Developing superior planting materials is the way forward

14 September 2015 03:27 am - 0 - {{hitsCtrl.values.hits}}

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Pic by: Indraratne Balasuriya

Following are excerpts of the speech delivered by Planters Association (PA) Chairman Roshan Rajadurai at the 161st Annual General Meeting
held recently.

Ladies and Gentlemen, The PA has a proud history of championing the cause of the plantation industry which has contributed greatly to the economic wellbeing of this country since its founding up-to-date.

When George Byrd opened up the first c

offee plantation in 1824 in Sinhapitiya, Gampola and subsequently when James Taylor started his commercial tea plantation in Loolcondera, Hewahata in 1867, they would never have imagined that they were laying the foundation for a glorious and a vibrant plantation industry that would be the sustaining lifeblood of our nation and our economy, for over a century.

The plantation industry has had its glorious days while now, diverse other industries and services have taken its pre-eminent position in a changing and a diversified Sri Lanka.

However, there is still much our industry can contribute to our nation even in our present circumstances because of the vast resources of people and the land we command and the wealth of more than 160 years of managerial experience.

Whatever its critics and detractors may say, the plantation industry has had a proud and an undisputedly glorious history of service to the nation with alluring stories and epoch making historical events marking its colourful journey.

The plantation industry now requires sustained productivity growth while constantly upgrading itself in terms of innovative technology, professional management , product quality and other desirable features such as improvement to product technology and efficiency so that the industry acquires the capacity and the capability to compete in sophisticated supply-driven markets and tightly controlled defensive industry segments in order to exceed customer satisfaction and competing stakeholder expectations.

Challenges

The plantation industry is beset with many challenges presently.
The pervasive threats of politicization of plantation industry at local levels and interference by local politicians.
Vicissitudes of the wildly fluctuating weather and its resultant adverse effects on plantation crops, land and labour productivity and product quality and its impact on costs.
Slow increase in land and labour productivity.
Aggravation of the symbiotic and dependent relationship between the Plantation sector and the other stakeholders, particularly the Land Reform Commission (LRC) who continue to interfere with the estate land.
Imposition of restrictions on key agriculture related economic activities and the highly regulated and statute governed procedures related to our industry.
n On the external front, stiff competition from established producers who have strong state support and patronage, enabling them to have absolute cost advantages, thus enabling them to be more efficient at producing at a lower cost than their competitors.
Emergence of new producers with vast economies of scale.
Continuous decline of real market prices for our end products as a result of intense and lethal price driven completion.
nThese are some of the real issues we are facing today. Coupled with the steeply escalating production costs which are way above the global price bands for Tea and Rubber, we also have the specter of out migration of workers from the plantations to further compound this situation.

In his monumental study of history, the famous British historian, Sir. Arnold Toynbee has traced the rise and fall on 20 past civilizations which have perished over time.

Today, some of the greatest of these past civilizations show only faint signs of their former great power and glory. Toynbee argued that this phenomenon occurred not due to natural disasters or barbarian invasions as some historians say but because of the internal rigidity and complacencies that these civilizations themselves developed over time.

This resulted in their failure to respond appropriately and in time to events that were overtaking them rapidly and led to their downfall. It was the very same institutions and practices that had earlier helped them to attain greatness, that were eventually responsible for their ultimate demise. A closer look at recent history shows us that these conclusions on civilizations by Toynbee, holds equally true in the case of businesses and industries as well.

Adapting to changes
The plantation industry fortunately has adapted to the changing environment and changed the prevailing work systems, remodeled critical factors, mobilized the organization at all levels and has been flexible in searching for new ideas and methodologies to improve performance.

Most plantations managers have understood clearly that radical changes are needed to be effected to the well-entrenched organization models within which they operate today. We have discarded some of the old managerial systems and procedures that were more suited to a bygone era.

The most widely discussed and the topical subject recently has been the labour wage negotiations. Gentlemen, at the last AGM, I brought to the notice of all concerned the challenging situations the plantation industry was faced with. Alas and unfortunately, the systemic issues that have engulfed the global tea trade are external and uncontrollable to us as Producers.

It has taken a turn for the worse since the last AGM and perhaps, this is the longest period of depressed prices for the last 50 years or so.

The high grown auction prices were at Rs. 459 per kg from January 2014 which is now selling around Rs. 385 which is only around 80 percent of the price of 2014. We have seen a drop of over Rs. 70 per kg in price. Likewise, the rubber price which was Rs. 321 in January 2014 has dropped to Rs. 240.

