J. Charitha Ratwatte Jr., MBA ’09: Reviving Heirloom Rice and Farmers’ Prospects in Sri Lanka

A recipient of an inaugural Social Innovation Fellowship creates Rural Returns to ease poverty through sales of high-end products in global markets.

September 19, 2009

Change Wall at Stanford GSB

In Sri Lanka, a significant proportion of the population consists of rice paddy farmers who operate mostly at subsistence level. Battered by economic realities, poor policies, price volatility, and weather variability, and conditioned into welfare dependency, families of small-scale farmers often break up as they seek supplemental work in the cities, making them vulnerable to isolation, alcoholism, and depression. When populist price controls and imports of cheaper rice leave local farmers unable to pay their debts, sometimes weeks ahead of the harvest, many resort to suicide.

Rural Returns is an organization that is helping these farmers find new hope through the cultivation of heirloom rice for sale in global markets. The nonprofit is accomplishing its goal through a four-pronged approach.

First, it is connecting farmers with small groups that have preserved high-value traditional grains and can provide the knowledge, technology, and support to return to sustainable practices. Second, it is establishing a nonexploitative, reliable supply chain connected to local and global distributors. Third, it is creating an umbrella brand for exotic rural products. Fourth, it is enabling community-driven development with the increased income that results from the higher-value goods produced.

The Problem

J. Charitha “Chari” Ratwatte Jr. worked for several years as a software engineer in Malabe, Sri Lanka, where his employer, Millennium Information Technologies, was surrounded by rice paddy fields. On days when the rains inundated the fields and destroyed the crops, Ratwatte and his colleagues wondered uneasily what the already vulnerable farmers would do to recoup their losses.

What Ratwatte witnessed reflected how precarious life can be in Sri Lanka. More than a fifth of the country’s population comprises rice farmers, the majority of them operating on 2 acres or less of land. Government policies that sought to achieve local food security have in fact led to inefficient production and institutionalized poverty. The use of subsidies and restrictive regulations on land use and ownership have left farmers with no incentive to break away from subsistence agriculture and take a more market-oriented approach. What’s worse, price volatility in the rice market often leads to their complete economic ruin.

As a result, in a country with a high incidence of suicide, the rates reported in paddy-cultivating districts are higher still.

The Novel Idea

In the midst of this bleak scenario, Ratwatte sees signs of hope. With the country’s nearly three decades of civil conflict now concluded, its highest-potential production areas are once again becoming available to produce high-yielding commodity rice and assure local food security. This will free up small paddy farmers to experiment with niche rices for export to gourmet markets. It is here that Ratwatte sees the potential for rural communities to lift themselves out of the poverty that has governed their lives for decades.

Many heirloom rices are particularly well-suited to grow in areas with the kind of rain variability, water salinity, and reduced solar exposure that characterize many rural rice paddy fields. These varieties, many of which are reddish or pinkish in color, have exceptional flavor and aromatic qualities — as well as colorful stories and histories — and they offer special nutritional and health benefits. These low-yield, more expensive rices are ideal for international markets, particularly in the United States and Europe, where consumers are willing to pay a premium for higher-value foods. The total potential market in the U.S. alone is more than a billion dollars.

Ratwatte and D.C. Jayasundera, MS ’09 — his childhood friend and now also his Stanford colleague — created Rural Returns with a vision: What if Sri Lankan farmers cultivated high-value traditional grains? What if they could distribute them through a nonexploitative, reliable supply chain?

We want to turn small farmers into businesspeople so that they may become empowered and independent.
Chari Ratwatte

The organization is helping farmers connect with groups that have the seeds, technology, and know-how to grow traditional grains sustainably. It is linking them with local and global distributors, and stimulating demand for fine rural products on international markets by creating an umbrella brand. The increased income resulting from such higher-value goods will lead the way to community-driven development.

Cultivating commercial rice is a practice that was largely imposed on farmers to serve the nation’s food needs during a period when warfare engulfed the most viable lands. Moving toward the production of more gourmet varieties involves coordination with local organizations that have already been working with the farmers to preserve indigenous varietals and traditions.

Based in Colombo, Sri Lanka, Ratwatte is also working specifically with companies that have expertise in the country’s impressive spice and Ceylon tea trade to process and package products for foreign markets. With Jayasundera operating in California, the two are establishing networks with American and European buyers, distributors, and retailers as well.

Finally, Rural Returns aims to return the lion’s share of the profits back to the rice farmers themselves.

“We want to turn small farmers into businesspeople so that they may become empowered and independent, and no longer be caught in a cycle of dependence on Sri Lanka’s much-burdened social welfare system,” says Ratwatte.

His efforts are also intended to cut water usage by as much as 50 percent and thereby reduce emissions of methane — a potent greenhouse gas that’s a significant byproduct of flooding fields for weed control, which fosters methane-producing microbes.

The Innovator

Ratwatte is from Kandy, a central province in the hill country of Sri Lanka. His concern for the less fortunate was fostered early on by his father, who worked for many years as a civil servant and in the citizen sector on social and economic development, and who took his family on numerous trips to the poorest, most underdeveloped parts of the country.

His interest in the trials of rice paddy farmers in particular may well be “something in the blood,” as Ratwatte puts it. After founding Rural Returns, he discovered that in 1928, his paternal great-grandfather participated in Sri Lanka’s Third Agricultural Conference, emphasizing that the paddy land owner “must get a return on his investment.” A maternal uncle still cultivates rice on the family lands and presses government researchers to pay greater attention to crop diversity.

After graduating from Manchester Metropolitan University in the United Kingdom with a degree in information systems, Ratwatte served for five years as a software developer, team leader for global software support, and then business analyst for Sri Lanka-based Millennium Information Technologies. He then enrolled at Stanford GSB, with many questions as to what career direction he wanted to pursue. It was at Stanford that he joined forces with Jayasundera, who was attending the civil and environmental engineering program, to create Rural Returns.

“I want to achieve real, sustainable poverty alleviation that helps the world’s rural poor find for themselves something they very rarely have: choices,” Ratwatte says.

J. Charitha Ratwatte Jr. received an MBA from Stanford GSB in 2009. That year, he was awarded one of the first two Stanford GSB Social Innovation Fellowships, which provide up to $180,000 in funding, along with advising and support, to graduating students who want to start a nonprofit venture that addresses a pressing social or environmental need during the year after graduation.

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