PLANTATION AGRICULTURE
IN SRI LANKA
PLANTATION AGRICULTURE
IN SRI LANKA
Issues in Employment and Development
Edited by
W. Gooneratne and D. Wesumperuma
International Labour Organisation
Asian Employment Programme (ARTEP)
P.O. Box 2—146, Bangkok
Copyright® International Labour Organisation 1984
Publications of the International Labour Office enjoy copyright under Protocol 2 of
the Universal Copyright Convention. Nevertheless, short excerpts from them
may be reproduced without authorisation, on condition that the source is indicated.
For rights of reproduction or translation, application should be made to the Publications Branch (Rights and Permissions), International Labour Office, CH— 1211
Geneva 22, Switzerland. The International Labour Office welcomes such applications.
ISBN: 92—2—103690—1 (Soft Cover)
ISBN: 92—2—103691—X (Hard Cover)
First published 1984
The designations employed in ILO publications, which are in conformity with
United Nations practice, and the presentation of material therein do not imply the
expression of any opinion whatsover on the part of the International Labour Office
concerning the legal status of any country or territory or of its authorities, or
concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and contributions rests solely with their authors,
and publication does not constitute an endorsement by the International Labour
Office of the opinions expressed in them.
ILO publication can be obtained through major booksellers or ILO local offices in
many countries, or direct from ILO Publications, International Labour Office,
CH—1211 Geneva 22, Switzerland. A catalogue or list of new publications will be
sent free of charge from the above address.
Iv
CONTENTS
Pref ace
IX
X
XIV
List of Tables
Abbreviations
PART
I INTRODUCTION
Chapter 1 — Plantation Agriculture in Sri Lanka
— An Overview of Employment and Develop-
ment Prospects
3
W. Gooneratne and D. Wesumperuma
Introduction
Structural Change
Trends in Employment and Incomes
Employment and Development Potential
Institutional Constraints
Opportunity, Adjustments and Prerequisites
Concluding Remarks
PART II STRUCTURAL CHANGE AND EMPLOYMENT
Chapter 2 — Structural Change in Plantation Agriculture
in Sri Lanka
G.H. Peiris
33
Introduction
Agrarian Reforms
Ownership and Tenure
Land Use and Cropping Patterns
Production and Productivity
Employment
Chapter 3 — International Trade Movements and the Plan-
tation Crop Sector
57
P. Athukorala
Introduction
Price Movements
The Impact of Price Movements
on the Plantation Secter
Policy Options
Chapter 4 — Labour Availability and Labour Demand in the
Plantation Sector — Recent Trends
87
M. Sinnatharnby and P. Wickramasekara
Supply of Labour
Demand for Labour
V
The Labour Demand — Supply Balance
Conclusions
Chapter 5 — Land Reforms in the Plantation Sector — the
Employment and Income Effects
NA. Fernando
111
Pre — Reform Context
Employment and Income Effects of the Land
Reform
Concluding Remarks
PART Ill PROSPECTS FOR EMPLOYMENT PROMOTION
Chapter 6 — Potential for Raising Employment and In-
comes In the Estates Sector
135
N. Sanderatne
Introduction
Issues
Tea Estates
Rubber Estates
Coconut Estates
Other Crops
Conclusion
Chapter 7 — Employment and Development Problems In
the Tea and Rubber Small Holdings Sectors
155
A.B. Dissanayake
Introduction
The Tea Small Holdings Sector
The Rubber Small Holdings Sector
Conclusions and Recommendations
Chapter 8 — Development of Uneconomic Tea and Rub-
183
ber Lands
V.J. Jacob
Introduction
Extents, Location and Productivity
Alternative Development Possibilities
Employment and Income Implications
Types of Enterprise
Marketing Prospects for Alternative Crops
Conclusion
Chapter 9 — Potential for Agricultural Diversification of
Lands under Coconut to Increase Productive
Employment
VI
207
S. Tilakaratne
The Setting: Coconut as a Monoculture
Rationale for inter — Cropping
Current State of Inter — Cropping
Government Efforts to Promote Inter — Cropping:
Performance and Targets
Potential Scope for Inter — Cropping:
Agronomic Factors
Economic Feasibility of Inter — Cropping
Labour Absorption Potential
Constraints on Inter — Cropping
Concluding Note
APPENDIX
Proceedings of a National Seminar on Employment Expansion
in the Plantation Crop Sector of Sri Lanka
INDEX
VII
235
253
PREFACE
In the predominently agricultural economy of Sri Lanka the plantation
crop sector has played a key role as a source of employment and incomes for
a large segment of the population. During the last several decades, this sector
has experienced a substantial overall decline, thus contributing in a major way
to the worsening employment situation of the country. Attempts are now
being made by the current Government to bring about an overall improvement in this important sector. The present study is a contribution towards
examining the technical potential of plantation agriculture in expanding employment opportunities and analysing the key issues that affect the realisation
of this potential.
The papers included in this volume were prepared for discussion at a
National Seminar held in Colombo in December 1982 under the title
"Employment Expansion in the Plantation Crop Sector of Sri Lanka". The
Seminar was organized as part of ARTEP's on—going work on rural employment promotion in Asia.
A summary of the proceedings of the National Seminar is given in the
Appendix of this Volume. Chapter One provides an overview of the employment and development prospects of plantation agriculture in Sri Lanka.
The Chapters in Part Two of the study examine the links between structural
change and employment in plantation agriculture. The prospects for employment expansion are examined in the subsequent Chapters of Part Three.
The Sri Lanka Foundation Institute in Colombo hosted the Seminar and
assisted the ARTEP in organising the preparation of papers included in this
Volume. The Seminar was sponsored by the Ministries of Janata Estates
Development, State Plantations, Coconut Industries, and Labour. Dr. M.
Muqtada and Dr. P. Ronnas of the ARTEP gave this manuscript a careful
reading and provided helpful suggestions. Mrs. Panipa Ratanawijarn and Mrs.
Preya Wadhanakul typed several drafts of the papers and the final manuscript
for the printer. Miss Ubol Watanapisit carried with her the entire burden
of seeing the book through the press. We wish to record our gratitude to
all of them.
November 1984
ARTEP
Bangkok
IX
LIST OF TABLES
Chapter 1
1. Importance of the Plantation Crops Sector in Sri Lanka's Economy.
2. Distribution of Plantation Crops by Tenure Categories.
3. Sectoral Distribution of Employment.
4. Average Minimum Daily Wages of Tea and Rubber Estate Labourers
1960—80.
6
8
9
11
5. Production and Yield of Tea, Rubber and Coconuts.
6. Sri Lanka's Share of World Production and Exports of Tea, Rubber
and Coconuts.
12
14
Chapter 2
Plantation Sector in the National Economy. Per centage share
based on triennial average
2. Extent of Land Acquired during the Land Reforms.
3. Principal Recipients of Land under the Land Reform Programme.
4. Ownership of Plantation Land in Sri Lanka, 1950—1972.
5. Post — Reform Changes in the Ownership of Land under the
Principal Plantation Crops of Sri Lanka.
6. Replanting and Fertilizer Consumption in Tea and Rubber.
7. Replanting and Fertilizer Use in Plantation Agriculture: Post—
Reform Phase.
8. Production Trends of the Principal Plantation Crops. 1950 to
1980
9. Yield Trends in Tea and Rubber.
10. The Performance of the State Plantation Corporation in the 'Pre1.
Reform' Phase: 1963/64 to 1971/72.
34
36
37
38
42
45
46
48
50
53
Chapter 3
1. World Market Prices of Tea and Rubber: Trend Rates and Instability Indexes: 1950—1980.
2. Colombo Market Prices of Tea and Rubber: Growth Rates and
Instability Indexes, 1950—80.
3. Pearson Correlation Coefficient (r) between Deviation from Trend
of World Export Quantities and Prices for Tea and Natural Rubber,
1954—73 and 1970—80.
4. Number of Workers on Tea and Rubber Estates Employing Indian
60
61
65
68
Labour.
5. Average Number of Hours Worked by Male Workers in the Months
of March and September in Tea and Rubber Sectors and Market
Prices of Produce, 1964—1978.
x
70
6. Minimum Wage Rates in the Tea and Rubber Sectors. (Male
72
Workers)
7. Tea and Rubber: Cost, Price and Gross Producer Margins 1950,
1960, 1965 and 1970—80.
8. Rubber Small Holder Sector: Cost, Price and Per Cent Gross Producer Margin, 1981.
A—i Tea and Rubber Prices in the World Market.
A —2 Tea and Rubber: Colombo Market Prices.
A —3 Average Colombo Auction Prices of Major Categories of Tea,
1970—80.
A—4
A—5
Tea: Area Cultivated, Production and Yield per Hectare.
Rubber: Area and Production.
77
78
81
82
83
84
85
Chapter 4
1. A. No. of Employees—Permanent, Temporary and Casual.
B. Number of Employees by Sex.
2. Sectoral Labour Force Participation by Sex, 1973.
3. Labour Input by Level of Yields.
4. Average Yield, Green Leaf Intake and Labour Supply in Estates,
1978
5. Unemployment and Under—employment by Sectors, 1978/79
6. Average Number of Days Worked During a Period of 60 Days
90
91
94
100
101
107
108
Chapter 5
1. Extent of Plantation Land Vested in the Land Reform Commission
under the Land Reform Programme
2. Average Earnings per Labourer per Month in the Estate Sector
3. Employment Growth Between 1975 and 1978—Public Sector
Estates
4. Replanting and New Planting — JEDB & SPC Estates
5. Production and Yield of Tea and Rubber on JEDB & SPC Estates
6. Changes in Composition of the Labbur Force, 1975 & 1978
7. Average Minimum Daily Wage Rates of Plantation Workers.
8. Sale of Basic Wage Goods in the Estate Sector Under the Ration
Scheme
9. Daily Wage Rates of Workers on State — owned Plantations.
10. Average Earnings per Worker per Month—Public and Private
Sector Estates
11. Per Capita Consumption of Selected Wage Goods—Estate Workers
.
112
115
121
122
122
125
127
128
129
130
130
Chapter 6
1. Distribution of Tea Lands in Estates and Small Holdings— 1981
Xl
142
2. Relationship Between Yields and Labour Requirement in Tea
3. Distribution of Tea Estates by Elevational Category— 1981
4. Approximate Estimates of Tea Estate Lands for Filling & Replanting by Elevation
5. Distribution of Rubber Lands
6. Relationship Between Yields and Labour Requirement in Rubber
7. Labour Requirements for Replanting Rubber
8. Net Return for Small Holder Inter—cropping for an 8 Year Period
9. Extents Under Other Crops
144
144
145
147
148
149
150
152
Chapter 7
1. Size Distribution of Tea Small Holdings in Galle & Matara
Districts
2. Production of Tea (Estate + bought leaf) by Districts - 1977
3. Estimated Yield of Tea Small Holdings— 1977
4. Cost of Production of Green Leaf on Tea Small Holdings
5. Increase in the Demand for Labour with Increase in the Yield on
Small Holdings
6. Economics of Inter—cropping in Tea
7. Total Area under Rubber Small Holdings —1979
8. Size Distribution of Rubber Holdings in Ratnapura and Kalutara
Districts
9. Cost of Production of Rubber—Ribbed Smoked Sheets— 1978
10. Cost of Production of Rubber — Estate Sector
11. Estimated Profit Margins of Rubber Holdings
12. Age of Rubber in Ratnapura and Kalutara
13. Quality of Small Holder Rubber
14. Labour Requirements for Inter—cropping 1 ha of Rubber
15. Economics of Inter — cropping on Rubber
156
158
159
162
166
168
170
171
173
173
175
176
178
178
179
Chapter 8
1. Tea — Expected Net Returns and Employment
2. Possibilities of Minor Expert Crops in Relation to Tea and Rubber
at Different Altitudes
3. Labour Requirements of Various Crops or Forms of Land Use
4. Farm Enterprise Budget for Two Beverage Crops
5. Farm Enterprise Budget for Three Spice Crops
6. Farm Enterprise Budget (per ha) under Good Management for (a)
Tea Interplanted with Pepper/Coffee/Clove and (b) Rubber
Interplanted with Cocoa
7. Alternatives to Seedling Tea — Annual Values of the Parameters
8. Labour Input per Flectare of Different Crops.
xl'
186
192
194
195
196
197
199
200
9. Mixed Cropping Model at Delpitiya
203
Chapter 9
1. Performance of Inter — cropping Subsidy Schemes for Coffee,
Cocoa and Pepper: 1978—1981.
