Government Bets Big on Tea, Rubber and Coconuts

COLOMBO (News 1st); Sri Lanka's plantation sector, the backbone of some of the country's most important export industries, is set for a major injection of funding under Budget 2027, with the government unveiling an ambitious plan to lift export earnings from the current USD 3 billion to USD 5 billion by the end of the decade.

Presenting the Budget, President Anura Kumara Dissanayake outlined a broad strategy aimed at revitalising tea, rubber, coconut and palmyrah industries while improving the livelihoods of plantation workers and smallholders who keep the sector running.

To support that target, the government has allocated Rs. 13 billion for plantation sector development in 2027.

A significant share of the funding will be directed towards tea, Sri Lanka's most iconic export crop. The Budget allocates Rs. 730 million to establish 500 tea villages across the Southern, Sabaragamuwa, North Western, Western, Uva and Central Provinces, with the aim of improving productivity among smallholders who account for nearly 70% of the country's tea production.

Tea growers will also receive direct support through a Rs. 5 billion fertiliser subsidy programme, providing Rs. 4,000 per bag of fertiliser to help ensure continuous fertiliser application. In addition, Rs. 820 million has been allocated to assist small-scale tea estate owners with replanting and filling vacant cultivation areas.

The coconut industry, another major foreign exchange earner, is set to receive Rs. 2.5 billion through a Coconut Rehabilitation Project designed to improve the productivity of underperforming estates.

Meanwhile, the government plans to strengthen the rubber sector by supporting replanting, encouraging cultivation in non-traditional areas and investing in new research. A further Rs. 1 billion has been allocated for a rubber fertiliser subsidy programme, while Rs. 650 million has been earmarked for rubber cultivation and productivity enhancement initiatives.

The Budget also sets aside Rs. 100 million to modernise Sri Lanka's palmyrah industry, focusing on value-added products, innovation and SME development in the Northern, Eastern, North Western and Hambantota districts.

Recognising that plantation productivity is closely tied to worker welfare, the government has allocated Rs. 3 billion for infrastructure improvements across estates, including field rest rooms, toilet facilities and the rehabilitation of Praja Shakthi centres.

Estate workers are also set to continue receiving the Rs. 200 daily incentive allowance introduced last year, with provisions made to maintain the programme throughout 2027.

Beyond immediate spending, the government has also turned its attention to the future of the plantation industry's management model. With the lease agreements of Regional Plantation Companies due to expire in 2045, a Cabinet-appointed committee has been tasked with reviewing the agreements, assessing estate productivity and ensuring that the interests of both estate owners and workers are protected.