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| Wednesday, 22 October 2003 |
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by Lindsay Beck For years the smell of tea in the Sri Lanka hills was the smell of money. Time has not changed the smell of tea, but the whiff of cash is getting fainter. Static auction prices are not new, but after the Iraq war hurt sales to the Middle East and the worst flooding in half a century hit low-grown areas, the island's plantations are struggling harder than ever. They provide livelihood to more than one million people, most of whom do the back-breaking work of plucking tea leaves. Among them is 30-year-old Suppiah Vijerajah, who has worked in the plantations since he was a teenager, like his parents before him, but is not sure he wants the same life for his two sons. "I would like my children to be educated, to do a job not necessarily on the estate, but outside," said the slightly built man. His future depends on people like Malin Goonetileke, who is trying to find a way to save the tea estates. "The plantation companies are certainly undergoing a severe crisis, particularly from their cash-flow point of view," said Goonetileke, Secretary-General of the Planters' Association of Ceylon, which represents private plantations. "The inputs are steadily increasing and the price levels have been constant over the last 18 years," he said of the industry, the island's third-largest foreign exchange earner after garments and expatriate remittances. At the weekly Colombo auction, tea prices this year have averaged US$ 1.49, a decline of 35 per cent in US dollar terms from their peak in 1997, as increasing global production outstrips static demand. "The fact that we have been able to keep our heads above water at the estate level is because of the ingenuity of the man on the spot, who has managed to somehow balance inputs and see that he's keeping them below his selling price," said Goonetileke. It is a challenge plantation superintendent Chaminda Senanayake knows only too well. Managing more than 800 workers on 350 hectares of rolling hills in the heart of the highland tea region, Senanayake works to balance rising labour and energy costs by boosting productivity and focusing on quality tea that will do well at auction. "With proper management style, we have managed to keep the costs under control," said Senanayake, surveying teams of barefoot pickers balancing on the slopes as they pluck the young leaves and toss them into baskets on their backs. He uses countless small measures to try to reduce costs without impacting quality. Land too steep for tea is planted with trees to use as fuel in the factory's drying process. A mini hydro-power plant generates a fraction of the factory's energy needs, but with Senanayake spending Rs. 500,000 a month on electricity, every bit helps. But the biggest cost for the labour-intensive industry is union-imposed wage hikes and low productivity among workers who toil on little more than a dollar a day and live in often squalid plantation complexes with families sharing a single, dark room. "We know that labour should be given a fair wage, but at certain times of the year we find it difficult to give the same wage every month," said Tissa Gunatilleke of Hayleys Plantation Services Ltd, which owns Senanayake's estate. Senanayake's profits crashed nearly 40 per cent last year after wages were increased to Rs. 147 a day from Rs. 121, but he sees bettering their conditions as the key to keeping them on the plantations and working productively. Housing on the estate is being upgraded with loans from the Asian Development Bank, a new maternity centre was built with Dutch aid and a volleyball court provides a place for workers to relax in the chilly mountain air. "We don't talk about productivity. Productivity comes naturally when we do these things," he said, winding through the factory where tea is processed and graded before being sent to Colombo brokers for valuation. But for others with less savvy management skills, or whose auction prices have not kept pace with rising costs, the cash crunch often means development on the plantation suffers, which could compound the hardship down the line. "Most companies are having liquidity problems. When you have liquidity problems, you give lower priority to capital development," said Gunatilleke. Struggling plantations are borrowing to keep up basic agricultural inputs, but have reduced replanting and are neglecting factory development. Others are moving to mechanisation - some say at the expense of quality - to cut costs and overcome labour shortages as increasing numbers of workers giving up the hardscrabble life on plantations to seek work in the city. Supervisor Senanayake says the industry will survive, however. "This industry has lasted for well over 100 years, so I'm sure it will last another hundred. It has to. Well over one million employees are here." - Reuters |
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