Business

Smallholders hold the key to productivity in Sri Lanka’s tea industry

Published

4 years ago

2020/11/6

Sahan Weerasooriya

Recipe for reform:

By K.L Gunaratne (chairman, Sri Lanka Federation of Tea Smallholders)

With nearly 500,000 smallholders in total, the tea smallholder sector is a significant contributor to the production and output of Ceylon Tea in Sri Lanka, and across the globe. We are often called the ‘backbone’ of our tea industry, and with good reason.

16% of Sri Lanka’s arable land belongs to the tea sector. Of this, tea smallholders operate in 60% of the total tea land and account for more than 70% of the total tea produced. According to the Tea Control Act, tea lands between 20 perches and 10 acres are considered “Tea Small Holdings” across the country.

I am a tea smallholder myself. My journey began in 1977 with a 2-acre tea land. I now operate three small tea lands while simultaneously serving as the chairman of the Sri Lanka Federation of Tea Smallholders. Running a smallholding over the past three decades (or more) has not been an easy feat. No matter how big or small your tea plot is, ensuring that the land is well managed, tea is correctly harvested, and the quality of Ceylon Tea is upheld are challenging standards to meet every day.

Currently, a great deal is being made about the tea industry and tea companies being in hot water over concerns on wages, productivity, output, and quality. As such we felt it was important to share lessons from a tea smallholder perspective to help refine best practices and discover a sustainable way forward. It is essential that the industry – as a collective – ensures a paradigm shift in the way we’ve been managing this sector. While it is true that the industry was introduced by the British in 1867, the challenges we face today are totally different from then, and there is no reason as to why our management practices should not evolve with the times.

Basic industry dynamics

Tea smallholder plantations are found commonly across the island. Most low-country tea comes from plantations in Ratnapura, Galle, Matara and Kalutara. Mid-country smallholdings are widespread across, Kegalle and Kandy. Up-Country tea comes from Nuwara Eliya and Uwa. A majority of tea smallholders are both managers and harvesters of their lands. Small tea plots are easy to manage, and if you own one, you and your family will likely tend to it. The larger the tea plot, the more decentralised management becomes – quite similar to the basics of how the much larger tea companies function. However, unlike the big tea companies – widely known as Regional Plantation Companies (RPCs) – smallholders are not bound by a ‘Collective Agreement’ when it comes to the matter of worker compensation. Sri Lanka’s Industrial Disputes Act of 1950 defines the ‘Collective Agreement’ as an agreement relating to the terms and condition of employment of workmen in any industry. Within the tea industry, this agreement mainly focuses on worker remuneration and is renegotiated every two years.

With wage negotiations approaching early next year, industry actors across the board seem to be at cross-roads on the best way forward. The only point on which there seems to be much agreement is that reform is needed and urgently. This is a battle fought every two years, and unfortunately, there are no winners; only losers. By contrast, smallholders like us who are not bound by such an agreement have the independence to make decisions we feel are best for our workers, the industry and the legacy of Ceylon Tea.

While we use the Collective Agreement as a benchmark for the rate of payment, we have one crucial advantage, which is that we have the freedom to decide on the model of payment. For us, the Collective Agreement is only a guideline. Our main focus is therefore in ensuring that we are able to offer workers a method of payment that is attractive, while still remaining sustainable as a business.

Lesson from tea smallholders

Here’s how we work: As a baseline, tea harvesters are paid a rate of Rs. 30 for every kilo they harvest. Some harvesters pluck up to an average of 30 kgs on a good day. A good day is when the weather, the soil and harvesting practices are all in our favour. Leaves on each tea bush are harvested on rotation every 7-10 days. This means that leaves from each bush are plucked at least three times a month. A tea plot needs more than just the expertise of tea harvesters to yield a successful output. Besides tea harvesters, we also have other fieldworkers who engage in manual labour oriented tasks like weeding, manuring and up-keeping estate infrastructure who are paid a daily wage of Rs. 1000. These fieldworkers work 8 hours a day.

