T H É M AT I Q U E
AGRIBUSINESS
Business acumen
and social commitment
PAY S
as keys
to success
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AGRIBUSINESS
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MA’s Foods, a processed foods manufacturer whose
specialities are spices and coconut derivatives, has made a name for itself over
the past three decades, not only in its home market Sri Lanka, but also abroad
– in countries ranging from Japan to the Netherlands. Company founder
Mario de Alwis owes that success to a combination of business acumen
and a concern for the land and the people working with him.
SRI L ANK A —
S
SRI L ANK A
ri Lanka has long been famous for such
spices as cinnamon, pepper, cloves and nutmeg. Spices, along with spice derivatives
and essential oils, still account for over 50% of
the country’s agricultural exports. And in that market, MA’s Foods is one of the most respected names.
Founded thirty years ago in Dambulla, a town
near the island country’s largest plantations,
MA’s Foods started out as a spice processing
business with just five employees. The comp a n y g r a d u a l l y e x p a n d i n g i t s p ro d u c t p o r t folio to include preserved pickles, chutneys,
curry paste, spice mixes and other items, with
t h e re s u l t t h a t i t b o a s t s f i v e b r a n d s t o d a y.
In 2006, coconut milk and powder were added to the
roster. What began as a micro-enterprise has developed into a thriving firm with a workforce of 300.
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To obtain the resources needed to ensure that
expansion, founder Mario de Alwis turned to local
and international investors and funding providers.
The latest is Aavishkaar, a venture capital firm in
India in which Proparco acquired a stake in 2015. It
has invested $2.1m in MA’s (see box, p. 27). Mario
de Alwis has successfully anticipated market expectations. In 2003, for example, his company was the
first in Sri Lanka to win Safe Quality Food (SQF)
certification for its food safety control system. Two
years later, MA’s was certified as an organic food
processor in the European Union and Japan. Subsequent certifications include FSSC 22 000 (food
safety), ISO 14 001 (environmental management),
OHSAS 18 001 (occupational health and safety), fair
trade, organic agriculture (Europe, Japan, United
States) and SEDEX (ethical trade).
Small farmers are the
centrepiece of the
MA’s Foods business
model. They are the
ones who guarantee
the quality of the
products it sells.
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2. At this 25,000-tree
coconut plantation, four
men manually extract
coconuts from their shells
– up to 3,000 per day (3).
At the Dambulla factory,
the process has been
mechanized (4).
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1. The Dambulla factory is the
“historic” location for MA’s
Foods. It opened in 1986 with
5 employees; today it has
143. Over one third of them
stay in on-site accommodations
during the week.
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TH
A
GÉRM
I BAUTSI IQNUEES S
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Sri Lanka is a
leading producer
of cinnamon
sticks, which are
prepared by hand.
The outer bark (8)
is first shaved off
of cinnamon tree
branches so that the
inner bark (9) can be
peeled away in thin
strips. The strips are
then arranged in
layers (10). As they
dry, they retract and
turn brown (7).
SRI L ANK A
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5. The MA’s Foods factory
in Minuwangoda, a short
distance from the Colombo
international airport,
processes an average of
7,000 tins of coconut milk
and more than a tonne of
coconut powder a day.
MARRYING BUSINESS WITH
COMMUNIT Y SPIRIT
The other key ingredient in the company’s success
is its choice of an inclusive business model, as
Mario de Alwis explains. “Right from the start, we
conceived of MA’s as a company connected to its
6. Lionel, a blind employee,
environment – the people of Dambulla, the plan­
has been working at the
MA’s Foods factory in
ters in the vicinity...” In his view, what makes MA’s
Dambulla since it opened.
different from other agribusiness companies in Sri
Packaging is one of his main
Lanka are “local roots, taking the people we work
tasks.
with into account. Without that, you can gain a foot­
hold in the market, but you can’t last. Some people
in this industry forget that they owe their success
first and foremost to the men and women who work
for them. You can have the best technology and the
best machines, but what ultimately counts are the
planters who put their hands in the soil, the factory
employees who select and prepare your products.
If you miss that point, you miss what the business
is all about.”
A t M A’s F o o d s , 5 0 % o f t h e
employees are women. Two of
them are managers and four are
Two out of every three
assistant managers (compared
women in Sri Lanka are
with seven men). For Mario, those
not part of the labour force. numbers are a legitimate source of
pride in a country where two out
Here, they make up 50%
of every three women are not part
of the personnel.
of the labour force.
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10
At its factories, MA’s Foods provides employees
with free food and accommodations. In Dambulla,
roughly a hundred of them are housed on the premises during the workweek. That policy costs money,
of course, but it also helps put the factory’s operations on a more secure footing. For the employees
as well, the benefits are considerable. Rents for a
one-room flat in the area range from €40 to €60
a month, and monthly food bills are just as high –
whereas most workers only earn between €100 and
€300 a month.
