The recent article by Lalin I. De Silva captioned “Tea Crisis: Who deceives whom?”needs a response.
The writer accuses the Planters’ Association of “deceiving”, “responsible for the confusion in the plantations” and “covering up the shortcomings of the RPCs”.
It is rife with fallacious reasoning and misconceptions and cannot go unchallenged or unanswered as at it would be a serious dereliction of duty on our part to our fellow Planters and to the Industry.
It is de rigueur to support such arcane and aberrant conclusions foisted on the Planters’ Association (PA) by solid evidence of which there is none.
The PA should not be the convenient ‘bete noire’ for anyone with some venal antipathy and some long held grouse against RPCs as the article is rife with many inaccuracies and untruths.
Matters should be taken up and resolved with the specific individual RPCs concerned itself and the Planters’ Association and all the RPCs should not be maligned. Such a Don Quixotic censorious approach is counterproductive and is contrary to the larger interests of this industry.
The very generous and liberal over simplification of the serious challenges facing the plantation sector may convey an entirely wrong notion to the majority who are uninitiated in the complexities of the plantation enterprise and to those who have little contact with the system.
Some uninformed entities may regurgitate such arguments over and over again to support their long held misconceptions.
Furthermore, this diatribe obfuscates the very serious issues at hand and does irrevocable harm, injustice and nullifies to nothing, the valiant effort and the toil of our erstwhile and fellow Planters, staff and the workers on the estates whose enterprise, hardship and heart break is part and parcel of their daily fare.
Is there an underhand attempt or an ulterior agenda to denigrate the PA and its constituent RPCs at someone’s behest for some inexplicable reason?
The Planters’ Association (PA) was founded in 1854 to promote, foster and protect the planting industry of Ceylon.
This is the second oldest Association in Sri Lanka after the Chamber of Commerce which is 15 years older. The role and the scope of the Planters’ Association is therefore mainly to represent the larger interest of the industry and not to be responsible for each and every Regional Plantation Company (RPC).
For the Planters’ Association to have achieved 161 years of continuous activity through various vicissitudes and challenges is to have acquired an undeniable distinction of service to the industry and to the nation which has been acknowledged by those who matter.
No other major industry in our country has been subjected to so many radical changes so frequently and to have continued so far is nothing but a testimony to the tenacity and the obdurate resilience of the industry and the people who are involved in it.
Our forebears and those who followed came together for the purpose of consolidating and directing a great agriculture enterprise and to cast such an unworthy aspersion and to postulate a preposterous accusation that the Planters’ Association is responsible for the “confusion, cover up and deception” is totally unjustified and uncalled for. It is an undeniable slur and a churlish attack on the character and the intentions of the thousands of Planters who were associated with the PA over the last 161 years and did yeoman service to the industry with devotion and distinction.
They will always march in the ranks of honour and their efforts and the good name cannot be sullied by deluded sophomoric accusations.
The results of the contributions and endeavours of such men of character who served the industry and are revered house hold names in our industry, will surely stand the test of time and will reverberate through the ages long after such plebeian allegations are trumpeted by those who strut and fret their hour upon our stage.
I wish to respond to some of the points that were raised in the article under reference. My association with the plantation industry too spans a period of 32 years as a Planter having started in the JEDB as a “Creeper” in 1983, Estate Manager, Chief Executive Officer and Managing Director.
The reality and the impact of the pendulum like fluctuations in the global economy and the political environment with its attendant consequences should definitely be taken into account when an analysis is done regarding the present unstable state of the industry.
The unprecedented downward spiral of Tea prices since April 2014, is an external and uncontrollable factor for the producers of Tea and Rubber as global commodity prices have taken one of the worst beatings in the living memory.
As a result, our national Rubber production decreased 30% in 2014 compared to 2013 as many Rubber Smallholders abandoned tapping and this prompted the government to grant only to the Smallholders, a guaranteed price of Rs. 350 per kilo for RSS1 Sheet Rubber.
Likewise, the tea prices too came down so low that the government gave a similar concession, again only to the Smallholder producers of a guaranteed price of Rs. 80 per kilo of Green Leaf. This clearly demonstrates the desperate situation of the producers of both Tea and Rubber crops even at Smallholder levels.
Sri Lanka exports over 95% of its tea production and therefore is heavily dependent on global market trends and prices. Our exports are primarily to the Middle East (Turkey, Iraq, UAE, Iran, Libya, Syria and Kuwait), and Russia and Ukraine where 75% of our teas are sold.
The chaotic war situation in these consuming countries coupled with the serious economic depressions that these countries themselves are subjected to, have resulted in a drastic drop in tea prices. The auction prices of tea have dropped so low that it has become uneconomical even for the Smallholder to pluck their Green Leaf at the current auction prices.
The national average of tea was at Rs. 510 per kilo in January 2014 and by April 2015 this has dropped to a low of Rs. 408. The High Grown Elevation average, where a majority of RPC estates are located, has come down to Rs. 378 for April 2015.
