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Tuesday, September 20, 2011

PLANTATION ECONOMY



This section mainly deals with the expansion of the plantation sector and its impact on economy after the independence of Sri Lanka. The labour component in the plantation industry is also looked at in the latter part of this section.

Nicholas Kaldor, a visiting economist, National Planning Consul, Sri Lanka in the late 1950s remarked that "Ceylon owned its present prosperity in comparison with other countries in the region, to the plantation economy." and went to the extent of even suggesting that "it is the further development of the plantation economy which provides the means for a rapid increase of Ceylon national wealth.”

Sri Lanka needed to raise her foreign exchange earnings to enable her to expand employment opportunities in all sectors. Since the plantation crops were considered to be the biggest foreign exchange earner, continued development of this sector essential for the provision of employment in the country.  Moreover, the bulk of the plantation crops are found in the Wet Zone of the country which is also the region of acute rural unemployment and under employment in the island. In addition, it is also considered to be strengthening the plantation sector not only to absorb more labour but also as a means of agricultural diversification. The plantation sector, therefore, was considered as vital to the growth of the economy of Sri Lanka.    

Land for plantation agriculture increased by a cumulative annual average of around 22,272 acre per year between 1831-50 and 1921-1930. In 1950s, the land under plantation crops was around 928,000 hectares (Tea 229,333, Rubber 265,000 and Coconut 433,000). The growth of area, production and exports of the plantation crops in the island from 1950s to 2002 is shown below.

Growth of Area (000 hectares)
            1950/52           1960/62           1970/72           1980/82           1990/92           2000/02
Tea           229             237                  241                  241                  221                  167
Rubber                 265             271                  258                  213                  198                  157
Coconut   433             444                  466                  42                    380                  439
Total        928             953                  968                  876                  801                  766

Production Trend (tea & rubber in Mn.Kg. and Coconut in Mn.Nuts)
            1950/52           1960/62           1970/72           1980/82           1990/92           2000/02
Tea           143             205                  213                  196                  212                  303
Rubber                 106             100                  147                  127                  102                  87
Coconut   2225           2531                2694                2268                2337                3055


Export Earnings  
1950/52           1960/62           1970/72           1980/82           1990/92           2000/02
Agri.    90.5                 91.2                 90.1                 57.9                 31.66               19.14*
Total    1,656               1,791               1,946               20,030             89,853             433,445**

Source: Compiled from the Annual Reports, Central Bank of Sri Lanka, (Various years).
*Percentage of the Total
**Total export values in million rupees.
Note: Agricultural exports including Tea, Rubber, Coconut- Kernel products & others and minor agricultural products.
                       
The figures show that the area under plantation crops expanded up to 1970s and thereafter it had declined except for a marginal expansion of area under coconut during the period in 2000/02.  However, the data clearly shows that the production of the plantation crops have steadily increased between 1950 and 1959 respectively.

It is also interesting to compare the plantation sector with the global scenario after the 1950s as well.  The following table given below show the production of tea and rubber in selected countries.

Percentage Share of the Global Production of Tea and Rubber

Country
TEA
1952
1968-70
1986-88
1998-2000
India
Sri Lanka
Other Asia
Africa
South America
Other Country
45.6
24.7
23.7
3.7
0.2
2.1
36.7
24.2
23.0
11.3
3.2
1.6
28.4
9.14
25.9
10.8
4.0
8.3
30.35
9.38
34.33
12.03
-
-
RUBBER
Malaysia
Indonesia
Thailand
Sri Lanka
34.8
43.0
5.3
5.5
40.9
26.3
9.2
5.3
33.5
23.2
18.1
3.2
28.78
26.00
-
4.2

According to the above table a higher percentage share of production of tea has been maintained by India and Sri Lanka, over the greater part of the 50s and 60s.  As far as rubber is concern, the attempts to increase production in the early years of independence had not been successful.  The years of 1960s were not favourable for tea and rubber.  It was mainly to some errors in the projection of these crops.  Incidentally, the rubber market was in decline due to the encroachment of synthetics since 1940s.  However, the market for synthetic completely collapsed due to increases in the prices of synthetic rubber, which occurred in the wake of price escalation of petroleum products in the 1970s. It should be noted that with all these constraints the tea and rubber sectors still continue to generate higher gross returns to the country.

