Connect with us

Business

‘Sri Lankan tea’s current crisis only reinforces the value of productivity-linked wages’

Published

5 years ago

on

By Dr. Roshan Rajadurai

“An incentive is a bullet, a key: an often tiny object with astonishing power to change a situation”

– Economist, Steven Levitt

Almost 7 months from the Government’s initial decision to ban the import and use of synthetic fertilizers and as at the date of this publication, Sri Lanka’s entire agriculture and plantation economy is still frantically in search of any viable option to mitigate the threat of declining yields.

Without any prior planning or notice, our entire sector has been coerced into blindly participating in the most unscientific experiment ever attempted in Sri Lanka’s history. We are all left to now anticipate what the implications of an immediate, nation-wide halt to all established and essential best practices relating to plant nutrition, pest, fungus and weeds will be.

We are told that arrangements are being made to import organic fertilizer from various, untested sources, and agreements are minted to produce organic fertilizer locally, much akin to attempting to rebuild an airplane while it is still in flight. Nevertheless, the inconvenient truth remains. At present, all supplies of “organic” and inorganic fertilizer are in short supply.

Stocks which are available, have increased in price owing to both supply-demand dynamics, disrupted supply chains and unprecedented increases in landed costs. These escalating payments are making Sri Lankan tea’s already high cost of production (COP) even higher, which is placing Sri Lankan plantations under even further stress. This a few short months after an increase in worker wages was thrust through the Wages Board.

Sri Lankan tea’s strange new normal needs to be re-evaluated immediately

With the end of the year approaching, and the window for fertilizing crops closing, it appears that the industry will be locked into at least one – if not more – growth cycles absent basic nutrients of Nitrogen, Potassium, and Phosphorus, and with no ability to control pests and weeds. Without immediate solutions, the broad consensus among those with expertise is that we can start to see exponentially worse crop losses starting from the end of 2021, hitting approximately 40% by next year.

If RPCs were to have disregarded basic agronomic practices and norms in such a manner of their own volition, it would have been called criminal mismanagement. With agricultural best practices now being roundly ignored in favour of a largely undefined and unplanned strategy for transforming Sri Lanka into a nation with “100% organic agriculture”, this historic, and intentionally misinformed self-sabotage is being repackaged as visionary and progressive.

Meanwhile, the nation’s best agricultural experts are being ignored or in the case of Prof. Buddhi Marambe, sidelined and silenced, on the grounds that he simply stated scientific facts regarding the current agro-chemical ban and had been consistent in doing so, because he had previously spoken up against the previous Government’s disastrous decision to suspend glyphosate imports.

This was a policy which resulted in the rejection of Sri Lankan tea exports as a result of issues with Maximum Residue Limits (MRLs), and caused the permanent loss of extremely high value markets in Japan, and a similar escalation in costs; all without a single shred of scientific evidence being provided to justify the lasting damage caused. As a result, the Government of the time was compelled to backpedal on its decision, but not without irreversible damage being done for no apparent reason.

This “justification” highlights a dangerous trend of politicization of science. If the science does not agree with politics, then it now appears acceptable to simply dismiss the scientists, rather than engage with facts and ground realities.

A simple extrapolation shows a grim future for workers

Regardless of short-term political expediency, reality has a way of asserting itself. Spread across 14 districts, the tea industry alone provides direct employment to over 600,000 people engaged in cultivation and processing and indirect employment to a further 200,000 involved in the supply chain. The sector provides complete livelihood support for a resident population of one million in Regional Plantation Companies (RPCs) and 450,000 Tea Smallholders with one million dependents, hence supporting a total population of nearly 2.5 million.

When considering both employment and livelihood generation, it is estimated that the industry sustains more than 10% of our national population and its net foreign exchange earnings are only second to the garment industry.

Even if “organic” fertilliser is made available, there are still serious concerns as to whether it can provide sufficient nutrients. Hence, it appears that the writing is on the wall. With insufficient nutrients as a result of the unplanned push for organic, we anticipate a series of cascading failures stemming from a collapse in productivity. No amount of rhetoric will be able to turn back the tide of negative sentiment against such developments.

If not land productivity, at least labour

Unlike the garment industry, where progressive incentive structures were allowed to flourish, in our industry, workers remain bound to an outdated colonial era daily wage model. As a result, unlike the dynamism of the apparel sector, Sri Lanka’s plantation sector is also weighed down with one of the lowest labour productivity rates in the world. The combination of low land and labour productivity will create a series of cascading failures.

