ComBank launches dedicated loan scheme to revitalise Sri Lanka’s tea industry

Commercial Bank of Ceylon has unveiled a specialized loan program aimed at rejuvenating Sri Lanka's tea industry, showcasing its commitment to the Small and Medium Enterprise (SME) sector and rural micro-economy. This innovative loan scheme empowers tea smallholders to invest in rejuvenating old tea fields, refine cultivation techniques, and enhance the productivity and sustainability of a vital export sector.

In partnership with the Sri Lanka Tea Factory Owners Association (SLTFOA) and participating tea factories, the 'Revitalizing the Sri Lankan Tea Sector' Loan Scheme intends to tackle a significant hurdle faced by the industry: restricted access to affordable funding for long-term investments necessary for sustaining tea production and boosting farmer incomes.

Despite Ceylon Tea's global acclaim, the sector contends with declining national production, aging tea bushes, insufficient replanting efforts, soil deterioration, and financial limitations that deter many farmers from investing in more productive cultivation. Accounting for over 70% of national tea production, tea smallholders' ability to maintain and enhance their lands is paramount to the industry's future.

By focusing financing on crucial cultivation enhancements, Commercial Bank asserts that this timely measure aims to address these challenges while safeguarding rural communities whose livelihoods hinge on tea. The scheme's unique selling point lies in its industry-linked financing model that harmonizes the Bank's financial expertise, SLTFOA's industry network, and the tea factories managed by tea smallholders.

This collaborative approach extends beyond conventional banking services, aiming to link eligible farmers with the financing required to rejuvenate their tea lands and augment productivity. Eligible tea smallholders can secure loans up to Rs. 1 million per acre for replanting and infilling, or up to Rs. 1.5 million per acre for replanting and infilling with an irrigation system.

The loan scheme is designed with tailored provisions to support tea cultivation projects, with repayments made through deductions tied to green-leaf deliveries to factories, backed by a corporate guarantee from the tea factory serving as collateral. Applicants must be registered tea smallholders supplying green leaf to recognized tea factories that are members of the SLTFOA, and meet the Bank's lending and repayment-capacity criteria.

Priority will be given to farmers with aged tea bushes, low-productivity lands, and those undertaking replanting or rehabilitation, while female participation is encouraged by the Bank. Commercial Bank's endeavor underscores its acknowledgement that the tea industry's long-term prosperity is intrinsically tied to the economic resilience of rural Sri Lanka.

By aiding tea smallholders in overcoming financial barriers to essential cultivation investments, the scheme endeavors to foster stronger productive capacity, more sustainable farming practices, and increased income-generation potential. Beyond its immediate beneficiaries, this initiative seeks to bolster Ceylon Tea's competitiveness in international markets by fostering a healthier production base.

It also highlights the significance of collaboration between financial institutions and industry stakeholders in addressing agricultural structural challenges, with the added benefit of a longer-term commitment to land, cultivation, and productivity. Through the 'Revitalizing the Sri Lankan Tea Sector' Loan Scheme, Commercial Bank extends its role beyond financing to actively support the rejuvenation of a critical national industry, assisting tea smallholders in investing in the future of their lands, livelihoods, and Sri Lanka's cherished tea legacy.