Planters’ Association’s unscrupulous response

The so-called revenue sharing scheme is no solution to the complex 

set of issues engulfing Sri Lanka’s plantations

By A Special Correspondent

The Planters’ Association displaying its perfidious intent to conceal its plunder remains completely oblivious to the lootingof the plantations’ surplus by conglomerates, which the writer exposed in two previous accounts.

Combined operation of licensed tea exporters, tea brokers, Regional Plantation Companies (RPCs) and the conglomerations which ownthe latteris illegal as per the Tea Board of Sri Lanka. It’s the firms under majority ownership of the most prominent business tycoons of the countryof the likes of Harry Jayawardena, Dhammika Perera, Merrill J. Fernando, etc., engaged in thispillage at the expense of workers and the industryas we revealed in our two previous accounts. 

On the other hand, plantershoodwinked the public by remaining silent on falsely elevatedunit cost of production it cited previously and by stating that aggregate revenue of the trade is determined by auction price when in reality it’s determined by world export price (F.O.B) which is over 40% above the latter.On this basis itself we proved workers’ daily wages can rise to Rs. 1,400in RPCs while industry remaining profitable by earning a contribution margin ratio of 14.4% and gross profit margin of 12.2% as per 2018 data. 

Moreover, planters completely distort our explanations on mechanisation which theydeliberately avoid to safeguard short-term profitsrate based on IRRs disregarding NPVs, stagnating production forces andreal wages. It hysterically accused us of attempting to “illegally” raise wages while planters themselves operateoutside the legal framework.(In psychoanalysis this behaviour is called projection, a subconscious defenceemployed to cope with overwhelming guilt). 

As we pointed out the existing industry framework (which itself is illegal),where surpluses are amassed within licensed export firms, precludes the lawful ability to raisewages given that approximately only 20% of the profits are concentrated within plantations. 

Plantations’ industry framework is erected by conglomerates specificallyto continue its plunder through draining the surplus while appearing to be loss making or less profitable. In an even more hilarious and bankrupt attempt to divert away from these arguments, the planters are accusing us of crimes committed by Stalin a century ago.

In the following discussion we address both intentional and unintentional distortions to our explanations on mechanisationwhich transpireinthe planters’ reply.

Daily wage in Kenya’s plantations

Firstis with regard to daily wage in Kenya’splantations. The Planters’ article states that it’s Rs. 780.70 while their graph indicates Rs. 443.30, displayingdistortion of data. Kenya’s daily wage of estate workers,similar to other undeveloped regions which the planters cited, cannot be assessed in abstraction given that majority of their tea estates aren’t mechanised which the planters themselves admit. 

Higher productivity of Kenyan workers therefore must be attributed to flat terrains, significantly reducing required effort of workersalong with partial mechanisation relative to Sri Lanka. Hence, lower productivity doesn’t emanate from lethargy of Sri Lanka’s workers as brazenlyunderscored by planters. It’stherefore a prevarication to conclude that mechanisation doesn’tallow for higher real wages. 

In this light it’s remarkable that planters missed the daily wage in Japan’s plantationsin their splendid graph.Japanese estate workers might travel to work in an automobile which they discard after few yearsand maybe exported to Sri Lanka where it’sproudly purchased by a local professional. In contrast a plantation worker in Sri Lanka struggles to meet herdaily nee ds withmalnourishment among themreaching nearly 30% (UNDP, 2018). 

Although subjected to opposite living conditions, both Japanese and Sri Lankan workers produce the same beverage: tea. In this light the planters perfidiously claim that heavy mechanisation in Japan is made possible by flat land and Sri Lanka’s inclined planes astonishingly prevent them from mechanisation. Of course the application of machinery requires in certain instances a change in the pattern of planting. ‘To be fully successful replacement of hand labour [with machines] requires systemic changes in the tea field’ (Dan Bolton, 7December2015, www.WorldTeaNews.com). But land inclination does not in anyway prevent mechanisation of any degree.

Mechanisation

Further, they claim that mechanisation reduces quality of leaves and therefore its supply price. If so Japanese tea should be cheapest in world as Japanese estates are the most industrialised.However, on the contrary, Japanese tea fetches the highest prices in world markets. 

For instance, Colombo auction average price was $ 4.27/kg in 2017 while Sencha tea which accounts for approximately 60% of Japan’s tea output fetched $ 10.81/kg in 2015 (Ministry of Agriculture, Japan, May 2017). It’s clear from this that despite heavy mechanisation quality of Japanese tea has not reduced indicated by significantly higher price it receives. 