The only measure that could at least temporarily mitigate this dynamic is the implementation of productivity linked wages. This is a model which has the support of all RPCs, and which was has been widely practiced with tremendous success by tea smallholders. While they have been implemented with ease in low-mid grown estates, it is only in the high-grown regions, where resistance to these models has been encountered.

Crucially, this resistance is not from workers who have experience with productivity linked wages, but rather with Trade Unions who would likely lose relevance if such models were implemented. The benefits for workers are immense. In addition to creating a potential monthly earnings per worker of between Rs. 37,000-Rs 62,000, under previous proposals advanced by RPCs.

This will also give workers flexi-hours, empowering them to choose when and how they work. Given the labour shortages prevalent across the entire tea industry, such a move would at long last incentivize workers effectively, and reward them for achieving their full individual potential, thereby significantly optimizing labour productivity.

However, without a scientific resolution to the fertilizer crisis, wage reforms can only serve as a stop gap measure. As land productivity drops, RPCs, state plantations and smallholders alike will be forced to reduce the amount of work offered, leading to a continuous diminution of worker earnings.

The few remaining workers in the plantation industry will have no choice but to try their luck in other lines of work, accelerating the ongoing migration of labour from the estate sector. It is unclear whether other economic sectors have the capacity to absorb such a large group of workers at once.

Already, we have seen multiple outbreaks of mob violence on estates, with the majority of such incidents being triggered by disputes over wages. Without proper solutions to these burning issues, worker wages will eventually be disrupted. Will the authorities take responsibility for what will follow?


Related Topics:
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Development deficit getting in the way of SL joining RCEP – Trade Ministry Secretary

Published

6 hours ago

on

2026/06/16

By

Principal panelists at Pathfinder Foundation forum.

Sri Lanka is not quite ready to join the Regional Comprehensive Economic Partnership (RCEP), since it is lacking sufficient development, Trade Ministry Secretary K.A. Vimalenthirarajah said.

‘At present the Trade Ministry is establishing Sri Lanka’s readiness to join RCEP, which consists of 15 countries, through several channels, Vimalenthirarajah said at a recent round table discussion titled, ‘Sri Lanka’s Pathway to RCEP and the Emerging Global Trading Order’, organized by the Pathfinder Foundation and held at the Colombo Club, Taj Samudra.

‘Sri Lanka is actively accelerating its compliance efforts to join the 15-nation RCEP having submitted its required accession questionnaire in early 2026, he explained.

Vimalenthirarajah added: ‘The Cabinet has established a high-level policy and working committee and also obtained some technical assistance from multilateral partners because complying with RCEP requirements is challenging. Subsequently, this body responded to the follow-up questions that came up and had discussions with RCEP representatives and it expects more follow-up questions with regard to Sri Lanka’s readiness to join RCEP.

‘Sri Lanka has also secured political and diplomatic support from current RCEP members, including Australia, New Zealand, and Indonesia, to facilitate its entry process.’

Meanwhile, state officials, including Industries and Entrepreneurship Development Deputy Minister Chathuranga Abeysinghe, are implementing key economic structural reforms, a new tariff policy, and transparent investment criteria required by the bloc. Because formal accession protocols for RCEP are still being finalized, Sri Lanka is also simultaneously negotiating bilateral trade and investment agreements with regional members to accelerate integration.

Abeysinghe, participating virtually in the event said that Sri Lanka cannot achieve sustained export growth and attract large-scale investment by relying solely on its domestic market. ‘As a small economy, the country’s future lies in deeper integration with regional and global value chains. RCEP connects 15 economies, including Japan, South Korea, Australia, New Zealand, China and ASEAN member states, collectively accounting for nearly 30% of global trade, he explained.

Abeysinghe added: ‘Access to such a market would create new opportunities for Sri Lankan businesses, particularly the country’s Small and Medium Enterprises (SMEs), which currently contribute only around 10 percent to national exports.

‘However, Sri Lanka is at least a decade behind in implementing many of the reforms required to fully participate in modern global trade. Recognizing this challenge, the government is now moving forward with several critical reforms: A new tariff policy to improve competitiveness and eliminate barriers to trade, transparent and predictable investment criteria, investment facilitation reforms to improve the ease of doing business, new legislation including the Public-Private Partnership (PPP) Act and SOE reforms to strengthen investor confidence and measures to improve investment protection and unlock new sources of capital, including venture capital and angel investment funds.

