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

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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?



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ESOFT Metro Campus holds Graduation Ceremony 2021

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Dr. Dayan Rajapakse – Chairman and Managing Director of the ESOFT Group (Right) presenting a certificate to a graduate

The Annual Graduation Ceremony of ESOFT Metro Campus was held at the Bandaranaike International Memorial Hall (BMICH) on the 23rd and 24th of November 2021. A total of 1,800 students graduated at this year’s event. Successful students received their Pearson BTEC Higher National Diplomas, Pearson Level 7 Qualifications, London Metropolitan University (UK) Degrees and MBA’s, Kingston University (UK) Degrees and MSc’s.

It was held across two days and split into 9 sessions, to be in full compliance with health guidelines. In addition to the conferring of degrees, batch tops were awarded gold medals and special awards were made to the top achievers of the programmes.

Keynote addresses were by an eminent group of academics and industry leaders including Mr. Conard Dias CEO, LOLC Finance PLC, Mr. Thushera Kawdawatta – CEO, Axiata Digital Labs, Dr. Dayan Rajapakse – Chairman and Managing Director of the ESOFT Group, Dr. Sampath Wahala – Chairman, Sri Lanka Accreditation Board, Mr. Tishan Subasinghe – Managing Director and joint Managing Partner Moore Stephens Consulting (Pvt) Ltd and Moore Stephens Aiyar, Prof. A.A.C Abeysinghe – M.Phil. PhD Programme Coordinator, Senior Lecturer Faculty of Management & Finance, University of Colombo.

Foreign delegates from the University Partners were present virtually and delivered their speeches and wishes for the graduates via video. The Virtusa careers team were also present on both days in order to provide career opportunities to the young and successful graduates. ESOFT prides itself in producing graduates who are work-ready and able to take on the challenges and opportunities presented by the new economy.

ESOFT has a rich history of 21 years and is the largest private sector higher education network in Sri Lanka, and offers a variety of programmes through an extensive island-wide network of over 40 branches and serves over 40,000 learners each year in a range of programmes from school leaver courses to postgraduate programmes.

ESOFT partnered with Kingston University London in 2012 to offer undergraduate and postgraduate qualifications in engineering and soon established a dedicated College of Engineering in Katubedda. In 2013, they partnered with London Metropolitan University to offer a range of programmes leading to undergraduate and postgraduate awards in Computing, Business, Hospitality, and Travel & Tourism. A range of MSc programmes in IT and an International Doctoral programme for IT, Science and Engineering research areas, has also been introduced via Kingston University.

The ESOFT Group has won local and international awards from Pearson (UK), BCS (UK), NBQSA, National Chamber of Commerce, Federation of Chambers of Commerce of Sri Lanka in recognition of their academic excellence and business performance. Their pinnacle accomplishment was to be recognized by the Sri Lankan Government as a Non-state Degree Awarding Institution in 2019.

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Coconut industry products raking in forex to the tune of $ 7000 yearly – State Minister

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By Steve A. Morrell

Earnings from exporting coconut products amounted to $ 7000 annually. Such exports include jaggery and treacle, which are key products relating to the coconut industry, State Minister of Coconut, Kithul and Palmyrah Cultivation Promotion Arundika Fernando said.

Although coconut, as part of the plantation industry, was not given due recognition, it was now a distinct contributor to forex earnings and was of significant importance to the economy of the country, Fernando said.

The State Minister added: “Development of the coconut plantations includes value addition promotion to its various products, which are now key to sustaining the coconut plantations.

“Such development included propagation of 600,000 nursery plants for distribution among smallholders and large-scale plantations to add further progress to the industry. As a result, the coconut industry is part of the mainstream economy.

“The coconut industry made a substantial financial contribution to the economy of the country. Value addition in all products was key to development. Coconut products, used extensively in allied local industries, were contributors to value addition. This is efficiently handled by the private sector.

“Collaboration with the Jaffna University was on-going to develop kitul and palmyrah.

“Soil testing and further inputs were envisaged for development.

“Export markets would include Europe, Canada and the US. This is particularly true of kitul treacle and jaggery. Value of these exports would reach approximately $ 2 million.”

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INSEE Cement’s 360-Degree Approach Eases Cement Shortage in Sri Lanka

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Operating at maximum production capacity with optimized distribution channels for a number of weeks, INSEE Cement has successfully helped to mitigate the cement shortage that was prevailing in the local market. INSEE Cement’s concentrated and immediate contingency measures across its entire operation at the onset of the shortage ensured an uninterrupted market supply of cement, while also logging a record-high 700,000 MT production output during the third quarter of 2021 for the company.

“As Sri Lanka’s leading cement manufacturer, INSEE Cement took on the responsibility to ensure the local construction industry’s post-COVID-19 revival remained on its trajectory,” stated Gustavo Navarro, Chief Executive Officer at INSEE Cement Sri Lanka. “We continued to fully support government regulations and industrial policies to first stabilize the market, and were able to deploy our island-wide distribution and dealership network to ensure an uninterrupted supply across the island. The loyalty and patience of our customers gave us that extra encouragement we needed to overcome the challenge.”

INSEE Cement operates at a 3.6MT maximum capacity, with a 1.5MT production at the Galle plant, a 1.3MT output from the Puttalam facility and a 0.8MT import capacity at the Colombo Cement Terminal. To mitigate the shortage the company introduced two more additional import vessels to its logistics operation to accelerate production and distribution cycles.

 

 

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