Sri Lanka signs US$125 million credit to modernize agriculture

Sri Lanka has signed a US$125 million credit with the World Bank that it hopes will help modernize the agriculture sector in the country. By modernizing the industry they hope to make it more environmentally sustainable and more alluring to modern businesses while increasing consumer demand.

The share of population employed in agriculture has remained at around 30 percent over the past decade, even as the sector’s share in national GDP has declined to 10 percent. This implied, and persistent, inequality makes it urgent to rethink the direction of agricultural development and explore new opportunities and strategies on how to sustainably increase rural incomes and promote a modern agriculture sector that meets the needs of the upper-middle-income country that Sri Lanka aspires to be.

Idah Pswarayi-Riddihough, World Bank Country Director for Sri Lanka and the Maldives and R.H.S. Samarathunga, Secretary to the Treasury, Ministry of Finance, signed the project on behalf of the World Bank and the Government of Sri Lanka. She said, “Sri Lanka’s history is deeply rooted in agriculture and its paddy cultivation tradition. Past practices can inform the future by preserving and building on the country’s farming traditions. There is now space to diversify and promote high-value, export-oriented food crops.” She added, “This shift is crucial for income growth, poverty reduction, reducing inequality and better nutritional outcomes. The new approach corresponds directly with the World Bank Group’s twin goals.”

The project will support value chain development to promote commercial and export-oriented agriculture, with a focus on higher value agriculture products, such as fruits and vegetables. It provides investments to improve productivity and diversify production patterns through modern agriculture, technology demonstrations in key areas and supports new institutional arrangements through farmer organizations and farmer-agribusiness partnerships. It will also support agricultural policy development to help the Government determine the sector’s future direction.

Beneficiaries include an estimated 30,000 smallholder farm households, who will benefit directly from a small matching grants program and agriculture technology demonstrations. Another 20,000 farm households will be supported through technical and business training and through professional farmer organizations that will help them become more effective and business-oriented enterprises.

Joe Qian
World Bank
Tel : +1 202 473 56331
jqian@worldbank.org