Business

Transforming tobacco farming in Sri Lanka: A value chain analysis

Published

4 years ago

2023/01/17

A new publication from the Institute of Policy Studies of Sri Lanka (IPS) finds strong evidence that tobacco farming is not a particularly lucrative enterprise for most smallholder tobacco farmers in Sri Lanka. The study notes that tobacco farmers can earn better profits from cultivating other crops like chilli, brinjal, carrot, bitter gourd, cabbage and big onion. The IPS study examines the potential for transforming tobacco farming through possible alternative cropping strategies in Sri Lanka. As such, the findings of this study will be of particular relevance to policymakers in Sri Lanka in their efforts and strategies on shifting farmers away from tobacco production to more economically, socially and environmentally sustainable crops.

The latest IPS publication, ‘Transforming Tobacco Farming in Sri Lanka: A Value Chain Analysis’, is authored by Nimesha Dissanayaka, Dilani Hirimuthugodage and Dr Manoj Thibbotuwawa. As part of a drive to reduce tobacco usage, the Government of Sri Lanka (GOSL) declared in 2017 that tobacco farming would be banned in the country by the end of 2020 and initiated a program to convert tobacco farmers to alternative crops. However, the timeline for the ban has already lapsed without desired outputs. Although the GOSL presently monitors tobacco cultivation, it does not support tobacco production as similar to the other crops cultivated in Sri Lanka. The latest statistics indicate a significant decline in both the tobacco cultivated area and production, leaving only 1,142 hectares, a mere 0.04 per cent of agricultural land and a production of 9,224 MT in 2020. Thus, this research explored the possibilities of transforming tobacco farming in Sri Lanka using secondary and primary data from a sample survey. The study finds several crucial features of tobacco farming that should help policymakers better evaluate any potential of transforming into alternative cropping strategies.

The study presents the following recommendations, which are based on a four-element framework- identifying alternatives, enhancing productivity, facilitating commercialisation, and strengthening policy:

The National Agricultural Research System (NARS) should be deployed to determine the suitability of identified alternatives considering production, marketing, commercialisation, and policy potential.

New technologies that have the potential to enhance agricultural productivity and income and to build the resilience of farmers should be developed and applied through timely and reliable extension services.

Investments should align with inclusive business models and value chains such as Public-Private-Producer-Partnerships (4Ps) to facilitate commercialisation. Further, the farmer organisations could be strengthened to involve in agriculture marketing and build linkages with modern value chains.

Strengthening the policy framework to create an enabling environment for these new livelihoods and business strategies through targeted policy and resilience-building action is vital. These include developing the rural agricultural financial markets and financial literacy of farmers that can further incentivise small farmers.

The authors note that these supply-side measures could be complemented with demand-side measures to disincentivise the manufacturers, such as laws, penalties and taxes to prevent existing non-tobacco farmers from joining the industry. They further stressed that continuing price increases through tobacco taxation should be adopted with greater awareness creation.

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Business

ADB approves $100 million loan to boost skills development and jobs for youth in Sri Lanka

Published

14 hours ago

2026/10/2

Thilina Walpola

The Asian Development Bank (ADB) has approved a $100 million results-based loan to help Sri Lanka transform its technical and vocational education and training (TVET) system, equip more young people with industry-relevant skills, and strengthen the country’s competitiveness and inclusive growth.

The Skills Development System Transformation Program will support the Government of Sri Lanka’s efforts in improving the quality and relevance of skills training, strengthening links between training providers and industries, and expanding employment opportunities for youth. The program will increase women’s employment opportunities in nontraditional jobs in fields including automotive technology, engineering, information and communications technology, construction, and renewable energy.

“A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” said ADB Country Director for Sri Lanka Shannon Cowlin. “This program will help create stronger pathways from education to employment by making training more responsive to industry needs, expanding opportunities for young people and women, and ensuring that graduates have the skills required by a modern and evolving economy.”

Though Sri Lanka’s economy is recovering, it faces skills shortages in priority sectors, high youth unemployment, and low female labor force participation. Many employers report difficulty finding workers with the skills needed in a changing economy.

Aligned with the Government of Sri Lanka’s Technical and Vocational Education and Training Sector Strategic Framework 2026–2035, the nationwide program will be implemented from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to quality, employment-oriented training.

Business

USD 40.84m pipeline to secure aviation fuel supplies to BIA

Published

14 hours ago

2026/10/2

Thilina Walpola

By Ifham Nizam

The government has cleared a USD 40.84 million and Rs. 8,548.75 million contract to build a dedicated aviation fuel pipeline from Muthurajawela to Bandaranaike International Airport (BIA), alongside a massive new fuel storage facility with a capacity of 92,000 cubic metres.

Energy Minister Anura Karunatilaka said the project represented a major investment in strengthening the infrastructure underpinning Sri Lanka’s aviation fuel supply and ensuring more reliable fuel availability at the country’s main international airport.

‘This project will provide the infrastructure required to strengthen the reliability and continuity of aviation fuel supplies to Bandaranaike International Airport, Karunatilaka said.

The contract has been awarded to China Petroleum Pipeline Engineering Company Limited, following an international competitive procurement process in which three bids were received.

The project will see a new aviation fuel storage tank complex constructed at Muthurajawela, together with the associated infrastructure required for handling and transferring aviation fuel.

Business

CSE activity up, turnover weak at Rs. 1.4 billion

Published

14 hours ago

2026/10/2

Thilina Walpola

By Hiran H Senewiratne

Trading activity on the Colombo Stock Exchange (CSE) gathered pace yesterday as global fuel prices began to show signs of easing, according to market analysts.In this context, both indices moved upwards. All Share Price Index up by 67.97 points while S and P SL20 up by 8.30 points.

Turnover stood at Rs 1.4 billion with seven crossings. Those crossings were reported in Sampath Bank 1.7 million shares crossed to the tune of Rs 238 million and its share price traded at Rs 140, Access Engineering two million shares crossed to the tune of Rs 159 million and its share price traded at Rs 79.50, LOLC one million shares crossed to the tune of Rs 129 million and its share price traded at Rs 129, HNB 100,000 shares crossed to the tune of Rs 38.4 million and its share price traded at Rs 384, JKH 1.9 million shares crossed to the tune of Rs 35 million and its share price traded at Rs 18.60, Hayleys 100,000 shares crossed to the tune of Rs 22.50 million and its share price traded at Rs 225 and Richard Pieris 847,000 shares crossed to the tune of Rs 22 million and its share price traded at Rs 25.50.

In the retail market top seven companies that have mainly contributed to the turnover were Sampath Bank Rs 114 million (813,000 shares traded), JKH Rs 100 million (5.3 million shares traded) LB Finance Rs 49 million (325,000 shares traded), HNB Finance Rs 30 million (27 million shares traded), HNB Rs 27 million (70000 shares traded), NTB Rs 25 million (82000 shares traded ) and Lanka IOC Rs 21 million (666,000 shares traded). During the day 65 million shares volumes changed hands in 10433 transactions.

The Banking and manufacturing sector counters performed well. In the banking sector Sampath Bank let the market while manufacturing sector especially JKH also significantly performed well. With the fuel revision Land IOC also a significant stock at the floor.

Meanwhile, First Capital Treasuries said that Ramesh Schaffter resigned as a Non-Independent Non-Executive Director with effect from October 1, to facilitate the restructuring of the company’s board.

Yesterday the Central Bank announced the US Dollar rate as against rupee. The rupee was quoted flat at Rs 330.65/80 to the US dollar in the spot market , while bond yields dropped, dealers said.