Can plantations rise again?


A record of fraud, neglect and inefficiency


In the plantation industry of Sri Lanka, there had been three major historical impacts, which turned its course in different directions. The first was in the 18th century, when the Coffee Blight completely wiped out the industry from the country and led to the birth of tea industry. The second was the enactment of Land Reform Laws and taking over of the estates by the State, and the third, the most disastrous of them all, was the handing over of estates to the Regional Plantation Companies (RPCs).

There was a school of thought that a panacea for development and efficiency is privatization of state enterprises. In the guise of this principle, powers of the time privatized the management of estates and the agreement drawn up for the lease, to say the least, is hilarious! One condition is that although the land belongs to the state, if any part is sold, the proceeds go to the RPC!

When these estates were handed over to the RPCs in 1992, a majority of them were highly profitable and had been employing more than half a million workers and staff. Lush green beautiful fields were seen, soothing the eyes! The privatization was expected to bring in efficiency, increase employment opportunities, develop agricultural standards, and increase productivity, both in quantity and quality. They were also expected to fill the Government coffers with lease rental and taxes on profit. Has even one of these been achieved? No, instead, unbelievable apathy, inefficiency and decline in all aspects have been their achievements.

Most disastrous is the neglect of agricultural practices. When these estates were handed over, fertilizer worth millions of rupees was also taken over by the RPCs, without any compensation to the state. But the plantations were gradually starved of nutrients and there were hardly any inputs for a long period. Due to this deficiency, the yields dropped to uneconomical levels and the think-tanks at the decision making level found a solution to maintain yield levels by abandoning the fields and reducing the area from the acreage statement; thus the yields in the books will match the previous figures. The generally accepted life span of a tea bush is 35 years, after which it should be replanted, and that is why a ratio of 4% of the area under tea was replanted every year during the time they were managed by the Sri Lanka State Plantations Corporation (SLSPC) and Janatha Estate Development Board (JEDB), so that this balance will be maintained. No RPC has adhered to this policy. On the contrary, they did not replant of re-fill at all. This disastrous consequence is the drop in production and yield. If one compares the area under production at the time of handing over of estates to RPCs in 1992 and now, it will be found that almost 40% of land area has been lost.

In 1992 when these estates were managed by SLSPC and JEDB, they employed more than 500,000 workers. This figure, however, has now dropped alarmingly and more than 30% have lost their jobs as the estates cannot find work for them. The once labour-incentive tea industry is no longer so, as majority of agricultural practices is not followed by the RPCs. They confine the work to plucking green leaf and little inevitable field work. As a result, the workers are unable to earn a livable wage and they leave these estates for greener pastures in the city.

If a census is taken of the factories operated at the time of taking over by the RPCs and now, it will be found that more than 35% of them have been closed down, alleging it is uneconomical to maintain them. If this allegation is correct, how can the private owners double their number of factories during this period of time? In fact, there is a joke going round on estates – ‘Circular No ... Please forward all available unserviceable items to call for quotation for sale’. This circular comes twice a year! The valuable machinery of these factories was sold for scrap iron. Closure of factories and abandoning of large extents of productive land have been the cause for loss of employment. There were nearly 20,000 members of the staff at the time of the takeover by the RPCs, and this has now been reduced to almost half; a solution to the employment problem! RPCs may claim ‘yet they are running’. Of course they are running, but see the results! Instead of increasing employment opportunities, the RPCs have created a great unemployment problem for the State.

Every possible moveable and immovable item has been mortgaged to banks or lending institutions. Now we see that some of these companies have been acquired by lending institutions for failure to pay the interest on loans taken – another joke is that ‘even the wheel barrow has been mortgaged.’ It is no secret that the capital investment made by the RPCs has been obtained by mortgaging these estates to banks, nothing came out of their pockets and they are bent on collecting the profits only, as they have nothing to lose. The corporate greed of these companies has no limit.

It is learnt that none of the RPCs have paid the paltry lease rental, which is only Rs.1, 300/- per hectare per annum to the Government, for the entire period of lease so far. However, they have accounted for this lease rental in their estate accounts and their profit or loss has been shown inclusive of this amount; attempting to show that the monies have been paid to the Government. That is one aspect, but the funniest part is that the Government has not made any attempt to collect them either!

All what is said above will mean nothing when you learn what the watchdog institution of these plantations was doing for the past 24 years! The Plantation Management and Monitoring Division was established in the Ministry of Plantation Industry for the very purpose its name stands. If this division has been doing its job as expected, none of these disasters would have arisen. This division was expected to monitor production levels, agricultural practices, replanting programmers, factory development, land use, manpower usage, welfare and health of the estate population, record keeping, disposal of assets, etc. However, none has taken place and it appears that ‘you scratch my back and I will…’ is what takes place. If a survey is made as to what is most the unwanted institution burdening the tax payers’ money, it will be this PMMD.

Even at this late stage, the Government should step in – genuinely – and take steps to revive this golden industry, which has more potential than one can imagine.

As a first step, collect all outstanding lease rentals from all Regional Plantation Companies!


An Estate Employee for 50 years.

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