Chathura Samarasinghe
Secretary Estate Services Association
At one time Sri Lanka was recognized by the whole world with its plantation economy. At that time a large portion of Sri Lanka’s export earnings came from the plantation economy. It has dropped considerably to this day. Given the collapse of the estate economy, what has really happened to the estates?
By the time we gained independence from Britain in 1948, the plantation sector accounted for 90% of Sri Lanka’s total export earnings. Even today, many years after independence, the plantation industry has been able to become a major contributor to our country’s total export earnings, despite such setbacks. Even today the plantation sector accounts for about 15% of the total export earnings. Despite the expansion of various sectors of the economy, we have seen a decline in many sectors of the country’s economy in recent times, especially with the various economic developments taking place around the world with the Kovid epidemic. However, during the 150 year history of the plantation sector, the plantation sector has become the backbone of the country’s economy and has been able to maintain the sustainability of the economy throughout this period. Therefore, if we continue to think about the future of Sri Lanka, the plantation industry in Sri Lanka has the potential to sustain the sustainability of the economy.
The most prosperous estates have now collapsed. Has this situation been recognized as a trade union working on estates? Trade unions also exist, especially if they have estates. What is the plan to protect these estates?
Yes. Clearly, there are several key factors that have contributed to the current state of plantations in Sri Lanka. In fact, the people of this country, including the media – especially the tea and rubber industries – are of the opinion that the plantation sector in this country is an unimportant part of the loss-making and unsustainable economy. That’s really wrong. Even today, if we take the amount of money generated through the plantation economy in Sri Lanka, even if we take the final position in 2019, Rs. Export earnings of around Rs. 250 billion are earned from tea, rubber and coconut. This money is a big part of the economy of this country.
Then you say, what we can see is that there were no estates then. Those roads, that culture, those conditions in the workplace today are in a state of disrepair. We know how it happened. In the 70’s there was talk of nationalizing full estates in this country. Even then the main plantation companies in Sri Lanka were maintained under British companies. Then the social forces of this country will stop attracting the resources of our country, the essence of the land, labor to foreign countries led by Britain and enjoy the resources of this country to the citizens of this country and the wealth earned from this will be reinvested in the country. When raised a loud voice. Because we know that many things that Britain took over in this country under the 1956 Bandaranaike government were nationalized. But only a small part of the plantation sector had been nationalized at that time. So, during the 1970 election, the leaders of our association raised a big voice calling for the government to take over and nationalize the plantation sector. That is how estates are nationalized. During the first decade or so of nationalization, a very lucrative plantation culture developed. We were able to re-invest the wealth that was attracted from this country to foreign countries and use it as a resource of the country.
Then, with the new economic developments that took place in 1977, many things that existed in this country for a long time such as political culture, estate culture, etc. were abolished and a new culture emerged in this country. That culture has decayed and today we see an extremely corrupt political culture. Then political henchmen will be appointed to control this nationalized property. This latter type of political culture enters the plantation sector in the same way that it destroys other public property in the country. The rulers and political henchmen who have no real understanding of the estates and no management skills and know nothing about this end up in the forefront. They become policy makers who make decisions. Then, gradually, around 1990, the plantation sector would suffer huge losses. Through this the General Treasury becomes in a position to pay salaries in the estate sector. At the same time we see that this is not a fault of the concept of nationalization, the politics of the corrupt elite that infiltrated it acted in complete violation of those concepts of nationalization. That’s what causes this crash.
After 1993 these estates will be handed over to the private sector again. Looking back over twenty years today, there is a huge breakdown. At that time around 500,000 people were employed in the plantation sector. Today it is less than one and a half lakhs. On the other hand, productivity has suffered a major setback. During the 2013 budget debate the Minister of Finance stated that 40,000 acres of transferred estates have become barren lands. Then we see hundreds of factories closed. Hundreds of official quarters have been razed. Employees have lost their jobs. Production continues to fall. Also, apart from the technology brought in by the British era, there has been no major technological advancement or transformation in the plantation sector. And the people who depend on it, especially we, the estate officers, enjoy something relative compared to the staff, but we see the living conditions of the plantation workers, who make up the largest part of the plantation sector. Living conditions in other parts of Sri Lanka, especially in terms of malnutrition, have more than doubled. Poverty is twice as high as in other parts of Sri Lanka. Considering the sanitation facilities, health facilities and low birth weight, the plantation sector is at a lower level than any other place in the country by any statistics. Also, the plantation sector has collapsed socio-economically and culturally.