Though plantation sector maintained its position as the leading sector of the economy, the preoccupation of peasant sector with promotion of welfare coupled with the gradual emergence of the industrial sector, brought about perceptible warning of the importance of plantation agriculture in the country. Similarly, within the plantation sector the trend of ‘Ceylonisation’ of ownership and management virtually stagnate the area under cultivation.  

 

Plantation Sector in the Economy of Sri Lanka


1947-50
1958-60
1968-70
1978-80
1988-90
1998-00
GDP
Employed Workers
36.5
26.9
33.0
N.A/
26.8
23.2
12.3
19.7
9.9
     (11.00)
3.6
(4.0)
Source: Cited in G. H. Pieris, Development and Change in Sri Lanka, p. 223.
Note: Figures in the parenthesises are estimated. 

The successive governments after independence had repeatedly announced plans for nationalisation of the foreign owned enterprises in the country. The attitude of the government led to curtail the plantation sector in terms of falling investment and demoralised management of the estate sector etc.  Consequently, many foreign owned plantation, companies and individuals fragmented their tea lands into small plots and sold them. The announcement of the nationalisation of foreign owned assets led to decline of further expansion of the plantation agriculture- particularly tea by the British owned companies like 'Sterling' and 'Rupees' that possessed large scale tea estates in the country.

This particularly curtailed the tea sector in terms of factory maintenance, transplanting activities, infilling vacancies of tea bushes and social conservation in the plantation sector. The following data shows the trend of replanting and fertilizer usage in tea and rubber plantation sector in the country in selected years.

Replanting, Application of Fertilizer to the Plantation Crops in Selected Years


Replanted (Hectares)
Fertilizer (000 mt)
Tea
Rubber
Tea
Rubber
1961/63
1970/72
723
2686
7089
3670
150.7
94.3
62.86
36.5
Compiled from Statistical Abstract of Sri Lanka (various years)


Nationalisation of Plantation

The structural change that took place in Sri Lanka's plantation sector referred to as ‘nationalisation of estates’ commenced of the Land Reform Law No. 1 of 1972 and Land Reforms (Amendment) Law No. 29 of 1975. The land reform Law, No.1 of 1972 imposed ceilings (25 acres for paddy land and 50 acres for other categories of land) on private ownership of land and provided for the setting up of a Land reform Commission(LRC) vested with powers to acquire and redistribute privately owned land in excess of the stipulated ceilings. Three years later, the scope of the reform was extended through the Land-Reform (Amendment) Law, No. 39 of 1975 under which land related capital assets held by public companies engaged in agriculture were nationalised. A crop-wise breakdown of the extents divested from private ownership during this three year period is presented in the following table.

 


Extent of Land Acquired during the land reform (in hectares)
Crops
Under 1972 Law
Between 1972 and 1975
Under 1975 law
Total
Tea
56,396
13,857
96,152
166,405
Rubber
33,413
2,702
38,379
74,494
Coconut
45,537
-
2,592
48,130
Others
92,663
5,389
32,021
130,073
Source: Cited in Source: Cited in G. H. Pieris, ‘Structural Change in Plantation Agriculture in Sri Lanka,’ in Goonaratne W and Wesumperuma D (ed.) Plantation Agriculture in Sri Lanka, 1984, ILO, p. 36.

The LRC was empowered both to develop the land under its own management as well as to alienate the land either in large blocks to other public sector agencies and co-operative organisations or small allotments to landless individuals for agricultural or residential use.

The Principal Recipients of land under the Land Reform Programme
Public Sector                                                                                      Extent (hectares)
            State Plantation Corporation                                                  105,828  
People’s estate development Board                                          94,739
Up-country Co-operative Estate Development Board             29,583
Tea and rubber Research Institute                                              4,006
Co-operatives
            Land Reform Co-operative (Janawasa)                                    19,425
            Electoral Co-operatives                                                             70,822
‘Special’ and Other Co-operatives                                            16,188
Peasant Smallhodings                                                                          35,815

In the immediate aftermath of land acquisition under the reform programme, the public sector agencies were entrusted with the task of management of the acquired land. The State Plantations Corporation (SPC), Up-Country Estates Development Board (USAWASAMA) and the Jantha Estate Development Board (JEDB) were set up and about 35 percent of the total area under plantation agriculture were distributed to these institutes. However, this situation did not remain static and subsequently the SPC and JEDB were the gigantic organizations who dominated the sector until 1990s.

