
Additionally, the AP&H Department estimates that local production is capable of meeting only
35% of the demand for milk in Kilinochchi and Mullaitivu districts, the majority of that unmet demand
being commercial demand for milk. This further illustrates the livelihood opportunities available for
households who can access high yielding crossbreed cows.
Market Analysis: Ability of the market system to meet the need for milking cows
As a livelihood input, the milking cow market system cannot meet the need for milking cows
for many years to come without external support. Aside from aid agency interventions, the market
supplies less than 500 crossbreed cattle per year to farmers. With the support of aid agencies and the
government Dairy Village programme, a further 1,000 livestock were provided to the target population.
However, at this rate it will take about three years just to reach 2007 milk production levels assuming all
replacement is with crossbreeds. If fewer crossbreeds are supplied, then it will likely take longer to reach
2007 production levels because more than triple the number of animals would be required to produce
the same milk quantities.
Movement restrictions limit supply: The movement restrictions on cattle are one of the most significant
barriers to the market system supplying more cows. The permit requirements have caused complete
disruption in the supply of milking cows to the target district from NLDB farms, and from private breeders
to INGO and UN agencies. The NLDB farms now focus exclusively on breeding cows for the districts in
which they operate and aid agencies have begun to work through LIBCOs to supply cattle, resulting in a
new market pathway between the LIBCOs and the aid agencies. Additionally, by limiting where cattle can
be sold, the restrictions effectively reduce the market opportunities for breeders and force farmers to
pay higher prices because of permit fees. It is very likely that this regulatory uncertainty will de-motivate
breeders from increasing their breeding efforts, even despite the high demand they are already facing.
Low LIBCO capacity: Because of the cattle transportation constraints, the LIBCOs have assumed a
central role in the market system and are acting as the primary connection between farmers and aid
agencies and the different types of milking cow suppliers. Almost all LIBCO societies were disrupted or
stopped functioning when communities were displaced, and since resettlement many are functioning at
a low capacity or have simply not yet been reconstituted at the community level. Because of this limited
capacity and the increased role they are playing in supplying milking cows, the LIBCOs are under quite
a bit of pressure to perform and risk becoming a bottleneck to the whole market system without further
organizational support or a removal of the restrictions on movement.
36. 35Emergency Market Mapping and Analysis Sri Lanka
Long lead times to replenish stock: The partial disruptions between middlemen and other direct
suppliers to farmers is the result of low levels of crossbreed supply relative to the high need and demand.
Currently, suppliers report that they are receiving a very high number of requests for crossbreeds that
they cannot fulfill. They cannot fulfill the needs immediately because of the high lead-time required to
breed cows and raise them to productive age. This process can take two to three years and given the
sudden nature of the increase in demand it will take breeders several years to increase their capacity to
meet the demand.
Demand dampened by lack of capital: Despite the high demand for crossbreeds, there are still many
farmers who do not have the income or resources to invest in high-yielding milking cows, causing partial
disruptions between suppliers (middlemen and private breeders) and farmers. Even though the demand
for milk is high and crossbreed cows offer a very strong return on investment, these breeds also require
greater upfront investment in terms of cow sheds, water sources and fodder than traditional varieties.
Most farmers lost their livestock during displacement and need to purchase cows as well as the basic
infrastructure, vet services and inputs to support them. The majority of recently resettled households do
not have the resources to invest in crossbreed cattle, despite the high pay-off potential and the availability
of credit schemes to support them in engaging in this livelihood strategy. Lack of capital at the household
level and access to these credit opportunities (due to collateral, need to invest in sheds prior to receiving
loan, etc.) also restricts the growth potential of this market system.
Minimalimpactofdairyinfrastructure:Lastly,althoughthelimiteddevelopmentofdairyinfrastructure
(collectionpoints,processingcentres,transportationnetworks,etc.)wouldappeartolimitmilkproduction
and thus demand for milking cows, this influence is fairly small. Aid agencies, government departments
and private companies are investing heavily in developing milk collection networks and the processing
capacity is gradually increasing. Additionally, despite the infrastructure challenges, demand for local milk
consumption is still very high (roughly 70% of all milk produced in target area) and private sector actors
(such as Nestle, Milco, Kothmole) are interested in expanding collection from the target districts. So,
although dairy infrastructure does require improvements in order to expand income opportunities for
dairy farmers, it has minimal impact on the supply of milking cows.