‘Sri Lanka’s exports currently stand at approximately US$ 17 billion and have grown only gradually over the years. Expanding market access through bilateral and multilateral agreements, while continuing domestic reforms, is essential if the country is to achieve its long-term economic ambitions.’

By Hiran H Senewiratne

Continue Reading

Business

Pussalla Agri Ventures secures EU, USDA organic certs, paving way for high-value exports

Published

6 hours ago

on

2026/06/16

By

Roshan Ranawake, Managing Director of Control Union Sri Lanka, presents the certification to Philip J. Wewita, Chairman of Pussalla Agri Ventures (Pvt) Ltd, in the presence of Dr. Chamindi Jayasooriya, Director, and members of the Pussalla Agri Ventures team.

In a landmark development for Sri Lanka’s organic spice sector, Pussalla Agri Ventures has been awarded both EU Organic and USDA Organic certifications for its premium Ceylon cinnamon products. The certifications were officially conferred at Control Union Sri Lanka, signaling a major milestone in the company’s strategic transformation toward fully certified organic operations.

The recognition strengthens Pussalla Agri Ventures’ position as an emerging exporter of certified organic products, with its flagship offering, organic Ceylon cinnamon (Cinnamomum verum, also known as Cinnamomum zeylanicum), cultivated in Sri Lanka’s traditional cinnamon-growing regions.

Notably, the dual certification opens doors to some of the world’s most lucrative and compliance-driven organic markets, including the European Union and the United States.

Pussalla Agri Ventures began its structured transition into organic cinnamon cultivation several years ago, building a fully integrated system covering cultivation, processing, and value addition. The company currently manages extensive cinnamon cultivation lands and operates under strict organic agricultural principles, ensuring compliance with global certification standards.

These certifications, issued through Control Union Sri Lanka, validate that the company’s farming and processing systems meet rigorous international requirements, including restrictions on synthetic chemicals, comprehensive traceability controls, and environmental sustainability practices. These certifications add to an existing portfolio that already includes SL GAP, Food GMP, and Cosmetic GMP certifications.

Company representatives described the achievement as a “milestone” in the Pussalla organic journey, one that paves the way for expanded access to premium export markets in Europe and the United States. According to them, the certifications are expected to enhance buyer confidence, particularly among health-conscious consumers and clean-label food brands.

Pussalla Agri Ventures emphasised that its organic cinnamon is sourced entirely from its own cultivated estates.

“This estate-to-exporter integration ensures full control over quality, traceability, and processing integrity. The company’s model allows cinnamon to be harvested, processed, and packed under continuously monitored conditions, maintaining strict alignment with international organic standards,” they noted.

Speaking further they said:

“Sri Lanka supplies the majority of the world’s True Ceylon Cinnamon, a spice prized for its delicate aroma, low coumarin levels, and reputed medicinal properties. The growing global demand for certified organic spices has created new opportunities for local producers who meet international compliance standards. Pussalla Agri Ventures’ certification achievement places it among a select group of Sri Lankan exporters adopting globally recognised organic systems, thereby enhancing the country’s reputation in high-value spice markets.”

“As organic food sales continue to rise in North America and Europe, certifications such as these are becoming essential rather than optional. For Pussalla Agri Ventures, the journey from conventional to certified organic is not merely a compliance exercise but a strategic repositioning aimed at long-term sustainability and premium pricing power.”

By Sanath Nanayakkare

Continue Reading

Business

NCCSL to host seminar on data protection & privacy

Published

6 hours ago

on

2026/06/16

By

The National Chamber of Commerce of Sri Lanka (NCCSL) will host a timely and insightful seminar titled “Data Protection & Privacy: Safeguarding Businesses in the Digital Era” on 18th June 2026, from 9.00 a.m. to 12.30 p.m., at the National Chamber of Commerce Auditorium, Colombo 10 with the objective of enhancing awareness among businesses on emerging cyber risks, data protection requirements, and digital security best practices.

As organizations increasingly rely on digital platforms, online transactions, cloud-based systems, and data-driven operations, protecting sensitive information and ensuring privacy compliance have become critical priorities for organizations of all sizes. The seminar aims to provide practical knowledge and strategic guidance to help businesses strengthen resilience against cyber threats while fostering trust and confidence among customers and stakeholders.

Interested parties are encouraged to register by contacting Udula – 0714034775/ 0114741788  | udula.nccsl@gmail.com or Nishanthi – 0762555707 | nishanthi@nationalchamber.lk

Continue Reading

Trending