These agencies were under the general direction and control of the executive branch of the government. As far as plantation crop is concern the continual adherence of non-optimise field practices, lack of supervision in field and factory management, wasteful expenditure on bureaucratic administration and over re-recruitment at executive and managerial level led to determination of the plantation sector in the country.

However, some institutional charge was taken place towards the end of 1980s.  A 'Core Group' was appointed by the government in 1989 based on the advice of the World Bank to identify the problems and process a programme for long term viability of the plantation sector in the country.


1.                  Leasing or sale of coconut estates to the private sector.
2.                  Leasing of the rubber and tea estates to the private sector.
3.                  Entering into management contract with private sector firms for the management of groups or clusters of estates.

As we noticed above the plantation represented 36,5 per cent of GNP in the 1948-50 period. It represented less than 13 per cent in the 1978-80 period and 11 per cent in 1983. During the same periods the share of plantation products in foreign exchange earnings declined from 90.7 per cent in 1950 to 53 per cent in 1980 and to 47 per cent in 1983. Therefore the government embarked upon a number of projects for rehabilitation. The targets that were expected by the implementation of the rehabilitation programmes did not sufficiently materialise and thus, the financial problem reached a crisis point because of the proportions of heavy borrowing from the two state banks.

 Subsequently, the government dissolved most of the co-operative agencies and handed over the tea estate management to the private companies under the recommendation of the Plantation Restructuring Committee (PRC), which was formulated with the assistance of the World Bank in 1984. Currently, the plantation companies (22) control around 53 per cent of the total tea estate management and around 40 per cent belong to smallholders. Only 7 per cent remain under the state corporations’ i.e the SPC and JEDB. However, labour unrest and low level labour participation in the industry emerged in the large-scale tea estates in the Higher and Mid elevation tea regions.


The Plantation Workers

There is some lack of clarity associated with the usage of occupational, demographic and ethnic terminology in the writings on plantation workers in Sri Lanka.  Quite frequently, the distinctions between the "plantation workforce", "estate population", "Indian Tamils" and "stateless persons" tend to be regarded inconsequential in the Sri Lankan exemplification of the 'plantation model'.  This perception requires clarification.

In an occupational classification of the economically active workforce in Sri Lanka, the term "plantation worker" may be used to refer to a person whose main source of income is employment as a wage earner in a large unit of production devoted to crops such as tea, rubber and coconut.

Using such a definition, the Socio-Economic Survey of 1985/86 has shown that the plantation workforce consists of about 430,000 persons.  They and their dependents probably number around 950,000.

The majority of plantation workers and their dependents resides on estates, constituting about 95.2 per cent of the "estate population".  About 15 to 20 per cent of the plantation workforce does not belong to the estate population.  The estate population itself is of mixed ethnicity, with Tamils constituting its majority.  Census records are not precise on the Indian Tamil/Sri Lankan Tamil distinction within the estate population.  Some among those who would be conventionally regarded as 'Indian Tamils' (on account of their "recent Indian origin"), have obtained Sri Lankan citizenship - an estimated 360,000by January 1986 - and tend to be enumerated as "Sri Lankan Tamils", thus inflating the size of the latter group in the estate population.

Thirty years ago, a 'typical' plantation worker in Sri Lanka could have been described as "a stateless person belonging to an ethnic minority which is largely confined to plantation sector employment".  The foregoing information shows that the application of such a generalisation at present to a study of the plantation workforce could entail considerable distortion of reality.

Well over 90 per cent of the plantation workforce in Sri Lanka is made up of those serving in the labourer grades who, on the basis of their conditions of employment, could be placed in several categories.  There is, first, the distinction between 'permanent' and 'casual' workers, with the former category accounting for about 80 per cent of the labour force.  The permanent workers derive most of their earnings in the form of cash receipts from the employer which consists of (a) a fixed daily wage, (b) a 'special living allowance' indexed for changes in the cost of living), and (c) 'over-poundage' payments (a bonus paid per unit of daily output of leaf plucked or latex tapped exceeding a specified minimum).  At various times in the past, there have been other allowances such as a price-wage supplement', an additional special allowance', and an interim devaluation allowance.  The fixed daily wage and the special living allowance are the main components of the total receipt.

