Bold Changes Needed to Salvage the Nation’s Tea Plantation Industry
Posted on April 29th, 2021

Ananda Wickramasinghe 

The Sri Lankan tea plantation industry is facing serious challenges that call for unbiased analyses of the current status and bold rethinking of the solutions required if it is to continue to hold its place as one of the nation’s leading sources of foreign exchange.

What we are witnessing presently is an industry that cannot be sustained anymore with a colonial-time attendance-based wages system. Tea is a high labour-intensive crop and requires an abundant supply of inexpensive and skilled labour throughout the year. Availability of cheap labour in the colonial period was the most significant contribution to the profits of the tea industry. The labour component of the total cost of production of tea is about 65%. The reality is that Sri Lanka is no more a country with cheap labour.


Printed version of this article appeared in the April. 11th, 2021 Sunday Times


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The periodical demand for wage hikes, given the rising cost of living, is rational and inevitable from the workers’ side. But even with periodical pay increases, some reports state that these workers will continue to remain under poverty levels. According to one trade union leader that the poverty level of tea plantation workers has increased from 22% to 32%. ( Source: Poverty in the plantations increased )

Wages, however, are only part of the problem.

This report analyses the current situation and proposes several measures that can be implemented to revive the tea industry

Under-utilized tea lands: Old Seedling Tea (OS tea) to Vegetative propagated tea (VP tea)

Tea is not native to Sri Lanka and was first propagated by using seeds imported from China and India. Due to the genetic variability among plants and other agronomical factors the plant growth and the yield of those century-old seedling tea bushes were not uniform.

A report published by Tea Research Institute (TRI) states that over 95% of old seedling tea in the high country, Uva, and mid-country are over 60-80 years old. The productivity of seedling tea normally started to decline after 50 years. The TRI introduced high-yielding vegetative propagated clone tea in the 1950s to replace low-yielding old seedling tea. As its name implies, VP tea is a plant that propagated vegetatively by a single leaf internode cutting from a mother plant.

TRI reports that in 2002, 46.7% of the area under VP tea produced 61.7% of the total crop, while 53.3% of the area under old seedling tea produced only 38.4% of the total. The average yield per hectare of made tea under seedling tea was 1050 kg while it was 1972 kg under VP tea. VP tea was, thus, seen to have over 80% greater capacity for than old seedling tea”. This report further states that A bulk of old seedling tea (57.9%) falls within the yield slabs of 700 to 1,300 kg made tea/ha/year. About 24.6% yields an average above 1,300 kg /ha/year . ( Source: agricultural profile of the corporate tea sector – 2002 ) It has been reported that several clones (cultivars) developed by the Tea Research Institute of Sri Lanka had been yielding around 8,000 kg/ha in Southern India under commercial conditions.( Source: Productivity of the Plantation Sector ) It is unfortunate that RPCs still maintaining about 50% of RPCs managed tea lands with old seedling tea. This is an underutilization of national assets which can be developed to obtain greater tea harvest.

Seedling Tea Plantation with exposed soil. Vulnerable for heavy soil erosion losses.
Seedling Tea Plantation.

The ability to produce higher yields is not the only benefit of VP tea. The plant’s uniform canopy cover acts as a protective soil cover. Exposed topsoil in old seedling tea lands tends to cause higher soil losses due to raindrop splash erosion and also due to runoff erosion. Several research studies have proven that the soil erosion losses in VP tea land are very minimal. ( Source: Assessment of replacement cost of soil erosion in Uva high lands tea plantations of Sri Lanka ) One should imagine how much soil would have eroded for about 2 centuries under old seedling tea.

Young plants of Seedling Tea during Colonial Time.. (Source: Lankaputhra)
VP Tea gives higher yield and also protects the soil.

