They will also be used to start small business enterprises and self employment schemes.
Sri Lanka has been struggling with a shortage of nuts, the price of which has soared in recent months.
The island will produce only 2,776 million nuts in 2008, 404 million nuts short of the annual requirement.
Bad weather and loss of coconut estates for housing and industrial use has affected the crop.
Sri Lanka produced 2,900 million nuts last year, part of which was used to extract coconut oil while the rest was sold for consumption in local markets by industries and domestic users.
Sri Lanka produces 70,000 metric tonnes of coconut oil at present but the requirement per year is over 160,000 metric tonnes.
Talks with UNDP officials for the grant will take place next month, Peiris said.
Schemes t