Sri Lanka tea sector stuck in colonial-era model after 75 years of independence

Due to lack of thrust in the direction of productivity-based revenue share model

By Sanath Nanayakkare

Regional Plantation Companies (RPCs) are encountering difficulty in planning the future of their financial viability due to the slowness of the government and the trade unions in exercising the best choice for the sustainable future of the sector, The Island Financial Review learnt at a recent press briefing called by the The Planters’ Association of Ceylon (PA).

It was revealed during the Q&A session that on the one hand there is a lack of political-will to deviate from the colonial-era daily wage model after 75 years of independence as the matter is politically sensitive to the government, and on the other hand, better earnings and flexi hours enjoyed by operators (tea pluckers) would lead to a loss of influence the trade unions have on their members.

These are seen key stumbling blocks to successfully implementing a productivity-based wages and revenue share model in Regional Plantation Companies (RPCs) which would be a win-win situation for both workers and RPCs.

Throwing numbers in good measure, RPCs pointed out that since privatization the RPCs have never been a burden on the Treasury as they were under the state control, and 22 RPCs are the only private sector stakeholders engaged in producing, processing and marketing of tea, rubber, oil palm and other crops.

RPCs account for over 450 estates, 371 factories/production units cultivating 43.36% of tea, 23.75% of rubber land and other RPC crops account for 33% of RPC land which include: coconut, oil palm, cinnamon and other crops.

According to Dr. Roshan Rajadurai, Media Spokesman of the Planters’ Association, 25%-30% of RPC tea crop is coming from the wages and revenue share model to which the operators have joined on their own volition having experienced the benefit of this system.

“These operators have used their own discretion to join the system because they can work flexible hours while taking care of their families. Others prefer to work independently and more productively without being pushed around. And there are others who have an entrepreneurial mindset in making their wages from tea plucking a second source of income. We have witnessed them taking good care of their plots and do the plucking in a sustainable way. So this system has resulted in more crop being harvested with improved leaf standards which has led to better prices and lower cost of production for the estate. Higher prices eventually result in higher revenue share for operators, but this needs to be widespread and formalized through a proper mechanism without further delay,” he said.

According to RPCs, the cost of production of a kilo of tea currently is Rs. 960 which has significantly increased due to cost of production and devaluation of our currency.

Senaka Alawattegama, Director/CEO Talawakelle Tea Estates PLC said, “We believe that the root cause of our historic economic crisis stemmed from the failure of successive governments to formulate policy based on robust stakeholder consultations. Unfortunately, we allowed cheap politics to hijack our economic policies. 100% organic fertilizer policy overnight compromised food security and plantation crops declined exponentially. Today, the trade unions are talking about 100% daily wage (Rs. 2,000 per day) as a buffer against the high inflation in line with the colonial-era daily wage model. Not only RPCs, the trade union and the government are aware that the productivity-linked wages and revenue model is the only way forward. Increasing wages in line with inflation will undermine the sustainability of RPCs. When workers are paid on how much they pluck and how much that harvest will seize at the auction, then their compensation would be in line with those dynamics. Had the authorities and trade unions implemented this system when RPC tea plantations proposed it years ago, workers would have been better off today. Instead of Rs. 1000 daily wage, workers would be receiving an average of Rs. 50, 000-60, 000 per month; and most productive workers even more than that.”

He said that RPCs have consistently advocated for reforms to the colonial era daily wage model, in favour of a productivity and revenue share model.

“Furthermore, this system will increase total export earnings with increased volumes of good quality tea available for export which would fetch higher prices. We are at a crossroads where every dollar counts. So we urge all stakeholders to fully implement this critical reform considering its multiple benefits, without procrastination,” Alawattegama, said.

RPCs urged the government and trade unions to look beyond their concerns and interests in order to ensure the sector’s continued progressive performance without letting it be another burden on the already reeling economy of the country.

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