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

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5 years ago

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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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Ceylon Chamber welcomes IMF review approval, urges continued reform momentum amid external pressures

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16 hours ago

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2026/05/30

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The Ceylon Chamber of Commerce welcomes and commends the Government of Sri Lanka on the successful completion and approval of the 5th and 6th Reviews under the International Monetary Fund (IMF) Extended Fund Facility (EFF) programme. This milestone enables Sri Lanka to access approximately USD 695 million in financing support, reinforcing confidence in the country’s ongoing economic recovery and reform agenda.

At a time of heightened global uncertainty and external sector pressures arising from the conflict in the Middle East, the Chamber believes this approval sends a strong positive signal to markets, investors, and the private sector. Continued engagement with the IMF programme remains critical to preserving macroeconomic stability, restoring investor confidence, and strengthening Sri Lanka’s external resilience.

The Chamber notes that the IMF review underscores the importance of sustaining structural reforms, including improving the investment climate, enhancing competitiveness, and accelerating infrastructure and institutional reforms that support private sector-led growth.

At the onset of the Middle East crisis, The Ceylon Chamber of Commerce submitted recommendations to the Government addressing several immediate economic and energy-related risks. These recommendations remain highly relevant in managing emerging pressures on the exchange rate, energy costs, and overall external sector stability.

In line with the Ceylon Chamber’s earlier recommendations, the following priority measures are reiterated:

Strengthen and optimize the fuel QR system as a digital platform to improve efficiency and facilitate better targeted support mechanisms for priority groups such as public transport and school transport operators, while maintaining cost-reflective pricing principles.

Continue to ensure clear and consistent communication on the direction of economic policy to further reinforce confidence among businesses and investors, support orderly exchange rate expectations, reduce market uncertainty, and sustain overall macroeconomic stability.

The Ceylon Chamber also emphasises the importance of accelerating reforms that improve Sri Lanka’s competitiveness in trade, investment, tourism, logistics, and digitalisation. Advancing these reforms will be essential to sustain and improve macroeconomic stabilisation and resilience. The Ceylon Chamber has also urged its members to act responsibly during this critical period by supporting measures that preserve economic stability and safeguard Sri Lanka’s long-term interests.

The Ceylon Chamber of Commerce remains committed to actively engaging with policymakers and stakeholders in supporting progressive economic reforms, the successful completion of future IMF programme reviews, and Sri Lanka’s transition towards a resilient and competitive economy.

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Abans Finance launches maiden debenture issue listing on CSE

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16 hours ago

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2026/05/30

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(Left – Right): Upul Gunasekara, Deputy CEO – Abans Finance PLC (Abans Finance); Danushka De Silva, Director – Abans Finance; Rajeeva Bandaranaike, CEO – Colombo Stock Exchange (CSE); K.J.C. Perera, Chairman – Abans Finance; Thulci Aluwihare, Director – Abans Finance; Nirosh Madawala, CEO of Abans Finance; Ms. Kaushini Laksumanage, Deputy CEO – NDB Investment Bank Ltd; Ms. Nilupa Perera, Chief Regulatory Officer – CSE; Prashad Samantha, Chief Financial Officer – Abans Finance.

Abans Finance PLC (Abans Finance) recently marked the official listing of its maiden 13,384,000 debentures on the Colombo Stock Exchange (CSE) with a bell ringing and market opening ceremony held at the CSE trading floor.

The offer for subscription for the initial issue of ten million (10,000,000) listed, rated, senior, unsecured, redeemable five-year (2026/2031) debentures of LKR 100/- each, was rapidly oversubscribed, having received subscriptions for 13,384,000 debentures for a value of LKR, 1,338,400,000/-, reflecting strong investor confidence in Abans Finance’s strengths and the debt market.

Abans Finance is a licensed non-banking financial institution and subsidiary of the Abans Group and currently operates with nine branches, nine customer centres and four kiosks in addition to the head office, leveraging on the island wide presence of Abans Group to reach customers across the island. Abans Finance services include finance leasing, hire purchase, mortgage loans, personal loans, real estate development and acceptance of time and savings deposits. Founded in 2006, the Abans Finance was also listed on the CSE in 2011 and enjoys a Fitch Credit Rating of A – (lka) Stable Outlook.

