Sri Lanka to subsidize dairy credit amid high interest rates

April 23, 2008 (LBO) – Sri Lanka's government will give interest subsidies for banks to lend up to 5,000 million rupees to dairy farmers and agricultural processors, the country's central bank said. "With the sharp increase in the prices of milk powder and food crops in global markets, a favourable environment has been created for development of local dairy industry and the food crop sector," the rural credit department of the central bank, which is co-ordinating the scheme, said in a statement.

"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."

Under the scheme, an interest subsidy of five percent a year will be given for loans from 50,000 to 400,000 rupees for five years.

Farmers could use the funds to buy cattle, cross-breed animals, construct cattle sheds, for veterinary services, purchase better feed, build bio-gas tanks or other upgrade