2. IRD Projects: Inter—cropping Performance & Targets
3. ADB/IFAD — Coconut Development Project: 1982—86 Inter —
cropping Targets
4. Economics of Ten Selected Inter—crops
5. Returns from Coconut and Inter—crops
6. Performance of Single Inter—crops Vs. Inter—cropping Systems
7. Labour Requirements of Inter—crops
8. Labour Requirements in Alternative Inter—cropping Systems
9. Labour Absorption Potential of Inter—cropping
10. Constraints on Inter—cropping
XIII
214
215
216
221
222
223
226
227
228
228
ABBREVIATIONS
ADP
ARTI
CFS
JEDB
LRC
NADSA
NIBM
SLSPC
TSHDA
Agricultural Diversification Project
Agrarian Research and Training Institute
Consumer Finance Survey
Janatha Estates Development Board
Land Reform Commission
National Agricultural Diversification Authority
National Institute of Business Management
Sri Lanka State Plantation Corporation
Tea Small Holdings Development Authority
XIV
PART ONE
INTRODUCTION
"Plantation Agriculture in Sri Lanka"
An Overview of Employment and Development Prospects
DISTRIBUTION OF PLANTA11ON CROPS
SRI LANKA
Coconut
Tea
Rubber
District Boundary
—.
Climatic Boundary
Scale: 1:2,000,000
One
PLANTATION AGRICULTURE IN SRI LANKA
An Overview of Employment and Development
Prospects
W. Gooneratne and D. Wesumperuma
Introduction
For well over a century, plantation agriculture" has played a prominent
role in the economy of Sri Lanka. Although the growth of the other sectors of
the economy in more recent decades has considerably reduced its importance, it continues to play a major role in the economic development of the
country. In the late 1950s, Nicholas Kaldor remarked that "Ceylon owes its
present prosperity in comparison with other countries in the region, to her
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
2,'
a rapid increase of Ceylon's national wealth"
That plantation agriculture has an important role to play in the eco-
nomy, and in particular, in the field of much needed employment generation,
is clear from a number of factors. Firstly, the foreign exchange shortage is a
major binding constraint on the expansion of output and employment in the
entire economy. Sri Lanka needs to raise her foreign exchange earnings to
enable her to expand employment opportunities in all sectors. Since the
plantation crop sector is still the biggest foreign exchange earner, a continued
1/
2/
agriculture and plantation crop sector as used in this study refer
mainly to the sector cultivating the three principal export crops of tea, rubber
and coconut, both under estates and small holdings.
Kaldor, Nicholas 'Observations on the Problem of Economic Development of
Plantation
Ceylon', in Papers by Visiting Economists, National Planning Council, Colombo,
1959, p. 25.
3
PLANTATION AGRICULTURE IN SRI LANKA
development of this sector is essential for employment expansion. Secondly,
due to the scarcity of foreign exchange and capital, the country has necessarily to look for more labour intensive techniques with low capital requirement per worker. Tea and rubber, in particular, are highly labour intensive
and require a good deal of labour per rupee of capital invested. The ability to
provide employment to the expanding estate work force will, therefore de-
pend on a continued growth of this sector. Thirdly, the bulk of 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. The solution to these problems, at least in the short run, seems to lie in a more
intensive development of the agricultural resources of the Wet Zone.
Fourthly, the levels of output and labour absorption in the main plantation
crops are well below the potential and both incomes and employment could
be raised through a more intensive land use approach involving yield increases, inter—cropping and agricultural diversification. Fifthly, there is an
untapped potential for employment generation in processing plantation produce which today is exported mostly in semi — processed form. The plantation
sector, therefore, is of vital importance to Sri Lanka's current efforts towards
achieving "export—led" economic growth.
Perhaps nowhere among the recent surveys has the critical importance
of plantation agriculture in employment expansion in Sri Lanka been better
recognized than by the ILO Mission of 1971h/ which argued that a full
employment strategy for the country must involve the continued development of the tree crop sector because of its intrinsic link with foreign exchange
earnings, possibilities of attaining higher levels of productivity and processing,
and diversification prospects. The Ten—Year Plan issued in 1959 also saw a
substantial potential in the sector to generate productive employment
through higher output. It estimated that over a long period when the entire
area under tea, rubber and coconut has .been replanted and rehabilitated, a
total of 552,000 additional jobs could be created on existing plantation land
a 64 per cent increase from the 1953 level.21 The 1972—75 Land Reform
Programme was implemented with the twin objectives of output and employment expansion on lands under plantation agriculture. The potential of
the sector was explicitly recognised in the Land Reform Law.37 The Medium
ILO:
2/
Matching employment opportunities and expectations: A Programme
of Action for Ceylon, Geneva, 1971.
The National Planning Council, The Ten—Year Plan, Colombo, 1959, p. 21ff.
The Five—Year Plan (1972— 76) however attached a lesser degree of importance
to the sector as a potential area for employment expansion and noted that
'Increase in employment will not be very significant as the increase in output
was expected to be from higher productivity'. See Ministry of Planning and
Employment, The Five Year Plan (1972—76) Colombo, 1971, p. 41.
Government
of Sri Lanka, Land Reform Law No. 1 of 1972 and Land
Reform (Amendment) Law No. 39 of 1975.
4
INTRODUCTION
Term (1983—87) Public Investment Programme of the present government
has also given high priority to the resuscitation of the plantation sector
through a comprehensive estate to estate investment programme meant to
expand output, employment and exports."
Despite the increasing recognition of the key role of plantation agriculture in promoting output and employment, the actual performance of the
sector has continued to be poor. This could, at least in part, be ascribed to a
lack of a clear understanding of the potential of the sector and the absence of
effective long — term policies towards realising this potential. Throughout the
period since Independence, the plantation sector appears to have suffered
from want of a clear and consistent policy.
The present study raises two critical questions relating to the role of
plantation agriculture in Sri Lanka. Firstly, what potential does the sector
offer in terms of achieving higher levels of output and employment? and
secondly, what basic issues affect the prospects of realising that potential,
particularly from a long — term perspective of re — vitalising the sector?
These questions are important in view of the distressing performance of
the plantation crops particularly during the last one and a half decades with
adverse repercussions on the whole economy. Several chapters of the present
volume21 have shown that over the period all three major plantation crops
(Tea, Rubber and Coconut) recorded stagnant or declining levels of output,
low productivity, decline in labour absorption and a consequent drop in
worker incomes. This declining trend in plantation agriculture has taken place
in a context where the Island's economic strategies have had as their
overriding priority the realisation of higher levels of production and employment expansion and where other sectors of the economy have responded
to these strategies more satisfactorily (Table 3).
The feeble performance of plantation crops aggravated an already
growing unemployment problem in the country. In the 1960s, the reported
unemployment levels were in the order of 12—15 per cent of the labour force;
by mid— 1970s it reached a staggering figure of 24 per cent. Around 1980,
the figure appears to have declined to about 15 per cent. Since close to 50 per
cent of total employment in the country is in agriculture, the rates of
under—employment have also been high amounting in recent years to as
much as 23 per
The declining employment opportunities in the
plantation sector, as seen in Table 3, was a major cause of the weakening of
the overall employment situation. In the face of a growing estate labour force,
Government of Sri Lanka, Public Investment Programme (1983— 87), Colombo,
1983, pp. 3, 11 and 30. The proposed programme is, however, confined to
state—owned
plantations managed by the two State Corporations.
2
See chapters, 2, 3, 5, and 6.
/
Central Bank of Ceylon, Report on Consumer Finances and Socio—economic
Survey 1978/79. Colombo, 1983, p. 24.
5
PLANTATION AGRICULTURE IN SRI LANKA
the sector failed to maintain the levels of labour absorption achieved in the
1950s and 1960s. The lower output of the three principal crops aggravated
the foreign exchange problem, seriously hampering the growth of the economy as a whole and consequently the growth of employment opportunities
outside plantation agriculture as well.
While plantation workers have been over—exploited (through low wages
and poor working and/or, living conditions) during a long period, the decline
in the sector did not permit labour resources in the plantation regions to be
fully "exploited" productively. The statement that hitherto "the trouble in
the Ceylon economy has not been too much exploitation of labour but too
little"1 aptly describes the situation in the plantation regions.
Structural Change
The position occupied by the plantation sector in the economy of Sri
Lanka is clear from Table 1. The total extent of land occupied by the three
major plantation crops is about 50 per cent of the country's agricultural land.
The sector also still holds a premier position in its contribution to exports and
foreign exchange earnings of the country. Compared to the urban and rural
sectors, the plantation crop sector offers the highest level of regular employment; and after paddy, this sector as a whole provides a livejihood to the
largest number of people of the Island.
TABLE 1
Importance of the Plantation Crops Sector in Sri Lanka's
Economy
1970
1982
09
05
35
24
88
47
Share of plantation crops in GDP (at 1970 factor cost) %
Share of plantation crops in total value added in
agriculture %
Export value of plantation crops as a % of total export
value
Direct employment in the plantation sector as a % of
total employment
17
20
(1971) (1980/81)
Plantation crop area as a % of total agricultural land
58
50
Sources: Central Bank of Ceylon, Annual Reports,
Department of Census and Statistics, Census of Population — 1971;
Labour Force and Soclo—economic Survey—1980—81; and Agricultural
Statistics of Sri Lanka, 1981.
'I Robinson, Joan, 'Economic Possibilities in Ceylon', in 'Papers by Visiting
Economists, National Planning Council, colombo, 1959, p. 71.
6
INTRODUCTION
Despite this continuing importance, the plantation sector as a whole has
been gradually slipping from the place it had historically occupied in the
economy of Sri Lanka. This is particularly so in respect of the total plantation
area as a per centage of total agricultural land, the relative contribution to the
GDP, export earnings and employment. Thus on the whole, the entire sector
has been subjected to a "long period of structural stagnation"'1
Yet, in more recent times, the plantation sector of Sri Lanka has undergone several institutional changes of considerable significance.2" The Land
Reform Programme of 1972 and 1975 resulted in eliminating foreign ownership of plantation land31 and restricted, for the first time, Sri Lankan
private ownership to an upper ceiling of 20 ha. The most noteworthy development associated with the land reform has been the growth of state ownership of plantation enterprise. With almost 30 per cent of the plantation
crop acreage and almost the entirety of the large estates (among which are
found some of the best plantation lands), the state has become the dominant
owner of plantation property in the country. By virtue of this fact, the state
has also become the largest single employer of plantation labour in the
These changes apart the land reform programme, however, did not
bring about any radical shifts in the distribution of plantation land or in the
management of plantations. Less than 10 per cent of the acquired land was
redistributed among the landless, mostly in small units of 0.10—0.20 ha.
These were also the agriculturally marginal lands that had suffered heavy
erosion and neglect. Certain management innovations were attempted during
the period 1973—1977 (these included the formation of cooperative farms,
setting up electoral coop. societies etc.) These efforts were ill—planned,
hastily organised and were later abandoned.
Another important structural change that has taken place over the last
several decades is the significant increase in the number of small holdings. As
seen from Table 2, they now account for almost 50 per cent of the total extent
of land under plantation crops.
2/
Richards Peter and Gooneratne Wilbert, Basic Needs Poverty and Government
Policies in Sri Lanka, ILO, Geneva, 1980, P. 83.
See Chapter 2 of this volume.
Between 1948 and 1971, foreign (mainly British) owned plantation area fell
from 69 per cent to 30 per cent in tea, 38 per cent to 13 per cent in rubber
4/
and 11 per cent to 4 per cent in coconuts.
A possible nationalization of foreign plantations was considered by Myrdal as
amounting to 'socialization on a scale unprecedented in South Asia'. Gunnar
Myrdal, Asian Drama, Pantheon, 1968, p. 832.
7
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 2
Distribution of Plantation Crops by Tenure Catogories
(1981)
Rubber % Coconut % All crops %
Tea %
State plantations
Private estates
Small
Total
Total extent (ha)
61.5
17.0
21.5
100.0
32
20
48
100
30
60
100
29
24
47
100
244,840
208,420
445,000
894,550
10
Source5: Sri Lanka Tea Board
Rubber Industry Master Plan
Authors' estimate
Note: The extent under coconuts is assumed to be 1.5% less than the figure
reported in the census of AgrIculture, 1973.
