Financial Times

Madulsima Plantations has said that rising costs continue to affect producer margins while poor labour productivity remains a major constraint as productivity indices remain static despite incentives offered.

“This is true particularly to the attendance incentive, indicating that it does not co-relate to productivity efficiency. With the impending wage revision due in November 2006 as the Plantation Worker Wage Collective Agreement expires on October 31, the industry faces a major upheaval. The rising cost of living would figure prominently at the negotiations and would be strengthening the bargaining arm of the worker trade unions,” V. P. Vittachi , Chairman Madulsima Plantations has said in his annual review.

He has said that in the Madulsima region, yield per hectare increased by 3.51 percent during the year in comparison to the previous 12 months, whilst in the Bogawantalawa region the improvement seen was 9.39 percent.

“Thus crop harvests in both regions improved marginally, though supply of brought leaf declined in the Madulsima region following the construction of a bought leaf factory by the Tea Small Holders in the Passara Region,” he has said.

“After much negotiation a collective agreement was signed between the Employers’ Federation of Ceylon (on behalf of the 20 members of the Regional plantation Companies) and the workers trade unions on October 24 2004, which will be operative up to October 31, 2006.

The wage increase was implemented with retrospective effect from July 1 2004,” Vittachchi has said, adding that the company incurred an additional expenditure of Rs 63,659 million when compared with the previous year on account of the wage increase granted to daily paid employers.

Total wage costs increased from Rs 404,353 million in 2004 to Rs 468,012 million in 2005, reflecting an increase of 15.74 percent.

The cost of organic fertilizer shows a significant decrease due to economising of fertilizer usage.

The increase in cost of fuel for driers and packing machines is due to price escalation. Better controls enabled the company to achieve a marginal saving of Rs 1.99 million on power costs during the year.

When compared with the previous year, an overall reduction of 2.13 percent, representing Rs 2,969 million, is reflected.