Through its first debenture, which carries an “A-” (lka) rating from Fitch Ratings Lanka Limited and was managed by NDB Investment Bank Ltd, Abans Finance aims to expand its asset base, strengthen loan portfolios, grow its presence by leveraging the Abans Group financial ecosystem to drive digital transformation and deliver integrated solutions.

K.J.C. Perera, Chairman of Abans Finance PLC and keynote speaker at the ceremony, remarked upon the company’s debenture issue, commenting “This milestone underscores strong investor confidence in Abans Finance PLC and strengthens our capital base as we advance our strategy for sustainable growth and innovation.”

Delivering his welcome address at the event Rajeeva Bandaranaike, CEO of CSE, remarked upon the debenture listing, stating: “Today’s listing of the debt issue by Abans Finance PLC reflects a broader engagement by companies to use the capital market for their funding requirements. More recently we have seen a fair growth in the primary issuances of debt. In 2024 approximately LKR 95 Bn was from debt. In 2025, LKR 113 Bn was raised through debt – and in 2026 approximately LKR 60 bn was raised through debt.”

2025 saw 22 debt listings including 3 new companies listing on the exchange by way of debt initial public offerings (IPOs) including several firsts in the country from GSS+ debt instruments (Green, Social, Sustainability linked), Shariah compliant debt instruments and High Yield Bonds, with access to investors and brokers facilitated by a fully digitized CSE platform, which can be accessed through CSE’s website and mobile app.

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Sun Siyam Pasikudah brings community together for coastal clean-up

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16 hours ago

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2026/05/30

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Sun Siyam Pasikudah, Sri Lanka’s five-star boutique retreat and part of the Privé Collection within Sun Siyam, reinforced its commitment to community and conservation with a beach cleanup along Pasikudah Bay on 08th May 2026. Held under the group-wide Sun Siyam Cares umbrella, guided by “Caring for our People, Nature and Culture”, the morning brought together school students, hotel staff, and in-house guests for hands-on environmental action.

Unlike typical cleanup drives, this initiative placed education at its heart. Students from a local school joined guided sessions on coastal ecosystems, the impact of marine litter on biodiversity, and the role every individual plays in protecting Sri Lanka’s coastline, giving young people from the surrounding community a firsthand understanding of why this bay matters, ecologically, culturally, and economically.

Arshed Refai, General Manager of Sun Siyam Pasikudah, said: “What makes this cleanup different is who we did it with. When a child understands why this bay is worth caring for, its ecology, its beauty, what it means to the families who live here, that knowledge stays with them. That is the most sustainable investment we can make.”

Pasikudah Bay’s shallow, crystal-clear turquoise waters and the Eastern Province’s rich marine and cultural heritage, from centuries-old mosques and kovils to the vibrancy of Kattankudy, make it a coastline worth protecting. Participants spread across the shoreline collecting and sorting waste in line with the resort’s zero-waste management principles, while guests noted the activity deepened their connection to the destination beyond a typical resort experience.

Sun Siyam Pasikudah holds the Travelife Gold Certification across 147 criteria spanning energy, water, wildlife, waste, and community welfare. The resort grows over 38 varieties of fruits, vegetables, and herbs on its organic farm, operates solar-powered installations, has eliminated single-use plastics entirely, and sources locally wherever possible. The Sun Siyam Cares Fund supports CarePhant, backing the care of Kalo, a young elephant at the Elephant Transit Home in Udawalawe, ahead of his return to the wild in 2029.

As part of Sun Siyam Resorts, named Most Influential Sustainable Hotel Group of the Year at the 2025 GO TRAVEL Awards, initiatives like this reflect a sustained, year-round commitment to ensuring tourism on the East Coast is a force for renewal, not depletion. For reservations, visit www.sunsiyam.com/sun-siyam-pasikudah or call 065 205 5555.

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