Release number IFAD/26/07

Rome, 8 May 2007– A new US$39.9 million development programme in Sri Lanka will improve economic and social conditions for almost 40,000 people in the mid-country region of Kandy, Kegalle and Matale districts, and in the Moneragala district.

The Smallholder Plantations Entrepreneurship Development Programme will be financed partly by a loan of US$22.5 million from the International Fund for Agricultural Development (IFAD). The loan agreement was signed today by E. Rodney M. Perera, Ambassador of the Democratic Socialist Republic of Sri Lanka to Italy, and Matthew Wyatt, IFAD’s Assistant President, External Affairs.

“The people targeted by the programme are among the very poorest in Sri Lanka,” said Sana Jatta, IFAD’s programme manager for Sri Lanka. “The programme will not only give poor people the tools to pull themselves out of poverty, it will also empower them through strengthened grassroots institutions that will eventually transform into farmers’ companies. This will give farmers increased bargaining power with private tea and rubber companies and public institutions.”

The Government of Sri Lanka will contribute US$3.8 million to finance the programme, which addresses the needs of tea estate settlers and small farmers growing tea on non-viable estates in the mid-country, as well as poor food crop farmers in the upland areas of Moneragala district who want to cultivate rubber.

Additional financing of US$5.5 million will be provided by the United States Agency for International Development (USAID). The Wellassa Rubber Company, a consortium of private rubber companies operating in Sri Lanka, will contribute US$5.2 million.

The initiative has a number of important goals. It will improve access rights to land by poor people, using longer-term leases under outgrower schemes, whereby small farmers are directly linked to specialized factories for plantation crops that will process and market products so that both the farmer and the processor benefit. This will be combined with crop diversification and better access to markets and services for plantation crops, including tea, rubber and spices.

Rural financial services will also be provided as part of the programme. Farmers will form small self-help groups to accumulate and manage savings, arrange credit and other services and make collective decisions about investment and other matters at community level. These groups will federate on demand, which will increase their bargaining position when dealing with private companies, banks and public services. The groups will eventually function as private companies that build assets and investments.

The two decades of conflict between the Liberation Tigers of Tamil Eelam and the Government continues to have an adverse impact on rural communities throughout Sri Lanka, including areas covered by the new programme.

“By increasing equitable access to resources, services, technologies and markets, IFAD hopes the programme will contribute to conflict prevention and peace building in Sri Lanka,” Wyatt said.

With this project, IFAD has financed IFAD had financed 14 projects in Sri Lanka for a total commitment of US$191.7 million.

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IFAD is an international financial institution and a specialized United Nations agency dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, IFAD develops and finances programmes and projects that enable poor rural people to overcome poverty themselves. There are 195 ongoing IFAD-supported rural poverty eradication programmes and projects, worth a total of US$6.7 billion. IFAD has invested US$3.1 billion, with cofinancing provided by partners including governments, project participants, multilateral and bilateral donors. These initiatives will help about 86 million poor rural women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$9.6 billion in 738 programmes and projects that have reached more than 307 million poor rural women and men. Governments and other financing sources in recipient countries, including project participants, contributed US$9.1 billion, and multilateral, bilateral and other donors provided another US$7.1 billion in cofinancing.