Bringing Business Back Home: Biomass Energy of Sri Lanka

by Lucky Dissanayake, Founder of the Biomass Group
May 16, 2018 9:10 AM ET
Blog

In 2006, my London-based publishing house, Dakini Books, published the critically acclaimed ‘Global Warning – The Last Chance for Change’, Paul Brown's fact-based book on climate change and its consequences for the planet and humanity. This book gave me phenomenal insight into what to expect in the next 20 years, and more importantly what we need to do if humanity is to even have a chance. 

I am an entrepreneur. I published this book at a time in my life when I felt I had taken my small publishing house as far as I could. I wanted to do something completely different. I thought, “Why not renewable energy?"

Despite the fact that I had spent my entire career in the media industry, knew nothing about renewable energy, and didn’t expect anyone to consider investing in me, my thoughts persisted. I felt I would regret it if I didn’t at least try. My parents had also just retired and moved to Sri Lanka, my huge extended family of relatives there seemed to have a wedding almost every month, and all stars seemed to be aligned and pointing to the land of my birth: Sri Lanka!

Between 2009 and 2011, I spent 2 years, at my own expense, attending conferences on renewable energy in order to learn about the industry. Solar and PV were too expensive (in 2009) and wind was not an option for Sri Lanka, but waste, biogas and biomass seemed to have potential. As part of an MBA research project, I then hired London Business School to look at renewable energy options in Sri Lanka. The report confirmed my suspicion: Sri Lanka – lush with fuelwood – was very well-suited for biomass energy.

The agro-energy sector in Sri Lanka, although poorly organized, had immense potential. Biomass is already a widely-used energy source for household cooking in rural Sri Lanka, but it is unsustainable in its present form; most households rely on forest-based fuelwood which leads to deforestation. My vision was to develop a totally sustainable and responsible supply chain for biomass and develop an out-grower system in which unorganized smallholder farmers (especially home gardens) are linked with existing supply chains. Out-grower schemes, although prevalent in the tea & coconut sectors, were not yet common in the biomass sector.

My biggest challenge these last 5 years has been to raise funding; Sri Lanka is a small, developing island with a relatively low population of 21 million people, and investors do not see it as a worthwhile investment destination. In 2010, in the face of these challenges, I reached out to those nearest to me and received support from ten friends and family members. Thus began Biomass Group. With funding in place, I set about addressing the most crucial issue in biomass – achieving security of supply at a consistent price. We started small, raised more funds and eventually set up a holding company in Singapore in 2012. Today Biomass Group has 26 individual investors and even institutional funding from multi-donor funded companies like InfraCo Asia.

The Biomass Group is a vertically integrated renewable energy company that develops biomass resources to make chips, pellets and power. The primary biomass fuel used is Gliricidia sepium, a rapidly growing, short-rotation tree that is found growing wild throughout Sri Lanka. It is a nitrogen-fixing tree and is used as a shade tree, soil improver, and as “live fencing” by smallholders. We started by introducing Gliricidia sepium into home gardens as a live fence and into other crops, like coconut, as an intercrop. We currently work with 60,000 smallholder farmers. Our aim is to work with 500,000 farmers by 2022.

My two years of research revealed that many biomass businesses failed simply because they did not focus on developing a sustainable and reliable supply chain. Taking these lessons into consideration, our entire focus has been on ensuring a strong supply chain.  Through Biomass Supplies, a wholly-owned subsidiary incorporated in 2013, we source supply from smallholder farmers and plantation owners and in the process generate millions of tons of commercial biomass.

Our out-grower model has the added value of delivering socio-economic impact for all the supply partners with whom we work. There are about 2 million smallholder farmers in Sri Lanka. Farmers are often poor, living at the base of the economic pyramid, and exploited by myriad middlemen, yet they are the people who actually do the work. Everywhere in the developing world, the perception is that rural development is the exclusive responsibility of the government. I have a different view. I believe we all as entrepreneurs have a shared responsibility in rural development. And it makes good business sense! Biomass puts this belief into action by connecting low-income rural communities to global value chains and achieving a healthy profit in the process.  

Sustainability has lot to do with inclusivity. We maintain positive, long-term relationships with all our farmers and they are the center of our operations. In the beginning, farmers were wary of our intentions and gaining their trust was not easy. Over these last 4 years, however, we have organized more than 700 training programs for the benefit of farmers and involved as many farmers as possible. We share knowledge with communities on how Gliricidia can increase soil productivity while reducing erosion and controlling pollution associated with the use of chemical fertilizers. Farmers no longer need to spend money on chemicals and the water table is no longer poisoned from chemical fertilizer and pesticide run-off. In addition to sharing knowledge, our training programs often serve as farmer forums where farmers can discuss their problems and find solutions. From time to time, when we have to take important business decisions, we use these forums to gather input from our farmers.

When the civil war ended in Sri Lanka in 2009, the country had a high unemployment rate among young men and women. Programs strived to include them in the workforce, but very few reached women. Whereas paddy field farming, construction and other main industries are usually the domain of men in Sri Lanka, women are often responsible for the home gardens. Through our work at the home garden level, we were able to directly engage women in war affected areas with few other economic opportunities. Now, more than 80% of our registered smallholder farmers are women. 

By encouraging women to participate in the business and by placing value on what is traditionally seen as ‘women’s work’, we challenge cultural stereotypes. Any additional income that women earn is a supplement to household income and is usually spent on family well-being and on children’s education in particular. Our aim is to double the per capita income of our farmers by 2020.

We are committed to connect Food, Fuel and Livelihood Development in rural Sri Lanka. We adhere to responsible environmental, social and governance standards while delivering economic benefits. We believe in an inclusive business model where no distinction is made between gender, religion or social status. We have created an innovative approach to sustainable biomass production, simultaneously mitigating climate change, enhancing food production, promoting soil conservation, and advancing economic, social and environmental well-being at the smallholder level.  We work hard every day to drive our business and values forward and we are creating a world-class biomass business from Sri Lanka!

 

Biomass Supplies, a Sri Lankan subsidiary of Biomass Group – the visionary renewable energy company – is developing Sri Lanka’s abundant sustainable energy resources through innovative partnerships with the country’s smallholder farmers. Biomass has joined the Business Call to Action (BCtA) with a commitment to boost the incomes of 40,000 farmers – at least 70 percent of them women – by 2018 and improve their yields through training in sustainable agriculture practices. Read more about their BCtA commitment here