• holdings above 4 ha. In extent
— holdings below 4 ha. in extent.
Trends in Employment and Incomes
Reliable time series data on employment in plantation agriculture are not
available. What is presented in Table 3, taken from the various censuses of
population and the Socio—economic Survey of 1980/81, can only by considered as approximations. The data show that there has been a considerable
decline in total employment in the sector during the last two decades.1"
The contribution of the sector to total employment in the economy
dropped from 29 per cent in 1953 to 17 per cent in 1980. Since the total land
area under the three crops has remained more or less constant during the last
three decades, the decline in total employment was due principally to a drop
in per ha. labour absorption. The relative share of employment in the
plantation crop sector as a per cent of employment in agriculture dropped
from 54 per cent in 1953 to 37 per cent in 1980. The contribution of
agriculture to growth in employment was depressed to the extent that the
weak performance of plantation agriculture offset the gains of domestic
agriculture.
1/
The total employment declined from about 856,000 in 1953 to about 788,000
in 1963 and to approximately 732,000 in 1971. The decline in employment
has occured in all the three crops.
8
INTRODUCTION
TABLE 3
Sectoral Distribution of Employment (%)
1953
1963
1971
1980/81
52
53
50
47
10
10
10
12
13
20
22
25
24
37
44
48
29
25
20
17
54
47
40
37
Share of Agriculture in
total employment
Share of Industry in total
employment
Share of employment in paddy
cultivation in total employment
Share of employment in paddy
cultivation in total employment in
agriculture
Share of employment in plantation
crops in total employment
Share of employment in plantation
crops in total employment in
agriculture
Source: Census of Population 1953, 1963 and 1971, Labour force and
Socio—economic Survey 1980/81 and authors' estimates.
The growth of the estate labour force in a situation of declining employment opportunities resulted in a high level of open unemployment and
under—employment on estates. According to the Consumer Finance Surveys,
open unemployment on estates increased from 7.5 per cent in 1963 to 12 per
cent in 1973. / The worsening employment situation on estates was also
reflected in rising under—employment, in 1971, almost a quarter of the
workforce on estates was reported to have been under—utilised.21 While the
rate of unemployment recorded a decline from 12 per cent in 1973 to around
6 per cent in 1978/79, the rate of under—employment in this sector increased during the same period. The average number of workdays during a
The urban
period of 60 days dropped from 41 in 1973 to 37 in
and rural sectors, however, recorded some improvement. Of the three sectors, estate sector experienced the highest rate of under — employment in
1978/79k'. The deterioration in the employment situation would have
/
/
Central Bank of Ceylon, Consumer Finance Surveys, 1963 and 1973.
ILO, Matching Employment Opportunitiesand Expectations: A Programme
of Action for Ceylon, op. cit., p. 87.
Central Bank of Ceylon, Report on Consumer Finances and Socio—Economic
Survey, 1978/ 79, Sri Lanka, Colombo. 1983, pp. 74 and 78.
Urban
20.7
Unemployment
—
Under—employment
—
Source: Central Bank of Ceylon, ibid.
12.8
9
Rural
14.6
23.5
Estate
5.6
33.4
PLANTATION AGRICULTURE IN SRI LANKA
further aggravated had it not been for the repatriation of nearly 260,000
adults and 78,000 Children of 'Indian origin' during the period from
1969—1980 under the Indo—Ceylon Agreement of 1964.
The unsatisfactory employment record of the plantation sector was also
reflected in stagnant wages and incomes of plantation workers. These latter
also indicate the dismal record of the quality of employment. The three—year
average minimum daily wage of tea and rubber estate workers for the period
1960—61 was around Rs.2/14. The wage increase during the 1960s was
marginal and the average daily wage for the period 1970—72 still remained
at Rs.2/80. During the same period, real wages, however, dropped from
Rs.2/12 to Rs.1/97." Since 1974, money wages have increased rather
sharply but in real terms, the increase has not been so dramatic—average
money wage for the period 1975—77 was Rs.5/70 and real wage was
Rs. 2/80 at 1952 prices. (Table 4).
Estate sector also records the lowest incomes among different sectors.
Estate incomes have remained close to one half that of the rural sector and
30—40 per cent that of the urban sector.
The quality of life (health, nutrition, education etc.) of estate workers
and their dependents has, remained far below satisfactory levels.21
Since the mid 1970s, a number of deliberate measures have been
introduced by the government to improve the living conditions of plantation
workers. In 1975, the basic daily wage of tea and rubber workers was
increased to Rs.5/60 which since then had progressively increased to reach
a level of Rs.11/60 in 1980. The real wage increased from Rs.2/48 in 1975
to Rs.3/41 in 1980. This increase was also accompanied by regulations
requiring the estates to provide a minimum number of days (240) of work per
year.3" State ownership of a large segment of the estate lands was the
principal reason for taking such deliberate measures. The real impact of these
measures and the ability to sustain them have, however, been questioned1'
particularly since these changes have not been accompanied by any signif icant improvements in production and in export prices.
As table 5 shows, both output and yield of tea and output of coconuts
have experienced a persistent decline in the 1970s. In tea, the downward
trend has continued in to the early 80s, while in coconuts, despite some slight
2/
Arrived at by deflating the money wage by the food price index (1952 = 100).
See Chapters 4 and 5 of this volume and for details K. Jayawardena. 'Basic
Needs. Workers' Organisations and Labour Policies in the Plantation Sector' in
Employment, Resource Mobilisation and Basic Needs through Local Level
Planning, ILO/ARTEP, 1979.
/ This requirement applied only to state plantations.
Gooneratne W. and Gunawardane, P.J. 'Rural Poverty
Lanka', ILO/ARTEP, 1983 (mimeo).
10
and Inequality in Sri
INTRODUCTION
TABLE 4 Average Minimum Daily Wages of Tea and Rubber
Estate Labourers 1960—80 (As)
Year
Real Wage
Money Wage
2.10
2.13
2.14
2.13
2.10
2.10
2.05
2.07
2.21
2.10
1.98
1.97
1.95
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
2.12
2.13
2.16
2.19
2.24
2.25
2.25
2.33
2.68
2.68
2.70
2.84
2.87
3.25
1.97
1974
4.06
5.06
5.92
6.17
8.27
11.60
11.60
2.14
2.48
2.93
3.03
3.59
4.40
3.41
1975
1976
1977
1978
1979
1980
Note:
•
Calculated by deflating the money wages by the Food Price Index
(1952 = 100). The rationale for using the Food Price Index is that the
estate households generally spend about 69 per cent of the total expenditure on food.
Source: Department of Labour, Sri Lanka Labour Gazette, various issues.
11
145
133
101
148
129
105
108
103
118
100
100
100
Production
Yield/ha
Production
Rubber
Coconuts
Statistics.
** 1962—64
Sources: Central Bank of Ceylon, Annual Reports and Department of Census and
1956—61
107
111
*
110
114
113
111
100
100
Production
Yield/ha
1971-75
1966-70
Tea
1961-65
118
129
95
134
135
93
150
142
91
99
NA
99
1981-82
99
1979-80
101
104
1976-80
Production and Yield of Tea, Rubber and Coconuts
(Index Numbers)
1959-60
TABLE 5
C)
INTRODUCTION
improvement, production has, nevertheless, remained at a low level. Since
the late 1970s, the rubber sector has entered in to a phase of declining
output. The performance of the rubber sector in the 1970s lagged behind that
of the latter half of the 1960s. The combined production of tea, rubber and
coconut has declined since 1977. In a situation of stagnant acreage, the
production decline was essentially the result of a drop in per hectare yield."
The overall decline was the cumulative result of a number of factors both
external and internal to the plantation sector. The direct and immediate cause
was the neglect of important cultural practices such as a drop in fertilizer
application, slow rate of vacancy filling (especially in tea) and the drop in
realising replanting targets.2t In addition, there was a serious cut back on
capital development work particularly in respect of soil conservation, land
development, building and factory improvement and other ancillary facilities
such as housing and sanitation.3' The consequent deterioration of the capital
stock, therefore, acted as a major cause that brought about the productivity
decline in the estates resulting in a drop in per ha. labour absorption and an
overall decline in the contribution of the sector to total employment.
It has been clearly shown in several chapters of the present volume that
the internal deterioration of the plantation sector was largely due to two
factors:
i.
Uncertainty of ownership, since the late 1950s, created by the fear of
nationalisation of plantations. This in fact encouraged foreign owners, in particular, to pursue deliberate measures of disinvestment.
ii. Low profitability of plantation crops which depressed investment.
There was a persistent drop in the producer margin of plantation
crops in the 1970s which, as shown in Chapter 3, resulted from
(a) the instability and unsatisfactory trends in international
prices of plantation produce, and
(b) the rising cost of production due to high cost of energy and
fertilizer, heavy taxation, and an over—valued rupee.
The decline in production of the Sri Lanka's plantation crops has taken
place in a context where both the world production and exports of these crops
have been growing. As seen from Table 6, between the period 1969/7 1 and
1980/82 Sri Lanka's share of world production and exports declined considerably. By allowing her plantation sector to deteriorate Sri Lanka failed to
2/
In the case of paddy cultivation production and yield indices increased to 242
and 168 respectively between 1959/60 and 1980/81.
See Chapters 2, 5, 7 and 9 of this volume.
Government of Sri Lanka, Report of the Commission on Agency Houses and
Brokering Firms, Government Publications Bureau, Colombo, 1974 and also
Chapter 5 of this volume.
13
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 6
Sri Lanka's Share of World Production and Exports of
Tea, Rubber and Coconuts
Rubber
Tea
Index of world
production
exports
Sri Lanka's share (%)
production
exports
1969/71
1980/82
1969/71
1980/82
100
100
141
100
100
128
110
11
5
19.5
5.3
3.4
4.0
130
16.0
28.4
Coconuts
Index of world production
Sri Lanka's share (%)
Share of exports (%)
coconut
desicated coconut
1969/71
1980/82
100
7.0
126
16.8
4.8
22.6
46.5
5.0
Source: Calculated from FAO ProductIon Year Book and Trade Year Book.
retain its share of world exports of the three commodities let alone capture a
part of the growing export trade.
Employment and Development Potential
Despite its poor performance in the past, it is now increasingly recognised that the plantation crop sector offers considerable potential for increasing agricultural production, employment and rural incomes. The papers
in part 3 of the present study have made an attempt to identify the technical
potential for realizing these objectives. The possibilities that have been
identified fall into three broad areas:
i.
Raising per hectare output of the three principal crops."
ii. Crop diversification through the introduction of other crops.
iii.
Introduction of other income generating activities within plantations.
The gap between the current and the potential yields of all the three
crops is fairly large. In tea, for instance, the average per hectare yield is only
900 kgs. 85% of the Island's tea lands are grown with seedling teas which
yield only 800—900 kgs/ha compared to the Vegetatively Propagated (VP)
1/
The
per hectare yield of tea in Sri Lanka is 70 per cent of that of Kenya and
the per hectare yield of rubber is only 50 per cent that of Malaysia.
14
INTRODUCTION
teas which produce between 1800—2000 kgs/ha. Further, the Mid—country
tea lands covering almost 40 per cent of the total tea area yield only around
750 kgs. per hectare, which is about one half of that ohtained in the
Low—grown tea regions. The small holdings sector, accounting for 22 per
cent of all tea lands in the country, yields on average less than 670 kgs. per
hectare, while 57 per cent of the small holdings extent which is concentrated
in the Mid—country region gives a yield of only 390 kgs. per hectare. Thus,
both in the estates and the small holdings sectors there exist a signigicant
potential to raise output through the adoption of improved management
practices. The employment implications of higher tea output have been
clearly demonstrated. In the short and medium run, the package of practices
required to raise the per hectare output such as replanting," infilling of vacant
space (low bush density being a serious problem in tea) and the related land
and soil improvement work would lead to considerable employment opportunities. In the long—run, higher labour requirements would result from the
increased demand for plucking in particular, and also processing. The per
hectare labour requirements of 1.6 units at a yield level of 500 kgs./ha.
increases dramatically to a level of almost 4 labour units at a yield of 3,500
kgs./ha.
