The Planters Association (PA) of Ceylon is one of the oldest institutions in Sri Lanka. It has represented the plantation industry for more than 150 years. During the British Raj it was one of the most influential and dynamic institutions, greatly influencing the social, political and economic activities in the country. In those days, members [...]

The Sundaytimes Sri Lanka

Whither the plantation industry – way forward?


Plantation workers

The Planters Association (PA) of Ceylon is one of the oldest institutions in Sri Lanka. It has represented the plantation industry for more than 150 years. During the British Raj it was one of the most influential and dynamic institutions, greatly influencing the social, political and economic activities in the country. In those days, members of the PA were appointed to the legislative assembly and were able to directly influence political decisions.


Only two plantation companies have substantial extents of coconut. Coconut however is socially, economically and politically, very sensitive. Despite the strong anti-coconut lobby, on the basis that, although coconut is a vegetable oil, it contains saturated fats and can contribute to enhance cholesterol levels in the blood, coconut consumption by Sri Lankans has not declined. On the one hand, there is a natural population increase and thus greater consumption. However, new housing and construction results in uprooting many coconut trees without any replacement of these removed trees.

The only organised attempt at newly planting coconuts on a substantial scale has taken place due to the initiative of the DC Millers Associations, through a new company, Mahaweli Coconut Plantations, which has planted 1,500 acres under drip irrigation on Mahaweli land. Originally, the intention was to have the entire extent under drip irrigation and they got a special subsidy from the government for investing in drip irrigation equipment.

As the plants matured, drip irrigation was insufficient to provide a minimum of 60 litres of water a tree per day which according to them was the requirement of a mature plant. Then they resorted to flood irrigation, as water was freely available. During the last year, they harvested three million nuts which may not be that substantial at 2,000 nuts per acre. However, they anticipate harvesting five to six million nuts this year, which will increase the yield to three to four thousand nuts per acres. This new plantation will provide three million new nuts. Source of coconuts for the DC industry will therefore increase along with the total production in the country. I feel that a proper cost benefit analysis should be done to consider extension of such plantations as the capital expenditure on drip irrigation is substantial and in this particular plantation such costs were subsidised by the state. Furthermore, additional suitable extents of lands may not be available in the Mahaweli area.

The coconut crops generally depend on rainfall which affects the next year’s crop. Of course without regular fertiliser application the full potential cannot be realized and levels of fertiliser applied will also depend on the price.

Export crops

Of the export crops like cinnamon cloves, nutmeg, pepper, areca nut, cocoa, coffee and oil palm, perhaps cinnamon is the most important in relation to export earnings.

An interesting development is the branding of CeylonCinnamon as a unique product. The uniqueness of Ceylon Cinnamon had not been exploited adequately earlier.

Oil palm

Oil palm appeared to be a good alternative to rubber, as in Malaysia, Thailand and Indonesia, when it was introduced to Sri Lanka. Quoting from your Chairman’s address at the last AGM “It is unfortunate that the vast tracts of uncultivated land required to cultivate oil palm and justify the construction of a mill are not readily available in this country…..”

It is interesting to note the export value of the spices sector at Rs 20.25 billion is higher than the export earnings of rubber and coconut, respectively.


Rubber has enjoyed a boom during the last few years. In 2011, all grades reached record levels but began to decline in the fourth quarter. Latex crepe, which recorded an unprecedented peak of Rs. 627 in the first half, tumbled to Rs. 417 by the fourth quarter.

Good weather, and better fertiliser application by producers increased production to 158 million kg, probably the highest recorded in Sri Lanka in recent times. When considering the fact that Sri Lanka’s rubber production was less than 100 million kg, and the average yield marginally over 1,000 kg/ha in 2003/04, it is a very significant increase, directly related to better prices. The national average yield was 1,552 kg/ha in 2011 which is a tremendous increase. The corporate sector however fell behind with an average of 888 kg. In comparison, the Indian national yield was 1,885 kg/ha. India and Vietnam are projecting to reach 2,250 to 2,500 kg/ha by 2021.Should not our corporate plantation sector study this issue in depth and come up with short term and long term solutions?

Historically there have been booms every 20 to 30 years. Unfortunately, most booms are followed by busts.

Fortunately, local consumption has continued to increase consuming over 70% of local production. Local demand will undoubtedly continue to increase.

We must appreciate the government’s efforts to expand production to Moneragala and even to some North -East locations. Growth maybe slower in such dry areas but the greater number of tapping days available will compensate for the longer gestation period.


