Loans to enhance milk production, agriculture

The Central Bank of Sri Lanka (CBSL), in association with the Government has launched a special credit program effective this month to enhance local liquid milk production, milk and milk based products and promoting agricultural crop processing industries in the country.

A total of Rs. 5,000 million at a concessionary rate of interest is expected to be disbursed under the scheme to small scale dairy farmers, liquid milk processing industries and agricultural crop processors.

The credit scheme has been introduced as announced in the Budget 2008. With the sharp increase in the prices of milk powder and food crops in the global market, a favourable environment has been created for development of the local dairy industry and the food crop sector.

Non-availability of a credit scheme for dairy products at present has been identified as one of the constraints for development of liquid milk production in the country.

Further, strengthening of agro-processing industry by providing financial facilities for agro-based industries, storage and processing of crops would help to develop the cultivation of food crops on a sustainable basis. Accordingly, this credit program will increase the investments in the local liquid milk and food crop sectors in the country.

It is expected to assist the farmers to deviate from traditional farm practices and to adopt modern scientific animal husbandry practices by providing financial assistance under the credit program. Accordingly, it is compulsory to construct modern cattle sheds to keep the animals inside instead of allowing them to roam in the field.

Further, a part of the loan funds could be utilised to feed the cows with concentrated feed, grass and fodder with adequate water and required veterinary care too. Farmers are allowed to keep local breeds, or cross breed and if available they could purchase hibreed animals too with the loan funds.

However, the loan limit will be determined on the basis of the veterinary surgeon’s recommendation on the capacity of each farmer.

The veterinary surgeons will examine the experience of the farmer, availability of water and fodder and other necessaries when they issue such recommendations.

The CBSL in association with lending banks will make arrangements for Forward Sales Contracts (FSCs) between the dairy farmers and milk collecting companies to ensure a stable market with a remunerative price for liquid milk.