However, he added, this would not make a big difference. Under the new programme, plantation and minor agricultural export sectors would be excluded from the subsidy scheme, he said.

The annual government allocation for the fertiliser subsidy is nearly Rs. 4.5 billion
The new farmer coupon system will be launched in the forthcoming Maha season, Hettiarchchi said.

"This is really a targeted scheme to boost the entire agriculture sector to achieve self-sufficiency in rice," he added. The new incentive scheme is to benefit more than 850,000 small paddy farmers with less than three acres, he said.

Eligible farmers would be entitled to a coupon of up to Rs. 2,000 to buy agriculture related items and for cultivation. About 80 percent of farmers are smallholders.
Hettiarachchi also said that each farmer's coupon would only entitle him to buy items stipulated in it in order to prevent malpractices such as the acquisition of non-agriculture related items.

Tourism arrivals fall; seen picking up
By John Breusch
The anticipated peace-inspired recovery in international tourism has fallen short of industry expectations, with arrivals in the first five months of the year down 26 percent on the same period last year.

But a marked improvement during May has fuelled optimism that the industry may finally be starting to see the benefits of the peace process. And while arrivals from Western Europe are well down on last year, the effects have been stemmed to some extent by an equally dramatic increase in tourist numbers from India.

A spokesman for John Keells Hotels, which accounts for almost 10 percent of Sri Lanka's hotel rooms, said tourist volumes had picked up on the back of the cease-fire in the north and east, although not as much as hoped.

"At this moment there are not enough flights coming into Sri Lanka," he said.
"There is nothing from Germany." Germany is a key market for Sri Lankan tourism, but arrivals from Europe's biggest economy fell from 35,610 in the first four months of last year to just 18,945 this year.

Charmari Maelge, director of marketing at the Sri Lanka Tourist Board, agreed that arrivals from Germany had been hurt by SriLankan Airline's decision to cease flights to Frankfurt in the wake of the attack on Colombo airport.

"For the German market we have been having difficulty with access," she said.
"That will be redressed with the resumption of flights to Frankfurt via Paris [in late October]."

Figures released by the Tourist Board show that arrivals from January to April fell more than 30 percent compared to last year. But Maelge said statistics just in for May showed that arrivals in that month were down just one percent on last year, compared to a 27 percent decline for April.

"We are quite happy that we've been able to get back to the previous year's level," she said. Despite the industry's disappointment with tourist volumes so far this year, it remains optimistic about the prospects for a recovery.

The spokesman for John Keells Hotels said the group hopes to achieve 70 to 80 percent occupancy in the upcoming tourist season. The fall in tourist numbers from Western Europe - coupled with a 53 percent increase in Indian arrivals - meant Sri Lanka's closest neighbour displaced England and Germany as the tourism industry's biggest source market in the year to April 30.

Almost 20,000 Indians tourists travelled to Sri Lanka during that period, up from 12,912 last year. Maelge said the ongoing peace process had been the most important factor behind the dramatic increase from India.

Free visas, aggressive marketing by the Tourist Board and a "buy one, get one free" promotion by Sri Lankan Airlines had also contributed. "That [marketing] has created increased awareness levels and generated a lot of business," she said.

NTB to buy StanChart branch
Nations Trust Bank, part of the John Keells conglomerate,has announced it plans to take over the Standard Chartered Bank's Kandy branch business under its expansion policy. The bank is awaiting Central Bank approval for the acquisition which is part of its strategy of lateral geographic expansion supported by the takeover of businesses that are complimentary to banking, informed sources said.

NTB has a network of 13 branches and plans to open 20 by year's end, they said.
Standard Chartered Bank sources said the bank wants to consolidate its operations in Colombo and sell its Kandy business since there was no need for a single outstation branch.

NTB was started with the takeover of the business of Overseas Trust Bank and has plans to acquire at least four other business of foreign banks, sources said.

Tea de-regulation soon
The government has approved in principle with minor changes the recommendations made by a task force studying ways to de-regulate the Ceylon tea industry. The Plantations Industries Ministry is awaiting comments from some of the stakeholder associations that have asked for more time to study the report of the Regulatory Review Task Force before implementing the proposals.

The aim of the regulatory review, which was started after a conference on de-regulating the economy earlier this year, was to increase the "buyer-friendliness" of the tea industry and improve its competitiveness and efficiency.

The task force recommended that the Tea Board give top priority to register the Ceylon tea appellation of origin and register tea districts where teas with distinct flavours are made, such as Uva, as appellations of origin, ministry officials said.

It has also said that tea warehouses be registered to control the quality of tea and prevent the trading of stolen and adulterated teas. The tea trade has been concerned about the growing sales of such teas in what has become known as the Pettah market.
Financial support to tea exporters for promotion of their individual brands should be given in the form of soft loans and not as subsidies as presently paid to them, the task force has recommended.

Restrictions on the number of garden marks that can be registered by the Tea Board have been removed. (Garden marks are a form of brand names under which teas are sold by factories. Each estate may have three or four garden marks).

The number of garden marks that can be auctioned would now be a matter between the producer and the Colombo Tea Traders' Association that controls the Colombo tea auctions.

Tea brokers should be allowed to take part in other tea-related businesses with the removal of restrictions on ownership and investments by brokers in other activities in the tea value chain, the task force also said. However, such activity should be by the creation of separate corporate entities.

Promotion of country of origin and trademark protection should be strengthened to underpin the quality image and integrity of Ceylon tea, the task force said.
The use of the "Pure Ceylon Tea" claim and the Lion logo should be allowed only on packs with blends of pure Ceylon tea and such teas should be packed only in Sri Lanka, it said.

Among other recommendations of the task force are the annual review of the green leaf formula to reflect changes in the costs of harvesting and factory production.
The formula should provide better prices to be paid for better quality green leaf, it said. At present, factory owners pay the same price for both good and poor quality leaf.
The task force did not consider that tea futures and options was a possibility at present because tea is not suitable for such trades, being a non-standard and variable product, and because the local industry lacks the infrastructure for a commodity exchange.
The task force, appointed by Plantations Industries Minister Lakshman Kiriella, consisted of representatives from all tea sector associations and government agencies.

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