SME bank loan scheme for big onion storage barns

CREDIT: The SME bank together with the Agriculture Department of the Central Province (ADCP) launched a special loan scheme for big onion producers to construct storage barns to preserve the harvest.

Under this project selected big onion cultivators will receive a grant of Rs. 50,000 from the Government, the required technology and assistance from the Agriculture Department, and a soft loan of Rs. 70,000 at a concessionary interest of 9% p.a. from SME Bank, with refinance provided by the Central Bank, to construct storage barns.

The total cost of a storage barn is estimated to be around Rs. 150,000 and the balance Rs. 30,000 will be the borrower's contribution.

The CEO of SME Bank Douglas Weerasinghe said big onion producers in Sri Lanka face two major problems. 'Wide fluctuation of price of big onions leading to drastic decline of market prices after the harvest, and non-availability of high quality big onion seeds are those problems,' he said.

At the first phase of the project, 100 storage barns are targeted to be built in Dambulla, Kimbissa, Galewela, Devahuva, Naula and Kongahawela.

The farmers who cultivate a minimum of one acre under big onions will be eligible for SME Bank loans, and they will be given 3 seasons to settle these loans out of the enhanced income.

During the glut after the harvest, the prices of big onions in major producing districts of Matale and Anuradhapura drop to between Rs. 25 - Rs. 35 per kg - leaving only a slender margin of profit to the farmers. After 2-5 months from the glut, the price per kilogram increases between Rs. 60 - Rs. 80 encouraging imports.