Impact on farmers: As a result of the milking cow market’s weak ability to meet the demand for cows,
farmers are unable to take advantage of, or to maximize, milk sales as an income strategy. Roughly
25% of the population in the target districts relied primarily on cattle farming for a livelihood prior
to displacement, and a majority of the remaining agricultural households engaged in cattle rearing as
a secondary income source. The low supply of cattle for restocking and the high prices (LKR 30,000
higher than in 2007) makes it difficult for farmers to re-stock livestock they lost during displacement,
particularly as households are also attempting to meet other essential needs.
Anticipated functioning of the market system: Because of the long lead-times for cows to reach milk-
production age (roughly 2 to 3 years) it is not likely that the milking cow market system at the national
level will be able to significantly increase supply for the next few years. Even if breeding efforts increase
dramatically across the country, it will take several years before these cows enter the market system,
however the restrictions on movement of animals will likely dampen any big increases in breeding
efforts. On the demand side, demand for milk is anticipated to stay strong for many years as new milk
transportation and processing systems come online and corporations increase their purchasing of milk
from target districts. Dairy farming will likely remain a viable and productive livelihood strategy for
37. 36 Emergency Market Mapping and Analysis Sri Lanka
households, but support is needed for households to restock and for the market system to continue the
supply of milking cows.
The current supply from the milking cow market system is roughly 1,400 cows annually
provided to farmers in Kilinochchi and Mullaitivu. Considering that over 1,000 of these 1,400 cows were
delivered by aid agencies, however, a continuation of this level of supply cannot be expected in the future.
To replace the cows supplied by aid agencies, private companies could potentially enter the market and
deliver 1,000 cattle per year with the remainder being provided by a combination of contract farmers and
private cattle breeders in adjacent districts (especially from Jaffna).
Gender Analysis
Women participate throughout the market system starting from cattle breeding up to milk
collection, with the exception of transporting and selling cows which is commonly left to men to handle.
While men focus on cattle trading and transporting, the women are often those responsible for cattle
rearing,takingouttopasture,collectionoffodderetc.Amongtheinstitutional actorsinthemarketsystem,
women are active members in the LIBCOs as both farmers and as functionaries within the organization,
and there are several female staff members attached to the Department of Animal Protection and Health,
ranging from the Director to support staff. However, as these institutions continue to recover and grow
following the end of the conflict, it is important to assure and expand female participation and ownership
in the governance and management structures of these organizations.
The expansion of crossbreed cows will be a great benefit to women, many of whom directly
benefit from the sale of milk. Higher yielding cows offer the potential for greater income generation.
Additionally, because crossbreed cows must be kept in confined areas, there is the potential to reduce
the work burden on women, who would traditionally care for cattle in the fields and take them out to
pasture. This confined nature can also create secondary income opportunities out of the work that
women normally pursue, such as fodder collection. Confined animals require fodder be brought to them,
so there is the potential for women to get benefit from the collection and sale of the fodder.
2.5 Recommendations
The milking cow system is functioning, but at a very low capacity relative to the demand, with
few prospects to increase capacity in the near-term without outside assistance. There are several key
actions that agencies can do to enable resettled farmers to pursue sustainable livelihood strategies linked
with the dairy sector, and to support market actors to improve market functioning that will ultimately
benefit the dairy farmers. These actions are summarized in the table below, and described in more detail
following the chart.
38. 37Emergency Market Mapping and Analysis Sri Lanka
Table 2.4 - Recommendations for the Milking Cow Market System
Recommended
Response
Effect on market system
and target group
Key risks and
assumptions
Timing and
feasibility
Advocate for
relaxing of permit
requirements to
transport cattle
• Frees up the market system
to move cattle supply to areas
of highest demand
• Could reduce livestock
prices
• Government
policy can be
changed
• Breeders can
increase supply of
milking cows to
meet demand
Immediate
Highly feasible
Assist dairy
farmers to
construct sheds
and to access
fodder for confined
management of
cows
• Can be accomplished by
directly assisting producers
or through assistance to
LIBCOs
• Would strengthen LIBCO
as key actor to support the
members increasing milk
production.
• Improves access to credit
Ample water
source availability
Short to medium
term approach
Highly feasible
Scale up the
government’s
Dairy Village
approach to
milking cow
management
• Can be directly supported
through government efforts
or via NGOs utilizing a similar
approach
• Improves supply of milking
cows and community
management of dairies
• Government
willing to scale-
up or allow NGOs
to utilize similar
model
• Requires
supportive
extension system
and support
services for
communities
Medium to long-
term approach to
restocking milking
cows
Highly feasible
Provide support
and advocacy for
importation of
milking cows from
India/Pakistan
• Implementation through
private companies, agrarian
department or directly by
humanitarian agencies.
