On reading and hearing of the views expressed by the Planters’ Association, I was tempted to pen a couple of lines myself. Most of the issues had been discussed over end over and heard frequently and repeatedly but no remedy elucidated.
My association with the plantation Industry is over 40 years and I know a little bit of the plantation history. I am very clear in my mind with regard to what took place in the plantations with Land Reform Commission stage I in 1973 and Land Reform Commission stage II in October 1975. I remember the expansion of the Sri Lanka State Plantations Corporation under the Chairmanship of Clifford Ratwatta and the formation of Janatha Estates Development Board in April 1976 with K.H.J.Wijedasa as Chairman. Thereafter, in July 1977 after the General Elections, President J.R.Jayewardena appointed Pemsith Seneviratna to the JEDB as the Chairman and later the Board appointed Lasantha Fernando as DGM.
JEDB and SLSPC
I knew exactly how the plantations were developed under the two state organizations. Perhaps, only few people knew the facts and statistics of the nationalized plantations from the inception and unfortunately the two people who knew the subject are no more, namely late Kolitha Ratnayaka and late T.P. Gunawardena.
After the General Elections in July 1977, all estates taken over by Land Reform Commission (LRC) were rationalized systematically on electoral basis and some estates were exchanged between the JEDB and SLSPC for effective regional management. About 40,000 acres of prime coconut land taken over by LRC were given to Coconut Cultivation Board and National. Livestock Development Board to develop the Dairy Industry. The JEDB were given the balance 25,000 acres of coconut which were attached to Chilaw and Kurunegala regions.
Fortunately, under the management of state ownership, very generous foreign funding was available through the World Bank (MTIP), ADB and other Multilateral agencies to revamp the plantations after nationalization. As a result, most estates in JEDB/SLSPC were in good agricultural order at the time of privatization in 1992 and nobody could deny this fact. A fair portion of 25% to 30% of the acreage on each estate had been replanted by JEDB and SLSPC during the 17 years state management in addition to what had been replanted by the former owners prior to LRC take over. Therefore, all estates which were privatized were viable and the few estates which were considered not viable were not privatized and remained with JEDB and SLSPC.
Purpose of privatization
The purpose of privatization was to harness the resources of the private sector for the development of the plantation industry, as the government could not continue to fund the plantations with other development projects in hand, but what happened thereafter was the complete opposite. Certain management companies did not infuse new capital and depended on bank borrowing and were only interested in skimming the plantations by charging high management fees and paid no attention to replanting and development.
Cost of production
On average, the cost of production (COP) for Sri Lanka’s tea sector is approximately USD 3.6/kg among the highest in the word. This has affected the country’s competitive position in the global arena. The primary determinants of COP in the tea sector include labor productivity. In this regard, it is clear that the wage bills of most estates are inflated, mainly in view of the low productivity levels of their labor force. For instance, wages make up approximately 60% of the crop.
Reasons for low productivity
There are several reasons for the low yields. It is accepted that Sri Lankan yields has been lower than those of competing countries . The yields of the smallholdings are higher than those of regional plantation companies (RPCS) may be due to better labor productivity and bush productivity although the RPC’s disputes this. Once again I do not wish to be controversial and my personal view is that low incidences of replanting and in-filling have affected yields in Sri Lanka .
The logical means of increasing productivity on plantations is re-planting and in-filling. According to accepted norms, replanting rate of 2 to 3 % is essential to obtain sustainable improvement in yields .Currently, it is around 0.6 %. It is known that over 50% of the tea plantations are over 100 years old.
Although the management contracts made it mandatory to replant a minimum of 3% per annum, most of the RPCs ignored these conditions. Unfortunately, Golden Shareholder who was unaware of what was happening in the RPCs and did not monitor this important condition in the agreement. All subsidies including fertilizer which were available to the smallholders were made available to RPCs without discrimination.
Financial assistance to construct new housing for labor on estates was made available through PHDT (Plantation Human Development Trust). Therefore, there is no valid excuse for RPCs to neglect re-planting. The tea smallholders who produce 70% of national tea crop with their limited resources have replanted most of their land and increased the yields by 200% and do not complain about the productivity of workers.
The Planters’ Association of Ceylon which acted as the “Guardian Angel” to the industry from colonial times is equally responsible for the confusion in the plantations and for covering up the shortcomings of RPCs.
Who deceived and who gets deceived. Had the RPCs followed the conditions in the agreement which they signed in 1992, all RPCs would have replanted more than 66% of their acreage during the last 22 years of private management and there would not be any old seedlings tea in the plantations and the low commodity prices which they complain now would not have affected their cash flows. I do not think that there is at least one RPC has replanted 66% of the acreage out of the twenty-two.
Some believe that replanting is a waste of money and they only concerned about ROI (Return On Investment). I wonder whether the current minister of plantation industries is aware of this situation in the plantations and the mindset of these people who are ruining the county’s wealth!
What is the remedy?
For the National interest, irrespective of who owns the plantations, those who have underperformed and violated the conditions in the management agreement should be taken to task. There are many investing public who yearn to invest in Plantation Agriculture if the opportunities are available to them!!!.
There is a marked variation between estates and smallholdings. For an example Powysland Estate, Agrapatana is currently yielding more than 3000kgs/Yph with only 52% VP and even some seedlings are yielding 3000kgs/Yph and this estate won the Presidential Award at National Level for the Best Tea Property at the ministry of plantation awards held in November 2014.
The main problem as I could see is the low yield on the plantations which they do not wish to admit. No point blaming the unions and workers for not cooperating in increase productivity. Let me ask a question, how could the workers increase productivity with under fertilized and 100-year-old tea bushes in some estates which fit only for firewood! This is the result of not replanting at the correct time.