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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Don’t fragment the tea plantations

Don’t fragment the tea plantations

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1Don’t fragment the tea plantations Empty Don’t fragment the tea plantations Sun Jul 29, 2012 1:01 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Written by The Nation

A Cabinet Committee headed by Minister Dew Gunasekera has proposed that the leases of State lands be restricted to 5000 acres and that plantation companies which have more than this acreage should be required to return these lands to the State to be given to small holders. This reminds us of the original take-over of the tea plantations by the government in 1972. Dr Colvin R. de Silva, a committed Marxist insisted that the plantation companies should not be broken up and that they should be managed as an integral unit as previously done by the British. Hector Kobbekaduwe on the other hand wanted these lands to be given to the Kandyan peasantry. If Kobbekaduwe had succeeded we would have lost the backbone of our export industry.

The JVP leader Rohana Wijeweera at the time suggested that the tea bushes be pulled out and manioc be grown in the plantations instead. All these crazy ideas were fortunately thrown out and the tea plantations were taken over as integral units. The commercial management of the plantations whether tea , rubber or coconut land should be large enough to make it worthwhile for the owner to employ a paid Manager and also generate sufficient profits to plough back into the land. But the Land Reform law placed a ceiling of 50 acres and many large plantations particularly coconut lands were fragmented.

When the State found that it could not run these plantations profitably (it could hardly do so when bus conductors were (appointed as conductors on the Estates), the plantations were privatized and Regional Plantation Companies were set up to take over these large estate companies. Had the plantations not been privatized our economy would have been wrecked and we would have been deprived of our tea plantations which are an important source of export earnings. Now that we are facing a serious balance of payments crisis the value of these export crops must be apparent to any politician. But politicians like to play to the gallery. Land ceiling and fragmentation of large properties will be popular.

But commercial agriculture requires large extents of land under a single management. Our politicians placed a serious obstacle on improvements of productivity in the paddy farming sector. Land was given to peasants in the colonization schemes on a restricted tenure. They could not sell such land nor could they grow any other crop on paddy land. Economic freedom where the landowner is free to dispose his property is an
essential feature of a free market economy. Our politicians deprived the small farmers of economic freedom.

So they labor on small plots of land working only for a month or two on the land and eking out a miserable existence.

Their productivity is perhaps the lowest in the world. If they had the economic freedom they would sell their paddy lands and move into paid employment or set up some business. But the law prevents a free market in agricultural land. In the case of the large tea plantations the Minister and his Committee want to deprive the plantation companies of part of their land. The plantation companies are struggling to carry on and this sort of suggestion will only undermine their morale and make them wish to give up their tea lands altogether.

The Government gave a bad example by taking over the sugar factories, which sent a wrong message to all foreign and local investors. This new suggestion will also undermine the sense of security of the plantation companies. What the Government should do instead is to take over the schools and small hospitals run by the plantation companies and fund them from its own budget and relieve the plantations of a financial burden. The Government must allow the Plantation Companies the economic freedom to manage their properties without unnecessary hindrance from the State.

Any person who invests will want a sense of security and long term investments which are necessary by the Plantation Companies require an atmosphere of long term economic freedom that their investments will be safe and their properties will not be taken over by the government after the investment has been made.

Our tea plants are old and have outlived their useful lives from a productivity point of view. They have to be replanted. This requires considerable new capital investment. The government is cash strapped and cannot provide loans to the Plantation Companies as in the past. But this sort of recommendation will undermine any wish that the Plantation Companies have to invest in replanting. The Government must leave the decision to the Plantation Companies, how to deploy their resources.

http://www.nation.lk/edition/opinion/item/8695-don%E2%80%99t-fragment-the-tea-plantations.html

2Don’t fragment the tea plantations Empty Re: Don’t fragment the tea plantations Sun Jul 29, 2012 1:20 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
"proposed that the leases of State lands be restricted to 5000 acres and that plantation companies which have more than this acreage should be required to return these lands to the State to be given to small holders"

Oh come on. If mistake once was not enough, you want to repeat it again it? Take perfectly profit making entities like SUGA, and Sevanagala and make it a burden to tax payers and locals. Talk about Expropriation in disguise again.

Please stop this nonsence and try to concentrate on how to increase productivity and output of already existing and under performing State entities which are at losses. Will do much more good than sending the wrong signals again to companies and foreigners.

The plantations companies are hit already. Try to see what can be done to encourage them to use their land productively than giving these companies even more negative things to worry about. If there is unutilized land , see what can be done to encourage the companies to cultivate on them or help these companies figure out a plan to lease out these land to identified individuals with potential who can contribute to all. Taking by force the land and then giving it to a start up farmer? Please let us know the performace of the companies which were expropriated and their performance before expropriation and now.

3Don’t fragment the tea plantations Empty Re: Don’t fragment the tea plantations Sun Jul 29, 2012 7:26 pm

Whitebull


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
the leases of State lands be restricted to 5000 acres


When handing over state lands there has to be a proper policy but this type of hard and fast rules may negatively affect.What should be done is implement a system to see whether these lands are being utilized properly.

Plantation companies which have more than this acreage should be required to return these lands to the State to be given to small holders.

This is rather absurb.If they realy worry about small holders there are bare lands to give.

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