Project Name Tea Development Project
Project Number 29600-013
Country Sri Lanka
Location All tea-growing areas covering 13 districts in the southwest region of Sri Lanka: Kandy, Galle, Matara, Ratnapura, Badulla, Nuwara Eliya, Kegalle, Matale, Kalutara, Hambantota, Monaragala, Colombo, and Kurunegala.
Approval Number 1639
Type or Modality of Assistance
1639 ADF US$ 35.00 million Approved
Strategic Agendas
Drivers of Change
Sector / Subsector

Agriculture and Natural Resources - Agricultural production

Gender Equity and Mainstreaming
Responsible ADB Department South Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SARD
Responsible ADB Officer ADB Disclosure
Project Sponsor(s)
Description The Project aims to increase the income of tea smallholders and private estates on a sustainable basis and to improve the environment at the same time. To fulfill the objectives, the Project will (i) undertake institutional reforms to improve the effectiveness of tea-related institutions and rationalize the cess rebate to benefit the smaller holdings; (ii) provide credit financing for replanting and infilling on smallholdings and private estates, establishment of nurseries, rehabilitation of tea factories, and handling of green leaf; and (iii) improve social infrastructure such as workers' housing and rural feeder roads as well as afforestation. The Project is expected to replant 9,600 ha and infill 35,800 ha of tea; establish 455 tea nurseries; rehabilitate 85 tea factories; improve 5,000 workers' housing and sanitation facilities; improve 250 km of feeder roads; and afforest 1,000 ha of degraded land.
Objectives and Scope
Linkage to Country/Regional Strategy The Project was consistent with the Government s over-all objective of accelerating economic growth under the Public Investment Program (PIP) of 1996-2000. The private sector was to act as the catalyst for growth while targeted assistance to the needy sectors, such as smallholders and estate workers, would be highly encouraged. The PIP also supported the promotion of environment-friendly and sustainable agriculture and industry and recognized the need to increase land and labor productivity as well as to relate labor cost to prices and productivity for the country to retain its competitive position as a tea exporter. With specific reference to the tea industry, the PIP aimed at (i) raising the yield per ha by 20% in 5 years, (ii) developing alternative uses for uneconomic tea lands , (iii) increasing the share of CTC (Crush, Tear, and Curl method) tea production, (iv) changing the methods of marketing and (v) moving toward direct exports. Furthermore, this was supported by the National Agriculture, Food and Nutrition Strategy of 1984, which called for (i) crop diversification , (ii) investments in the tree crop sub-sector, (iii) enhancing the export earnings from tree and other export crops, and (iv) promoting agro-industries. TDP is also consistent and relevant to the ADB medium-term country operational strategy (1998-2003) at the time of approval. The project objectives were in line with the ADB strategy aimed to address unemployment and poverty though (i) faster growth rates, (ii) better access of the poor to productive assets, and (iii) environmental improvement and protection.

Safeguard Categories

Environment B
Involuntary Resettlement
Indigenous Peoples

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation

Business Opportunities

Consulting Services A total of 10 person-months of international consultants and 46 person-months of domestic consultants will be engaged individually by the Project Management Unit in accordance with the Bank's Guidelines on the Use of Consultants and other arrangements satisfactory to the Bank.
Procurement Goods and services for implementing the Project will be procured in accordance with the Bank's Guidelines for Procurement. The portion of the loan earmarked for credit will follow procurement procedures applicable to Bank loans for development finance institutions. Civil works will be undertaken through local competitive bidding in accordance with procedures acceptable to the Bank.

Timetable for assistance design, processing and implementation

Concept Clearance -
Due Diligence
Credit Committee Meeting 28 May 1998
Approval 10 Nov 1998
PDS Creation Date 14 Feb 2007
Last PDS Update 23 Feb 2007

This page was generated from on 20 February 2017