In 1958, the first government-sponsored tea replanting (replace old seedling tea with VP tea) subsidy scheme targeted about 2% of tea extent (which is about 1,567 Ha) to be replanted annually. However, the 2011 TRI report states To achieve the conventionally accepted norm of 2% annual replanting in the corporate sector, the extent replanted annually should have been an average of 1,567 ha per annum. What is most disturbing is that the net area the 307 RPC estates failed to replant, to achieve the annual norm of 2% from 1991-2005 is a total of 23,500 ha which would have all been in full bearing by 2008, and given an annual incremental crop of about 58 million kg made tea per year, at a modest yield of 2,500 kg per ha”.  The TRI reports that in 50 years (1956-2008) the average rate of replanting in the corporate tea sector was about 0.92%. Highest rate of 1.46% of replanting achieved during 1986-1990. Since then the rate has dropped to 0.42% during 2006-2008 period. ( Source: Agronomic Profile of the Corporate Sector Tea Plantations in Sri Lanka )

Productivity of Tea

About 79% of the seedling tea yielded less than 1,300 kg per ha per annum, of which 11.3% (totaling 4,334.9 ha) yielded even less than 700 kg, while 0.3% yielded more than 2,500 kg per ha. In VP tea, 65.4% of the area (24,360 ha) yielded above 1,600 kg per ha per annum, while 17.9% (6,659 ha) yielded below 1,300 kg. About 75.7% of the seedling tea in the Up country, 81.5% in Uva, 82.4% in Mid country and 89.3% in the Low country produced less than 1,300 kg per ha per annum. The overall productivity of VP tea was relatively high in the Up country (at a yield per ha (YPH) of 2,070 kg), while in the Low country, only VP fields in the early ages (up to 20 years) were more productive at a YPH above 1,900 kg. VP fields in the Up country achieved their highest productivity level at 21- 30 years, whereas, in Uva and Mid country it was at 31-40 years. The highest overall average productivity of VP tea fields in the corporate sector was achieved at the age group of 31-40 years. The declining trend of VP tea yields started at the age of 20 years in the Low country, at 40 years in Mid Country and Uva, and at 30 years in Up Country regions.

About 19.7% of VP tea in the Up country, 8.1% in Uva, 10.2% in Mid country and 8.8% in the Low Country yielded more than 2,500 kg per ha per annum. There was a significant extent of VP tea in Low country (19.2%) producing less than 1,000 kg per ha, while in Up country, Uva and Mid country, 1.3%, 5.5%, and 11.1% respectively fell into the same yield slab. Productivity was also analyzed under Agro-ecological Regions and soil series (types).

Replanting is an expensive procedure that requires a high input of manual labour. This procedure takes about 10 years to make a significant income from the newly replanted tea. The current estimated average expenditure to replant a hectare of old seedling tea is about 3.33 million rupees and about 70% of this cost accounts for manual labour.

According to RPC sources, they have been experiencing losses since 2014, and, therefore, cannot be expected to invest in expensive operations such as replanting. ( Source: Sri Lanka’s plantations in crisis; Estates suffer massive losses in 2014 )

Also with the current wage hikes, RPCs may argue the need to take further measures to lower their losses. The impact of such measures will result in gradual negligence of maintaining the plantation such as abandoning low yield tea lands, reduction of labour inputs for maintenance of plantation, etc. This has already confirmed by one of the spoke person attached to RPCs where he stated We will manage and cut the coat according to the cloth, and if we cannot fertilize we won’t, and if we cannot upkeep we cannot,” ( Source: Wage hike to incur Rs.15 billion more losses to RPCs )

As a country, we cannot permit this to happen to one of our national assets because these lands have a greater potential to produce a higher yield than the current rate.

The slow rate of replanting for several decades has resulted in a greater loss to the country and also damage to the environment due to soil erosion. Some say that the required replanting rate was not specified in the 1992 ‘Indenture of Lease’ agreement. This was a grave mistake and one should inquire why the authorities never took any action to force the lessee to implement the replanting operations.

It is now evident that lessees are not in a position to undertake the replanting operation and therefore the government should initiate a well-planned vigorous program to start replacing century-old tea bushes with VP tea. Since it is already late, a proposed program should complete this task within a given time frame. A separate authority with ample powers and funds should undertake this task.

This is a high labor-intensive and expensive task and, therefore, the government should consider obtaining the assistance of personnel from the Sri Lankan Tri Forces and also the help of volunteer groups to complete this task.