2/
The gap between the current and the potential yield of rubber is also
considerable. It has been clearly recognized that the present average national
yield of 675 kgs./ha. can easily by raised to a level of 1,000 kgs./ha. The per
hectare yield of well managed rubber estates is around 1,300 kgs.31 The
slump in the national average yield is due to the presence of over 60,000 ha.
of land with low—yielding rubber, which need to be replanted. The rate of
labour absorption on these lands is only 0.8 person per every hectare. Much
of this acreage is found within private estates and small holdings, whose
average yield is only about 565 kgs./ha. A yield of 1,100 kgs./ha. can raise
labour requirements to 1.4 persons per ha.
The current yield of coconuts is even more distressing, with an average
of only 1,800 nuts per hectare which is only one quarter of the potential
achievable even with commonly cultivated tall varieties. While the well managed estates yield 5,000—6,000 nuts per hectare, with hybrids, (which now
occupy less than ten per cent of the total coconut area) yields up to 8,000 nuts
per hectare per year can be obtained. Coconut is also the least labour
absorptive among the three plantation crops and provides employment to
only one person per every 4—5 hectares.
1/
2/
Estimated
labour requirement for replanting a hectare of tea is 2700 mandays
for all elevation categories.
See Chapters 3, 6 and 7 of this volume.
The state plantations which account for 30 per cent of the rubber lands contri-
bute 40 per cent of the country's rubber production. The average yield on SPC
and JEDB estates was 1033 kgs./ha. for 1980—82.
15
PLANTATION AGRICULTURE IN SRI LANKA
A number of short and long term strategies required to raise output
levels of individual crops have been identified. These include, in the short run
filling bush vacancies in tea, under—planting in coconut and increased fertilizer application, land improvement and soil conservation in all crops, along
with measures for replanting of old plantations with improved clonal varieties
(especially rubber).
An improvement in the yield of the main crops would result in increased
employment and incomes in two ways:
i.
Higher yields demand more labour per hectare in the long run and
would thus provide better wages and steady employment on estates.
They would also ensure greater profit margins for the operators of
small holdings. The long term effects of higher yields on employment
have been clearly shown for tea." Even for coconuts, greater use of
fertilizer and irrigation can raise labour requirements significantly.2t
ii. The development/rehabilitation of land and the crop improvement
work required to bring about a yield improvement would generate
job opportunities in the short and medium run.3"
In the small holdings, given the current low yields, the need for increasing the operator income as well as per hectare labour input is well
recognized.41 The first is important because of the extremely small size of the
average holding and the second due to the fact that most small holdings
provide casual employment to village landless labour.51 In the case of tea even
on small holdings below 0.8 ha. 50% of labour used in plucking is found to be
casual labour. Hence on both counts the justification for maximising the
potential of the small holdings sector is very strong. There is even a stronger
justification for doing so, due to the fact that alternative investment avenues
which can benefit the rural poor in these areas are extremely few.
Crop diversification6" is another area available for raising employment
and incomes on lands occupied by the major plantation crops. Two possibilities have been identified;
1/
2/
4/
6/
See Chapters 6, 7 and 9 of this volume.
ILO/ARTEP, Increasing Employment and Incomes in the Coconut Sector
of Sri Lanka, mimeo, 1982.
See Chapter 6 of this volume.
Some small holdings in Matara have recorded a per ha. labour input of 1170
rnandays at a yield of 2070 kgs./ha. N.A. Fernando: 'Needed Redirections in
Analysis of Efficiency of Plantations and Smallholdings in Tea Cultivation', Staff
Studies, Central Bank of Ceylon, Vol. Il (No. 1 & 2) April—September 1981.
It has been found that 33% of tea small holdings below 0.8 ha. and 61% of
those between 0.8 — 2.0 ha used hired labour. Sumith Silva and D. Groenveld,
Sample Survey of Small Tea Holdings, 1971.
See Appendix for a discussion of the concept of diversification.
16
INTRODUCTION
i.
introduction of additional crops on lands already planted with the
main crops; and
ii.
introduction of new crops on lands which have become marginal or
unsuited to the main crop. The latter refers mainly to unproductive or
abandoned tea and rubber estates or uncultivated lands within large
plantations. "
The greatest potential for introducing large scale inter — cropping is
found in the coconut sector,2" which accounts for a quarter of the cultivated
land in the country. On coconut lands, the main crop barely occupies 25% of
the land surface thus permiting a range of agricultural activities on the vacant
space. At present, hardly 10 per cent of the total coconut area is
inter—cropped. Even on currently inter—cropped lands, an average labour
input of nearly 100 mandays per hectare per year has been recorded, which
is several times higher than the average per hectare labour input (25—35
mandays/ha.) on pure—stand coconut lands. Similarly, the per hectare incomes from inter—cropping even at the current low level of its development
approximate the income obtained from the coconut crop.3" The potential, as
shown in Chapter 9, however is remarkably high. Some 100,000 to 130,000
hectares of coconut lands have been identified to be well suited for
inter—cropping. The available inter—crop models show a four to five fold
increase in the per hectare labour requirements (up to 220 mandays. ha/year)
and five to ten fold increase in the incomes compared with a sole coconut
crop.
4/
Compared with coconut, inter—cropping possibilities are limited in both
tea and rubber. These limited possibilities include the cultivation of alternative
crops on unutilized portions of estates, on lands that have been identified as
"marginal" to the main crop and the cultivation of other crops in association
with the main crop (e.g. pepper vines on shade trees in tea plantations). As
shown in Chapter 8, large scale diversification away from the main crop does
not appear either feasible or even desirable, particularly in the case of tea,
which is a highly labour intensive crop. As pointed out in Chapter 3, "no
major internationally traded crop generates as much revenue (and employment) per hectare as tea and this is so even in Sri Lanka where the yields are
below global averages..." Inter— cropping is not feasible in mature rubber, but
a number of short term crops can be cultivated on young plantations.
The information assembled in various papers of this volume indicate that
a well planned strategy of crop diversification is capable of bringing about (I)
Thirty per cent of the land vested under the Land Reform Law of 1972 was
2/
jungle, grassland or uncultivated, see Chapter 6, this volume.
See Chapters 9 and also 6 of this volume.
ILO/ARTEP, 1982. op. cit.
Ibid. and also Chapter 9 of this volume.
17
PLANTATION AGRICULTURE IN SRI LANKA
a better use of land in the plantation regions, (ii) a more efficient use of labour
resources and (iii) an improved capacity to withstand the adverse effects of
price fluctuations of the principal crops. The potential and the feasibility of a
mixed — cropping strategy on hitherto mono — cropped tea and rubber lands to
provide a cushion against low and/or fluctuating prices have been clearly
shown in the papers as well as in the discussions at the seminar.1" The need
for achieving some crop diversification is important for the small holdings to
enable them to increase and stabilize their incomes.
The technical feasibility of raising the output levels of the 3 major crops
and introducing a diversified cropping pattern on lands under plantation crops
is clear from the above discussion. However, any programme for realizing the
two objectives should be based on a careful consideration of the need to
remain competitive in the world market, reduce the dependence on a few
major export crops, maintain high levels of employment and above all
rationalize the use of agricultural land resources in the plantation regions.
There are also several other income generating agricultural activities
that are possible on estates employing resident labour. The potential for the
development of livestock farming and the intensive cultivation of vegetables is
well recognised. This can be an integral part of a programme for improving
incomes2' and nutritional levels as well as reducing under — employment in the
estates.31 Livestock development, which will also augment the supply of cattle
manure can have an important bearing on the expansion of intensive vegetable cultivation by estate workers.
The upcountry areas, due to their favourable climate, are well suited to
raise high yielding milk cows of temperate breeds. Many of these areas also
Larger estates are also in a position
have a tradition of cattle
to set aside portions of land for the cultivation of improved pastures. For
instance, the cultivation of improved grass along estate roads, on ravines and
marginal lands is being promoted under the Nuwara Eliya District Integrated
Rural Development Programme.5t A programme launched by the Ministry of
"
2/
See Appendix.
It has been reported that a 25—50 per cent increase in the estate family incomes
is achieved by practising animal husbandry.
See, IRDP Nuwara Eliya — Sri Lanka Netherlands Project — A Summary,
mimeo, 1982, 'Each cow provides a net income of Rs.300—400 a month during
the lactation period' see Kurien, R., Position of Women Workers in the
3/
4/
Plantation Sector in Sri Lanka, Working Paper, ILO, 1981, p. 115.
It requires about 240 mandays of work per year to keep a cross—bred cow.
See, ILO/ARTEP, Employment Expansion in Indian Agriculture, Bangkok,
1979.
Agroskills Ltd., Proposals for improvement of milk production and marketing, (Nuwara Eliya IRDP) Colombo, 1980, p. vii.
IRDP Nuwara Eliya — Sri Lanka Netherlands Project, op. cit.
18
INTRODUCTION
Industrial Development to promote dairy farming among the estate
workers has already given promising results.11 It is, however, the coconut
lands which offer the greatest scope for an expanded programme of livestock
development. Large areas of coconut lands are located within densely populated regions of the country and in proximity to urban areas thus providing
a ready market for livestock products.
Rural
Two other activities that offer considerable potential for increasing
employment and incomes of workers on the estates should be noted. One is
the possibility of undertaking social infrastructure development programmes
(schools, housing, creches, sanitary facilities, water supply etc.) on estates.
The provision of these facilities has been neglected for long years and a major
programme to upgrade them would generate many man — years of employment. They can also have the long term benefit of ameliorating the quality of
life of the estate workers and their families. There is an untapped potential to
organise these programmes on a large scale using labour intensive methods
relying on more participatory approaches. These would include building new
schools, houses, creches, latrines etc., upgrading existing line rooms and
creches and building improved facilities to provide safe drinking water. Organisation and implementation of such activities can be undertaken within the
context of a broader programme of estate village
The second
area relates to the introduction of some non—agricultural activities on estates,
such as weaving, handicraft making etc. which can contribute to reducing
under — employment and to improving the household incomes of the estate
families in selected plantation regions.
Institutional Constraints
The long term revitalization of the plantation crop sector and the effective realisation of its full potential as a source of employment and incomes
would depend on the effectiveness with which several major constraints now
facing the sector are removed. Many of these constraints are internal to the
plantation sector itself and are essentially institutional in charactor. Some
have long acted as major impediments to the progress of the sector while
others are of more recent origin.
One of the major structural issues relate to the management of large
plantations. The traditional mode of plantation management had several
unique features, the more important among them being the following.
i.
Managerial and supervisory cadres were given high rewards and
generous incentives in the form of high salaries, bonuses and a whole
range of fringe benefits. A large part of their incomes depended
directly on production efficiency.
1/
2/
Similar animal husbandry projects are also being implemented under the Nuwara
Eliya IRDP, Nuwara Eliya IRDP—Sri Lanka Netherlands Project, op. cit.
See Next Section.
19
PLANTATION AGRICULTURE IN SRI LANKA
ii.
Labour on the estates was a lowly paid captive one. Living conditions of workers were deliberately kept at a low level in order to
realise higher profit margins.
iii.
Efficient plantation management meant, by and large, efficient management of labour.
At Sri Lanka's independence, the incompatibilities within this system
became glaringly apparent. On the one hand a large portion of plantations still
remained in foreign hands and on the other resident labour continued to work
and live largely outside the mainstream of national development. Although
the land reform did away with foreign and local company ownership, as
argued by Peiris and Fernando", the internal management structure of
plantations hardly changed, except for a few marginal adjustments. The
management innovations attempted during 1972 and 1977, as shown in
chapters 2 and 5 did not bring about a genuine change in the internal
organization of plantations.
Yet, given the fact that virtually all the large plantations are now in the
hands of the state, the continuation of the traditional management system
would appear no longer tenable. While the state plantations need to be run
efficiencly, this has to be achieved within the framework of a management
system that is both sympathetic and sensitive to the needs and aspirations of
the workers and alert to the socio — economic needs and developments of the
Island.
The Plantation management has yet another dimension. This relates to
the inward looking mono—crop attitude of plantation managers. In the tra-
ditional system of plantation management, specialization simply meant
mono—culture. The plantation manager was only expected to plant, nurture
and replant the particular crop on his plantation. The labour was expected to
know and perform only those activities that are related to the raising of that
particular crop. The manager had no incentive to promote any other activities
on his estate. The system that developed, as a result, was one that specialised
narrowly on the production of a single crop. While some change in this rigid
mono—crop orientation has occured since the nationalisation of plantations,
such change has had little impact so far in bringing about a system of
diversified farming on estates.