• Will increase supply of high-
yielding varieties.
• Will also increase price of
milking cow due to import
costs, and will require
measures to improve farmer
purchasing power.
• No disease
outbreak
• Favourable
policy on import
Short-term
intervention to
improve dairy-
related income of
farmers.
Medium feasibility
39. 38 Emergency Market Mapping and Analysis Sri Lanka
Improve breeding
practices through
upgrading
breeding
technology,
including
adoption of
improved artificial
insemination
practices.
• Implementation through
support to NLDB farms,
LIBCO, or private sector
• Provides the technology
and systems to meet long-
term demand of milk by local
population and increasing
private sector actors.
• Potential to transform dairy
into a key industry benefitting
smallholders
• Technology
transfer from
other countries
is appropriate for
Sri Lanka
• May require
improved genetic
engineering
technology
• Long timeframe
to increase
livestock supply
Long-term
approach to
increasing supply
Medium feasibility
Advocate for relaxation of permit requirements to transport cattle
This intervention is recommended to relax the policy that limits the transport of cattle from
the adjacent districts. Advocacy efforts should be directed at the Ministry of Livestock Development and
at the local level authorities that approve the permits. This indirect intervention to relax the movement
limitations would promote market integration, allowing cows to move from areas of surplus production
in the country to areas where demand is high, as in Kilinochchi and Mullaitivu. From the suppliers’
perspective, relaxing the permit requirements will increase the potential number of farmers to whom
the suppliers could sell, providing greater motivation to increase breeding efforts. From the farmers’
perspective, being able to purchase cows from other districts and a variety of suppliers will reduce cost,
increase the possible volume of trade, and foster competition among producers.
Provision of conditional cash grants to assist dairy farmers to construct sheds and to
access fodder for confined management of cows
In order to maximize milk yield from crossbreed cow varieties, intensive cattle management
practices should be used instead of relying heavily on fodder. Many farmers do not have the ability to
invest in these assets to improve their milk production capacity.
Support in the form of a cash grant – conditional on the construction of sheds and fodder
production etc. – can have a doubly positive impact for cattle farmers. Not only would this assistance
provide dairy farmers with the necessary household infrastructure for crossbreeds, but it also provides
assets in the form of sheds, fodder supplies, water sources, etc. that can be leveraged for additional
loans. Once infrastructure is in place, farmers can access credit to purchase cows, re-start dairy-based
livelihoods, and rely on the sheds and pasture to protect their investments.
Scale up the government’s Dairy Village approach to milking cow management
Aid agencies should influence the government/line ministry to scale up the Dairy Village
programme to more communities. The Dairy Village model brings a comprehensive package to cattle
40. 39Emergency Market Mapping and Analysis Sri Lanka
farmers including cows as well as associated veterinary and extension services. Fostering this network
of services in concentrated areas allows service providers, particularly extension and veterinary agents,
to focus on a geographical area that is manageable given their resources, yet still benefits all the farmers
in that area. Aid agencies can support government efforts to scale up the Dairy Village programme or
identify complementary activities to support new groups of villages in a manner that increases the
numbers of people receiving livestock and services as well as expanding the network of service providers
for greater community access.
Provide support and advocacy for importation of milking cows from India/Pakistan
Given the weak supply of milking cows in the Sri Lanka market system and the large-scale
demand,aidagenciesshouldconsidereitherdirectlyimportingcowsfromIndiaorPakistan,oradvocating
for the government and private companies to take these measures. Such a measure could quickly address
the availability of crossbreeds, but likely at a high cost and with the possible risk of imported animals not
adapting well to the Sri Lanka environment. This indirect intervention would, however, rapidly restock
households desiring to produce milk and greatly improve income opportunities for resettled farmers.
Improve breeding practices through upgrading breeding technology, including
adoption of improved artificial insemination practices (sex semen)
A long-term recommendation to improve the supply of milking cows is to support the extension
service department to upgrade breeding technology. By supporting the extension system to provide
technical services in artificial insemination practices to cattle farmers the breeding of livestock can be
decentralized to farm level. In the long-term, after livestock populations recover and stabilize, farm-
level artificial insemination and production of crossbreeds will assure sufficient supply at the necessary
volume. New approaches, such as use of sex semen artificial insemination, which can guarantee a female
calf, will help to lower the overall livestock population (reducing environmental impact) while at the
same time maintaining production levels.
2.6 Response Options Framework
The response options framework is an EMMA tool to document the brainstorming process used
in identifying the best response recommendations based on the market system. The table below contains
the long list of ideas and concepts considered by the market analysis team when thinking through the
most appropriate responses for the milking cow market system.
