Two leaves and a bud; That’s how tea is plucked in Sri Lankan estates through a worker-management chain that includes the ‘Thangachchi or Amma (worker)”, ‘Kankany (supervisor)” and “Sinna or Periya Dorai (junior or senior Superintendent”. That model hasn’t changed for decades except for some tinkering, here and there. Likewise the lament over rising wages [...]

The Sundaytimes Sri Lanka

Sustaining the tea economy


Two leaves and a bud; That’s how tea is plucked in Sri Lankan estates through a worker-management chain that includes the ‘Thangachchi or Amma (worker)”, ‘Kankany (supervisor)” and “Sinna or Periya Dorai (junior or senior Superintendent”.
That model hasn’t changed for decades except for some tinkering, here and there. Likewise the lament over rising wages making our tea business the most unproductive in the world amongst other tea producers, is nothing new.

So when senior officials of the Planters’ Association (PA) met the media this week to talk about rising wages, based on the latest wage hike for plantation workers, journalists reminded them that this is perennial problem where the industry complains about wages whenever such negotiations take place with trade unions. “It’s happening every year; nothing new in this,” one journalist said. Officials agree.

Simply said, the tea production model needs to be changed and changed fast. It is no longer economical or viable for the simple reason that in a fluctuating commodities market, prices are volatile.

Owing to a social obligation to sustain the plantation community – the responsibility of the state before handing over to the private sector more than 20 years ago-, most tea estates are running at a loss. The model has somewhat changed to a subsidy-type structure where companies with a large exposure to rubber are able to sustain their tea plantations with profits from rubber. But this is not sustainable and is a “robbing Peter to pay Paul’ kind of short-term strategy.

Apart from the wage issue, plantations carry the cost of sustaining estate communities under the ‘cradle to grave’ system where people are taken care of from the day they are born to when death comes. Social welfare including housing, education and other needs are provided by the estates though today less than 20 per cent of the total estate population work on estates. “Most of the estate population works elsewhere but we sustain them through various benefits,” grumbled one planter.

This all means that the classic tea producing and growing model needs serious change (from the time it was introduced by the British) but is that change happening? A sizable percentage of the tea plants needs replanting with most plants being as old as 60 years old but the cost is an issue as replanting subsidies are given mostly to smallholders. Replanting costs at least Rs. 3 million a hectare with the return on investment coming in between 13-15 years. With the lease period already in the half-way mark and due to expire in another 30 years, plantation companies are questioning the viability of such investments.

The Government’s recent policies in cancelling leases like Pelawatte and Sevanagala Sugar plantations and the recent move to hand over some 25,000 acres of estate land to handpicked, unemployed youth is also a negative development for plantation companies. Given the kind of ad-hoc decision-making in the country, who would want to invest millions on plantations if the state suddenly, under the guise of ‘unused or underutilisation’ cancels land leases for political reasons?

The plantations were privatised in 1992 under a 5-year management contract which was then extended to 50 years in 1995. The industry is asking for a long-term lease of 99 years to make their effort viable. That’s a very reasonable request particularly when the Government is randomly changing rules on foreign ownership of land or lease just to entice investments, some of who turn out to be fly-by-night operators.

In fact it is the responsibility of the state to respond favourably to this request as the plantation economy is far more important that trying to raise a billion dollars in foreign investment every year with incentives. It is far more important for many reasons.
Sustaining the plantation economy is now the responsibility of the private sector which is unable to enforce its usual model – run at a profit; sell at a loss – and essentially is performing a social obligation, an exercise the Government moved out of after huge losses with the British exit from the plantations. Even tea estates owned by trade union officials like the Thondamans’ for example are losing heavily purely due to the high wage component.

Maintaining the tea economy is now all about keeping the trade unions happy (they risk losing their voice and power if they don’t clamour for high wages) and the upkeep of the plantation community.

The burden of ensuring plantation workers don’t get restive is now the task of the private sector while the Government (of the day) enjoys their vote base vis-à-vis the CWC. The only change from the period when the plantations were nationalised and loss-making is that management is more efficient, focused and there is higher productivity. But the losses continue as long as wages are not linked to COP.

Yet, even though wages in Kenya for example is half of what a worker gets in Sri Lanka (US$2.50 against $5 per day), the wage here is a ‘living wage’. The cost of living in Sri Lanka is much higher than in other tea producing countries and even a wage that is more than double that of other countries, sometimes is not enough to make ends meet.

Just goes to show that the tea model needs not just tweaking but a radical overhaul to ensure a colonial industry that has provided a culture, spirit, discipline (working from 4 am in the morning) coupled with beautiful, environmentally-friendly tea gardens is sustained for another century.

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