Another structural problem linked to the management issue is a tendency towards increasing bureaucratic rigidities. The state plantation organizations, in their efforts to achieve overall .efficiency through centralized
planning, have increasingly moved towards greater bureaucratization of
management.21 The rigidities inherent in over—bureaucratization have the
"
2/
See Chapters 2 and 5 of this volume.
See, Appendix.
20
INTRODUCTION
danger of reducing the state plantations to the routines of ordinary government departments invariably leading to delays, high costs and lost opportunities and, above all, jeopardizing initiative. Such a tendency would clearly be
inimical to the realization of the full potential of a sector which has to compete
in the world market.
A second set of structural issues is associated with the privately owned
estates. The problems relating to the development of these lands are complex
and the information available is still inadequate to reach any firm conclusions.
The total extent under private estates (i.e., those over 4 ha. in extent) is
approximately 215,000 ha. with tea occupying 19%, rubber 19% and coconuts 62% of the total. Both productivity and labour use on privately owned
tea and rubber estates are low compared with state plantations. For instance,
it has been shown that the bulk of the low yielding mid — country tea estates
was privately owned.1" Attention has also been drawn to the unsatisfactory
performance of private tea estates in
The yields of private
coconut estates are also found to be extremely poor. In addition, it is also in
these estates that inter — cropping is least practised.31 Thus the private estates
in many respects, appear to have fallen into a major deadlock. Following the
land reform, this sector emerged as the 'third force' in plantation agriculture
along with a large state plantation sector and a numerically important and still
expanding small holdings sector. For investment, this sector depends largely
on the funds generated internally rather than on government subsidies. Low
producer margins resulting from high taxes, low prices etc. drastically reduce
the ability of the private estate owners to invest on land and crop development work.
While recognizing the importance of the above factor, it is now becoming increasingly clear that the widespread prevalence of 'absentee landlordism' associated with private estates imposes a severe structural rigidity to
its development. A considerable extent of these estates are believed to be
owned by absentee landlords residing in urban areas and engaged in various
other regular occupations. For most such landlords, the estates are only a
source of supplementary income and even more importantly, a symbol of
social status. A recent policy review of the coconut industry considered
4/
absentee landlordism to be 'endemic in the industry' This statement has
been confirmed by the data from a more recent survey which found that
practically all the private coconut holdings above 4 ha. were owned by
absentee landlords and over 50% of such estates did not even have a resident
Chapter 6 of this volume.
Central Bank of Ceylon, Annual Report, 1981, p. 20.
ILO-ARTEP, 1982, op. cit.
See,
/ Report of the Committee Appointed to Review the Policy Framework
Applicable to the Coconut Industry, Colombo, 1979, p. 24.
21
PLANTATION AGRICULTURE IN SRI LANKA
manager.1" Given the considerable extent of land under private ownership, a
fuller development of these lands can make a significant contribution to help
alleviate the employment problem in the villages adjacent to these estates, but
the absentee ownership problem (as it has been noted for the coconut lands)
"seriously limits the development potential".2' The high output levels realized on proprietor managed private estates underlines the adverse impact of
absentee landlordism in private estates.
The third structural issue concerns the small holdings sector which
during the last three decades or so has emerged as an expanding area of
activity in Sri Lanka's plantation agriculture. The current productivity levels
and incomes are extremely low31, but the scope for improvement is considered to be high. This potential has been clearly demonstrated by the high
output levels achieved by some small holders. The low grown tea small
holdings in particular have recorded the highest
in the country and
appear to provide a convincing case of this potential.5"
The absence of dynamism in the small holdings is a product of a number
of constraints of an institutional nature which include difficulties in processing
and
middlemen intervention, lack of credit facilities, and difficulties in obtaining planting material, and extension services.
In the past such dissabilities have continued to prevail due to the 'vested
interests of the estate system ... and policies favouring estates".71 By and
large, "the private sector apparatus passed them by" and in addition
"authorities themselves have doubted the capacity of small holdings to pro8/
duce estate crops competitively" The result was a severe neglect of the
small holding sector. In recent times a large number of state operated schemes
ILO—ARTEP,
2/
/
/
6/
7/
8/
1982, op. cit., The survey involved 85 holdings in 3 major
coconut growning districts.
Ibid.
See Chapter 7 of this volume.
See N.A. Fernando: 'Needed Redirections in Analysis of Efficiency of Plantations and Smallholdings in Tea Cultivation', 1981, op. cit.
For a discussion on the absence of scale economies in the cultivation of plantation crops see, S.B. de Silva, The Political Economy of Under—Development,
Routledge and Kegan Poul, London, 1982. pp. 281—284 and also D.M. Ethirington, 'Economics of Scale and Technological Efficiency: A Case Study in Tea
Production,' East African Journal of Rural Development, Vol. 4 (1), 1971.
These are particularly crucial for tea and rubber since processing is a part of
production. For example, factory facilities are grossly inadequate for rubber
and most private growers process their rubber crudely in to smoked sheets
which fetch 1/3 the price of high quality rubber.
See chapters 3 and 7 of this volume.
SB. de Silva, op. cit., p. 282.
Richards Peter and Gooneratne Wilbert, op. cit., p. 84. Note that the 1958
Estates Fragmentation Act set a lower limit of 40 ha. for estates.
22
INTRODUCTION
intended to strengthen the small holdings sector (replanting subsidies, marketing and processing facilities, extension services, etc.) have been in operation
but these services have remained inadequate and fragmented. As a group, the
small holders themselves have remained unorganized.
Finally, central to the whole question of revitalising the plantation crop
sector is the basic issue of producer margin. The government taxation policies
in the form of export duties and special levies have subjected the Sri Lanka
producer of tea, rubber and coconut to a disadvantage with her main competitors, who enjoy a relatively sheltered tax structure." While a certain
amount of the surplus extracted has been ploughed back to the industry, a
major part has been diverted to support other sectors of the economy, in
particular social welfare programmes and domestic food production. Nigh
export taxation through depressed producer margins has made the sector
starved of funds for reinvestment resulting in reduced capital expenditure on
housing and amenities for workers, low level of fertilizer application, abandonment of less productive land and a drop in field and crop development
activities. Successive governments considered the plantation sector mainly as
a source of revenue raising for the state.21
Opportunity, Adjustments and Pre—requisites
As a result of the Land Reform programme of the 1970s the State has
emerged as the biggest single owner of plantation land in the country with 30
per cent of all land in plantation crops under its management. These include
the bulk of the best and the most fertile plantation lands. The major processing and marketing infrastructure is now under State control as well as the
plantation crop research institutes.3' By virtue of these factors, the State is in
a pre—erninent position to play a "lead role" in the development of not only
the estates under its ownership but also the rest of the plantation sector, in
particular the small holdings sector, by using the vast infrastructure facilities
and the expertise within its command.
The uppermost objective in plantation agriculture in Sri Lanka in the
past has been the exploitation of the main crop for private profit in the
colonial period and for revenue raising during the post—colonial period. It has
been correctly pointed out that "with ownership in the State a
The tax burden on tea was around 30% of export value (1980) where as in
Kenya it was insignificant. On rubber the export duty was approximately 50%
of FOB. price (in Malaysia it was 27%, Indonesia 14% and Thailand 25%).
2/
A recent government document considered the high taxation policies on the tea
sector as a reflection of 'a policy stance which viewed the tea sector more as a
source of revenue for ambitious social welfare programmes than as a source for
increasing the productivity of tea in Sri Lanka'. See Ministry of Finance and
Planning, Public Investment 1983—1987. Colombo, May 1983.
3/
Tea, Rubber and Coconut Research Institutes.
23
PLANTATION AGRICULTURE IN SRI LANKA
thorough—going rationalization of the whole plantation system is possible and
savings will result. We can achieve a higher level of efficiency in management
approaches and techniques and in building up and preserving these assets
rather than making profit the sole objective". /
Agrarian reforms of the early 1970s reflect basically the failure of the
plantation sector to adjust to the wider political, economic and demographic
changes that have taken place in Sri Lanka during the last several decades.
The further development of the plantation sector, therefore, has to be
"future" oriented in keeping with the likely changes in the socio—economic
environment. The opportunity now exists for planning the development of the
sector with employment generation, income improvement and resource
conservation as the major long term objectives, which were also the most
important objectives of the Land Reform Programme. These considerations
were never uppermost during any period in the entire history of plantation
agriculture in Sri Lanka. On the contrary, the earlier system was sustained
through the operation of strategies for maintaining higher profits with low
wages and under—employment. Resource conservation in the long term
national interest had no place in this system.
The question of estate village integration is another important issue. The
continued separate existence of estates and villages not only appears anachronistic, but would be clearly inimical to the future socio—economic progress of plantation regions. The need for a closer integration of the two
sectors rests on two important considerations.
Firstly, a good part of the plantation crops are in the village sector in the
form of small holdings forming an integral part of the village economy of most
plantation regions. Their improvement can have a far reaching effect on the
rural economy. Secondly, the development of the plantation crop sector
cannot be viewed in terms of merely developing the plantation crops; it should
be part and parcel of the efforts towards bringing about an overall transformation of the rural sector. The plantations developed as enclaves alongside
the village without any productive interaction between the two.
Estate village integration has been defined variously and in most cases
rather vaguely.2" However, viewed from the standpoint of employment and
income generation, the concept of integration needs to be given a clear
operational meaning. Such an interpretation would basically involve two
major elements.
2/
Dr. Colvin R. de Silva, (Minister of Plantation Industries) in an interview with
the Economic Review, Vol. 1 (3) Colombo, June 1975.
These interpretations include 'Bringing the total resources of the estates and
villages together for the total development of the rural economy', (Agrarian
Research and Training Institute, Land Reform and the Development of
24
INTRODUCTION
i.
Getting the estates to assist in raising the productivity and employment levels on small holdings by playing an active role in the pro-
vision of (a) technical and managerial know—how; (b) planting
materials and other inputs such as fertiliser, and (c) marketing and
processing facilities. All these are available in large estates and often
within reach of the small holders.
ii, Embarking on a programme of large scale area planning in the
plantation crop regions to enable maximum utilisation of both land
and labour resources of the two sectors towards re — integrating the
estate economy with the larger rural economy.1"
It is now possible to bring the state plantation sector under a system of
central planning while at the same time enabling a high degree of decentralised management at regional, sub—regional and estate levels. The attemp'ts
at such central planning have resulted in placing, in 1980, all the large and
productive estate lands under two major State Corporations (SPC and JEDB),
with their regional boards at sub—national levels. However, it has been noted
that the efforts made in 1980 to decentralise plantation management "is
unlikely to bring about the desired results due to high
of centralisation
,2/
of decision — making power at the head office" the two major corporations
remaining organizationally "monolithic" in character, Important initiatives
are required at the level of the central organizations of the two corporations
to focus their functions on overall planning of production, marketing and
export promotion. Parallel institutional changes would be necessary to infuse
greater dynamism at the regional, sub—regional and estate level.
The estate management itself would be required to make several adjustments in its orientation. The changes that are most crucial would include:
(a) looking at the "estate" as a multi—crop/diversified economic enterprise.
1
Coconut Lands, Colombo, October 1977), and 'complementary development
of services and institutions to serve estates and villages together' (B. Weerakoon, 'Estate village integration'. Sunday Observer, 12 March 1978). Others
have interpreted it to mean an increase in employment opportunities for village
labour. Some plantation trade unions have even interpreted the concept to
mean a tacit desire by others to bring about the assimilation of estate Tamils
with the Sinhala population.
/ The difficulties encountered in recruiting village labour to estates experiencing
labour shortages (especially with repatriation) are attributed largely to poor
standards of basic facilities of education, health and housing. It is a well known
fact that what the Sinhalese villagers detested most in the estate system was
2/
the primitive, over—crowded barrack—like line rooms.
Central Bank of Ceylon, Review of the Economy, 1980, p. 25.
25
PLANTATION AGRICULTURE IN SRI LANKA
(b) considering the "estate" with its superior facilities, know—how etc.
as a nucleus which could serve the needs of the small holdings and
the villages, and the need to bring about a closer re — integration of
the estates with the rural economy, and finally
(c) treating "estate" labour not only in terms of mere "sellers" of
physical labour but as active participants and partners in production.
