Sustaining Sri Lanka’s tea sector is important for the country’s future
The tea industry plays a crucial role in the economy with its contribution to employment, export earnings, etc.
However the fact is that Sri Lanka is no longer the world’s largest tea exporter. The industry faces many difficulties with rising cost of production, declining productivity and an acute labour shortage to name a few.
Tea plucker at work. File photo
We have failed in the search for a sustainable and viable solution to problems the industry is facing. Tea is the most consumed liquid next to water. The authorities should come out with a formula to improve the cost efficiency which is a burden on the industry and productivity of tea production. Reducing the cost of production and increasing productivity alone will not ensure that the Sri Lankan tea industry is able to survive the fiercely competitive global market.
One needs to ask: Is Sri Lanka a better competitor than countries such as India, Indonesia, Vietnam, Bangladesh or Kenya?
On average the cost of production (COP) for Sri Lanka is the highest in the world. This has affected the country’s competitive position in the global market. The primary determinants of cost of production in the tea sector include labour productivity.
The collective wage agreement of 1998 revised the wage package to Rs.101 and now the wage package is Rs.620. This was lauded as a success and welcomed by a cross section of the planation community and their representatives. Fortunately, unlike on many previous occasions when negotiations dragged on for months causing heavy losses to the industry, the parties reached a settlement just within a week of the expiry of the biennial agreement. Whatever said and done, most companies will not find it easy to sustain the impact of this revision unless the trade unions and workers cooperate to increase productivity and efficiency.
It is well known that Sri Lankan yields are lower than those of competing countries. There are several reasons for such low yields. Low labour productivity including absenteeism, shortage of workers coupled with low levels of social recognition for plantation workers have also been compounded by trends of young men and women to seeking employment outside the sector.
The logical means of increasing productivity on plantations is re-planting and in-filling. According to accepted norms, the replanting rate of nearly 2 to 3 per cent is essential to obtain sustainable improvement in yields. Currently it is around 0.5 per cent. Over 50 per cent of the tea plantations are over 100 years old. Is it viable to utilize this extent of ‘old’ land (for tea)? The return on investments may not justify such an exercise. The gestation period for a new plantation of tea is around four years. The investment required cannot be justified on the basis of present cash flows for tea.
Tea companies are inherently exposed to a multitude of risks due to the very nature of the industry. A company’s performance is vulnerable to cost pressures particularly increased wages, rising energy costs and varying fertilizer prices which are beyond their control.
Tea lands are eroding. The option is look to our basics and increase soil fertility level, using compost to rehabilitate soils. Researchers must develop fast growing cultivars that could have a longer sustainable life span at least up to 50/60 years. There is a need for new varieties of high yielding plant material that could yield production quicker.
Worker and land productivity needs simultaneous attention; value addition and respect will address worker recognition for the work they do. We should improve the status of workers.
The Government must provide subsidies the cost of re-planting and grant relief on taxes.
The necessary required funds must be given to the Tea Research Institute since they need more funds for innovative research while researchers should also be given attractive remuneration packages.
The government, the regional plantation companies, trade unions and workers: All have a role to play. It is time that all of us who are interested in the progress of our country work together to sustain the tea industry in a much more responsible mann¬er.
(The writer is involved in the tea industry)
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