Dilrook Kannangara

2026 budget proposals included increasing the daily wage of plantation workers by the highest ever increase in history. The news was well received by the Upcountry Tamil community. They lit fire crackers and venerated photos of the President. On the face of it the act seems sensible. Politically it may retain some votes for the NPP. However, what is the economic impact? The writer takes no pleasure from correctly predicting the 2021-24 economic crisis way back in 2013.

Highest Paid Tea Plantation Workers in the World

Compared to other large tea producing countries, Sri Lanka’s tea plantation workers are the highest paid in the world. In addition to their wages, monthly payments are made on behalf of them to their kovil, laundry, barber, trade unions, etc. As a result, most tea plantation companies are running at a loss. The government pays billions of rupees in subsidies to sustain this excessively high cost. Further increasing their salary will worsen this economic deficit and increase the annual burden on the government, the Treasury and taxpayers. Doing meritorious acts using taxpayer funds does not earn merits and it can only ruin the national economy!

Largest Tea Buyers are Sanctioned by the West

Largest tea buyers from Sri Lanka include Turkey, Russia, Syria, Libya, Iran and the UAE. All these countries have various degrees of US-led sanctions. Some have total sanctions while others have limited sanctions. Sri Lanka has been allowed to trade with them despite sanctions subject to certain conditions. Sri Lanka trades with them at the mercy of USA. These sanctions can tighten anytime at the discretion of the US. When that happens Sri Lanka’s tea export earnings will crash. In addition to US sanctions, Russia, Turkey and Iran have also imposed their own conditions to buy Ceylon tea. In 2016 Russia temporarily stopped buying tea from Sri Lanka alleging that tea contained parasites. It turned out that the ban on asbestos imposed by the then regime affected Russian asbestos exports to Sri Lanka and Russia retaliated. Some of the conditions are costly for Sri Lanka to keep and comes into direct conflict with demands by the US-led West. USA, together with the EU and the UK are the biggest export earners for Sri Lanka so they have a say.

Cost to the Environment

The cost of the tea industry to the environment is significant. It has destroyed catchment areas, near catchment areas, biodiversity, food chain of both humans and animals in the region and disrupted the water table. However, sadly, these costs are suffered by the nation as a whole and the industry is not charged a cost.

The impact of environmental destruction due to the tea industry will increase with time. The environment always fights back and when that happens the consequences will be catastrophic. The environmental impact was totally disregarded by British colonialists who introduced tea and tea plantation workers into the region despite very strong protests by the people.

Conclusion

The sum product of cost increases, unaccounted cost to the environment and earnings reduction due to economic sanctions against large tea buyers will be an impending economic catastrophe driven by the tea industry. When this economic pain is felt by all Sri Lankans in the near future, they will term it corruption” and will turn against the ruling party. Tea industry should be kept only to the extent it provides a net export income to Sri Lanka and a net overall profit after considering all the costs. It should not be sustained for the sake of sustaining it.