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AGRIBUSINESS
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A FUND FOR MICRO - AND SMALL
ENTERPRISES IN ASIA
How fair trade works
Aavishkaar, or balance
between social impact
and return
on investment
Smallholders and workers located near the start of
the value chain don’t always get a fair share of the
wealth they help create. The Fairtrade system has
set out to achieve greater equity in international
trade. The minimum price determined on the basis
of Fairtrade Standards covers the cost of production
and provides farmers with a safety net at times when
world market prices fall below a sustainable level.
Farmers also receive a Fairtrade Premium that is put
into a community fund to finance projects devoted to
education, healthcare, increasing yields and the quality
of farms.
Founded in 2001, Aavishkaar (which means “invention”
in Hindi) is India’s leading impact investment firm. It
has over $150m under management through its five
funds dedicated to providing capital (from $0.5m to
$5m) to micro- and small enterprises operating in
agribusiness, education, energy, healthcare, water and
sanitation or working to promote financial inclusion.
Its vision and mission are to catalyse economic and
social development while generating commercial
returns. Aavishkaar investments have helped, for
example, to create nearly 35,000 jobs and make
affordable goods and services available to over 28
million people in rural and semi-urban areas. Those
achievements have earned the company a number
of awards, including the World Business Award,
which in 2006 recognised Aavishkaar’s flagship fund
(AIMVCF) as one of the top ten business models in
the world working towards achieving the Millennium
Development Goals (MDGs).
SRI L ANK A
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11. Mrs. Shriyani is the
secretary of the SafeNet
sustainable agriculture
planters’ association in the
south of the island. She
single-handedly runs her
farm, where cinnamon trees
and pepper plants grow at
the foot of coconut trees.
That diversification ensures
a steady revenue stream all
year long.
THE VALUE OF WORKING THE LAND
But that’s not all there is to the community involvement of MA’s Foods. The company gives precedence to sourcing from small farmers, and assists
them with the adoption of socially responsible
business practices. MA’s took the initiative in organising a network of planters committed to sustainable
agriculture called SafeNet (Sustainable Agri-Farmers
Enterprise Network). The goal is to help them meet
international certification standards for free trade
and organic agriculture. The company’s staff provides advisory service, technical assistance and
training. Moreover, MA’s Foods covers the cost
of certification. On the coconut plantations in the
south of the island, the organic label has enabled
SafeNet planters to sell a kilo of output for 300
to 400 rupees above the price for conventional
coconut. Even so, Rajeewa Kularathna, the head of
compliance at Dambulla, admits it can be an uphill
struggle. “It’s sometimes hard to get
farmers to change their practices
and see the benefits of certification,
Over
particularly when you realise that
it may take up to five years to get
the Fairtrade label and two or three
jobs for
years to get organic certification.”
planters will
In supporting the organic agriculture
be created or
trend in Sri Lanka and fair trade, the
maintained
founder of MA’s Foods makes no
in the value chain
secret of his desire to help restore
of agricultural
farming to its rightful status. “As in
projects financed by
other countries, farming has become
Proparco in 2015.
unattractive here. Our young people
350,000
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are leaving the countryside. To them, farming is
the last option, what you do when you’ve failed
elsewhere. I’m worried about the future. Fifty years
from now, we’ll have to feed three million more
people. How are we going to manage that if no one
wants to work the land? Sri Lanka is lucky enough
to have the natural and human potential to go a
long way towards meeting that challenge, but so
far, there have been very few attempts to aggregate
all the interested parties and develop a sustainable,
nationwide agribusiness sector that serves the inte­
rests of our farmers, our economy and our country.”
The response, claims Mario, is to try to give prior
accomplishments a sustainable character. “After
growing MA’s, we need to think about the next step.
I won’t be around forever, so it’s important to me
to attend to succession,” he says. And he’s already
prepared the ground. His eldest son, Maliek, is the
current CEO of MA’s Foods, and his youngest son,
Sheran, is in charge of compliance.
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12. On the 1st of May,
MA’s Foods invited all
its employees and their
families to celebrate
the company’s thirtieth
anniversary at its Dambulla
location. The festivities
included foot races,
a palm weaving contest,
a bed bolster fight and
a relay race for the top soda
drinkers (in the foreground,
Mario de Alwis).
13. Near the coconut
plantations in southern
Sri Lanka, Mario joined
forces with Jumbo
Supermarkten, a Dutch
client, to help renovate an
elementary school where
70 children of local planters
are enrolled.
Encouraged by its success in India, Aavishkaar has
moved on to replicate its “recipe” in South and
Southeast Asia. Its new $45m fund, Aavishkaar Frontier
Fund (AFF), was established to assist high-growth
micro-and small enterprises in Pakistan, Bangladesh,
Indonesia and Sri Lanka. In support of that aim,
Proparco acquired a €6m interest in AFF in 2015.
AFF made its first investment in Sri Lanka – providing
$2.1m (300 million rupees) to help MA’s Foods roll
out new products (vegetable oils and recipe mixes),
increase its production capacity, above all for export,
and open an additional coconut processing plant in the
north of the country, a region torn by civil war between
1983 and 2009.
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