The Government is currently studying the prospect of bringing changes to the regional plantation companies (RPCs), mainly concentrating on ensuring profitability of the estates as a result of which Prime Minister Ranil Wickremesinghe appointed the Plantation Reforms Committee (PRC) headed by R. Paskaralingam which has called for an assessment and an audit of the RPCs. [...]

The Sunday Times Sri Lanka

Govt. assessment of viability of plantations runs into protests from RPCs


File picture of tea workers using modern plucking methods

The Government is currently studying the prospect of bringing changes to the regional plantation companies (RPCs), mainly concentrating on ensuring profitability of the estates as a result of which Prime Minister Ranil Wickremesinghe appointed the Plantation Reforms Committee (PRC) headed by R. Paskaralingam which has called for an assessment and an audit of the RPCs.

However the now-available assessment report has become a controversial document strongly questioned by RPCs challenging flawed statements about the companies made by assessors, all retired planters who have little knowledge of current, difficult conditions in the plantations.

Nationalisation and then privatisation, the plantations have been a thorny issue for many decades.

Since 1992, 23 RPCs were formed and given leases on 502 estates, 272, 902 hectares of total land with a 389, 549 workforce. The number of companies today has come down to 20 with 453 estates under their management. Given on a lease period of 53 years, the Government is now considering extending it to a 99-year lease for companies performing to expectations or those under the ‘A’ category of the assessment report.

According to the assessment report, the study was carried out by 15 visiting agents over a period of three months on about three or four estates of each plantation. The government believes that a lack of monitoring of the estates was a result of the poor standards of the estates and has been approached by a number of local and foreign investors willing to obtain leases on these RPCs in a bid to develop the tea and rubber plantations. In this respect the state appointed authorities are proposing to cancel lease agreements of those that are poorly performing (or under the ‘C’ and ‘D’ categories) and make these available for lease.

Production drops

The assessment states that there has been a drop in overall production mainly due to encroachment of estate lands and it was alleged that some the estates did not have proper survey plans and maps.

RPCs blame local politicians for continued interference in the plantations as they even today receive ad hoc request for lands (both cultivated and uncultivated). Interference by the Land Reforms Commission (LRC), local politicians and political bodies continue to take place.

In fact most recently, just this week there had been a number of MPs who had requested Plantations Minister Navin Dissanayake to release lands from RPCs for public use. As a result some RPCs were called for a meeting with the Minister and other MPs in Parliament on Wednesday to find out if some of the properties held by these companies could be release for public purposes.

While some requests were refused some were compelled to be entertained as a result of which the RPCs were faced with problems of land encroachment on the one hand and compulsion to release lands on the other for various purposes.

Replanting teas

The report also indicates that there has been large vacant patches over the years in seedling tea and that replanting has not been carried out in those vacancies in the last 25 years in most companies. Due to this there has been a loss of about 30-36 per cent of seedling tea and a corresponding drop in crop.

However, RPCs argue that this is not the case and that replanting has been taking place over the years. The bearing extent during the period as at 2014 (according to available statistics from the Ministry of Plantation Industries) is 69,739 ha with the total replanted extent out of the total VP (vegetatively propagated) tea being 67 per cent and the total tea extent replanted since 1992 to 2014 being 35 per cent of the land extent. The annual rate of replanting since 1992 to 2014 has been 2.64 hectares.

Rubber statistics available from 2000-2014 indicate that this crop had been replanted over 100 per cent with the replanted extent amounting to 51,657 ha.

However, the RPCs indicate that there has been an increase in the yields per hectare over the year from 1992 to 2014 from 946 kg per ha to 1,248 kg per ha. However, the land extent has dropped over the years from 84,778 ha to 69,739 ha which is an 82 per cent reduction. In addition there has also been a drop in workers from 327, 123 to 163,068 in 2014 which was a drop of 50 per cent.

Manpower slows

The workforce on the estates has been a contentious issue over the years as the companies have been riddled with a continuous increase in worker wages whereas they claim productivity has not increased at a similar rate.

But the report highlights that the RPCs at the time of the takeover had been faced with an oversupply of workers as a result of which they were not interested in employing children of these people on the estates. The report blames the companies for not affording adequate employment for the next generations and that these people had continued to move out to other jobs outside the estates. Moreover, it was pointed out that the RPCs had not looked at providing dignity of labour on the plantations and that was another reason the workers were moving out.

However, RPCs today have come up with a number of vacancies that were filled by the estate workers children themselves and the companies were faced with the challenges of competing against better jobs outside the plantations.

RPCs reject the claim that they were instrumental in pushing the workers out of the plantation lamenting that the reduction in the workforce was something beyond their control. The shift to mechanisation as projected in the report is currently being worked out today by most plantation companies it is understood.

But the mechanisation which is currently taking place in certain countries with two, three and one man machines is being carried out on selective tea harvesting.

It was learnt that mechanisation could not be carried out throughout the year but was taking place even on the Sri Lankan estates in a selective and appropriate manner using appropriate machinery.

The report has proposed finding workers from even manpower companies or contract workers (which is already happening) in a proper manner to ensure that there would be a continued supply of labour.

Moreover, they have also proposed to establish Dubai-style labour camps for workers hired for a period of about six months from other countries to be employed on the estates.

More assessments

The sub-committee involved in this exercise to carry out the assessment of the estates would continue to do so in the future as well as a result of which the final report would be release in December. This would come about following visits by the agents to all the estates on the RPCs that would take a period of about six months which most companies the report indicates have agreed to.

RPC submissions

The plantation companies believe that continued interference by politicians is a constant challenge they face in their daily activities.

Moreover, wages being mandated by the government should not happen on estates as today the wages are being determined through a collective wage agreement entered into between the RPCs and the trade unions. These trade unions have become a strong force able to increase labour wages that started at Rs.48.30 in 1992 to Rs.730 by 2016. But this 15 fold increase has not seen productivity on the plantations increase as they are required to pluck only a minimum of 18 kg per day. At present 67 per cent of the cost of production is spent on wages by the RPCs.

Moreover, state policy to ban the weed killer glyphosate has been seen as an “illogical thinking” on the part of the politicians as a result of which the plantations are filled with weeds and with a low workforce they are unable to control the situation.

Some of the other challenges the RPCs face today are the high capital cost incurred to replant at the rate of Rs.5 million per hectare that would take 35 years to recover the investment. Each hectare requires a workforce of more than 4000 workers.

Adverse conditions like the VP and seedling mix that results in a low quality, a mountainous terrain and high rainfall have impacted on the agricultural productivity of the plantations.

In this respect, the RPCs believe that the assessment by the state appointed consultants has not indicated the correct picture of the plantations.

Meanwhile the government-directed audit report carried out by Ernst and Young, Pricewater house Coopers and KPMG examining production, productivity and the financial situation of the companies is expected to be ready by April 17.

However, the assessors believe that the plantations of today are a faint reminder of what it was in a bygone era when the ground was more fertile and economic and social conditions were different that allowed for a more prosperous time when markets like the Middle East and Russia had a better buying power as well.

By today’s standards these are a memory for some but changes are required on the plantations to ensure they survive longer to brew a better cup of tea that will continue to taste better with improved production patterns and enhanced productivity.

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