Ground conditions in the Sri Lankan plantations industry are beginning to change at a more rapid pace as an aging industry grapples to find new footing in a drastically altered global marketplace. With production costs rising and commodity prices falling, it is becoming increasingly clear that the future for Sri Lanka’s plantation economy lies not in volumes but in quality, innovation and niche markets and industry veterans like newly appointed CEO of Watawala Plantations PLC, Binesh Pananwala are now actively working to build a new vision for the Sri Lankan plantation sector.
Excerpts of a recent interview follow;
Q: What is your view on the plantation industry at present?
As is the case with the wider industry in the more recent past, we have been facing some depressed international prices in both tea and rubber segments however, these losses have been significantly mitigated through our diversification into palm oil. This is a very promising new sector and we are already working on acquiring new land in order to scale up palm oil production even further. Additionally, we are also moving into the production of Ceylon Cinnamon and we are now in the process of adding value to this process through the establishment of our own cinnamon peeling centers and cinnamon oil extraction units. This is another area of opportunity and Watawala Plantations has already started the process of seeking out new markets for cinnamon-based products.
Q: What are some of the key challenges?
A: One of the most concerning areas for Watawala Plantations and for the wider plantation industry is a continuous reduction in the strength of the plantation sector workforce or Associates. When the Company was acquired by the Sunshine Group in 1996, we had a very strong Associate workforce of about 14,000 employees. However, over the years we have seen a gradual migration of Associates out of the plantation sector as the Sri Lankan economy has grown, and so today we have Associates of just over 9,000.
In addition to our direct workforce of Associates, the Company is also responsible for the livelihoods of an extended community of about 55,000 people comprising of approximately 13,500 families and about 53% of our Associates are female. This is a responsibility that Watawala Plantations takes extremely seriously and we remain fully committed towards supporting and sustaining the wellbeing of each and every member of this vital community and their dependents from womb to tomb.
In that context what we see as the main challenge is growing our Associates. What we find is that as new opportunities for growth are being cleared within the Sri Lankan economy, people are more easily able to secure white-collar jobs and so it is now up to us to look for new solutions to such issues while maintaining and bettering our quality parameters.
Q: How could one address this challenge?
We are confident as I stated before that the impacts of these changes to our Associates can be mitigated through improvements to raw material inputs and improvements in harvesting techniques and in that regard, we have already brought in a large amount of sheer harvesting in order to maintain quality while reducing the amount of effort it takes to harvest.
We are also implementing several initiatives to improve the status of our Associates. This is being done in a variety of ways from simple steps like reclassifying their roles from simply ‘workers’ to associate-level positions and adopting improved productivity incentive structures in order to share our successes with our Associates, making them partners in the progress of Watawala Plantations.
Q: What is your opinion on frequent climate change?
Climate change has in more recent years been a serious issue for us. Especially during this past year, we experienced frequent extreme weather conditions. Throughout the year there were spells of torrential rains which drastically reduced the quantity of tea that the sector has been able to produce.
The final key challenge is one of cost. It is imperative that we develop solutions to mitigate our high costs of production in order to ultimately deliver a stronger bottom line. In this regard, certain Government policies such as the blanket ban of Glyphosate-based weedicides and the lifting of fertilizer subsidies have created serious challenges for the industry.
Q: What is your vision to overcome such challenges?
A: Watawala Plantations has been at the forefront in developing new mitigation strategies organized around principles of lean management and reduction of waste. From our experience as part of the Sunshine Group, we have also learned valuable lessons about the transformative effect that a stringent focus on quality can have across an entire business model.
This has helped our products to capture niche markets – it is an area that we will continue to work on in the coming years. We also took radical decisions on managing our crop. In some cases we had to put whole fields under the knife in order to reduce quantity and improve on quality.