Changing face of Sri Lanka’s plantations: Coffee for Tea
Ceylon Tea, once a globally sought after beverage is now transforming its plantations to become the future of coffee on the world stage in line with changing cultures; but continues to be the bone of contention in a politically charged industry lamenting for more surpassing productivity gains.
Industry veteran with over 40 years of expertise and former Planters Association Chairman Dr. Roshan Rajadurai speaking with The Sunday Times Business said, “The issue in Sri Lanka is that everybody is an expert on growing tea but they have never done it and don’t intend to do it in the future; and under the present circumstances they can never do it.” Dr. Rajadurai is also the Managing Director at Hayleys Plantations.
Wages
Here’s an industry that has faced flak time and again for not paying enough to its workers that have toiled on the plantations for the past 150 years since they arrived from India. A sorry lot at the time they arrived, the plantation workers have over the years become a key source of votes for a number of political parties and even the incumbent. From the pedestals of a May Day rally to a national budget the wages have been proposed to be increased. Promises for more votes at the next election!
But this time the government’s intention is to intervene in trying to work out an increased wage. Currently, Dr. Rajadurai explained plantation sector wages are the highest in all 45 wages boards. And plantation sector wages now at Rs.13350 per day and Rs.33,750 per month is 60 per cent more than the national minimum wage of Rs.840 per day or Rs.21, 000 per month. In fact, he noted the government has proposed monthly minimum wage for private sector workers at Rs.27,000 in April 2025 whereas plantation wages at Rs.33,750 were in effect since October 2024.
The plantation industry favours a productivity-based wage so workers can earn more than Rs.1700 per day based on their willingness to work by increasing the output. Already compared to last year tea prices at the Colombo Tea auction has reduced by Rs.116 at which time 25 per cent wage increase was not in force.
Prices & production
Tea prices are unlikely to maintain the same momentum as 2024 this year which will have a significant impact on viability and sustainability.
Dr. Roshan Rajadurai
In 2015 Sri Lanka was producing 340 million kg of tea which was hampered by the Glyphosate ban fiasco. As the industry was slowly recovering from this after laws were brought in place to allow for the use of Glyphosate on the tea plantations, they faced another setback with the sudden unplanned and unscientific stoppage of chemical fertiliser.
“This led to a significant reduction in crop production to 250 million kg and we are still hovering around that figure,” Dr. Rajadurai asserted.
He pointed out that today fertiliser prices have increased at Rs.125 per kg of made tea to around Rs.25 when the subsidy scheme was in operation in the past.
Less tea vs more coffee
The tea industry has shrunk with tea factories closing and most of the smallholders opting to grow other more viable crops while still others would have sold out.
All these concerns and the growing cost of production and a global shift in demand towards more coffee than tea has made most corporates take the decision to gradually increase cultivation of coffee on the tea plantations.
The demand for tea is reducing globally and there is an excess of production over demand mostly over 300 million kg of tea which means there is an over-supply of tea at almost half the price of Ceylon tea, Dr. Rajadurai said.
He pointed out that the reason for this is the acceleration of coffee and herbal drinks and infusions. In light of this growing trend this is the way forward especially for Sri Lanka because of the changing socio-cultural and economic landscape and with fewer people engaged in agricultural production. As a result corporates opt to grow crops that are less labour intensive and more revenue generating.
Coffee and the export of spices where harvesting is required only once or twice a year is more viable and will be more in demand.
Currently, Hayleys Plantations is cultivating 200 hectares per year and we intend to have 1000 hectares by 2027, it was noted.
Coffee is more profitable since there is less cost of production and fewer workers to maintain. In one hectare of tea the requirement is 1200 workers but coffee demands only one fifth of these workers.
Tea requiring harvesting every week which is more labour intensive while coffee is harvested only once a year. The plantation industry is currently facing a shortage of workers with most shifting to work in the cities and fewer opting to stay on the plantations to continue plucking. It was found that even workers from villages surrounding the estates were also hard to come by.
Sri Lanka island coffee has a unique quality and already the industry is receiving inquiries pertaining to purchases of coffee, Dr. Rajadurai said. “People like the different flavour and the same advantages for Ceylon Tea like the weather, soil and the general ecosystem in Sri Lanka contributes to the quality of coffee as well.”
Productivity
With over 90 per cent of the country’s production of Ceylon Tea meant for export, prices are determined by global demand and supply and as producers ‘we’ have zero influence, Dr. Rajadurai said.
“We are forced to sell the product at any price even below cost of production,” he noted
For every rupee earned close to 90 per cent of the money is retained within the country unlike other industries with 70 per cent of the cost of production set aside for salaries and benefits and 35 per cent contributing towards plucking cost.
Sri Lanka is said to have the lowest productivity level at 18-20 kg on average compared to 34 kg per day in North India, 48 kg per day in South India and 60 kg per day in Kenya.
The Regional Plantation Companies (RPCs) attract a harvesting workforce of only one tenth of the 500,000 workers on smallholder plantations. The smallholders obtain Rs.50 per kg without any statutory or traditional benefits. Earnings are in the range of Rs.1500 per day when they pluck 30 kg. Some on the RPCs also earn higher wages based on their productivity but not everyone. It is found that some estate worker still have a mindset locked into the attendance based wage system of plucking 8 hours per day and just get qualified for the name, Dr. Rajadurai said.
With workers earning about Rs.50-60,000 per month based on the productivity model “that’s why we are proposing flexi-time system where workers are rewarded based on productivity”.
Commenting on repeated queries by plantation authorities that the industry should resort to re-planting, Dr. Rajadurai noted that they can barely manage to pluck two rounds when with the minimum requirement being four rounds. “So even if you spend Rs.8 million per hectare and if pluckers pluck only 20 kg for 3 rounds you can never recover the interest.”
With worker shortage and the inability to even pluck the existing VP its “unwise” to plant more plants. “If anyone can demonstrate what they are preaching then I will follow,” he said adding that most people on a trip to Nuwara Eliya always assume they know everything about growing tea but it is easier said than done!
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