Cultivation of Black gram in Vavuniya under Forward Sales Contracts

The Central Bank of Sri Lanka (CBSL) in association with the Department of Agriculture (DOA) has made arrangements to cultivate black gram over 3,500 hectares in Vavuniya during the current Maha season 2009/2010.

Under the programme, 1,386 farmers living in 27 villages in and around Chettikulam have already been selected by DOA and arrangements have been made to purchase the entire black gram crop estimated around 3,500 mt under Forward Sales Contracts (FSCs).

Several leading food processing industries in the country have been invited by the CBSL to purchase the crop at a reasonable price determined under FSCs. Accordingly, at a meeting conducted with farmer organizations/farmer group leaders in Vavuniya on November 20, 2009, the companies have agreed to purchase black gram at Rs. 75 per kg directly from the farmers and farmer organizations. They have entered into FSCs with farmers to purchase 3,400 mt of black gram at the above forward price.

FSC system ensures the farmer a stable market for their crops with a reasonable price. Under the FSC arrangement, both farmers and buyers are eligible to borrow loans at concessionary terms from Participating Financial Institutions (PFIs) of the New Comprehensive Rural Credit Scheme (NCRCS) implemented by the CBSL.

Farmers are eligible for Rs. 36,000 per hectare for cultivation of Black gram while buyers who have entered into FSCs with farmers could enjoy facilities up to Rs. 50 million per buyer to purchase and store the agricultural commodities.

In order to maintain the low interest rate under the scheme, the Government provides an interest subsidy at eight percent per annum to the PFIs.