The plantation sector has collapsed beyond repair. Is that true?
As the Estate Services Association we say that is not true. There is so much hidden in this country. This tea industry is not a loss making industry. We clearly say it is profitable. We are ready to prove it with facts. There is a great deal hidden in the myth that the tea industry is a loss in particular. That is, these losses always calculate the difference between the cost of producing this tea and the price at which it is sold at the Colombo tea auction, which is confirmed as a loss within this society. But that is not true. It is true that the cost of tea production is known and what is the price when tea is exported from this country? The difference between that price and the product price is what we need to calculate as profit. All the citizens of this country, as well as many people including the media think that the plantation industry is losing money. There’s a big trading mafia here. Especially if you look at the 2019 data, Rs. 475 per kilo of tea mentioned in the Central Bank report. Then at the Colombo tea auction Rs. 475 per kilo of tea, with an average price of Rs. Like 528. It shows that Rs. There is a very small profit like 50-55. Then it is said that the estates are making losses by showing this as profit. But according to the 2019 Central Bank report, Rs. 820 is the export price of a kilo of tea. If the cost of production is reduced by that price, the value is close to 50%. Making such a profit. At that time, tea was exported from Sri Lanka with a profit margin of over 40% compared to the price at the Colombo tea auction.
From this we see that a huge amount of wealth is being exploited by middlemen. Then we can clearly see that this great wealth will not flow back to the producer, the local production plantation companies. The loss of such flow will result in the loss of a portion of the labor force. Employee welfare and proper salaries are being lost. New technology is not coming to the industry. This creates a number of industry-related problems. Manufacturing companies do not get enough money to fertilize, maintain and maintain the farm to the proper standard. That is why such a crisis has arisen. There is an idea that the number of workers is decreasing day by day and the profit level is declining and many people are losing estate estates. This situation in the country, especially this one, is affecting a large number of people, including plantation workers, plantation staff, estate executives, and hundreds of thousands of small-scale tea producers.
If this trade mafia is not controlled by the policy makers of our country with the intervention of the government, the plantation industry which has made a huge contribution to the economy of this country for about a century and a half may cry one day in the future. So we as the Estate Services Association are ready to do our duty. We are ready to expose this malpractice to the society and give the producer a fair price and the people who spend their labor to get their due share.
When we talk about this tea mafia, we have to ask why the manufacturing companies do not talk about the gap between the prices they get at the Colombo tea auction and the prices that the licensed tea exporters buy to buy tea through intermediaries. Why don’t they go to any discussion? Why not raise your voice and fight about it? There is a special reason for that. This is because it is often the parent company of local plantation companies and the parent company of licensed export companies. From that point of view this profit has gone to only one company. This is the reason for the crisis in the tea industry today.
So how do we distribute this large share? There are already such precedents in this country. With the amendments to the Tea Board Act of the 1970s, small scale tea suppliers were required by law to pay the factory 68% of the price at which tea was sold at the Colombo Tea Auction. That is what has become the law. Accordingly, even at today’s prices, they can get it based on that policy decision. Then we tell the government and the policy makers to compare the selling prices at the Colombo tea auction and give the opportunity to the small scale producer and go to a policy decision that gives a fair share of the high profits earned by the export company to those companies engaged in large scale production. That is the only way to end this. Therefore, we as the Plantation Services Union say that it is essential to rethink and reform the plantation sector in this country. That is how we can contribute to the national economy. In particular, we believe that justice can be done to the labor of the millions of people who make a living from this industry.