This is why the government of Sri Lanka is subsidizing the Tea Smallholder producers by giving them a minimum guaranteed price of Rs. 80 per kilo of Green Leaf. Unfortunately, the government in its inscrutable wisdom has seen it fit to discriminate against the RPC producers by not giving the same concession that was afforded to the Smallholder producers although the RPCs too are producers and sellers of the same type of Tea, at the same Colombo Auction to the same buyers.
The RPCs’ statutory and conventional responsibilities, commitments and liabilities towards their workers and dependents numbering close to one million is beyond any comparison to that of the smallholders. The article goes on to state that smallholders have “increased the yields by 200 percent and do not complain about the productivity of workers”.
If that be the case, there is something very serious and anomalous in granting the very same smallholders who are so highly productive these guaranteed minimum price payments but at the same time denying them to RPC producers.
The article states that the cause of the current crisis is because of low yield in the plantations as a result of not “replanting at the correct time”.
If replanting is the panacea for all the ills that are prevailing in the tea industry currently or if that is the magical silver bullet, something is seriously remiss in the industry! If replanting can solve all our current problems, then the problem at hand would not be such a daunting challenge for the RPCs.
The article looks at the current crisis in the industry only through a narrow prism of replanting. There are many estate divisions where they have more than 75% in replanted tea and accordingly, they should be making profits.
The article remonstrates that “most of the issues have been discussed over and over and heard frequently and repeatedly and no remedy has been elucidated” by the Planters ’Association.
However, neither this article nor any other for that matter has elucidated a practical and a workable solution to the issues at hand.
Many articles that appear in the media have however shown an unwillingness to come to terms with the past realities of the industry and an inability to define a clear path for the future.
Many scribes are afflicted with the infatuation of being unduly deflected by the facts and realities on the ground and consistently assess the situations in terms of their own pre conceived notions while ignoring or rejecting any contrary signs and facts.
Their attitude of a sense of superiority of their own reasoning is so dense as to be impenetrably inept and profoundly provocative.
The current crisis is a systemic one and we cannot so blithely over simplify it by merely laying the blame on replanting. Replanting has been the traditional “scapegoat” that many uninitiated have vacuously attributed to the current woes of the industry and has been the inane and hackneyed chorus repeated ‘ad nauseam’ by many uninformed.
The current systemic crisis facing the tea industry is not only affecting the Sri Lankan tea industry but other tea economies as well.
It is of particular significance when the producer has no control over the supply chain and acts only as a mere initiating point in the whole supply chain process.
Viability and profitability therefore depends on external purchasing shifts, supply pushes, demand pulls, international competition, internal cost structures, technological and the marketing environment prevailing at a particular time and their interlocking connections.
Tea is a homogenous product and out of a global production of 4819 million kilos in 2013, our national production is only 340 million kilos; a mere 7% of the global production.
We are not in a position to influence the global prices. Tea prices worldwide are governed by world supply and demand dynamics with its inherent supply push and demand pull factors coming into play along with other economic and geo political situations prevailing in the markets and economies at a given time.
The individual producers have no say in determining the sale price as Tea is a common primary commodity and all Teas from India, Kenya, Indonesia, Vietnam and numerous other producing countries have to conform to a global price band. We sell more than 95% of our product in the global market through local and international buyers and packers who buy our Tea at the Colombo Auctions, purely based on the global price levels prevailing at the time.
From 1992 to end 2014, the price of High Grown Tea in US Dollar terms at the Colombo Auction has moved up only by a measly 220% reflecting this competitive global over supply and slack demand scenario.
However, over a space of twenty years from 1992 since privatization, the Labour Wages have increased close to 11 fold up to 1063% resulting in the Cost of Production (COP) too increasing by 780%. In response to this, conversely the High Grown Sale Average for a kilo of made Tea at the Colombo Auctions has increased only by 617%. At the time of privatization in 1992, the daily wage of a worker was 92% of the relative value of a kilo of High Grown Tea sold at the Colombo Auctions. By the end of 2014 however, the worker wage has accelerated to 147% of the High Grown Average.
As at April 2015, the relative worker wage percentage has further increased to 155% of the High Grown Average reflecting once again the low Colombo Auction Average and the downward slide of prices. Prior to privatization in 1992 during state management, the daily labour wage was low as only 86% of the High Grown Sale Average.
Irrespective of the price levels we receive at the Colombo Tea Auctions, the RPC workers have to be paid over US $ 5 daily without all the other financial and non-financial commitments which add to a further US $ 3/- for only plucking an average of around 18 kilos of green leaf per day in Sri Lanka. Our competitors, who obtain close to our price levels in the world auction centres, pay their workers far less than Sri Lanka for a significantly higher daily output.
By end April 2015, the Colombo Auction Average has dropped further down to US$ 3.20 per kilo.
Our daily labour wage is the highest in the world Tea economies while the land and labour productivity is the lowest. The traditional facilities, amenities and the services that are provided not only for our workers but also to their dependents are unmatched by any other tea economy be in India, Kenya or Indonesia.
Even now, our daily labour wage of close to 5 US$ per day is far higher than that in North India (Assam), an area producing almost double that of our National production. Assam Tea workers receive only Indian Rs. 115 per day. While in South India, they receive Indian Rs. 195 per day for more than double our outputs.
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