Modern-day machinery preserves the quality of leafduring harvesting although Sri Lanka’s feudal Mafiaclad in modern capitalists’clothes are unaware of this. ‘Mechanical harvesting addresses both labour and quality issues’ (www.worldteanews.com). ‘With extreme precision, the harvester takes just thetender parts of shoots’ (www.discoveringtea.com).

Further, Nerada’s mechanical harvester use a specially-engineered apparatus‘to locate and carefully remove the most tender leaves and bud from each plant’ (www.neradatea.com). ‘Tea obtained by shear-harvesting from a continuously sheared field over a prolonged period was found to be superior’ (Ravichandran and Parthiban, 1998; Nandagopalan et al, 2014). ‘Bigger machines can clear a hectare in an hour while still maintaining the same quality harvest’ (Pauline Macharia, 5March2018, www.BusinessDailyAfrica.com). 

The University of Moratuwa also invented machines which preserve the output quality indicating that robber barons are not interested in developing local scientific efforts let alone incorporating foreign developments.This reveals the baselessness of the planters’ argument that mechanisation reduces output quality and supply price. 

Without wasting more words, the above elaboration also answers the planters’whinging onus not recognising their remarkable skills in maintaining quality of the output.These statements are designed to hoodwink the public to continue their plunder unharmed.

Planters further claim that ‘a two-man machine on sloping ground would always require one harvester to do more work and exert more energy than the other for the same pay’.According to them, workers therefore resist mechanisation while planters try to promote it! This would be the most ridiculous claim made in trade history, as it’s obviousthat two workers can switch and can be remunerated equally!

Revenuesharing

Planters highlight that they introduced a revenue sharing scheme which allows workers to individually manage a plot of land.According to the planters it yielded better results for them and the workers. On the contrary, the pseudo scheme is another plot to avoid development of production forces and plunder the surplus of the sector by conglomerates. This is sogiven that surplus destined to develop the industry is concentrated within export firms and RPCsand not among workers orsmall holders. 

Revenue sharing scheme istherefore another perfidious methoddevised to avoid the productive use of the surplus of plantations and to continue its destruction in conspicuous consumption and speculative investments by conglomerations. 

A few instances quoted by planters where workers have earned around Rs. 50,000 a month would also include other costs such as fertiliser and pesticides inputsand hence may not be their net earnings. Even if it was net earnings it could be on few flat terrains where worker has to exertless effort to harvest. Hence, their yield may remain higher compared to inclined planes.It explains why only an insignificant number of workers earned high incomes through this pseudo scheme.

Plantersunscrupulously highlight them to falsely accuse workers earning low incomes as being lethargic compared to few who earned more due to geographical causes.It’s evident that the so-called revenue sharing scheme is no solution to the complex set of issues engulfing Sri Lanka’s plantations.

No economies of scale

Planters further inquire why it allowed the extent of their estates and its workforce to reduce over time. This is given that on the current structure of production there are no scale economies in the harvesting process due to absence of mechanisation. Hence, there are no economies of scale in the large estate compared to the small holders which was seminally elaborated by late Dr. S.B.D. De Silva. 

Hence, given the fact that conglomerates control both auctions and the export firms including RPCs, theycan always monopolise the purchase and sale of the product while resting the cultivation process in the hands ofsmall holdersand naturally delegate processing to 200 odd small factories in the country without increasing aggregate unit cost of production in the sector. 

Small holders and small factory owners are dominated by export merchants in the auction process given that it’s mandatory for them to sell their output at auctions while only licensed export firms are allowed to purchase it at suppressed prices and sold in world markets at nearly double the auction price. This demonstrates an industry structure dominated by merchant cum rentier capital over industrial capital which echoes a definite historical stage preceding capitalism (pre-capitalist) in advanced economies roughly in the 18th century.

Workers managing the system

Finally, planters state that workers are not capable of managing the system which requires intricate knowledge about planting process, application of fertiliser, marketing, etc. Therefore our suggestion to revoke legal rights of export firms and establish a workers’ council, authorising it to purchase from auctions, managing the plantations, reinvestment of the surpluses in both production and workers’ welfare, determination of wages, determination of supply price, etc., cannot be performed satisfactorily and the suggestion is a disguised form of nationalisation which has failed miserably. 

It should be clear from the discussion so far that both private sector andGovernment failed to transform plantationsduring past seven decades since independence. Hence, it should be obvious that our alternative remains independent from both the degradation in the private sector and the Government and is entrusted on workers themselves without hierarchical intermediation. 

The ‘utopia’ would be to preserve existing relations of plunder by conglomerates and not our alternative as they portrayed. In this light planters misunderstood what we mean by workers. What we mean are not merely those who harvest at the estates but also professionals and skilled workers encompassing the entire supply chain. This should suffice to clear their childish misconceptions.