There is also a pressing need to provide the estate workers with
some sense of belonging to the land and one way of achieving this
would be the expansion of food production on estates in a way that
employment and livelihood of these workers do not remain tied
solely to wages.
Training and re—training of estate management personnel by themselves
will not be sufficient to achieve these objectives. A more important prere-
quisite would be the provision of incentives in the form of rewards for
initiative and enterprise and freedom of action in decision — making by the
estate management. To achieve this would require a major effort to de—link
the plantations as a major source of political patronage.
The question of re — privatization of state plantations as a means of
improving their efficiency has been raised at various levels during the more
recent years. While there is much to be desired in the management of state
plantations, any move towards a reversal to private ownership needs to be
based on a careful evaluation of the wider socio — economic implications of
such a change on the plantation regions. When the past experience of the
plantation system is taken in to consideration, it would be difficult to conceive
private ownership as an ideal mechanism for maximizing output with welfare
and securing social justice. Genuine fears have been expressed both by the
plantation workers and others concerned with their welfare of the possible
negative effects of such a reversal.
The approach and attitude towards the small holdings sector also demand a major departure from that of the past. Given its increasing importance (in terms of area as well as the role it plays in the rural economy), this
sector can no longer be considered as a "residual" to the estate sector. Nor
should it be considered inherently less efficient than estates.1" There is now
increasing official recognition that this sub—sector offers a high "potential for
increasing production"
While the need to "strengthen the institutional structure" has been
clearly accepted31, what it would involve, however, remains much less pre'The image of the small holding was a highly distorted one, and arose due
to the use of yield or a narrow notion of cost as a measure of efficiency without
considering the institutional structures'. See N. A. Fernando, 1981, op. cit.
2/
Central Bank of Ceylon, Review of the Economy, 1980, p. 25.
p. 25.
26
INTRODUCTION
cisely defined. Two major adjustments appear essential. One is the need to
re — assess the existing system of providing separate administrative arrangements to service the small holdings sector as distinct from the estate sector.
Ways must be found to utilize the organised production — processing —
marketing and research network of the state plantations sector to service the
small holders. The other relates to the need for organising the small holdings
into appropriate production entities to enable them to achieve certain advantages of large — scale operation.11 Such organisations would help small
producers to organise marketing and processing more efficiently and also
obtain services and inputs more effectively. When properly organised and
encouraged, such small holder organisations can remove some of the major
impediments to the growth of this sector. As suggested in a recent report
regarding coconut small holdings "organisation of small groups could be one
of the most rewarding
in the attempts to resuscitate this sector.
The private "estates" need to be brought in to the mainstream of
development of the plantation sector. The feasibility of undertaking such a
development programme and sustaining it would, however, depend largely on
how effectively the issue of absentee ownership is tackled. This would first
and foremost call for a careful analysis of the operation of the private estates.
The coordination and integration of research efforts must be considered
as a condition precedent to the planning for the integrated development of the
resource base of the plantation sector. Hitherto, research has been confined
by and large, to agronomic aspects on individual crops, the emphasis being
more or less exclusively on crop sciences with some work on technology
aspects (such as processing) and on extension and advisory work. None of the
research institutes had any social scientists for a long time and even today
research on socio—economic and institutional aspects finds an insignificant
place in the work of these Institutes. While the Coconut Development Authority has an economic research division, for tea and rubber no such institutional arrangements exist. The newly created Institute of Plantation Management is mainly a training organisation. The Agrarian Research and
Training Institute has so far not paid adequate attention to the issues of
plantation agriculture. Clearly, there is a vital need to strengthen research on
key institutional aspects of plantation agriculture. At the same time, with
regard to crop research institutes, it is important to institute a mechanism for
the "treatment of research and extension within an economic framework
.
for until now "coordination of
2/
programmes and national policy has been
Such as tea producers societies and small rubber processing groups around
local centres.
FAO,
Report of the high level mission on the follow—up to the World Con-
ference on Agrarian Reform and Rural Development in Sri lanka (1980)
p. 62.
27
PLANTATION AGRICULTURE IN SRI LANKA
rather general with no specific priorities to guide resource allocation".11 Even
more important is the need to extend the research infrastructure to serve the
private estates and the small holdings sector. A major effort must also be
taken to improve the data base relating to plantation crops. Reliable and
relevant data collected on a regular basis are essential for long—term planning
of the sector and the monitoring and evaluation of its performance. Contrary
to the long held belief, the sector lacks, as the papers in this volume have
clearly shown, even the most basic data in a reliable form.2t The strengthening
of the data base and the research capacity on socio—economic issues and
more importantly on management and organisational aspects remains a major
task.
Concluding Remarks
By allowing its plantation crop sector, the country's largest single source
of wealth, to stagnate and in many respects even deteriorate, Sri Lanka's
economy has suffered heavy losses. The country has not on]y been unable to
increase the much needed foreign exchange earnings, but also has failed to
maintain, let alone increase, its share in the world market for these products.
The unsatisfactory employment situation in the country during the last few
decades was partly a result of the decline in the plantation sector.
It has been clearly shown that there is a large potential to increase the
productivity levels of the individual crops as well as to bring about, in the long
run, a balanced diversification of agricultural and other related activities on
land under plantation crops. A major task ahead in the short—term is to close
the gap between current and potential productivity of the major crops.
The key to the long term development of the plantation sector, no doubt,
is to evolve an integrated long term development perspective. Such a perspective for the development of the sector would be necessary if Sri Lanka is
to remain competitive in the world market, increase foreign exchange earnings, intensify the use of limited land resources, and above all, increase
employment and incomes in the plantation regions. This is even more critical
for Sri Lanka in view of the fact that good agricultural land is becoming
extremely scarce. In the Wet Zone where the plantation crops are concentrated, land expansion possibilities were virtually closed many decades ago,
while in the Dry Zone, the capital cost of the development of new land has
escalated far beyond the levels that the economy can bear. Yet, as we have
seen, in the plantation regions, the intensity of the use of agricultural land
H.M.G. 1-lerath and Y.D.A. Senanayake, 'A study of the financial and human
resources in plantation crops research in Sri Lanka'. Journal of agrarian
2
/
studies, vol. 3(2). Dec. 1982, pp. 96—109.
The absence of 'correct and reliable data (even) on the actual extent under
(tea) cultivation' was highlighted as a serious matter for concern by the Central
Bank. See, Central Bank of Ceylon, Annual Report, 1982, p. 29.
28
INTRODUCTION
remains far below what is technically feasible and socially desirable. The
experience during the years that followed the introduction of the Land Reform should serve as a sufficient warning of the untold damage that can result
from policies which foresake long term planning for short term gains, attempts at ad hoc solutions to deep rooted problems and ill planned experimentation with productive assets.
What the plantation sector of Sri Lanka needs most is better planning,
better organisation and better management. The plantation sector needs no
longer remain, as it has been pointed out, "as merely another backward
sector with no impulses to spread"." Important structural changes have
taken place in plantation agriculture and the needed redirections have to be
examined in the light of a careful re—evaluation of these changes. What now
appears necessary is certainly not "more and more of the same thing" but
more of radically innovative approaches that would ensure growth of the
sector within a context of overall rural transformation.
S.B. de Silva, op.ctt. p.1.
29
PART TWO
STRUCTURAL CHANGE AND
EMPLOYMENT
Structural Change in Plantation Agriculture in Sri Lanka
International Trade Movements and the Plantation Crop Sector
Labour Availability and Labour demand in the Plantation
Sector-Recent Trends
Land Reforms in the Plantation Sector - the Employment and
Income Effects
Two
'STRUCTURAL' CHANGE IN
PLANTATION AGRICULTURE
IN SRI LANKA
G.H. Peiris
Introduction
The spread of plantation enterprise in Sri Lanka during the 19th century
created in its wake an economic system which, in form and function, conformed to the classic 'Dual Economy' model." By the time the country gained
independence in the mid-2Oth century, however, considerable change had
occurred in the earlier dichotomy within the economy.2'
Local capital had made significant inroads into plantation agriculture,
claiming, in terms of capital assets, a major share of plantation land. Local
management had also made headway within the plantation sector. While
plantations were no longer dependent on foreign sources for labour supply, in
certain avenues of plantation crop production, small-scale peasant enterprise
had gained considerable importance. Likewise, as Snodgrass3" has shown, an
increasing share of the economic surplus generated by the plantation sector
was being channelled into other sectors of the economy. Thus, at independence, plantation agriculture in Sri Lanka was no longer the 'foreign enclave'
Boeke, J.H., Economics and Economic Policy of Dual Societies, Amsterdam,
2/
3/
1953.
Van Geldern, J., 'Economics of the Tropical Colony' in Indonesian Economics,
ed. Royal Tropical Institute, Amsterdam, 1969.
Peiris, Gil. 'Agrarian Transformations in British Sri Lanka', Sri Lanka Journal
of Agrarian Studies, 2(2) 1981, pp. 1—26.
-
Snodgrass, D.R. Ceylon: An Export Economy in Transition, ilomewood,
Illinois, 1966.
33
PLANTATION AGRICULTURE IN SRI LANKA
which it appears to have been in earlier times and also, perhaps, in many
other countries that had been subject to colonial dominance.
In the post-independence era, the disintegration of the 'Dual Economy'
continued to remain in the mainstream of economic transformation. During
this period, overall economic change, in general, and some of thestructural
changes within the plantation sector, in particular, can be seen as continuations of earlier trends, featured invariably by an acceleration of the pace of
change. Though plantation agriculture maintained its position as the leading
sector of the economy, the country's increasing preoccupation with the
peasant sector and with promotion of welfare in its development effort and
some diversification of the economy which was associated with the gradual
emergence of an industrial sector, brought about a perceptible waning of the
importance of plantation agriculture in the economy. Similarly, within the
plantation sector, the persistence of earlier trends is represented by features
such as the continuing 'Ceylonization' of ownership and management, the
dwindling profits and the virtual stagnation in the area under cultivation.
1
Plantation Sector in the National Economy
(percentage share based on triennial averages)
TABLE
1948-50
1958-60
1968-70
1978-80
36.5
29.6
33.6
26.8
12.3
n.a.
n.a.
19.7"
90.7
86.4
77.3
53.0
GNP
Employment
Foreign Exchange
Earnings
data for 1946
data for 1981
In the long term, the economic trends in Sri Lanka during the period
after independence maintained continuity in its general directions of change.
However, in detailed scrutiny focussed on specific aspects of plantation crop
production, the changes that accompanied the agrarian reforms of the early
1970s can be seen as marking the commencement of a new phase in the
history of plantation agriculture in the country. As the discussions that follow
will show, on the one hand, the reforms caused a sharp acceleration of some
of the earlier trends of change. On the other, it introduced important new
elements to the nature of change. More significantly, in a global context, the
reforms also created a unique system of plantation agriculture, one which
finds few exact parallels elsewhere in the world. Hence, in the present study,
it is possible to use as a temporal framework of analysis, the scheme of a
'Pre-Reform Phase' and a 'Post-Reform Phase', with the early 1970s forming
the inter-phasal transition.
34
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
Agrarian Reforms
In view of the importance that has been accorded in this study to
agrarian reforms of the early 1970s, it is necessary here to recapitulate in
summary form the principal features of the reforms."
The reforms formally commenced with the enactment of the Land
Reform Law, No. 1 of 1972 which 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 (in accordance with prevailing government
policy aimed at reducing inequalities in private ownership of land) privately
owned land in excess of the stipulated ceilings. Accompanying legislation
(Agricultural Productivity Law, No. 2 of 1972) further provided for the
setting up on a regional basis of Agricultural Productivity Committees which
were vested with a range of powers and functions for ensuring optimal use
and proper management of agricultural land. Three years later, the scope of
the reform was extended through the Land-Reform (Amendment) Law, No.
39 of 1975 under which land and related capital assets held by public
companies engaged in agriculture were nationalized. The Estates (Control and
Transfer) Act, No. 2 of 1972, the State Agricultural Corporations Act, No.
11 of 1972, the Agricultural Lands Law, No. 42 of 1973 and amendments
introduced to the Land Acquisition Act, No. 9 of 1950 were among supportive enactments that comprised the legislative package which ushered in
the reforms.
