PLANTATION ECONOMY - STUDY GUIDE

Major Plantation Crops in the Economy of Sri Lanka

Items                           Tea                  Rubber                       Coconut

Area                            180,000           158,000                       439,000

(Hectares)

Production                  306                  87                                3,055*

(mn. kg)                                                                                   (mn.nuts)

Volume of Exports     288                  33                                -

(mn.kg)

Volume Exports

(Percentage)                94.11               62.06                           -

Export Earnings          53,200             2,179                           9,174

(Rs.mn)

Export Earnings

Out of Agriculture

Exports

(Percentage)                69.66               2.85                             12.02

Export Earning

Out of Total Exports   12.64               0.51                             2.18    

Value Added to as

Percentage of GDP     2.6                   0.4                               2.2

Note: * including the nuts used for desiccated coconut (712 mn), coconut oil (387mn), copra (84 mn), fresh nut exports (29 mn) and domestic consumption (1,832mn).

Source: Annual Report 2003, Central Bank of Sri Lanka.

Labour force

According to the Statistical Pocket Book published by the Ministry of Plantation the permanent Labour force in the plantation sector was around 295,200 and it is 4.3 percent of the total labour force in the country in 2001. This figure reflects to the registered workers in the private plantation management companies and the workers in the JEDB and SLSPC.  The disintegration figures by different crops and the actual number of workers is not available.

 

Introduction

Like in Sri Lanka, plantation in an important and vital sector in the economies of many countries in Asia, Africa, Latin America and the West Indies. The plantations provide raw materials to the industrial nations of Europe and North America. The system has been still in place with respect to the economic, social and political institutions. All indicators show that this will continue to be in the future as well.

The plantations system has introduced three main transformations in these countries..

1.      Creation of new pattern of exports and imports

2.      Large economic enterprises

3.      Significant increase in the coercion labour force

The plantation sectors also developed as “enclaves” divorced from the mainstream of social and economic activities. They are highly differential in economics and social organisation from peasant agriculture in these countries.

The term ‘plantation’ is subject to various definitions.

According to Edgar T. Thomson (1957), plantation is one type of settlement institution. It is a bureaucratically organized system in which whole blacks of people are treated as units and are marched through a set of regimentation under the surveillance of the small supervisory staff. However, one of the most accepted interpretation in the context of Asia is “ an economic unit producing agricultural commodities mainly field crops or horticultural products, but not livestock for sale and employing a relatively large numbers of unskilled labourers whose activities are closely supervised. Plantations usually employ a year round labour crew of some size, and they usually specialise in the production of only one or two marketable products. They differ form other kinds of farms in the way in which the factors of production, primarily management and labour are combined.   

It is to be noted that this definition goes back to 1960s, when the estate sector was chiefly large-scale. Another aspect of this is deficient is the present situation where workers are not considered to be unskilled labour.  However, this is a useful definition to go by

The greatest concentration of plantation economies is to be found is the Caribbean but the greatest concentration of population is in Indo - Ceylon.

Plantation Economy in Ceylon

The plantation economy came into force only through British Colonisation in Ceylon, Portugal and Holland had each enjoyed a century and half of rule of the island, but there influence limited to the narrow coastal belt.  Their economic interests were mainly on trading of was restricted to cinnamon, pearl, ivory and other exotic commodities which Ceylon had been renowned since ancient times.

The British interest in the early years centred on the cinnamon that was one of the major trade commodity of the by the Dutch companies (Holland’s) until 1796.  However, the revolutionary participation in the international trade was established after the introduction of coffee plantation is the island in 1840s.  British had developed a taste for coffee during 18^th century.  The coffee plant is not new to the peasants of Ceylon.  They had been growing this crop but never as a cash crop.  The first coffee plantation was set-up by sir Edward Barnes (later became governor) in 1823.  The British government provided incentives, like, abolition of an exports duty, exemption of land tax for coffee planting areas, etc.  Ceylon manage to oust West Indian coffee from British Market during the 1840's.

However, the coffee plantation was affected during world depression in 1846.  Coffee prices fell drastically within a period of fifteen years.  Industry went from peak prosperity to utter ruin.

The ultimate downfall of coffee was caused by the spread of coffee leaf disease:  The fungus, which destroyed the Ceylon coffee industry.  In 1886 the Ceylon coffee industry was for all practical purposes dead

However, the establishment of coffee industry help to the later development of the tea and rubber plantations in the country.  The plantation monopolized the centre of stage throughout colonial period.  Basically all these characteristics remained at least up to independence in 1948. British ownerships and management, provision of finance, large-scale-factory style-operation, Indian Labour, Capital equipment, estate supplies, and even food for the labour force and British Market for the product etc.  In short, fundamentals laid by the coffee plantation did not alter during the growth of future plantation crops like Tea, Rubber in Ceylon. 

It is also important to see how the British acquired land for initial establishment of coffee and the expansion of other plantation crops in the latter.  At the beginning in 1833 it was only 146 acres were acquired which rose very rapidly to 78,686 acres were sold to Britishes in the 1840's.  Coffee was planted around 276,000 acres towards end of 1847.  Land for plantation development was purchased from the Crown.  With the Conquest of the Kandyan Kingdom in 1815 all the land in the central part of the island that was not at that time occupied together with the forestland was taken over by the Crown.  The state defined "all forest, waste, unoccupied, or uncultivated lands" to be Crown land and converted them to establish the plantation in the hilly areas.

