Employees loads ice blocks

Ice cracks a lagging economy

An ice manufacturer in Sri Lanka empowers local fishing industry

What does it take to transport and keep fish fresh in tropical climates like Sri Lanka? Ice. Without it, fishermen and traders struggled to earn a reliable income from the fish they caught. Although Jeyantha Industrial Park’s owner Thinuravukkasu Senthan had a lifelong dream of starting an ice factory in his hometown, finding a viable business model was a challenge. 

“I was struck by how little entrepreneurship there was here as a result of the war,” he recalls.

Even though Jaffna and the rest of Sri Lanka’s northern peninsula is surrounded by water, the government did not permit fishing during the 26-year war that ended in 2009. Seeing the changing of tides brought about by peace, Thinuravukkasu seized the opportunity to support the fishing industry. 

“In Jaffna, the only resource we really have is seafood. There are no garment or plastics industries, and our crops aren’t of a high enough quality to compete. Our competitive advantage and raw materials are tied to the sea, with excellent crabs, prawns, lobsters and other seafood in the harbor. But our fishermen didn’t have the infrastructure they needed to maintain a quality cold chain for their shellfish,” says Thinuravukkasu.  

Tackling economic challenges like this and creating lasting jobs along the way has been the goal of the U.S. Agency for International Development (USAID)-funded VEGA/BIZ+ program implemented by Land O’Lakes International Development. 

Helping to build an ice plant that could transform economic opportunity through the seafood supply chain was one of the first catalytic investment grants the program made when it started in 2012. Done in partnership with a group called Volunteers for Economic Growth Alliance, VEGA/BIZ+ is fueling business growth and job creation in economically lagging areas of Sri Lanka through grants that co-invest with target businesses in their own growth.  These regions were struggling not only because of the decades-long internal armed conflict, but due to the devastation from the 2004 Indian Ocean tsunami. 

The road to economic growth proves icy

Early on Thinuravukkasu had already secured commercial bank loans to manufacture six tons of ice per day, but he still struggled to meet local demand. Within three months of submitting his business plan to VEGA/BIZ+, Thinuravukkasu learned he was successful, and began rushing to secure the cost share the program required to facilitate his business’ growth. Grantees must come up with their own capital to match the grant funds the program provides. 

Thinuravukkasu purchased land from his uncle, and was finally able to build his dream ice factory atop the ruins of a former prawn export company, which was destroyed by mortars during the war.  Jeyantha Industrial Park contributed about $200,000 for the land and factory construction, while the VEGA/BIZ+ grant of $266,000 covered the purchase, transportation and installation of a new 20-ton per day ice factory’s machinery.

Ice facilitates the local fishing industry’s economic development

Ice not only enables fish to remain fresher at the market, but also allows fishermen to work for longer durations without having to return to shore. Before Jeyantha expanded ice production, middlemen traders were the only ones who provided fishermen with their ice, and they also controlled the prices of what had been caught. This system is changing now that fishermen can access their own ice. 

“We used to experience a 10-20 percent loss of our catch during transport. If we could earn $3 (400 rupees) per kilo on a good day, we’d only get $1.50 per kilo if the catch was damaged or wasn’t sufficiently cooled,” says Mariahonesteen Nirojan, a large fish seller in Jaffna who sells in bulk on behalf of 40 local fishermen to about 20 regular customers. He adds, “Now that we have ice, we can ensure that everything sells for the same amount, and set a higher overall price for what we catch.”

Jeyantha Industrial Park is now operating at full capacity. The facility sells crushed and blocked ice to some 60 regular customers a day. Since the ice factory began operation, nearly 20 new boats have started fishing in the harbor. Jeyantha hired 23 new staff members, most of whom were previously unemployed youth. These employees are earning a salary equivalent of $152-$167 a month, which is competitive in a region where the median monthly income is about $100 

Now that his business is solid and steady, Thinuravukkasu plans to expand into related areas such as fish trading and processing in the coming year. The fishing industry is growing exponentially, and his customers expect him to supply ice and meet their increased demand when the need arises.

“Because of the USAID grant, we grew enough and had sufficient guidance to survive on our own and grow continuously. This is a starting point,” says Thinuravukkasu about the financial outlook of Jeyantha, “Our profit is large enough now that banks trust us and are willing to loan us almost as much as the USAID grant.”  

Thinuravukkasu is extraordinarily proud that he’s not only helping to change mindsets about rebuilding the fishing industry in Jaffna, but providing proof about what kind of assistance conflict-affected communities need the most. 

“The BIZ+ program means people are not just getting a handout, but a real salary. We don’t want charity anymore. If you give us free eyeglasses and reading materials, they will vanish someday. But if you create employment, we can buy those things for our kids ourselves. An entrepreneur will not allow his company to fail. We have to grow” says Thinuravukkasu.