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



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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NSB introduces special credit scheme for shrimp farming industry



National Savings Bank (NSB), in collaboration with one of its fully owned subsidiary, Sri Lanka Savings Bank(SLSB), has planned to introduce a special loan scheme to offer credit facilities under a lower interest rate with a view to accelerating the development of shrimp farming industry in Sri Lanka.

Shrimp farming industry in Sri Lanka, which came into being around 30 years ago, could be identified as a higher value generating sector among the industries based on aquaculture in the country.

With the objective of achieving a sustainable development in shrimp farming industry in the country, Sri Lanka Aquaculture Development Alliance has been established 15 years back and the permanent members of this organization will be able to obtain loan facilities within a value range of Rs. one Million to Rs. 100 Million under this loan scheme.

This Alliance comprises of 18 farmers’ societies, breeding center societies, seafood societies and shrimp feed societies in Puttlam District, in which the shrimp farming industry is mainly centralized. The Alliance operates the shrimp farming industry, in coordination with the National Aquaculture Development Authority of Sri Lanka, the main state sponsored organization mandated for the task of development of the aquaculture and inland fisheries sector in Sri Lanka and other government institutions. Further, the membership of this alliance represents the entire shrimp farming industry of the country.

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Lanka Realty Investments acquires controlling shares of On’ally Holdings



CSE turnover almost Rs 3.5 billion

By Hiran H.Senewiratne 

Lanka Realty Investments Plc has acquired 50.8 percent  of the issued capital of Colombo Stock Exchange (CSE)  listed On’ally Holdings Plc for Rs 1.42 billion.

With the transaction Renula Capital and Lanka Reality Investments share prices appreciated significantly yesterday, stock market analysts said.

On’ally Holdings Plc announced that Lanka Realty Investments Plc has acquired 50.8 percent  ( 47,244,050 shares) of the issued capital (93,003,087 shares) of the company with the purchase of shares made on 3rd December 2020 at a price of Rs.30.20 per share. 

Meanwhile, in a separate filing Renuka Capital Plc announced that it has sold and disposed of 40,754,820 Ordinary Shares (43.821 percent ) held by the Company in On’ally Holdings Plc to Lanka Realty Investments Plc at a value of Rs.30.20 per share on the CSE. Renuka Capital PLC is the second largest shareholder of On’ally Holdings Plc.

The turnover stood at Rs 3.44 billion with two crossings mainly; On’ally Holdings crossing which contributed 42 percent to the turnover and Access Engineering. On’ ally 47.2 million shares crossed for Rs 1.43 billion and its share price was Rs 32.20 and Access Engineering one million shares crossed for Rs 25 million and its share price was Rs 25.

With the transaction  Renuka Capital share price appreciated by  more than 50 percent or Rs 2.50 . Its share price startered trading at Rs 5 and at the end of the day it moved upto Rs 7.50. Lanka Reality share Price share price moved up by 13 percent or  Rs 4.60. It’s share price startered trading at Rs 34.40 and at the end of the day it moved up to Rs 39.

In the retail market top five companies that mainly contributed to the turnover were JKH Rs 141.5 million (945,000 shares traded), Expolanka Rs 135.7 million (5.2 million shares traded), Melstacorp Rs 128 million (three million shares traded), Access Engineering Rs 123.3 million (4.9 million shares traded) and Renuka Capital Plc Rs 121.7 million  (18.5 million shares traded).

Amid those developments both indices moved upwards  i.e. All Share Price Index up by 17.26 points and S and P SL20 up by 8.81 points up. The share volume that transacted during the day was 22487.  According to stockbrokers that market sluggish and the latter part of the day  it picked up following the major crossing.



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SLT and Mobitel launch Green Premier League 2020



SLT and Mobitel together began an exemplary green initiative project simultaneously with Sri Lankan Premier League (LPL) 2020 called “SLT – Mobitel Green Premier League” (GPL), as a sustainable environmental conservation project. According to the winning score of each team in every match of the LPL, SLT and Mobitel will take necessary actions to plant the equivalent number of plants as forest restoration at Rajawaka forest reserve in Kalthota, Balangoda. Thus, by the end of the LPL tournament, SLT and Mobitel will have taken the necessary actions to plant possibly around 4000 plants in the forest reserve and would have arranged a sustainable maintenance program with the Forest Department in accordance with UN sustainable developments goals. This would be a pioneer project within the context of any cricket premier league in the world!

From the 26th of November 2020 till the 16th of December 2020, SLT and Mobitel will be conducting this remarkable initiative aiming to increase the forest cover in Sri Lanka by planting these trees in 6 hectares in Rajawaka Forest reserve, which has identified as a rich biodiversity site and also the major water catchment area for the Samanalawewa reservoir. With an island-wide reach as the national telecommunications service provider, SLT hopes to inspire sports fans and the youth of the country to undertake their own steps towards environmental conservation and sustainability. SLT will continuously monitor this project in the next two years with the support of the Forest department to ensure the desired outcomes.



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