As illustrated above, for tea harvesters, our method of payment is far from an unrewarding, fixed daily wage model. Instead, each harvester is paid for the kilos of tea they yield – which is to say: a productivity linked model of remuneration.

Until the 2000s, like the RPCs, tea smallholders also paid harvesters and tea workers a daily wage. However, we found that this became a real challenge when trying to retain workers and maintain profitability, and so a collective decision was taken by tea smallholders to shift towards a productivity-linked wage, as we saw this to be far more efficient and effective for the industry.

Speaking from direct personal experience, the ability to remunerate tea harvesters based on output has been liberating for them and for myself. While this has helped me manage my tea lands better and yield higher output, it has also given me the time to venture into other areas of work I am passionate about. For instance, I was able to pursue my passion of setting up the National Pre-School Development Foundation; this foundation aims to train pre-school teachers in Early Childhood Development within plantation communities. For tea harvesters, moving out of a daily payment system has opened up a path for them to secure higher earnings while increasing mobility of labour – meaning that workers were freed up to actively pursue work on different smallholder plots in order to boost their earnings even further.

Over the past few years, tea harvesters who work on smallholder plots have evolved into entrepreneurs themselves. Driven by the need to improve efficiency and output, harvesters themselves have become ‘agents of change’. Management and production practices have become smarter, output-oriented and have resulted in improvements in the quality of the tea leaf itself.

A recent study by the International Labour Organisation confirms these observations which I have personally witnessed over the years as a smallholder, namely: that casual workers engaged in tea smallholdings usually earn a higher daily wage compared to the plantation workers and contribute towards more productive work (Future of work for Tea Smallholders in Sri Lanka, ILO, 2018). This is simply due to the fact that the people we contract to work on our plots are paid solely based on their productivity.

Over the years, although the tea smallholder sector has evolved to suit the times, it is unfortunate that the rest of our industry has been held back from progress by forcing the continuation of a basic wage system that does not prioritize or sufficiently reward productivity. RPCs continue to play an important role in our industry – particularly in terms of upholding the international image and reputation of Ceylon Tea through their commitments to securing international standards and certifications.

Hence it is essential that the RPCs are able to continue operations in a sustainable manner. A collapse in the RPC sector would create major risks to the entire industry’s reputation for the highest quality standards and its capacity for innovation – given that more recent advancements in mechanization, climate-friendly factories, use of drone technology and IT to optimize production and supply chain have only been made possible due to their investments. Such advancements can only be scaled down to provide benefits to tea smallholders once a path to implementation has been cleared by RPCs. Failure to facilitate this progress will ultimately jeopardize the sustainability of the entire industry.

Moreover, the first and most pressing solution to this dilemma is obvious to all parties. The wage model must be revised. Our experience as tea smallholders is clear proof of this fact and should not be lightly disregarded. We are all advocates of our tea, and what hurts one sector of our industry will ultimately impact all of us. A paradigm shift is necessary, and it can only start with a long-overdue update to the way in which, workers are paid.

(The writer is the chairman of the Sri Lanka Federation of Tea Small Holders. The Federation of Tea Small Holders is an industry body aimed at promoting the advancement and development of tea smallholdings in the country. In 2018, tea smallholders contributed more than 70% of the overall tea production in the country.)

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Business

Manufacturing and Services expand in Nov. 2024

Published

15 hours ago

2024/12/21

Thilina Walpola

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 53.3 in November 2024. This indicates an expansion in manufacturing activities on a month-on-month basis, with positive contributions from all the sub-indices.

New Orders sub-index expanded during the month, primarily driven by the textile & wearing apparel sector. Further, the expansion in Production sub-index was mainly attributable to the food & beverages sector. Moreover, Employment and Stock of Purchases sub-indices remained expanded during the month, aligning with the New Orders and Production sub-indices. Meanwhile, Suppliers’ Delivery Time remained lengthened during the month.

The outlook for manufacturing activities for the next three months remains positive. However, some manufacturers, especially in the food sector, are concerned about the limited supply of several key raw materials.

