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close this bookBoiling Point No. 19 - August 1989 (ITDG Boiling Point, 1989)
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View the documentPakistan Villages - Improved Stoves
View the documentMorogoro Fuelwood Stove Project
View the documentStove Subsidies in Sri Lanka
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View the documentGranular Biomass Fuel Stove
View the documentStove Profiles
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Stove Subsidies in Sri Lanka

by Emma Crewe, postgraduate student, University of Edinburgh, Sri Lanka 1988-89

Introduction

Stoves produced by rural potters in Sri Lanka are marketed by the Ceylon Electricity Board and subsidised by the Ministry of Power and Energy, the Integrated Rural Development Programme, NORAD and the Dutch Government. In Western Kenya, stove producers who have received marketing training and assistance from KENGO and ITDG promote and sell their own products. Notwithstanding the substantial differences between the stated objectives of these two programmes, their inputs and the social, institutional, political and economic conditions within which they are operating, the results illustrate some of the advantages and disadvantages of the two marketing systems.

Background

In 1984 the CEB (Ceylon Electricity Board) initiated stove dissemination as part of the Sri Lankan National Fuelwood Conservation Programme. The project manager has stated that the programme aims to benefit: (1) individual cookstove users; (2) communities, by generating income and employment opportunities; (3) the nation, by reducing fuelwood consumption and thereby decelerating deforestation - R M Amarasekera.

The CEB has trained over 20() potters to produce ceramicliners end 1000 stove builders to install the liners and construct the stoves. The stoves are purchased and distributed by the CEB, utilising existing government networks. They are sold to users at the subsidised price of Rs. 15 (£ 1 = Rs 54), while the total of the potter's/installer's labour and materials, transport and co- ordinating activities per stove amounts to Rs 68. So far over 177,000 stoves have been installed in 13 districts.

The KENGO/ITDG women's Maendeleo ceramic training project has been in operation since 1987. Its main development involved improving the long-term viability of ceramic activities among women's groups and in particular the production of fuel-efficient stoves. The project has provided production and marketing training and assistance to three women's groups. As a result, a potentially self-sustaining stove business has been established at the Keyo Women's Group, with nine members producing high quality liners for wood- burning Maendeleo and charcoal burning KCJ stoves.

The women 'have been promoting and selling stoves through other women's groups, retailers, agricultural shows, church organizations, local development agencies, government departments and schools. Although KENGO/ITDG initiated the links, the Keyo women are expanding the number of marketing outlets. The recorded sales figures are low - 852 stoves were sold between July 1988 and January 1989 - hut the records are probably incomplete.

The different results and impacts of the two programmes can be at least partly attributed to the different marketing strategies. They are compared below under the following headings stove dissemination, immediate benefits to producers, long-term viability.

Stove Dissemination

The stove dissemination figures for the subsidised Sri Lankan Programme are extremely impressive. The CEB recorded one of the highest rates of stove installation during one year (1985) of any organization in the world (Sepalage and Amarasekera 1987). The low price of stoves has created a high demand, although it has been reported that the poorest groups rarely buy the improved stoves in rural Sri Lanka. Access to national media has generated considerable publicity. The use of government administrative networks and transport facilitates the distribution of a large number of stoves to areas where demand is high. In contrast, while the cost price of stoves in Kenya is lower, the selling price is relatively higher. Creating demand and transporting stoves poses more of a problem for the Kenyan producers. Consequently, a significant stove dissemination level is being established very gradually.

Immediate Benefits to Producers

Both programmes have generated employment opportunities and income for stove producers and/or builders but the levels vary significantly. In Sri Lanka the income of 2()() potters (who were previously making traditional pots) and l000 installers has increased as a direct result of the programme. In a survey of 31 potters (conducted in 1988) it was found that the per capita monthly net income of pot-makers was Rs 51'), of stove-makers was Rs X74 and of combination producers was Rs 952 (Crewe). The income levels of stove- makers are relatively high partly because the government guarantees large orders for stoves. In Kenya at least 8297 Ksh of net income has been generated in seven months, although one producer received as much as 3()2X Ksh. The per capita average monthly net income of 132 Ksh may appear low, but most of the nine stove-makers have a demanding daily schedule of agricultural and household work to complete as well. Their income from stoves fluctuates according to demand.

How does the government subsidy affect income levels? The administration of the Sri Lankan programme has at least one major advantage and one important disadvantage for producers, as compared to the non-governmental Kenyan enterprise. The Sri Lankan government finances the transport and distribution of stoves, which reduces the potters' production costs. On the other hand, the payments for stove are usually delayed for between 3 weeks and 2 months front the time they are collected. Consequently, stove producers frequently consume their savings, take goods on credit or resort to arranging loans at exorbitant rates of interest.

Long-term Viability

A subsidised marketing strategy serves a useful purpose at the beginning of a stoves programme. Potters are offered a low-risk incentive to establish stove production and stoves are more affordable for the rural poor. However, the inevitable withdrawal of the subsidy can jeopardise the long-term viability of stove businesses.

Judging by results so far, the Kenyan stoves production and marketing is likely to be consolidated and increased at a gradual pace. It is more difficult to anticipate the future of stoves in Sri Lanka once the subsidy is relinquished. The potters who have lost contact with their previous marketing outlets will need to reinstate arrangements with retailers, wholesalers or markets/fairs. The overall cost price of the stove will decrease, but without the subsidy the marketing costs for the potters will be much higher. If the price of stoves suddenly rises, sales may decline. Also, in the absence of the government training officer, the quality of the liners could diminish which would adversely affect the promotion of stoves. On the other hand, if the subsidy is withdrawn very gradually, the price increased at a similar rate and assistance given in initiating marketing strategies, then the viability of stove businesses may be assured.

In conclusion, a subsidised marketing strategy can facilitate stove dissemination in the early stages of a programme. However, there is a potential danger that when project funds come to an end, producers will be unprepared and the long-term viability of their businesses could be threatened.