Both tea and rubber prices are now lower than when we granted 20 percent of increase in wages to the workers in 2013. The plight of the grower/producer is amply manifested as the government was compelled to grant a guaranteed green leaf price of Rs. 80 per kilo to the Tea smallholder and guaranteed price of Rs. 350 for RSS 1 for the Rubber smallholder completely leaving out the corporate sector producers in oblivion.

According to the Government formula, the breakeven Gross Sale Average for Tea should be in the region of Rs. 547 per kilo of Tea at the Colombo Auctions. The government is currently subsidizing over Rs. 1 billion per month in guaranteed green leaf price payments to the Tea smallholders alone. It is no secret that the Regional Plantation Companies have far higher commitments towards their workers in terms of wages, statutory payments, established and traditional payments, provision of free medical and child care, health, housing, sanitation and welfare services along with so many other non-cash benefits which are incomparable compared to the costs involved in the Tea smallholder sector.

Further insult to injury
To add further insult to injury and to compound this imbroglio, when the industry is in a crisis situation and is on its knees, the worker Trade Unions started a 10-day go slow campaign in July crippling the industry demanding for a daily wage of Rs. 1000 from the current daily wage of Rs. 620, an increase of 61 percent. I can’t think of any industry giving such a high percentage of wage increase even at the height of their prosperity.

The ill effects of that unwise and untimely action will be certainly felt for a very long time and the industry and its dependent employees will surely suffer the consequences of that ill-informed and unwise action because it caused a further serious diminution of the already endangered industry.

While we have increased the daily wage of workers 11 fold from 1992 to 2013, this year, we have clearly explained to the representative worker Unions, our inability to pay such a high percentage of wage increase purely because of unaffordability and our inability to pay such an increase because commodity prices have crashed to its lowest levels comparatively in our living memory.

It doesn’t need a very high level of common sense and arithmetical knowledge to understand that any or whatever business or industry in the world must first earn sufficient revenue from the product it sells in order to pay its employees and meet other obligations. It is impossible to pay out what you do not earn or what you do not have, whatever pressures are brought upon. While our cost of production is in the region of Rs. 450 per kg of made tea, the prices we have received at the Colombo auctions have been in the region of Rs.

380 or so.
You do not have to be an Einstein to understand the equation and therefore the loss incurred per kg of tea. Our labour wages component is 67 percent to 70 percent of our total cost of production and furthermore, we are mandated to offer 300 days of work per annum of guaranteed family employment for workers from 18 to 60 years, irrespective of the productivity or the output either of
land or labour.

The employers’ ability to pay is a very important and critically fundamental aspect when labour wages are negotiated. The archaic and the century old model of attendance based wages that was suited for a by-gone era must necessarily be changed to a productivity based, opportunity and ability to earn based wage model for the industry, even to have a faint chance of survival.

The adoptive expectations of the workers must be changed to one of allocative efficiency fostering a spirit of entrepreneurship and a bargaining of wages should be acceptable to both parties on the long-term and should not be detrimental to the industry on which close to a million people are dependent for their livelihood and sustenance.

The Employers’ Federation of Ceylon (EFC) and the Planters’ Association (PA) have proposed a Revenue Sharing and a Productivity Based
Wage Model to the worker unions in order that the workers who desire so to have the opportunity and the ability to earn the desired daily wage. We do not see any reason as to why the Unions should reject these models as there have been many estates where these models have worked successfully on experimental basis. The success of more than 400,000 tea smallholder operators which is almost 2 ½ times the RPC worker strength is a good indicator of the effectiveness of this scheme for the 170,000 RPC workforces to emulate.

Revenue Sharing model
The efficacy and the success of the Revenue Sharing model is evidenced by the fact that within a 20 year period from 1992, the tea smallholder extent under cultivation has doubled from 60,000 hectares to 120,000 hectares along with more than a 250 percent increase in their total crop.

Their quality of life has improved tremendously and this bears testimony that the Revenue Share model is a tried and tested model for plantation operations, for over 50 years. We have repeatedly seen the lunatic spectacle seemed periodically bent on dragging the industry towards paralysis, apparently under the misguided impression that the workers who are employed in the industry are separate from the industry itself. The workers and their Unions should not adopt a “beggar thy industry” policy. This is a pursuit of a policy contrary to the self-interest of the constituency involved.

I wish to reiterate that the most important and the critical stake holders, the workers must even now at this late stage take the issue of labour productivity even more seriously than ever before. It is not an exaggeration at all to state that the sustainability and the continuation of the industry and the livelihood of around 1 million people are in peril if some radical changes are not effected now.