41. 40 Emergency Market Mapping and Analysis Sri Lanka
Table 2.5- Response Options Framework
Response
Option
Advantages Disadvantages
Feasibility (High,
low, medium and
why?) and timing
(short, medium,
long-term)
Actors
Distribution
of crossbreed
cattle
Immediate
impact
For the short
term
Simple
distribution
programme
Limits
integration
with markets in
target area and
neighboring
districts
Low!
Expect of lack of
stocks availability
Short term
Government,
Private and
Nongovernmental
Organizations
Upgrading
cattle breeds
Unsusceptible
breeds to
diseases
Requires
intensive cattle
management
practices,
High!
Availability of AI
Services
Long term
intervention
Government,
Private and
Nongovernmental
Organizations
Conditional
cash grant
distribution
Pre
conditions
could be met,
i.e. shed for
cows
Practicing
intensive
cattle
management
Limited supply
of milking cow
in the market,
Small scale of
intervention
Medium!
Unavailability of
large number of
milking cow in
local market,
Nongovernmental
Organizations
Redistribution
of milking
cows
No capital
required
The cattle
became stray
animal and
settled in
military bases,
High!
Advocacy/Lobby
with government
to arrange
redistribution
of cattle to the
farmers
Short term
Government
departments
Strengthening
LIBCOs
[Livestock
Breeders
Cooperative
Societies)
Collective
action
Legal
recognition
Limits of
infrastructure
facilities
High!
Emerging trend for
institutionalization
Long term
Government and
Nongovernmental
Organizations
42. 41Emergency Market Mapping and Analysis Sri Lanka
Fodder cutting
distribution
Availability
of fodder at
household
level
Protection from
stray cattle
Medium!
Limited access to
protected land
Long term
Government,
Private and
Nongovernmental
Organizations
Linking
with credit
institution
Pre
conditions
could be met
i.e. shed for
cows
Practicing
intensive
cattle
management
Risk of over
burden
Medium!
Lack of credit
institution
Long term
Government,
Private and
Nongovernmental
Organizations
Training on
improved
cattle
management
practices
Skill
development
Lateral spread
of knowledge
Limited
extension
services
Medium!
Lack of human
recourses in
extension services
Long term
Government,
Private and
Nongovernmental
Organizations
Advocacy/
lobby with
government
for pasture
land
Increased
fodder
availability
Productive land
contaminated
with mines
Medium!
Non mechanized
process of
demining
Long term
Nongovernmental
Organizations
44. 43Emergency Market Mapping and Analysis Sri Lanka
Chapter 3
3.1 Credit Services Market System
Access to financial services is a key necessity for households seeking to re-start their livelihood
activities following resettlement. Previous assessments in Kilinochchi and Mullaitivu have shown high
numbers of households resorting to pawning jewellery and taking loans at very high interest rates from
moneylenders in order to meet household-level cash-flow needs. This assessment seeks to build on the
findings of previous assessments looking at household asset holdings and losses by mapping out the
various sources of credit available in Kilinochchi and Mullaitivu districts and identifying the constraints
households face in accessing these credit options. Specifically, this analysis seeks to answer three key
analytical questions:
a) Who are providers of credit in the targeted area?
b) What are the challenges faced by the target population to access credit? How best support
can be provided to open access to credit for the target population?
c) What opportunities exist to open access to credit for the target population?
3.2 Target population
The target population for this analysis is the conflict-affected and resettled population in
Kilinochchi and Mullaitivu districts, Northern Province, Sri Lanka, totaling 300,000 people. The entire
target population was displaced from their homes at the end of the conflict in 2009, seriously disrupting
livelihood activities, food and income sources, and resulting in near total loss of financial and physical
assets.
Although they have received varying degrees of support to restart income generation
activities following resettlement, the target population still relies heavily on credit to re-start
livelihoods and to meet their immediate needs. There are three main livelihood patterns in the target
districts, mainly agriculture, fishing and wage labour. Households have different credit needs and
opportunities according to the type of livelihood strategy pursued and credit schemes available.
However, the majority of the population in Kilinochchi and Mullaitivu rely on credit not only to re-
start and expand livelihood activities, but also to rebuild homes, to meet food and household needs
and to pay back other debts.
Table 3.1 Approximate number of the population groups representing different livelihood systems.
Farmers Fishers Livestock keepers Women headed
household
Kilinochchi 24,935 3,129 7,240 3,713
Mullaitivu 20,558 4,032 6,097 5,469
Source: Statistical Handbook of Kilinochchi and Mullaitivu, 2012
