Colombo, Jan 2: Sri Lanka will roll out a Rs. 10 billion concessionary pledge loan scheme from January 1, 2026, targeting small and medium-scale paddy millers and cooperative societies, in a move aimed at stabilising farm-gate prices during the Maha cultivation season 2025/2026, officials said.
The scheme, introduced by the Development Finance Department of the Ministry of Finance, Planning and Economic Development, is designed to strengthen domestic paddy procurement while ensuring farmers receive a minimum guaranteed price set by the Agriculture Department.
Under the programme, eligible millers with a daily milling capacity of up to 25 metric tonnes will be able to access loans of up to Rs. 50 million at a concessionary annual interest rate of 7 percent, with repayment required within 180 days. Applicants must possess a valid business registration and a licence issued by the Paddy Marketing Board.
Approximately Rs. 10,000 million is expected to be disbursed through a network of participating financial institutions, including major state and private banks, to ensure broad access to credit across paddy-producing regions.
Officials say the scheme seeks to reduce farmers’ dependence on informal traders and market intermediaries, a long-standing concern within the agriculture sector. By empowering SME millers with affordable financing, the government aims to improve procurement efficiency and price stability during the peak harvest period.
The initiative follows criticism from farmer organisations that recent budgets have failed to adequately prioritise agriculture. National Agrarian Union Chairman Anuradha Tennakoon has repeatedly warned that farmers face difficulties selling produce at fair prices due to market distortions and the influence of middlemen.
In the first reading of the 2026 Budget, the government allocated Rs. 15,000 million for the concessionary pledge loan scheme, signalling a renewed focus on strengthening agricultural value chains and supporting rural livelihoods.
Economic analysts note that the success of the programme will depend on timely loan disbursement and effective monitoring to ensure benefits reach intended beneficiaries ahead of the Maha harvest cycle.
