At a local summit discussion on human resource management, an Indian expert explained how Indian companies overcame a major crisis facing tea plantations. Mohan C. Varghese, General Manager, Tea Manufacture, Kanan Devan Hills Plantations Co (Tata Tea) in Kerala was speaking in the context of the crisis facing Sri Lankan tea plantations. He referred to [...]

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Saving the plantations

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At a local summit discussion on human resource management, an Indian expert explained how Indian companies overcame a major crisis facing tea plantations. Mohan C. Varghese, General Manager, Tea Manufacture, Kanan Devan Hills Plantations Co (Tata Tea) in Kerala was speaking in the context of the crisis facing Sri Lankan tea plantations.

He referred to a model where workers got onto the management in a shared worker-management role/increased productivity and eventually, (some) went on to become directors. He noted that this could be a lesson for Sri Lankan tea companies on how to handle the crisis. The Sri Lankan tea industry is no doubt facing a multitude of crises. Cost of production is rising; wages are not fixed in relation to selling prices; energy costs are rising; the labour shortage worsens as children of workers seek other job opportunities and, there is a growing debate over the call for more tea imports for blending purposes. The last issue will lead to more issues. If and when more (uncontrolled) imports of cheaper tea are permitted, the percentage quantity of imported tea in the blended product will increase and lead to local prices falling. That in turn would put pressure on wages, making the estate uneconomical to run. Rightly or wrongly, there are two sides of the coin on this issue: traders are finding it hard to retain margins as Sri Lankan tea is costly (being a niche market product) and want to go the way traders in other countries do: pack with more cheap teas and less Pure Ceylon Tea. On the other hand, by doing so, the Pure Ceylon Tea brand gets decimated in the process when discerning consumers realise that their cup of Ceylon Tea is ‘not the real thing’ but a mishmash of different teas going under the label of “the best teas from the highlands of Sri Lanka”.

This is the tip of the iceberg. The industry has been grappling with the cost issue, growing labour shortages, inconsistent wages and unpredictable weather among other issues, for many years.

Wages is the main bone of contention with producers arguing that due to union and subsequently political pressure they are forced to agree on a wage that doesn’t tally with production costs or profit margins. This has been a perennial problem. Productivity has also been an issue.

On the other hand, unions and workers complain that companies are making huge profits and wage demands, thus, are not unreasonable. Demands for a wage hike is also based on inflation and cost of living and workers have a right to get a ‘living’ wage, they say. In the early days of the privatization of the estates (around the 1990s), there was criticism that management units, a unit of the private plantation companies, were creaming off the profits through their costly fees and the companies then showed losses or reduced profits. While the to-and-fro dispute continues and the arguments become endless, the industry suffers and is now at the crossroads of the need for an injection of capital, new ways of attracting labour and cutting costs to sustain the industry. Now, entering the debate is the new Indian model of the transformation of workers to managers, directors and CEOs which, in the Indian context is resulting in the sustainability of plantations. Will this model work for Sri Lanka where, unlike India, the workers are still referred to as ‘workers of Indian origin’ and have faced many non-tea/plantation issues in the past? Asked for his comments, Roshan Rajadurai, Deputy Chairman – Planters’ Association of Sri Lanka, says that while this is an excellent model, it would not fit into the Sri Lankan situation. At the same time Sri Lanka too has similar structures as worker ownership in shares and managers and workers sitting together in decision-making, he says. Mr Rajadurai says the structure is different in the two countries and points out to the fact that though the Sri Lankan tea industry has faced worst crises than that of India, there has been no attempt to close down any estates or retrench any worker. In today’s context, companies that have exposure to both tea and rubber are financially better off due to comfortable rubber prices, than tea-only firms. This is subsidisizing tea costs to some extent. The issue of an effective management is also coming into play where some estates are doing better than the others. However the fact remains that the industry is facing its worst or one of the worst-ever crises in history and is now looking for a more sustainable model. It is thus imperative that the government and the industry inclusive of workers, trade unions and buyers (who believe in the sustenance of an industry) put their heads together and develop a strategy that would see the industry through for another 100 years. Tea is too vital a crop to be discussed, debated and conclusions reached without any wider discussion taking place. National committees or parliamentary select committees have often proved to be a waste of time; they neither produce results, are just talk-shops with a set of unviable recommendations or produce recommendations that are not implemented.

While not (generally) in favour of a committee-based approach, the Business Times feels this may be the only recourse to a solution where ideas, proposals and needs are discussed and a workable conclusion reached to save an industry that has been among the biggest assets inherited from the British.




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