Wages and sustainability of tea industry

By Dr. N. Yogaratnam. Consultant / NIPM
Sustainability of the tea industry always becomes a key issue whenever revision of worker wages is proposed. Inflation takes a back seat. Let us look at this from a scientific perspective.

It is only to be expected that wages and input prices will increase overtime.

The extent to which these increases can be neutralized by corresponding improvements in productivity, particularly in a situation of uncertain market conditions, falls strictly within the ambit of sustainability.

In other words, each unit of production viz Land (Soil), Crop, Labour and Management should be developed to meet the increases in variable cost of production (COP). Break-Even Analysis (BEA) technique would be useful in developing models in lines of a Sustainable Tea Productivity Package (STPP) and attempting to meet the set targets, if sustainability is to be assured.

The critical issues to be considered are 1.productivity, soil, crop and labour management, 2. Economic viability; 3. Social considerations and 4.

Political support Soil Productivity
The necessity to increase production from steadily decreasing and degrading tea lands, places considerable strain on the fragile ecosystem. Due to a continuous monocropping system of cultivation over a very long period, the nutrient supplying capacity of soils has decreased considerably, corresponding to general decline in organic matter content. Furthermore, soils of the tea lands are known to be more prone to soil erosion losses and surface – runoff as these depend on the slope of the land, length of the slope, erodibility of soil and erosivity of rainfall. It has been reported that 30- 40 cm loss of top soil results in 40 – 50 % loss of productivity in tea lands

Tea is environment friendly. Being a rain-fed crop, tea hardly makes inroads into the scarce availability of conserved water for irrigation. On the other hand, the leaf fall from the bush gives a certain degree of improvement of soil fertility. Burying of prunings not only recycles valuable nutrients but also enhances the water holding capacity of the soil and improves soil texture.

Periodic lopping of shade trees generates green manure, which when added to the soil, improves its organic mater status. Mulching of young tea and growing of cover crops, retain moisture and protect the soil from the insidious effect of erosion. Composting of weeds ensures the nutrients so removed to be siphoned back into the field. Protection against loss of fertile soil is also secured by proper conservation measures through the planting of grasses along the drains etc.

Yet, the threshold yield of a significant proportion of tea fields remains under-exploited. The hallmark of sustainability in terms of this criterion centers on the strategies for using optimum nutrients, and reducing the agro-chemical load by adopting systems involving Integrated Plant Nutrient Management (IPNS) and Plant Protection with minimum use of pesticides.

Crop Productivity
In tea, crop productivity is determined by bush density (No. of bushes per unit area), shoot density ( No.of shoots per bush) and mean shoot weight.

The short term aspect of crop productivity improvement would entail skilful manipulation of pruning practices and related activities, adoption of stringent harvesting standards, regular harvesting rounds and ensuring adequate maintenance foliage, balanced input of fertilizers and appropriate plant protection measures. There should also be proper soil management to improve soil fertility and control acidity.
The medium / long term approach envisages improving the genetic character of plants by consolidating selected fields as replanting lands, identified for this purpose by adopting stringent land selection criteria. The success of the consolidation programme will depend on using the right combination of clones in seedling field that have the potential for higher productivity. Also, new planting and replanting area should be selected on the basis of an appropriate land suitability assessment system based on productivity potential.

Geographical Information System (GIS) technology would provide the necessary back-up information for this. Annual replanting rate also should be stepped – up to over 3%.

With respect to planting material, the well-known clones for replanting and infilling, such as the TRI 2000 series in Sri Lanka, give an average yield of about 3000 kg/ha over a pruning cycle. New varieties such as the TRI 3000 and 4000 series, as well as the emerging 5000 series, are known to have a higher potential. Although these may satisfy the short-term needs, the productivity of planting material reported from competing countries is of a much higher order.

While a higher yield has to be targeted in the long term, (TV 23 in Tocklai has a productivity of 6500 to 7000 kg/ha and a hybrid clone in South India 6120 kg/ha), future planting programmes should also, as is contemplated, take into consideration accompanying characteristics such as quality, resistance to drought, pests and diseases etc.

From a somewhat theoretical perspective, it is reported that the maximum yield potential of tea is about 20,000 kg/ha. With more than half of it about 10,000 kg/ha have been obtained and sustained under the existing research management system, the current maximum yield, if about 7000 kg/ha in some plantations, could possibly serve as the benchmark for further gains to follow.

Worker Productivity
Like other plantation industries, the tea industry is worker – intensive. As much as 55 to 60% of the cost of production constitutes the worker component. But worker productivity is known to be very low in Sri Lanka. In-take per plucker is about 12 -20 kg per labour, per day in Sri Lanka, while in Kenya it is about 30 – 35 kg per labour, per day.

