# Smallholder Agribusiness Partnerships

Increased Livelihood Standards through Tea Sector on Farm Development

Total Project Cost

RSb149.76 Mn

Locations of the Project

Kandy, Galle, Matara

Number of Beneficiaries


Background of the Proposed Project

Tea production is one of the main sources of foreign exchange for Sri Lanka (formerly called Ceylon), and accounts for 2% of GDP, contributing over US $1.5 billion in 2013 to the economy of Sri Lanka.[1] It employs, directly or indirectly, over 1 million people, and in 1995 directly employed 215,338 on tea plantations and estates. In addition, tea planting by smallholders is the source of employment for thousands whilst it is also the main form of livelihoods for tens and thousands of families. Sri Lanka is the world's fourth-largest producer of tea. In 1995, it was the world's leading exporter of tea (rather than producer), with 23% of the total world export, but it has since been surpassed by Kenya. The highest production of 340 million kg was recorded in 2013, while the production in 2014 was slightly reduced to 338 million kg. The major tea growing areas are in Central Province, Uva Province ,Southern Province, and Sabaragamuwa Province. Central Province is famous for High-grown tea, where the first tea plantations were established. UvaProvince,Southern/Sabaragamuwa Provinces famous for Mid-grown and Low-grown teas respectively. Low-grown tea mainly originates from southern Sri Lanka. These teas are grown from sea level to 2,000 ft (610 m), and thrive in fertile soils and warm conditions.[36] These areas are spread across four main sub-districts ,Ratnapura/Balangoda, Deniyaya, Matara, and Galle. Low-grown tea is stronger and less-subtle in taste and is produced in Galle, Matara and Ratnapura areas. Inadequate liquidity position to mitigate the risk of low auction prices on Tea by increasing revenues from Local tea sales and Fertilizer sales.

Project Focus

To enhance mid grown tea output of tea small holders specifically out growers supplying for Kalubowitiyana Group.

Project Goals

Increase access to finance capabilities of tea small holder increasing profits of the business over 20% Increase the yield of the tea small holder by 20%p.a.

Project Objectives

Investment Plan

Social Impact

• Tea small holder will continue to have increase output over 15 years.
• Positive impact on foreign reserves of the country.
• Increased living standard of the farmer.


It is evident that high financial cost leads tea small holder to struggle, constraining to the current production levels. SAPP Program model provides solutions assisting farmer to increase tea output accessing low cost funds. For an example, assistance provided for replanting/new planting will continue to generate sustainable income levels over 15 years stabilizing income levels even to raise funds at current market rates. This will further enhance productivity levels enabling themselves to invest in innovative technology.