The issues related to Crow Land acquired for plantation of tea rubber have been vary controversial. Please read Asoka Bandarage: pp 87-97, Nihal Perera: pp 64-69, de Silva: p 297 etc.

However, the British investors acquired land for plantation cultivation in the hilly area.  Initially, the land was of little alternative use and sold to British investors at nominal price of five shillings per acre.  In 1844, restrictions were imposed on the sales of land, and no land would be sold before being surveyed and that the price was raised to 20 shillings.  However, the value of land had been declined as a result of downfall of the coffee industry.  But it tuned around during the tea cultivation,

Tea was one of the several alternatives to coffee.  (Cinchona was first alternative and planted in 39,000 acre in 1885.  However the British market was not favourable, hence they tried to plant Cocoa, but suitable land for cocoa was limited.  The tea plantation followed the pattern of estate system, which was set up to grow coffee, with the minor refinements.  In many cases the same land, capital and labour were converted to plant tea.

Early experiments of growing Tea plants in the 1840s were not encouraging.  But in the 1860s new variety of tea plants from Assam was imported which was quite successful. The area planted with tea rose to around 20,000 acres in the 1870s.  Production cost around Rs. 0.35 per pound of tea fetch Rs. 0.75 in 1880s and tea remained highly profitable.

The Ceylon Tea industry was confined to large estates. They were European-run and owned by Europeans.  The constant attentions of a trained and dedicated supervisory staff and labour are required for tea cultivation.  The labour that they recruited for coffee had continued to work in the plantation.

The favoured position of Ceylon tea in the market stood in good stead even during the depression in the 1930s.  Ceylon tea was inexpensive than any other tea in the world market till the1970s.

Despite the residual supplies of land, labour and capital remaining unused after the coffee blight, the tea industry required for more resources for expansion.  Unlike coffee, tea can be grown at a much wider range of altitudes.  New Crown lands paved way to meeting this rising demand. As for labour, more Tamil labour was immigrated.

Smallholders in tea also held a position similar to that occupied by the predecessors in 1935, there were nearly 70,000 tea smallholdings, which accounted for around 11% of total cultivated land in the country.

Establishment of Rubber and Coconut Plantations

The weak prices for tea which prevailed in the early years up to 1907, influenced some planters to seek for alternative crops.  Rubber was demanded in larger quantities by industrial countries and it was planted just 1750 acres in 1900 and went to some 150,000 acres in 1907.  By 1913 rubber earned three times as much foreign exchange as tea.  In 1917 the industry enjoyed war-inflated prices. Acreage, output, and exports all rose steadily throughout the decade of the 1920's.

It should be noted that rubber is naturally much more smallholder-oriented industry than tea.  About 40% of Ceylon Rubber Land in the 1920's were less than 100 acres.  Much of the rubber land located in middle altitudes and it is closer to the peasant economy.  Labour requirement for Rubber cultivation is less than tea and not on the regular basis.  It is heavily relied on casual workers both from estate and adjoining villages.

Coconut cultivation plays a vital role in the village economy and it became third modern export plantation crops in Ceylon.  It has multiple uses and endlessly use by the villages.  Smallholders in the country dominated the coconut industry.  Indeed five production of coconut are commercial value, which are traded internationally: Copra, oil, poonac, desiccated coconut and coir major product items.  However, coconut never came under any international regulatory agreement, which did tea and Rubber. It should be noted that the area under coconut comparatively larger than tea and rubber and almost always locally owned.  Coconut acreage and production expanded steadily up to World War I and it was a leading supplier of desiccated coconut in the 1920s.  However, its position was threatened by the entry of Philippines in the late twenties.

Economic Growth

The modern economic development established in the 1840's to World War II was dominated by the growth of estates.  The county can be divided into number of phases of economic growth.

1845-1870       -           High prise fetch by Coffee and establishment of estates.

1840-188         -           Coffee decline

1888-1913       -           The rise of Tea and Rubber up to World War II

1913-1929       -           War, Peace and prosperity

In each of these periods, the country depended heavily on the estate sector.  Total exports rose and fell with coffee.  Rise of the tea industry is mainly responsible for the upward movement of export volume at a 6.2 percent annual rate.  In 1929, coffee, tea, and rubber were the leading sector anand it proved the engine of growth for the economy.  Indeed, world demand has been increasing rapidly in the inception of the industry.

The following table shows the export income between 1891-1959.

Year	Tea	Rubber	Coconut	Other	Total (Rs. 000,000)
1891	52.3	-	10.7	-	58
1913	37.7	26.3	9.6	16.4	233
1939	57.3	20.5	13.3	17.6	328
1954	65.1	16.0	12.2	6.7	1,724
1959	58.9	16.8	13.7	10.6	1,773

Cited in Snodgrass (1966), Ceylon an Export Economy in Transition, Yale University p. 54.

* Combination of Coconut Oil, Copra and Desiccated Coconut.

Major Reference

Beckford G. L. (1972), Persistent Poverty under development in Plantation Economies of Third World, Oxford University Press, London.

Courtenay, P. P. (1969), Plantation Agriculture, G. Bell & Sons, Ltd., London.

Perera Nihal (1998) Society and Space, Colonialism, Nationalism and Post colonial Industry in Sri Lanka, Transition Asia and Asian America.  Westview Press.

Sanderatne Nimal, (1983), Plantation Agriculture: Economic Opportunities and Challenges, Staff Studies, Central Bank of Sri Lanka.

Snodgrass R. Donald, (1966), Ceylon: An Export Economy in Transition, Yale University, Illinois.

Thanks 

  A. S. Chandrabose