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

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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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HNB Finance inks partnership with HNB Assurance

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Sri Lanka’s leading integrated financial services provider, HNB Finance PLC, has entered into an exclusive partnership with HNB Assurance PLC, making it significantly easier and faster for HNB Finance customers to obtain insurances required for most of the offerings from the company.A memorandum of understanding (MoU) signed recently by the two companies enables HNB Finance customers to obtain the insurances they require for personal and other offerings from the company, without even having to leave the premises of HNB Finance. Since representatives of HNB Assurance will now be stationed at the offices of HNB Finance, the process of obtaining the necessary insurance policies will be both more convenient and faster, further enhancing the overall customer experience.

“HNB Finance constantly strives to elevate our customer experience, particularly via partnerships with reputed organisations of the calibre of HNB Assurance,” HNB Finance PLC Managing Director/CEO Chaminda Prabhath said. “This also serves as an example of the synergies and strengths that HNB Finance benefit from, by being part of one of Sri Lanka’s largest financial services conglomerates, the HNB Group.”

“We take pleasure in this partnership with another member of the HNB Group and in offering the customers of HNB Finance the highly customer-centric offering of HNB Assurance,” HNB Assurance PLC CEO Lasitha Wimalaratne said. “Superlative customer experience has always been a core pillar of our strategy and HNB Finance customers can now benefit from these capabilities.”

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Mega training programme in SL in ICT related skills by Trainocate

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By Hiran H.Senewiratne

Trainocate, being Asia’s largest IT and human capability development training provider, in a bid to create demand for future ICT related employees will be commencing a mega training program in Sri Lanka targeting youth and corporates.

“With the rapid advancements in digitalization and digital services driven by AI, the Internet of Things (IoT), cyber security and 5G, old paradigms and business models are being challenged. More organizations across sectors are now required to have an online-offline presence and operations, Trainocate’s CEO, South East Asia New Markets and the UAE Zafarullah Hashim told The Island Financial Review.

Zafarullah added: ‘According to a recent World Economic Forum report, by 2022, close to 30 per cent of new job opportunities globally will be in data, artificial intelligence (AI), engineering and cloud computing for the future Digital Economy.

‘The pace of change over the past few years has been accelerated by the diffusion of technology, speed of innovation and rapidly evolving business needs. Jobs have changed and new ones have emerged and replaced existing ones. In tandem with this, the required skills and competencies have also rapidly evolved.

‘Many South Asian countries’ corporates as well as current employees and youth aspiring for employment are not reading this.

‘With a global presence in 15 countries, Trainocate SEANM, a pioneer in delivering cutting edge training and certifications which are industry recognized, will commence helping beginners and professionals to expedite their career advancement through our centers.

‘Trainocate also works with key government and private stakeholders to ensure that beginners and professionals have access to high quality and industry-specific training that meets the demands of different sectors of the economy for an innovative and productive workforce.

‘Knowing which skills are in demand has never been more important. With evolving consumer demands and disruptions brought about by the COVID-19 pandemic, we function as the bridge between vendors, such as Microsoft, AWS, Google Cloud, and the partner. We are also the bridge between the partner and customers. We do partner enablement programs for partners through the vendors and then from the partner to the customer. A partner has to commit to the vision and the goals of a vendor. You also need to have product knowledge and become certified, which is where we come in.

‘Microsoft has been our main force and we have been providing free fundamental training sessions, as we believe that primary knowledge is key in building the country’s digital transformation journey. Our business operation is carried out between business to business, business to government and business to customers as well.

‘Digital skills are increasingly transferable across different sectors, as more enterprises embark on digital transformation and technology adoption. The Digital Economy entails different types of skills, depending on their job role applications. Tech-Lite roles are job roles that involve the use of foundational digital solutions at work; while Tech-Heavy roles are specialized roles responsible for the development, implementation and maintenance of more complex technological solutions and applications.

‘Trainocate SEANM focuses on developing skills, competency, ability and improving employee performances and organizational productivity. Organizations spend millions in acquiring and upgrading systems or hardware and give truly little thought to the training process. As a result, a vast majority of companies do not make maximum use of the features and benefits of the software in which they have invested. Proper training will increase productivity and reduce downtime which will complete IT projects faster.

‘Traincoate SEANM is rapidly reaching new heights by helping organizations that are going through a tough time and are in the transitioning period towards technology. Trainocate SEANM delivers well-informed and stable individuals who can provide their expertise towards the rise of these businesses. We have trained many blue-chip companies, along with their partners. Our goal is to develop individuals in tools that are already available that they don’t know how to use.

“Trainocate SEANM offers a range of resources, tools, certification and training programs and initiatives to help individuals and organizations identify and acquire the necessary skills to facilitate employment, improve job performance and adapt to job content changes in the midst of technological advancements and business operating model shifts.

‘We are not just a training company, but rather, a guidance company. We have been doing this for 25 plus years and have assessment tools that help us analyze and identify any skill gaps within organizations. We can use this to help the organizations’ HR and L&D teams streamline their training methods, as we can help identify these gaps and guide them on what they need the most.

‘Overall the company is helping organizations to think differently, plan strategically, save money and get the best out of technology. That is our secret to success.’

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Sunshine Healthcare appoints T. Sayandhan as CEO

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Sunshine Healthcare has appointed T. Sayandhan as the Chief Executive Officer of Lina Manufacturing, the pharmaceutical manufacturing segment of the diversified company. Sayandhan, currently CEO of Sunshine Medical Devices, has more than 30 years of experience in the healthcare industry. He joined Sunshine Healthcare in 2017 to spearhead Sunshine Medical Devices and has been instrumental in growing the healthcare business to be the key driver of the Group’s financial performance, helping Sunshine Healthcare to sustain its growth over the few years amidst tough macroeconomic conditions.

Commenting on the new appointment, Sunshine Healthcare Managing Director Shyam Sathasivam said, “As a responsible Sri Lankan conglomerate, we believe the local production of pharmaceuticals plays a vital role in maintaining the resilience of national healthcare systems. When escalating macroeconomic conditions are putting immense pressure on the local healthcare sector, producing pharmaceuticals locally will facilitate access to needed medicines and decrease exposure to imports and international supply chains. At this critical juncture, I believe Sayandhan has demonstrated the right combination of talent and drive to step into this key leadership role at the company.”

Commenting on his appointment, Sayandhan said, “It is a challenging yet exciting time to join Lina Manufacturing when the company is advancing its efforts to develop Sri Lankan-made, innovative healthcare solutions.”

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