Within two years of the enactment of the Land Reform Law, an extent
of approximately 226,629 ha was taken over by the LRC. Although land
owned by joint-stock companies remained outside the purview of the reform
until the introduction of the Land Reform Amendment Law in 1975, the
initial stages of the reforms were marked by a substantial decrease in the
company ownership of plantation land as a result either of voluntary sales or
of imposed purchases by the government. Between 1972 and 1975, this
decrease amountedto approximately 22,258 ha. The second phase of acquisition under the reform programme which commenced with the introduction of the amending legislation referred to above resulted in a further
168,758 ha of land being brought under state ownership. A crop—wise
1/
also Sanderatne, N., 'Sri Lanka's New land Reform', South Asian Review
6 (1) 1972, PP. 7
See
Gooneratne, W., Land Tenure Problems and Land Reform in Sri Lanka,
Tokyo, 1975.
Peiris, Gil., 'Land Reform and Agrarian Change in Sri Lanka', Modern Asian
Studies, 12(4)1978, pp. 611—628.
Agrarian Research and Training Institute (ARTI), Agrarian Reform and Rural
Development in Sri Lanka, Colombo, 1978.
35
PLANTATION AGRICULTURE IN SRI LANKA
breakdown of the extents divested from private ownership during this
three-year period is presented below in Table 2.
Certain features relating to the extent, distribution, utilization and sizecomposition of the land acquired by the state underscore the importance and
the relevance of the reform to the present study. The aggregate extent of
acquisitions works out to about 0.42 million ha or, roughly, 23 percent of the
total area then under permanent agriculture in the country. This extent is
located almost entirely in the Wet Zone which is the venue of plantation
agriculture in Sri Lanka. The changes in ownership that were consequent
upon the acquisitions involved about 40 percent of the agricultural land
within this zone. Secondly, and more significantly, paddy land was virtually
unaffected by the reform, the paddy area acquired accounting for less than
1.4 percent of the total paddy acreage in Sri Lanka at that time. In contrast,
the acquisitions represented about 60 percent of the country's tea acreage,
30 percent of the rubber acreage and 10 percent of the coconut acreage.
Another salient feature was the multiplicity of holdings which the acquisitions
comprised. Land which the state took over in 1972 consisted of 16,732
holdings which ranged in size from a fraction of a ha to over 800 ha. The
estates acquired in 1975 numbered 395. The number of units purchased in
the intervening period was 22.
TABLE 2
Extent of Land Acquired during the Land Reforms
Acquired
through
the
'ceiling'
legislation
Purchased
between
1972 and
1975
Acquired
through
the
'amendment'
Total
of 1975
of 1972
(Hectares)
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
land)
92,663
5,389
32,021
130,073
Total
228,009
21,947
169,145
419,101
Others (including
uncultivated
Sources: Central Bank of Ceylon
State Plantation Corporation
Land Reform Commission
36
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
The Land Reform Law laid down, in general terms, the purposes for
which the land acquired by the state may be used without, however, mdicating specific priorities in this regard. 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 orga-
nizations or in small allotments to landless individuals for agricultural or
resdential use. It seems clear from the clauses of the Land Reform Law
relating to this aspect of the reform that a measure of flexibility was deliberately retained in the choice of form and purpose of land allocation so that
different strategies may be pursued under different conditions of demand for
land and farm employment, crop technology and available infrastructure. As
it turned out, the land allocatioh policy pursued by the LRC was such that it
vested the control of the larger plantations acquired in public sector agencies,
leased units of varying size (usually within a range of 20 to 120 ha) to
government sponsored organizations for setting up co-operative farms and
allocated a relatively small percentage of the acquired extent for distribution
among peasants in small allotments (Table 3).
TABLE 3
Principal Recipients of Land under the Land Reform
Programme
(as at the end of 1976)
Extent distributed
(Hectares)
Public Sector Agencies
State Plantation Corporation
People's Estate Development Board
105,828
94,739
Up-country Co-operative Estates
Development Board
Tea and Rubber Research Institutes
29,583
4,006
Co-operatives
Land Reform Co-operatives (Janawasa)
Electoral Co-operatives
'Special' and other co-operatives
19,425
70,822
16,188
Peasant Smallholdings
Others including land held by the
LRC, Disstrict Land Reform Authorities
and Governmentt Agents of Districts
Source: Land Reform Commission
37
35,815
PLANTATION AGRICULTURE IN SRI LANKA
Ownership and Tenure
Pre—Reform Phase
Structural changes in the plantation sector during the two decades that
preceded the agrarian reforms of the early 1970s reflect basically the adjustments that occurred within the sector to wider political, economic and
demographic changes that were taking place in the country.
The most prominent among these structural changes was the progressive transfer from foreign to local ownership of an increasing share of the land
under plantation crops. This process of 'Ceylonization', whIch, as mentioned
before, was a continuation of an earlier trend that gained momentum, can be
attributed mainly to the fact that the fiscal policies pursued by the government (increasing direct and indirect taxation of the plantation industries and
restrictions placed on the transfer of profits abroad) and, more generally, the
dwindling profits generated by plantation enterprise, reduced the attractiveness of this sector of the economy to the foreign investor. Local political
conditions which, at various times since independence, engendered amongst
foreign owners of plantations a fear that their assets would be nationalized
also contributed to the gradual withdrawal of foreign capital from Sri Lanka's
plantations.
TABLE 4
Ownership of Plantation Land in Sri Lanka
1950 - 1972
Extent under each crop as a percentage of the respective totals
1972
1950
Tea
Foreign owned
estates
Ceylonese owned
estates
& smaliholdings
Rubber Coconut
Tea
Rubber Coconut
69.1
37.6
11.9
31.3
14.2
4.2
30.9
62.4
88.1
68.7
85.8
95.8
Sources: Based on data from Reports of the Tea Controller, Rubber Controller,
Census of Agriculture 1952, and Census of Agriculture 1973.
It must be made clear, however, that this change in the ownership of
plantations was not accompanied by a similar change in the prevailing system
of plantation management. Throughout the period under scrutiny, the overall
management of the bulk of estate land and related commercial activity remained in the hands of 'Agency Houses and Brokering Firms' which, despite
38
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
some 'Ceylonization' in the form of transfer of equity capita! and managerial
personnel, continued under the direct and indirect control of foreign mer-
cantile interests.1" On this latter phenomenon it has been observed that
"Ceylonization has meant principally that Ceylonese Agents became available to look after non-national interests"
2/
Yet another concurrent aspect of change in the ownership pattern within
the plantation sector was the emergence of State enterprise, Its origins can in
fact be traced back to the 1 940s when certain estates purchased by the
government for the purpose of distribution among landless peasants were
held back intact under government control due to the prevailing notion that
the fragmentation of the estates would have adverse effects on their
productivity.3' In the late 1940s, 4 estate properties were also brought under
the control of the Land Commissioner's Department consequent upon canfiscations due to non-payment of income tax by their former owners.4' In
general, however, up to about the end of the first decade after independence,
governmental participation in plantation agriculture was confined to research
and extension services, sponsorship of rehabilitation programmes and, in the
case of tea and rubber, overall control of trade. This situation changed in
1958 with the formal setting up of the State Plantation Corporation. Though
initially concerned with the development of new plantations in the interior of
the Wet Zone, the extent of plantation land under the control of this institution soon expanded due both to transfer of properties held by the Land
Commissioner's Department as well as to purchases from the private sector
under the provisions of the Land Acquisition Act of 1950. By the eve of the
agrarian reforms of the early 1970s, the State Plantation Corporation owned
about 13,275 ha of plantation land and had thus become the largest single
owner of plantation properties in the
In the 'pre-reform phase', a third aspect of structural change in the
plantation sector (one which had ownership implications) was the decline in
the relative importance of large units. Tea estates of over 40 ha which in
1948 covered 82 percent of the total tea acreage accounted for 71 percent
in 1972. The estate acreage in rubber similarly dropped from 51 percent to
46 percent, and in coconut from 34 percent to 25 percent. This change
cannot, of course, be interpreted in its entirety as a decline of the 'capitalist
sector' and a corresponding gain by the peasant sector; for, plantation crop
production on smallholdings in Sri Lanka cannot, by conventionally applied
1/
2
Government of Ceylon, Report of the Commission
Government Press, Colombo, 1971, pp. 17—34.
Ibid., p. 10.
on Agency I-louses,
Government Press, Administration Reports of the Land Commissioner,
Colombo, 1939—47.
Ibid.
Government
Press, Ceylon Year Book, Colombo, 1971, pp. 60—61.
39
PLANTATION AGRICULTURE IN SRI LANKA
definitions of related terminology, be regarded synonymous with 'peasant'
production. Nevertheless, there is little doubt that during this period, peasant
ownership of plantation land did record an increase in both absolute and
relative terms, and that this increase was due partly to new land in small units
being brought under plantation crops and partly to fragmentation of large
units resulting from distribution of estate land acquired from private sources.
Private speculative practices in the land market in the form of buying, subdividing and selling of estate properties (a process which the Estates Control
of Fragmentation and Sub-Division Act of 1958 sought to curb with only
partial success) also resulted in some transfer of land away from the 'capitalist
sector', notably in those parts of the country where there was an intense
demand for residential land.
As an incipient change in the ownership of plantation land in pre-reform
times must also be noted the emergence of co-operative ventures in plantation
crop production. Since the early post-war years there were several sporadic
government and private attempts to organize plantation enterprises on cooperative lines, the most famous among them being the Ma Oya-Mary Mount
"experiment" which attracted considerable critical attention at the time.
Without exception, these pioneer attempts failed either to become commercially viable or to foster principles of co-operation and were disbanded and
converted to individual tenure.1' A surge of governmental interest in cooperative farming (which had only a marginal impact on plantation agriculture) is represented by the "Electoral Farm Programme" of the early 1960s
which was also a failure and was abandoned within a brief span after inception. A major thrust towards an extensive development of co-operative
farming in Sri Lanka was witnessed on the eve of the agrarian reforms in the
Divisional Development Councils Programme initiated in 197 1.2,! By the time
the agrarian reforms were begun, a few hundred acres of former estate land
were being controlled by co-operative ventures, for the most part, in the form
of medium sized units of production.
Post-Reform Phase
The Structural changes in the plantation system of Sri Lanka witnessed
during the post-reform phase can be attributed largely to the implementation
of agrarian legislation to which we have referred earlier. As noted in our
previous discussions, ownership changes under the reform programme in'I Government Press, Report of the Land Commission, Colombo, 1957, P. 76.
Government Press, Report of the Co—operative Commission, Colombo, 1970,
p.80.
2/
Peiris, G.H., 'Agricultural Growth through Decentralisation and Popular
Participation', Modern Ceylon Studies, 3(1)1975, pp. 60—94.
Karunatilake, H.N.S., 'Evaluation of the Divisional Development Councils'
Sri Lanka Journal of Social Sciences 1(1), 1'978, pp. 1—37.
40
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
volved approximately 0.4 million ha of land, an overwhelmingly large share of
which was under plantation crops. The reform brought about a complete
removal of public companies (including the Agency Houses) from the scene of
plantation agriculture, and reduced by about 40 per cent the extent held in
the form of estates by individuals of the private sector, confining the size of
most of their "residual properties" (after imposition of the ceilings) to less
than 80 ha. Large.scale capitalist enterprise that epitomizes the plantation
mode of production was thus liquidated and replaced with extensive state
ownership within a brief span of 4 years since the commencement of the
reforms. In the early years of the post-reform phase, new complexes of
co-operative and collective farming also emerged and, at peak expansion,
controlled about 4 percent of the total extent under plantation crops. The
reform, through land distribution, also caused a modest increase of the extent
under small-holdings carrying plantation crops.
In the immediate aftermath of land acquisition under the reform programme, the public sector agencies that were entrusted the task of management and control of the acquired estates were the State Plantations Corporation (SPC), and two other institutions—namely, the Up-Country Estates
Development Board (USAWASAMA) and the Janatha Estate Development
Board (JEDB) -both of which were set up under the State Agricultural
Corporation Act of 1972. By the end of 1976, these three institutions were
controlling about 35 percent of the total area under plantation agriculture in
the country.
