Press release number: IFAD 41/04

Rome, 15 December 2004 - About 80 000 rural households in the districts of Anuradhapura, Badulla, Kurunegala and Moneragala in Sri Lanka will benefit from a new USD 30.4 million programme. The programme is aimed at increasing agricultural productivity and production, as well as adding value to produce in the dry zones of the country.

Of the total amount, the International Fund for Agricultural Development (IFAD) will provide US$22 million. The loan will be used for assisting vulnerable families in the four districts to improve their incomes and living conditions through increased access to water and land, improved agricultural technologies and better access to markets.

The loan agreement was signed today by the President of IFAD, Lennart Båge, and the Ambassador of Sri Lanka in Rome , E. Rodney M. Perera, at IFAD's headquarters in Rome .

In Sri Lanka , where poverty is largely a rural problem, rainfall in the dry zones is the sole agriculture input for many small farmers. Rural poor families, often headed by women, lack access to resources like water and land, or services like credit, appropriate technology and quality seeds.

The communities participating in the programme will identify their needs and set priorities through participatory assessments. The solutions that will emerge out of discussions will be implemented, as pilot initiatives, in Farmers Field Schools before its application by individual farmers.

Promoting marketing and enterprise development will be a key component of the programme. Farmers will learn about forward sales contracts and inventory credit schemes to improve their business. Forward sales contracts are legal arrangements whereby farmers agree in advance, generally at planting time, to sell a certain quantity of their future crop yields exclusively to a certain buyer at an agreed price. I nventory credits scheme are mechanisms whereby stored crops are used as collateral for commercial loans. At harvest time, farmers store part of their crop instead of selling it at low prices and use it as collateral for bank loans to satisfy their cash needs.

The programme will also support a number of other activities, including training for better farming in rain-fed areas and rehabilitation of irrigations systems to reinforce market-driven agriculture.

With this loan, IFAD will have financed 11 programmes and projects in Sri Lanka , totalling approximately US$134.6 million. Sri Lanka was the first country to receive an IFAD loan.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in the most disadvantaged regions of the world. There are more than 200 ongoing IFAD-supported rural poverty eradication programmes and projects, worth a total of US$6.5 billion. IFAD has invested about US$ 3 billion in these programmes. Cofinancing has been provided by partners including governments, beneficiaries, and multilateral and bilateral donors. At full development, these programmes will help more than 100 million rural poor men and women to achieve better lives for themselves and their families.