The tea plantation industry is facing yet another crisis. As mentioned in your Secretary General’s report; “Need for long term planting to meet future challengers, climate change, shortage of workers, rising interest rates resulting in high cost of funds, poor yields are some of the areas that need the attention of the research institutes with the necessary encouragement of the government which cannot ignore an industry that contributed Rs, 346.8 billion to export earnings in 2011.”

These factors apply even more emphatically to the tea plantation industry which earns around Rs. 170 billion in export earnings. More so because tea is planted on the most fertile lands in the country.

Basically the only answer is to increase productivity of all resources utilised by the industry.

Human resources

Tea is one of the most large-scale, labour-intensive agricultural crops. I am not being critical, and I appreciated political, social and economic pressures that would have been applied during the last negotiation for wage increases, but a 27 per cent increase is obviously totally unsustainable without a corresponding productivity increase.

The first collective agreement of 1998 revised the wage package to Rs 101. Now the wage package is Rs 15 per day, an increase of around 500 per cent.

The tea prices have undoubtedly increased but not in the same proportion, nor stabilised at profitable levels. It appears to be a never ending battle to achieve economic viability.

Regarding human productivity, there are many challenges. Firstly, until the crop yields are increased, one cannot expect workers to harvest more than what is potentially available in the fields. For instance, when Indian rubber tappers have fields yielding over 1,500 kg/ha to tap, their productivity will exceed that of Sri Lankan tappers who tap fields yielding around 900 kg/ha in our plantation companies. The same prevails in the tea plantations, with yields around 1,200 to 1,300 kg/ha. A need to re-plant vigorously is the obvious solution, but not easily achievable as will be indicated later.

As mentioned, the above incentive wage packages have been used extensively for all crops with good results, but may not be applicable throughout the year.

Land productivity

Tea plantations in Sri Lanka occupy the most fertile lands in the country, but the fertility may have declined over the years. Since management was taken over by the plantation companies, a more scientific method of fertiliser application, on a replacement basis, has been almost universally adopted with soil and foliar analysis, to decide on replacement basis, rather than routine fertiliser application.
The logical means of increasing productivity of plantations is re-planting both in tea and rubber, whereas the plantation companies have recorded average yields of only a round 1,300 kg/ha for tea and 900 kg/ha for rubber. These yields perhaps can be doubled by re-planting. However, the crux of the matter is, is it viable to be carried out in the plantation at present as the return on investments may not justify such an exercise?. The gestation period for a new plantation of tea is around four years including rehabilitation of the land and, with rubber; it could be five to seven years. The investment required cannot be justified on the basis of present cash flows for tea. In rubber, however, it may perhaps be viable with the high prices prevailing and the fact that old rubber trees are marketable for various timber products or used as essential firewood.

There is a definite need for support from the government in a concerted re-plantation programme and every effort should be made, as in the past, to persuade the government to subsidise the tea and rubber plantations in the corporate sector. It is my view that the plantation industry must compute, objectively, the cost of re-planting that can be sustained and viable, and request the government for the balance expenditure required to complete such a programme. This would be a huge outlay on the part of the government but, considering the fact that unless re-planting is carried out in a vigorous manner the industry will be unviable, the authorities concerned may be convinced of the dire need to support such a programme.

Tea hub vs Pure Ceylon Tea

The controversy regarding the need to import teas from other sources, in order to blend with pure Ceylon Tea and market in price competition with other tea in the market, has been strongly advocated by the Ceylon Tea Traders Association [CCTA] and the Tea Exporters Association [TEA]. The advocates of this strategy claim that this is the best way to market tea in the global tea market where competition from multinationals who blend their tea in other destinations, is the solution for increasing tea exports from the country.
This controversy was also prevalent more than 10 years ago when I happened to be the Chairman of the Planters Association. We were able to resist the proponents of blending Ceylon Tea with cheaper teas for marketing at that time. Once again this demand has come to the forefront maybe due to the marshalling of several diverse forces.

As late as 30th July 2011, a local newspaper reported under the subject “Tea Hub: Stalemate”, and quoted the Minister of Plantation Industries; “a) The ministry has not taken a decision; b) The decision will be only in consultation with the President; c) Unable to compromise smallholders”.

In the newspaper report, it is stated that 70 per cent of the national production came from tea smallholders who own less than half an acre. It was also stated; “Let me also make it very clear that I will not take any decision detrimental to the local industry by sacrificing their interest for a speculative objective of increasing foreign exchange earnings. Another point to remember is that there are 400,000 smallholder families accounting for 75 per cent of production. This kind of huge population cannot be sacrificed for the sake of possible increases in foreign exchange earnings.” It therefore appears that any such decision will be given only after much deliberation.

