A group of tea planters who have not been given a proper categorization are facing pressures in maintaining operations due to a lack of government support as well as macroeconomic issues.
“The Rs.80 guaranteed tea price for smallholders from the interim budget is not being paid for planters with land more than 10 acres. Even the grants by the local governments are only given to those with less than 10 acres,” a planter who wished to remain anonymous told MirrorBusiness.
Plantation Industries Ministry Secretary Anura Jayawickrama said that this was not done as the government defined a smallholder as a planter with less than 10 acres.
However, since Regional Plantation Companies (RPCs) say that 30 percent of the tea land is under their management, and the rest owned by smallholders, the planters in question too are considered as smallholders.
“They are some kind of smallholder, but we can’t afford to pay for the 50-acre planters,” Jayawickrama added.
Planters who own between 10-50 acres form less than 1 percent of the smallholders.
According to the source, planters with less than 10 acres of tea attract informal employees who are paid around Rs.700 daily wage without EPF, ETF or gratuity payments despite receiving the subsidy and grants.
“So the small players make profits, and the factories make profits, but we don’t.”
The tea industry has been hit hard in recent times with the succession of crises in Russia, Ukraine and the Middle East, which are the top markets for Ceylon Tea. Prices of tea at the Colombo Tea Auction hit a 5-year low at the start of the year.
In addition, the regular increases of plantation worker wages has also hit the RPCs and smallholders who adhere to good practices adversely. Labour accounts for over 70 percent of tea production costs.
While the 23 RPCs have been running at a cumulative Rs. 2 billion loss in recent times, most have been managing with diversification and economies of scale. Therefore, it is these planters who are being ignored by the government who are facing the greatest pressure.
However, the source said that the government will pay estates with land up to 50 acres if they are owned by 3 or more shareholders.
Jayawickrama confirmed that such an action is being contemplated.
“This is something the Tea Board has to discuss and inform the ministry. I don’t know how they will implement it,” he said.
As reported by MirrorBusiness earlier, Rs.5 billion was earmarked as the tea subsidy in the interim budget, but only Rs.4 billion was provided to the Plantation Industries Ministry. Rs.16.4 billion is required to properly implement the programme.
Many criticise the move in the interim budget as an ill-thought out measure designed to win votes.
Meanwhile, Jayawickrama said that the rubber subsidy also given in the interim budget is proceeding smoothly.