Time to replant in tea smallholdings (TSHs) too

One TRI report states that, in the low country, the highest productivity of VP tea reach in the first 20 years. Based on a 2002 TRI report, the productivity has started to decline in 65% of low country lands. This shows that by 2021 more than 90% of VP tea lands in the low country have already started to decline their productivity. This shows how important to increase the current subsidy rates in TSHs sector before it affects the national tea productivity negatively. ( Source: agricultural profile of the corporate tea sector – 2002 )

Labour wages problem in the plantation sector

The current issue on wage hikes is happening in RPCs and the state-managed plantation sector that only contributes about 25% of total national tea production.

To minimize losses from plantations, RPCs came up with several productivity-based wages and revenue-sharing models. ( Source: revenue-sharing model – 1 ) ( Source: revenue-sharing model – 2 ) However, these models have not been accepted by the trade unions. Mr. Ramiah Yogarajan a trade unionist and a former MP says that proposed models fail due to the non-uniformity of the prevailing conditions in the estate field level, conditions vary from estate field to estate field, due to the age of the bushes or trees and other agricultural inputs and practices. Under this circumstance, it is not possible to fix an all-industry productivity norm. It may be feasible in an industry where conditions are controllable”. This observation is true because the workers who get marginal old seedling tea under revenue sharing models will face grave hardships due to low productivity.( Source: Who has brought tea plantations to the brink of collapse? )

RPC models would have developed after studying the current tea smallholdings (TSH) sector. TSH sector can be considered as a very successful model, initiated with little government backing in the early years. The total extent of TSH was 60,000 ha in 1992 became double within 20 years to 121,000 ha. Remarkably, the production of RPCs managed tea lands declines the TSHs production that went up 2.5 times from 1995 to 2012. Currently, TSH contributes more than 75% of national tea production.( Source: Future of Work for Tea Smallholders in Sri Lanka )( Source: Looking Back at Tea Production Trends )

The average productivity of TSH in the year 2018 was 2029, 2075, and 1449 kg /ha/Year in up-country, low-country, and mid-country respectively.  

Tea small Holding’s land in the low country – Image 1.
Tea small Holding’s land in the low country – Image 2.

It is interesting to observe how the average extent of TSH that was 1.17 acres in 1983 has dropped to 0.69 acres by 2017. This clearly shows that TSHs less than 1 acre which can be managed only with family labour and are becoming popular.

If both groups failed to come to an amicable solution, the government should consider distributing the plantation land as tea smallholdings to workers. Descendants of the villagers whose land was taken by the British to cultivate coffee and tea should also be considered in this exercise.

Land fragmentation of tea smallholdings. (Source: TSHDA annual report various years).

Distributing plantation land among estate workers who were working in those plantations for 5-6 generations is a humane endeavour. These workers were been subjected to various forms of discrimination from the inception of plantations. Currently, there is a decline in labour force in the plantation sector due to poor living conditions and low wages. Making those workers as TSHs can be an encouragement for them to stay in the plantation. ( Source: Outgoing labour and its impact on the tea plantation sector in Sri Lanka )

This process of distributing estate lands as smallholdings has to be performed in a carefully well-planned manner to assure that the current tea production is not interrupted. Prior to this process, planners should also study how the cooperative tea farming systems function in countries such as Vietnam, Kenya etc.( Source: The contract farming as a determinant promoting tea production and marketing at farm household in Vietnam )

Due to the various conditions of tea estate, some may get unproductive tea lands. Such receivers may need additional assistance during the replanting period.

Tea Factories

With the replanting, the authorities have to look into the tea factories. If such a massive replanting operation is implemented the upgrading of tea factories should be undertaken concurrently.