Sri Lanka Purchasing Managers’ Index for Services (PMI – Services) indicated a further expansion in services activities in November 2024 as reflected by the Business Activity Index, which recorded an index value of 60.5.

The expansion in Business Activities was driven by the improvements observed across most of the sectors. Accordingly, business activities in the financial services experienced a significant improvement amid increased lending activities. Further, business activities in accommodation, food and beverage also showed a considerable improvement due to the increase in tourist arrivals. Meanwhile, wholesale and retail trade business activities also increased ahead of the festive season, despite the adverse impact of unfavourable weather on sales.

New Businesses increased in November 2024, primarily due to considerable expansions in the financial services and accommodation, food and beverage activities.

Employment increased amid recruitments made to accommodate growing economic activities with increased tourist arrivals and festive season, whereas Backlogs of Work continued to decline in November 2024.

Expectations for Business Activities for the following three months continued to improve, at a higher rate, driven by the ongoing tourist season and the upcoming festive season.

Questionnaires are completed in the first half of the succeeding month. For each variable, respondents are asked to report an increase, decrease or no change compared with the previous month, and to provide reasons for any changes. The index compilation and interpretation of indices follow the survey methodology of S&P Global.

PMI – Manufacturing, which is considered as the headline index for Manufacturing, is a weighted average of New Orders, Output, Employment, Suppliers’ Delivery Time and Stocks of Purchases.

The Services Business Activity Index is the headline index for Services, which is referred to as the PMI – Services, as per the international best practices. The Services Business Activity Index is comparable to the Manufacturing Production Index.

The Index

PMI is calculated as a ‘Diffusion Index’, where it takes values between 0 and 100. PMI=50 – sector remained neutral on month-on-month basis PMI>50 – sector is generally expanding on month-on-month basis PMI<50 – sector is generally declining on month-on-month basis

Sample

The sampling frame was based on a list of large companies located in the Western province obtained from the EPF Department. Samples for Manufacturing and Services activities were selected based on the GDP sectoral share, with a target of 100 responses for each.

Definitions of Variables

Employment : Number of staff working for the organization Stock of purchases : Raw materials purchased and kept in a warehouse to be used for production Supplier Delivery Time : Time lag between order placement and delivery by the supplier Backlogs of Work : Uncompleted orders Other variables are self-explanatory.

(CBASL)

Business

Design in the Moment: Furniture by the Geoffrey Bawa Practice opens in Colombo

Published

15 hours ago

2024/12/21

Thilina Walpola

The late Sri Lankan architect Geoffrey Bawa (1919-2003) was known primarily for his architecture, but he also created a series of contemporary furniture designs throughout his five-decade practice. With regards to this custom built furniture, he was known to say “We did what was thought to be right in that moment.”

This “moment” is the culmination of political, economic, and social circumstances that shaped the Sri Lankan context within which Bawa worked: one of a closed economy, restricted imports, and a consequential reliance on locally-available materials. The Geoffrey Bawa practice produced a number of furniture designs as a result, namely lamps and chairs. Bawa and his associates worked with local craftspeople across disciplines and frequent collaborators to produce pieces embodying this innovative spirit, drawing inspiration from prevalent styles of the time.

An exhibition focusing on these designs and their role in the wider context of Bawa’s practice is now open in Colombo. Design in the Moment: Furniture by the Geoffrey Bawa Practice closely examines the histories and context of Bawa’s furniture designs and considers how they can be meaningful for contemporary use. This exhibition is a collaborative effort by the Geoffrey Bawa Trust and India-based furniture company Phantom Hands. Curated by architect and Chairperson of the Geoffrey Bawa Trust Channa Daswatte and Phantom Hands co-founder Aparna Rao, the exhibition interrogates the idea and process of reproduction through furniture designs, including the “Next-Door Café” Chair and the Saddle Chair. Phantom Hands’ Geoffrey Bawa Collection, a furniture collection offering re-editions of these designs and others from the architect’s practice, launched alongside the exhibition and will be available for purchase in 2025.