As I mentioned at the last AGM, there is ample room for improvement to the productivity levels of pluckers at estate levels as we have seen at the ground levels. While our daily plucking averages are around 18 kilos of tea leaves, in India it is close to 30 kilos and in Kenya around 48 kilos.

The current attendance based wage system with a guarantee of a minimum number of 300 days of work per annum without any relevance to the seasonal variations in crop and daily individual output, which is inherent any agricultural enterprise, is a great disincentive for productivity at all levels.

Enabling a conducive and a favourable environment for enhancing productivity which will result in creating and improving the earning capacity of the workers must be viewed seriously by everyone concerned.

Opposing progressive action
Trade Unions must not senselessly oppose every progressive and practical approach that is being proposed to improve productivity. If this attitude persists, I am afraid the dissipation of the industry which has been such a significant landmark in our country will surely hasten.

The well-known poet Laureate of England, Alfred Lord Tennyson, immortalized “The old order changeth yielding place to new and God fulfills himself in many ways lest one good custom corrupt the world”. Perhaps it is timely now that all good things must come to an end for better things to begin and the wage bound system of employment that persisted for over a century must change to a system where the employees have an opportunity to earn as much as they are willing to work for it.

They should be able to control their ability to determine the amount of income that they would want to earn. As Shakespeare famously quoted “there is a tide in the affairs of men, which taken at the flood leads on to fortune, omitted, all the voyage of their life is bound in shallow and in miseries. On such a full sea are we now afloat, and we must take the current when it serves or lose our venture.”

Professional competencies
The Planters who are generally acknowledged to have sound management and administrative skills along with a wide range of leadership, people management and other competencies must now focus on being even more professional in keeping with the modern competitive business environment.

They should sharpen their professional competencies by using innovative technology to sustain productivity growth and unique product quality offering a unique selling proposition in relation to Ceylon Tea.

The social and environmental responsibility concerns and conformation to a myriad number of international standards and certifications whilst being closely scrutinized by the NGOs, INGOs and other pressure groups are an additional challenge that we have to contend with, in this extremely competitive and customer driven environment. There is a huge disparity between the price paid to the producer and the price the consumer pays for our product in the global retail markets.

Just as much as our predecessors overtime tenaciously and with an indomitable will faced the challenges and the hardships courageously and overcame them, I am sure the present generation of Planters too, would leave their indelible mark on the industry with their total commitment, high level of competency and dedication to the work ethic which is required to lead hundreds of people on a daily basis under their charge.

The way forward for our industry is to develop superior planting materials by identifying elite clones with the help of the Research Institutes, to change the inherent plant architecture where required to increase productivity, improve quality and to adopt to mechanization, fine tuning harvesting machines to suit Sri Lankan conditions with emphasis on quality of the tea leaf and the longevity of the tea bush, develop appropriate planting models to aid mechanization of field work from the re-planting stage itself and incentivizing re-planting and quality oriented manufacturing initiatives, public private partnership programmes to facilitate value added exports with support from the state machinery for the promotion of Ceylon Tea in select countries and in new markets highlighting the positive aspects of Ceylon Tea.

I wish to now conclude my very brief address. It will be a grave remiss on my part if I do not take this opportunity to thank my employer, Hayleys Group PLC and in particular Mohan Pandithage, my charismatic Chairman for the great support and unhesitating assistance extended to me at every occasion. I am indeed greatly honoured today by the presence of my Chairman at this AGM as I am aware that he had to forego an important previously committed meeting to be present with us in order to encourage the Planters.

I also want to express my sincere and heartfelt gratitude to Malin Goonetileke, our indefatigable and evergreen Secretary General along with the thoroughly dependable Suresh Ganeshan, our Asst. Secretary General and the full PA Secretariat for the fantastic job they have done during the year.

I am deeply aware that the number of meetings and events to attend along with the multiplication of schedules and returns required by various organisations which have exponentially increased and it is to their credit that they have managed the PA Secretariat without any slowdown in spite of the increased workloads and other demands etc. I have to thank my colleagues in the Plantation industry and in the PMC without whose support; I could not have endured the challenges and the demands of representing the PA in perhaps one of the most challenging years in the
recent history.

In 2017, Ceylon Tea will celebrate 150 years of official existence since its founding as a commercial plantation crop in 1867. Dear friends and colleagues, let us therefore, brace ourselves to our duty and so bear ourselves that when the Plantation Enterprise has lasted for another 100 years, men will still say, this was their finest hour.

Let us all make this our finest hour. Think of the future and not of the past.

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