Casual workers are also employed by the plantation industries in fairly large numbers.  they are drawn either from the worker population residing on the estates or from the villages outside.  Usually, this category of workers is employed more in work relating to keep and maintenance (replanting, weeding, pruning, etc.) than for the routine tasks of plucking or tapping.  Employers exercise some flexibility in regard to their remuneration by paying them 'task rates' rather than daily wages.

Under the pattern of payments to workers described above, the to main determinants of earnings of the large majority in the plantation workforce are the wage-cum-living allowance, and the 'employment intensity'.  Accordingly, in plantation worker agitations for improvements in conditions of employment, these two determinants have always tended to receive prime attention.

Plantations ("estates") as a human settlement type differ from other types of rural settlements in Sri Lanka.  The overwhelming majority of those who belong to the labourer grades of plantation employment live in "line-rooms" (usually, single room, barrack-type residential units), clusters of which are found scattered around within each plantation.  Typically, such a cluster consists of a large number of residential units that stand in rows ("lines") on a small patch of carefully demarcated ground.  Small vegetable plots, an occasional cattle shed, open drains, and communal open-pit latrines occupy the narrow spaces between and adjacent to the "lines", providing the residential cluster the appearance of extreme congestion and squalor, mitigated only by the fact that it is surrounded by vast stretches of tea or rubber land.

The plantation workers of Sri Lanka have often been identified as a segment of the country's population that suffers from extreme poverty and want.  This has been attributed to two sets of interwoven causes - namely the exploitative production relations inherent to the plantation system, and the political oppression of an ethnic minority.  To generalise on the literature relating to these themes, while writings that deal with global perspectives of underdevelopment and poverty tend to stress the aspects of economic exploitation, those that are concerned more specifically with ethnic conflict and minority rights in Sri Lanka usually highlight oppression and discrimination.

The basis of these themes from a historical viewpoint is so well known that it requires only brief recapitulation.  Even since the origins of plantation enterprise in Sri Lanka during the 19th century, living standards among plantation workers - most of whom were immigrants from South India - have been featured by earnings that were barely adequate for survival, and gross deficiencies in the satisfaction of basic needs in food, shelter, education, health care and sanitation.  Their wages were constantly kept at low levels primarily for maximising the surplus extracted form their labour either for transfer ** profits to owners of plantations or for diversion into other sectors of the economy for investment and consumption.  Moreover, the daily lives of plantation workers have been subject to greater regimentation and authoritarian control than those of many other categories of workers.  They have also had little scope for occupational mobility.  This, along with the precarious balance persisting between their earnings, on the one hand, and survival needs, on the other, inhibited collective effort on their part towards the improvement of their living conditions.  And, the majority among them remained excluded from participation in the political processes of the country, having been divested of their citizenship rights soon after country gained independence.

Several changes witnessed during the past two decades have, in various ways, contributed towards increasing the bargaining strength of the plantation workforce, and hence, to certain distinct improvements in their conditions of employment.  The foremost among such changes in terms of relative impact is the admission to Sri Lankan citizenship of an increasing number of Indian Tamils living on the plantations.  This has enabled them to emerge as a political force in the country.  At the presidential, parliamentary, and provincial councils elections held since the late 1970s, for example, it was evident that the "Indian Tamil" segment of the plantation workforce, acting as a cohesive group, could have a perceptible impact on the outcome of the elections.  Thus, the general trend during the recent past has been one of increasing responsiveness of the government to the needs and demands of the plantation workforce.

The changes that accompanied the land reforms in the plantation sector have also, in the long term, been beneficial to the plantation workforce.  At the initial stages of the reform programme, mainly on account of the related organisational dislocations.

The central position of the plantation is the main foreign exchange earner and a key provider of employment make it imperative that the plantation industry needs to be revitalised and made viable once again.  The problems that the industry confronts are clear, and most of them are not of recent origin.  Nearly two decades of state ownership and management of the larger plantations has apparently contributed to compound the problems the lack of dynamism and even deterioration of the industry under public ownership provided.

References

1.                  Amerasinghe, Y. R. (1993) Recent Trends in Employment and Productivity in the Plantation Sector of Sri Lanka with Special Reference to the Tea Sector, ARTEP, New Delhi.
2.                  Goonaratne, W. and D. Wesumpermu, (1984) Plantation Agriculture in Sri Lanka, ILO/ARTEP.
3.                  Peiris, G. H. (1996) Development and Change in Sri Lanka, Geographical Perspectives, Macmillan India Ltd.


Thanks 
  1. S. Chandrabose

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