On the other hand, the Secretary to the Treasury appears to be very much in favour of marketing Pure Ceylon Tea and has many times quoted the success story of “Dilmah”, which has been the result of almost 25 years of effort by a pioneer Merrill J Fernando.

Unfortunately, the tea producer is out of touch with the market, with the tea exporters coming in between, unlike, for instance, in the garment industry, where although the producers are marketing their products to the consumers through intermediaries they are far more in touch with the consumers and in a position to understand and meet their needs.

It is commonly stated that “if you cannot fight them, you should join them”. It may therefore be good to explore the possibility of plantation companies either investing in export companies by maybe a “share swap”, or purchasing export companies with direct investments as already done by certain plantation management companies very successfully.

Way forward

It is not for me an outsider to suggest to veterans in the plantation industry as to how they should move forward. All I can say is the oft-quoted “think outside the box”. However, let me put down some thoughts for your consideration.

There is a need to persuade the government to invest in a subsidised re-planting programme. Since most effort made in this directions in recent times have not been successful, I suggest that the industry hires the services of a reputed institute like the Institute of Policy Studies to carry out an overall in-depth study of the industry to recommend short term and long term interventions. Dr. Saman Kelegama, its Executive Director, I believe, is the ideal person to carry out such a study as he is very conversant with the plantation economy.

–Incentivise the research institutes to perform more effectively, especially in the vital field of mechanical harvesting, increasing yields, and reducing gestation periods with faster growing clones.

–Diversify cultivation of tea and rubber as much as possible by planting other crops like cinnamon, pepper, clove, nutmeg, areca nut, oil palm, etc., wherever agro-climatic conditions are suitable.

–Embark on tea tourism as the tourist industry has been given special emphasis by the government.

Finally, I am making a revolutionary suggestion. That is to lease the cultivable land to the workers, and be tea factory owners, plus facilitators of good cultivation practices. This may be perceived as politically suicidal for any government. It will also be resisted by all the trade unions, as they will not be effective in their trade union activities when people are leaseholders and cultivate their own lands. As you are well aware, this practice generally prevails in Kenya and is very successful.


Since delivering this address at the PA AGM I received a letter dated 28th September 2012 addressed to me by Dr. I Sarath B Abeyasingha, the Director Tea Research Institute of Sri Lanka. Under the title “Research Institute Take flack at PA AGM”

Quoting from his letter:

“As you may be aware in Sri Lanka every one of the crop research institutes currently perform under severe constraints [i.e both human and financial resources]. In a situation where limited resources are available for research and development programmes, well focused and result oriented programmes are crucial in crop research institutes, where resources could be shared to address these concerns”.

He had forwarded to me a copy of the “Proceedings of the Fourth Symposium on Plantation Crop Research”, which includes a collection of papers in various aspects of crop research, presented at this symposium.

I have not been able to go through the whole volume of research presented at the symposium. However, I would like to clarify my comments. I am aware of the extensive research done at our research institutes and accept their commitment to the plantation idustry in Sri Lanka. I am also aware of the pioneering work done by TRI and the RRIC in the days gone by when they were considered to be the most prestigious research institutes on tea and rubber. However, as a former plantation manager, I am of the view that it is the bottom line that matters. When our productivity in terms of yield per hectare is below those of competing countries, we have not achieved the required benefits of the research. Many reasons can be given, such as the senility of our tea plantations due to no re-planting being undertaken in the recent times. We have to accept reality that the cost/benefit of re-planting tea is negative. Therefore, we have to find other means of either increasing productivity in the short term or going into possible alternative crops.

As far as rubber is concerned, a certain amount of re-planting has taken place. Therefore how can we justify and average yield of around 900 kg per ha when our neighbours in Kerala with similar agro-climatic conditions achieve yields over 1,500 kgs per ha?

In regard to coconut, what success has Sri Lanka achieved in inter-planting coconut with other economic crops? I have seen many research papers regarding this matter but hardly any success in the field.

There is something fundamentally wrong with the direction of our research. Either the research is too academic, or research findings are not extended to the field by good extension services. The lack of resources is certainly a constraint and will continue to be one in the years to come. That is the reason why I suggested that specific project proposals should be submitted to the plantation companies for funding which I feel will have a positive response from the stakeholders.

(These are excerpts of an address at the 158th annual general meeting of the Planters Association of Ceylon by Mr Amarasuriya who is a former Chairman, Commercial Bank of Ceylon Plc and Planters Association of Ceylon, and former Deputy Chairman, Hayleys Plc & Talawakele Plantations Plc).

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