According to Tea Small Holders Association, 187 factories out of 800 have closed down due to the failure to upgrade them. One factory owner said that the main reason for the closure of tea factories was the lack of sufficient tea leaves. He pointed out that each tea factory had a certain capacity to set up, adding that if the tea harvest was not enough to meet that capacity, the cost of production would be more than the revenue earned. Tea factory owners face many difficulties, he said. Most owners including him were heavily indebted and when incomes are low, they were unable to pay off loan installments.” (Source: Tea industry dying a natural death | History of Ceylon Tea). The Tea Brokers’ Association has too highlighted this issue on tea factories in Sri Lanka. ( Source: Tea industry dying a natural death | History of Ceylon Tea )

Loss-making plantation companies to Tea smallholders ? – Not a Good Idea

A meeting presided by the president in September 2020, examined the cause for the severe setback in the nation’s tea plantation sector. There it was decided to hand over loss-making plantations to the tea smallholders. The main cause for the losses from tea plantations is the low productivity due to the presence of century-old seedling tea. Handing over those low productive estates without replanting to tea smallholders is a grave mistake. How can the new smallholder generate an income from old seedling tea bushes? These marginal unproductive seedling tea should be converted into VP tea before handing it over to smallholders.( Source: Holistic approach to develop tea industry: President reviews number of proposals )

Watch – Sri Lanka Ceylon tea plantation in 1958

Tea Smallholdings Sector in Sri Lanka – MB Cyril

Watch – Pathikada interview with Mr. Vadivel Suresh

2 Responses to “Bold Changes Needed to Salvage the Nation’s Tea Plantation Industry”

  1. Nimal Says:

    My friend is struggling to keep his tea estate running. Getting the right staff is a problem. We seems to run down the Indians who will find better conditions in Assam and other places.

  2. Nimal Says:

    This is what my friend sent me with respect to the above article.Hope the government will take notice.He has 50 acres of fine upcountry tea,struggling to make a living.

    Thanks Nimal for this link. Estate workers are a big issue and it’s never getting better. The working hours of colonial era is the issue here. Men are not productive, they come to work at 8am and leave at 2pm, in between, they take a break of 30 minutes for tea, and then while working they stop to chew bottle, each occasion takes 5-10 minutes, so the productive work is done for only 4 hours. On a day we spray chemicals, they only do 10 tanks, that’s 160 liters which takes about 3-4 hours, if they come at 8am they leave by 11am. If it’s a casual working day such as weeding, both men and women work from 8am to 2pm (only 4 hours productive work). For females on a plucking day work from 8am to 4pm taking a tea break 30 minutes and lunch break 1 hour. For men put to plucking, they work from 8am to 2pm. For a day’s wage on a plucking day must be 20kg green leaf weight, excess to 20kg, will be paid casual @ Rs.35.00 per kg. There are women that pick 15-18kg/per day, depending on the field for heal, and still get the full day wage. Average Estate worker could earn about Rs.1500.00 or more for a day, If a daily wage is calculated @ Rs 900.00, and if the plucked picks 35kg green leaf, so he/she has picked 15kg extra, which will be calculated @ Rs.35.00, so that’s equivalent to Rs. 1425.00 per day’s wage. Yesterday my worker plucked 35kg working from 8am to 2pm, so if she worked up to 4pm, she would have made a better earning. Tea Factory treats us very unfairly, they deduct 8% from my total gross weight for coshleaf, water, bag weight, where I had already paid the worker and I got to bear this loss. Last month I was paid for my green leaf supply to the Factory @ Rs.75.00 per kg. So you could work out my profits… The cost of production is very high, where weeding, pruning, fertiliser, folia and maintenance is concern, it takes 80% of the profits, left with a humble drop to surviving the tea industry.

    Private Tea Factories are making a good profit… it takes approximately 4kg to make 1kg of black tea, the cost is Rs.300.00 + manufacturing cost, made tea is sold at Rs.1000.00+ so you could imagine the profit margin.

    For the srilanka tea industry to thrive, they have to change the mentality of thinking of how productive is a Estate work equivalent to a construction unskilled worker. Construction unskilled workers go through hard labour from 8am to 5pm and get paid about Rs.1200.00 per days wage.

    My experience that I expres is as a Tea Smallholder. Company run Estate are better profitable and could pay an extra wage to their workers, and that’s possible it they could reform the mentality of the working hours and Workers Union must also understand and cooperate to be amicable. Government should be stern in applying labour rule equivalent to all labour categories of the society.

    So Nimal, this is where the Srilanka tea industry stands today, if they think better otherwise to go back to the colonial era.

    Kind regards

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