Sri Lanka: Government Introduces Measures To Bail Out Tea Smallholders


The Sri Lanka government at its last Cabinet meeting decided to award a series of concessions to tea smallholders and tea factories to bail them out.

Cabinet Minister of Plantations & Export Agriculture, Ramesh Pathirana said that most of the factories were facing closer due to huge debts taken from Banks. Some factories were also to be taken over by the banks due to defaulting of payment.

“Some tea smallholders have even gone to the extent of pawning their households due to server hardships faced during the previous three years,” Pathirana said.

The Cabinet has now decided to take Rs. 500 million from the Tea CESS promotion fund and create a separate fund and launch a special bailout loan scheme through banks. Loans at very low rate would be provided to Tea factory owners so that they will get a financial injection to wake up. In addition the government will talk with banks to differ Tea Small Holders loans for another six to 12 months.

“We will also request the banks not to take over the lands or properties that were mortgaged,” Pathirana said.

Pathirana also said that they will also talk to banks to explore the posterity of cutting down interest and even capital. “We will compensate the banks in other ways.”

Meanwhile Chairman, Sri Lanka Federation of Tea Smallholders Development Society K. L. Gunaratna said that there around 500,000 tea smallholders which account to 75% of industry output.

“Firstly we were burdened with the glyphoside issue and then with high fertilizer prices in the last three years. A bag of fertilizer sold at Rs. 1,300 was arbitrarily increased to Rs 2,900 which was a major blow to us.”

In addition there were also issues with dry weather, he said.

An official form the Tea Factory Owners association said that over 110 factories were on the brink of closure and this bailout package was highly welcomed. He thanked the government for their quick action.

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