Design in the Moment: Furniture by the Geoffrey Bawa Practice will be on view at the newly-opened Geoffrey Bawa Space on 42/1 Horton Place, Colombo 07, between 13th December, 2024 and 31st May, 2025. The Geoffrey Bawa Space is open Wednesday through Sunday between 12 p.m. and 6:00 p.m. except major holidays. A series of curatorial tours and public programming will take place throughout the duration of the exhibition. More information is available on geoffreybawa.com and phantomhands.in.

Phantom Hands

Phantom Hands is a craft and design driven furniture maker based in Bangalore, India. Founded in 2014 by Aparna Rao and Deepak Srinath, their collections include re-editions of 20th century classics, as well as contemporary objects created in collaboration with acclaimed furniture and textile designers. Made by skilled artisans from traditional craft communities, Phantom Hands’ products are available globally via leading design galleries and furniture showrooms in Europe, North America, Asia and Australia.

Geoffrey Bawa Trust

The Geoffrey Bawa Trust is a non-profit organization with charitable status in Sri Lanka that was established in 1982 by the late architect, with the objectives of furthering the fields of Architecture, the Fine Arts and Ecological and Environmental Studies. Since the architect’s passing in 2003, the Trust has sustained year-round public programmes comprising lectures, educational tours, scholarships, residencies and exhibitions which engage broader discourse on the built environment and the arts in both Sri Lanka and overseas.

Business

ICMA Australia hosts 6th graduation ceremony honouring 225 newly Certified Management Accountants

Published

15 hours ago

2024/12/21

Thilina Walpola

The Institute of Certified Management Accountants (ICMA) of Australia proudly celebrated the 6th Graduation Ceremony with 225 graduates receiving the prestigious Certified Management Accountant (Australia) designation.

Over 30 students from Bangladesh and India also received their degrees at the graduation ceremony. The ceremony took place at the Grand Ballroom, Hotel Galadari, Colombo, recently.

Professor Janek Ratnatunga, Global CEO, ICMA Australia, chaired the ceremony. The Australian High Commissioner to Sri Lanka and Maldives, Paul Stephens, attended as the Chief Guest, alongside Guest of Honour David Pine, New Zealand’s High Commissioner to Sri Lanka.

He stated, “Today marks an important milestone as we welcome 225 new Certified Management Accountants into our global community. The achievement of the new graduates reflects academic excellence and commitment to advancing the field of management accounting. The graduation of these professionals, including those from Bangladesh and India, demonstrates ICMA Australia’s expanding influence across Asia. In today’s dynamic business environment, the graduates are well-equipped to provide vital strategic financial leadership for corporates to navigate complex economic networks.”

At the ceremony, outstanding graduates were recognized with gold medals for their exceptional performance in the ICMA examinations. Furthermore, special appreciation plaques were presented to CMA (Australia) Executive Council Members for their dedicated service and continued support in strengthening ICMA Australia’s presence in Sri Lanka.

Additionally, three distinguished leaders from Sri Lanka’s banking and business sector were also inducted as Foundation Members of the Institute of Certified Management Accountants including J Durairatnam, Chairman, DFCC Bank PLC, Bingumal Thewarathanthri, CEO, Standard Chartered Bank and Nihal Jayawardene PC, Chairman, Hatton National Bank PLC

Established in 1996 in Australia, ICMA is a global accounting body dedicated to advancing management accounting expertise. With a growing presence across Asia-Pacific, the Middle East, and Africa, ICMA’s educational modules are recognized up to Level 9 by the New Zealand Qualification Agency (NZQA).

ICMA has established a strong presence in Sri Lanka since 1998, through a partnership with the Institute of Chartered Accountants of Sri Lanka. The Academy of Finance became its exclusive partner in 2006, making Sri Lanka the global hub for the Graduate Conversion Programme, under the leadership of Mr. Kapila Dodamgoda.