Advancing Women in Agriculture
USAID CATALYZE Spurs Growth for MSMEs in Sri Lanka’s Mushroom Industry, Paving the Path for Sustainable Success
With increasing market demand, a relatively small cultivation footprint, and high nutritional value, Sri Lanka’s mushroom sector has the potential to elevate household incomes, increase food security, and create economic opportunities for women and other marginalized groups — if the industry is able to scale. The USAID CATALYZE Private Sector Development (PSD) activity is helping to unlock the industry’s potential and open the door to global markets by building capacity to meet end-market standards, facilitating partnerships between micro, small, and medium enterprises (MSMEs) and end-buyers, and supporting increased access to financing.
Star Mushrooms, a women-led MSME that sources from a network of over 100 mostly-female, rural suppliers, sought to expand and take advantage of market demand for high-quality fresh and value-added mushroom products. However, like many agriculture sector MSMEs in Sri Lanka, they struggled to obtain consistent, high-quality supply and meet the requirements of these higher-value markets due to lack of technical expertise and limited access to affordable financing for both Star Mushrooms and its suppliers. As part of its efforts to support agricultural MSMEs and increase women’s economic empowerment, CATALYZE PSD is supporting Star Mushrooms to overcome these challenges.
Building capacity to meet market requirements
Prior to the CATALYZE PSD intervention, Star Mushrooms supplied to several hotels and mid-range local supermarket chains but was unable to produce at the level of quality required by high-end and export markets.
With CATALYZE PSD support, Star Mushrooms staff were trained in best practices for packaging and labelling, and the company has since refined their packaging for value-added products to target export markets. Following the packaging and labelling support, CATALYZE PSD facilitated tailored training on Good Agriculture Practices (GAP) for 128 suppliers to Star Mushrooms. These suppliers are now aware of and able to comply with GAP requirements, resulting in a higher-quality product and increased income, as Star Mushrooms pays a premium for GAP-compliant mushrooms meeting export requirements.
The improved quality and packaging of their products has allowed Star Mushrooms to expand beyond Sri Lanka to reach export markets.
“Thanks to the market orientation in labelling and packaging, value addition, good agriculture practices guidance, and internal capacity building we received through the (CATALYZE) PSD intervention, we gained confidence to start a small-scale export venture,” said Nimesha Rasangi Perera, Star Mushrooms co-founder.
Facilitating end-buyer connections
During a meeting with one of Sri Lanka’s high-end grocery stores, SPAR, CATALYZE PSD learned that the retailer was looking to identify new, GAP-compliant mushroom suppliers. CATALYZE PSD introduced Star Mushrooms to the SPAR team and provided follow-up support to Star Mushrooms on sample sharing and onboarding to the supermarket’s supply chain, resulting in a pilot program with 35 of Star Mushrooms’ suppliers.
According to Star Mushrooms’ co-founder R.L.D.A. Indira Kumari, the connection with SPAR has been “pivotal” to the company’s expansion. In just seven months, Star Mushrooms has seen a 20% increase in their overall revenue because of sales through SPAR.
“This strategic partnership has broadened our market reach and positioned Star Mushrooms for sustainable growth,” said Kumari.
Increasing access to financing and resources
Many of Star Mushrooms’ current suppliers had bandwidth to increase their production, however the initial investment in equipment and supplies associated with expansion, which averaged $200 per supplier, prevented them from doing so. CATALYZE PSD leveraged its relationships with commercial financial institutions to facilitate access to new financing for Star Mushrooms’ suppliers.
CATALYZE PSD invited two leading banks, Commercial Bank and Hatton National Bank, to participate in the GAP training and capacity building workshops and speak with the suppliers about various lending products. The CATALYZE PSD team then conducted a rapid needs assessment of training attendees and shared the findings with the two banks. As a result, Commercial Bank approved 10 farmers to receive micro-loans under a concessionary scheme with a fixed 6.5% interest rate, significantly lower than the market average, and Hatton National Bank facilitated loans to 10 more suppliers at a concessionary rate and selected 25 more suppliers for further screening for financial facilities.
With adequate and appropriate financing, the suppliers and farmers can expand and grow their production, meeting the increased demand from Star Mushrooms.
Impact on women’s economic empowerment
Through its interventions, CATALYZE PSD has not only supported the growth of Star Mushrooms but also contributed to the economic empowerment of women in rural areas. The majority of suppliers for Star Mushrooms are women, and by providing them with training on GAP and facilitating access to financing and resources, CATALYZE PSD has enabled these women to increase their incomes by supplying higher-quality mushrooms that meet export standards and become key contributors to Sri Lanka’s mushroom industry.
By leveraging partnerships between MSMEs, financial institutions, input suppliers, buyers like supermarkets or exporters — as well as targeted support for underfinanced groups — CATALZYE PSD is helping to unlock the full economic potential of sectors like agriculture in Sri Lanka.
CATALYZE PSD’s assistance to MSMEs in agriculture extends well beyond Star Mushrooms, supporting 3,027 entities in securing catalytical capital, technical assistance, and increased market access, further improving their financing opportunities. To date, CATALYZE PSD has generated $23,916,843 in private capital specifically for MSMEs, fueling local entrepreneurship and economic growth.
Through its dynamic initiatives, USAID CATALYZE has supported 86,890 entities — including firms, associations, cooperatives, schools, and individuals — across 39 countries in Africa, Asia, Europe, Latin America, and the Caribbean with vital technical and financial assistance. Notably, 59% of these entities are owned by women or co-owned by women, underscoring CATALYZE’s strong commitment to gender equality.
By March 31, 2024, USAID CATALYZE had successfully mobilized an impressive $498.5 million in private capital to drive impactful development projects.