A recent study on motivation / productivity of tea workers in Sri Lanka has indicated that, there is positive relationship between monetary benefits and worker motivation. Among the monetary benefits, over kilo payment is the most beneficial motivating factor for workers engaged in tea plucking. Since, other non-monetary benefits are not quantifiable and of no immediate significant benefit to them and also not related to work output levels, workers are not motivated by these.

Worker wage increases would therefore motivate them and more if these are linked to plucker intake.

This would not only benefit the workers, but also the management. Management should consider the non-monetary factors as part of the Corporate Social Responsibility (CSR) and not a wage increase issue.

A combination of better skills and improved knowledge through worker development programmes, (that is the underlying reasons behind the various skilled operations) positive attitude (eg: urge for achievement motivation) and enablers, will go a long way to upgrade an average worker into top performance.

Professionalism in Management
Leadership, on the other hand, evokes reference to the processes of creation and destruction. The old has to be destroyed and the new created. Leadership in business involves elimination of the old and replacement by new products and processes. It is enterprise, innovation and vision. It is associated with impossible looking goals, miraculous solutions, unheard of triumphs. It is also associated with discarding and destroying the old modes of doing business, seeking new solutions to old problems and vice versa. One should hasten to add that management and leadership are different but not mutually exclusive. One can interact with the other and they often blend.

Training will bring out the latent leadership characteristics in individual managers. Unless this is done as a continuous process, management will remain, more or less, frigid and barren and stop short of the potential for greater success.

Economic Viability
This criterion considers yield, cost, prices and thus income. Changes in weather pattern on crop and seasonal variation in quality are only to be expected. However, the major concern is the stability of income. With uneconomic returns, some tea lands in the mid-country have, over the last decade, gone out of tea, whereas the higher demand and price potential for low-growns, provided an impetus to the new planting in the south. For the industry in the up-country and Uva, it has been, despite a falling extent with un economic tea land going out of tea, a case of barely being able to keep its head above water.
From a global perspective, the problem with a perennial crop like tea, which has a long gestation period, is that its supply cannot be regulated on annual basis according to changing market conditions. Furthermore, the stability of world prices is dictated by international factors. It is unlikely that Sri Lanka can, on its own bring about policies and practices that could promote greater price stability in the world market. Nevertheless, given our status as best tea, at least in theory, we should be able to dictate terms and unilaterally fix prices for our tea leaving aside market fundamentals. Unfortunately, it is the reverse that is happening.

It can be argued that since tea production involves long-term investment, the profitability should also be viewed on a long-term basis. In that sense, the prices fetched over a long-term have, perhaps, justified the investment.

How can economic viability be ensured? For the corporate sector; minimizing overheads, linking production with downstream activity via value addition and direct exports. For smallholders, this could take the form of intercropping with compatible agricultural crops. Apart from generating additional income, the alternative crops (s) could help tide over periods of low prices.

Social considerations
Although acceptability is often regarded as a social criterion, it also has considerable economic implications. With large-scale migration to non estate jobs there is increasing absenteeism. In addition there is stigma attached to estate work. The best way out seems to be through intermediate mechanization in harvesting, pruning and fertilizer application, besides factory automation. These are also areas where management system needs to be intensified and, along with it, the deployment of relatively small, motivated, skilled, trained, well managed and well looked-after workforce. For smallholders, the approach will have to be somewhat different in that, in the absence of a captive residential labour, greater emphasis will have to placed on monetary and non-monetary incentives for accessing the required number of workers, particularly during the heavy cropping season.

Government support
This was an issue in the recently concluded worker wage negotiations. Whenever there is a dispute, the state issues directives which is an un healthy precedent in private sector management. Nevertheless, no agricultural system, especially in the land – hungry, Third World countries, can remain in isolation from government intervention. And, tea is no exception. Subsidies, development projects financed by International Funding Agencies etc are a few examples.
Most plantation crops are grown on smallholder lines, with tea, rubber and palm oil being among the very few still associated with the estate model also. Even in tea, the rationale for proximity to the central processing facility has been displaced by the emergence of bought-leaf and co-operative tea factories. The general belief, empirically demonstrated in the Kenyan and Sri Lankan smallholder sector, is that both land and labour productivity is higher in this form of ownership. This obviously is possible mainly because of state support for this sector.

Conclusion
The sustainability of the tea industry as a large scale corporate sector implies a lot more than affirming the economies of large scale agriculture, or the importance of integrated processing. The justification of the plantation model in the modern context should be that it helps to transform traditional agricultural into a truly agri-business encompassing high-tech farming, capital-intensive technology, strong commitment to R & D, value addition, product diversification and direct consumer marketing.

Proliferation of smallholdings is also bound to continue and can be a threat to the corporate sector in terms of productivity and profitability.
Finally, because of the dynamics of change, sustainability cannot be achieved at all times. It will remain a ‘moving target’ and so will ‘ worker wages.’