This situation, however, did not remain static. For instance, the USAWASAMA which, by the end of 1976 was controlling 107 estate properties
with an aggregate extent of 29,500 ha (and had abandoned the 'co-operative'
system of plantation management which it was originally intended to foster)
was disbanded at the end of 1977 (by the new government which had been
returned to power at the General Elections earlier that year) on grounds of
inefficiency, and the properties under its control were re-allocated among the
SPC and the JEDB.
From the viewpoint of plantation management, the foremost change
caused by the reforms was the replacement of the former multiplicity of
private owners with state ownership in a large segment of the plantation
sector, a segment which includes the most fertile tea and rubber land in the
country. This change, as noted already, entailed the transfer of the managerial and supervisory functions of private Agency Houses to the SPC and the
JEDB.
Compared to the Agency Houses in former times (the largest of which
controlled some 28,300 ha) the SPC and the JEDB are gigantic organizations,
centrally controlled by their respective Colombo-based head-offices. Despite
various attempts made during the recent years to achieve administrative
decentralization within them through the establishment of 'Regional Boards',
41
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 5
Post-Reform' Changes in the Ownership of Land under
the Principal Plantation Crops of Sri Lanka
Approximate extent in ha with
percentages in parenthesis
1972
At end of
1976
At end of
1980
190,409
(20.7)
0
(0)
0
(0)
At end of
Sterling & Rupee
Companies
316,754"
Public Sector
Agencies'
14,771
(2.0)
(35.1)
Co-operatives
364
Private Sector
(including Small holdings)
Total
Note:
includes,
inter alia,
319,911"
(34.7)
33,185
0
(-)
(3.7)
(0)
712,262
552,894
(77.3)
(61.2)
602,995
(65.3)
921,854
902,833
922,906
undistributed land held by the LRC, land in the
custody of Government Agents and "land released for public purposes".
includes about 8,100 ha, the ownership of which was in dispute.
they have continued to remain organizationally monolithic ... carrying with
them all the disadvantages of large size.
Internally, the estates under the control of the SPC and the JEDB have
more or less the same hierarchically structured system of management that
has always characterised plantation agriculture and, in many instances, the
same managerial and supervisory personnel as before the agrarian reforms.
Among the noteworthy practical changes that appear to have occurred at
these levels of the plantation system are, the lowered effectiveness of the role
of 'Visiting Agents' (who in former times performed on behalf of the Agency
Houses a supervisory function over the management of estates), and the
erosion of authority of the Estate Superintendents in affairs that relate to the
routine operation of estates.
The promotion of co-operative forms of agricultural production was one
of the cardinal objectives of the reform programme. As the reform was set in
motion, new co-operative farming complexes—Electoral Co-operatives and
Land Reform Co-operatives or
hurriedly set up, and existing
co-operatives were strengthened; and a large extent of the acquired land (in
aggregate, about 107,650 ha by the end of 1976) were entrusted to their
care. Though only a part of this extent (an estimated 33,185 ha) was under
plantation crops (mostly coconut), for a brief span, co-operative enterprise
figured prominently in the plantation system of the country.
42
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
Farming co-operatives associated with the agrarian reforms functioned
under a high degree of political control. Politicization pervaded almost all
levels and, in most instances penetrated down to the level of selecting farm
workers ("members"). The close identity of the co-operative farms with the
political parties then in power resulted in the development of a strong antipathy towards them amongst those in opposition. Consequently, with the
change of government in mid-1977, there wasconsiderable "reorganization"
of the co-operative farming system which, in most instances, meant the
summary dissolution of the co-operative societies and the re-allocation of the
land among other institutions and among individual ailottees of the peasant
sector. Thus, as data in Table 5 show, co-operative ownership had faded out
of the picture by the end of 1980.
Distributing land to landless peasants, despite policy declarations to the
contrary, remained relatively unimportant in the overall pattern of redistribution under the reform programme. According to a statement released by
the LRC at the end of 1976, since the reforms began, about 350,000 peasant
families had received from the LRC units of land ranging in size from 0.05 to
0.4 ha., the total extent so received approximating 46,540 ha. As the
General Elections of 1977 approached, largely as a device for mobilizing
electoral support, the pace of land redistribution was enhanced for the aggregate extent to reach about 60,700 ha by mid-1977. Following the elections, some of these redistributed lands were withdrawn, and according to
more recent (30 April 1982) statistical compilations available at the LRC,
"redistribution among villagers" now account for only about 46,115 ha. In
any event, productive plantation land seems to cover only a small proportion
of this aggregate.
In the very recent past other structural modifications appear to have
occurred in the arrangements brought into being by the reforms of the
preceding decade. For instance, 17,600 ha of land acquired under the reform
had (by April 1982) been released to "people who were politically victimized" during the previous regime.
Some land (total extent not known) has also been rediverted for development under large-scale private enterprise with foreign collaboration, with
employment generation and agricultural diversification providing the main
justification for the move. These modifications assume significance, not for
the extents which they have hitherto involved, but for their possible agrarian
policy implications for the future.
Land Use and Cropping Patterns
Pre — Reform
Phase
In 1948, when Sri Lanka gained independence, there were about 1.3
million ha of land under permanent agriculture in the country, of which
43
PLANTATION AGRICULTURE IN SRI LANKA
paddy, the principal crop of the subsistence sector, occupied about 364,225
ha and tea, rubber and coconut, the staple export crops, an aggregate extent
of about 850,000 ha. The remaining 81,000 ha were either in small 'home
gardens' usually carrying crops geared to subsistence or under the so-called
'minor export crops' like cocoa, cinnamon, citronella and cardamom, in units
of varying size.
At the time of commencement of the agrarian reforms of the early
1970s, the total area under pernanent agriculture in Sri Lanka stood at 1.8
million ha with paddy accounting for 570,000 ha and the main plantation
crops about 890,000 ha. An appreciable increase had also occurred in the
extent under 'garden land cultivation' which by 1972, together with the
'minor export crops', covered about 283,300 ha. Thus it is seen that the
acreage gains recorded by the plantation sector during this period were of a
substantially lower magnitude than those of the other sectors.
cropping patterns associated
Considered individually, the landuse
with the different crops in the plantation sector do not exhibit important
changes during the period under review, except that, in tea and rubber,
advances were made in the intensity of resource use in terms of improved
planting practices, replanting and/or fertilizer application. Tea, though losing
some ground in the mid-country, continued to occupy about 238,800 ha.
From around the early 1960s, the "actual" area under rubber also stabilized
around 230,700 ha, following a steady decline during the preceding decades,
a decline which can be attributed largely to the progressive abandonment of
"uneconomic" rubber in the physically marginal higher elevations of the
interior. The extent under coconut cultivation in Sri Lanka increased from
about 364,225 ha to 450,000 ha principally on account of its extension in
small units in the Intermediate and Dry Zones. On 'minor export crops', at
least up to the early 1960s, their collective acreage appears to have recorded
a decline due to a drop in the extent under cocoa (a crop largely confined to
the mid-country) and citronella (concentrated in the southern lowlands). By
the early 1970s, these crops had an effective aggregate acreage of approximately 36,500 ha, with cinnamon (14,600 ha), cocoa (10,100 ha), citronella (6,700 ha) and cardamom (4,500 ha) accounting for about 98 percent of
the aggregate.1!
As mentioned before, in the cropping patterns associated with plantation agriculture during the
phase', significance must be placed on
the 'Rehabilitation Programmes' in tea and rubber. These programmes were
launched in the 1950s with the objective of strengthening the competitive
Kuhonta, P., Cocoa Industry of Sri Lanka, Agricultural Diversification Project
(ADP), Peradeniya, 1978.
McConell, Di. and Upawansa, G.K., Cinnamon; Cardamom; Citronella, ADP,
Peradeniya (mimeo)., 1974.
44
STRUCTURAL Cl-lANGE IN PLANTATION AGRICULTURE
position of the two industries which were being adversely affected by falling
prices and rising costs.
Data relating to the principal components of the rehabilitation programmes in the 'pre-reform phase' (Table 6) show that in both replanting and
fertilizer use, the two plantation industries, made considerable headway,
though in most years, the actual achievements fell short of targets. By 1972,
approximately 21,000 ha of tea (9 per cent of the total tea area) and
122,600 ha of rubber (53 percent of the total rubber area) had been replanted
with high-yielding varieties. Fertilizer consumption in tea and rubber had also
been raised above the levels that prevailed in earlier times, though in this
respect, towards the end of the period under review, there was a perceptible
deterioration. Some progress also appears to have been made through the
other components of the rehabilitation programmes (soil conservation, increasing planting density, factory modernization). Thus, in the period as a
whole, it is possible to conclude that the intensification of resource use in tea
and rubber production was the most significant change relating to cropping
patterns in plantation agriculture. In fact, there was hardly any other.
TABLE 6
Replanting and Fertilizer Consumption in Tea
and Rubber
Cumulative extents
Replanted
(ha)
Tea
1955
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
—
457
982
1,696
2,627
3,922
5,186
6,634
8,767
10,898
13,528
16,303
20,204
21,588
Rubber
18,278
61,125
68,687
75,953
82,393
87,877
92,936
97,623
101,705
106,858
111.748
115,892
119,322
122,860
Amount of Fertilizer
Consumed
('000 mt.)
Rubber
Tea
n.a.
na.
n.a.
n.a.
143.5
147.9
160.9
172.5
156.7
156.8
142.2
133.2
110.8
106.2
84.6
92.3
64.1
62.9
61.6
59.8
52.2
50.2
49.1
39.6
45.2
45.7
38.3
25.5
Sources: Jogaratnam, 1., et.al, Tree Crop Production in Sri Lanka, University
of Peradeniya, Sri Lanka (Mimeo.), 1979.
Tea Controller
Rubber Controller.
45
PLANTATION AGRICULTURE IN SRI LANKA
Post-Reform Phase
Changes that occurred during the 1970s in the landuse pattern of
plantation crop production were relatively minor and were associated either
with the sub-division of some large units in the plantation sector or with
State-sponsored attempts at crop diversification. Changes in the extents
under the principal plantation crops were also insignificant.
As we have already shown, about 10 percent of the total extent (i.e.
about 40,500 ha acquired by the state during the early 1970s) was converted
into smallholdings through distribution. As in previous times, such disintegration of large units often resulted in the conversion of former plantation land
into residential use. Statistical data on the extent and distribution of this
conversion are not available. However, impressionistically, it is possible to
contend that the extension of residential land use in this form was most
pronounced in the rubber and coconut areas of the lowlands. It is also possible
to note on the basis of sporadic observation that this conversion has been
greater than what the official data on the three main plantation crops suggest;
because, in some areas at least, the newly created residential smallholdings,
though no longer concerned with the production of plantation crops, have
continued to be officially enumerated as plantation land.
TABLE 7
Replanting and Fertilizer Use in Plantation
Agriculture: Post-Reform Phase
(1973 onwards)
Cumulative extent
Replanted (ha)
1973
1974
1975
1976
1977
1978
1979
1980
Amoun t of Fertilizer Consumed
('000 mt.)
Tea
Rubber
Tea
Rubber
Coconut
23,997
25,730
27,493
28,608
29,849
31,558
34,049
36,127
125,805
128,668
131,898
134,447
137,063
140,289
144,456
149,892
93.8
102.6
101.8
95.6
80.4
115.5
105.4
101.7
14.9
12.5
9.5
13.0
12.4
20.9
23.2
21.0
39.4
40.1
27.5
21.0
30.8
43.0
49.6
55.8
Source: Central Bank of Ceylon
Diversifying export agriculture by increasing the relative importance of
the minor plantation crops has been an important aspect of agricultural
development policy, particularly since the early 1960s when various mea46
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
sures were adopted to assist the producers of these crops. The initiation of
the Mid-Country Crop Diversification Project in 1971 (which roughly coincided with the commencement of our 'post-reform phase') may be seen as a
systematic and co-ordinated intensification of the earlier attempts to stimulate
the growth of this sphere of production. In 1977, this project gave way to an
expanded programme of overall agricultural diversification under the newly
established National Agricultural Diversification and Settlement Authority.
The general impact of these attempts on the country's economy have hitherto
remained slight. Nevertheless, in respect of landuse in the plantation sector,
attempts at crop diversification have had some impact in parts of the midcountry where tea and rubber production were uneconomical." Accordingly,
a comparison of the data generated by the Census of Agriculture 1962 with
those of 1980 show that during the intervening years the acreage devoted to
minor export crops had increased from about 38,800 ha to 48,600 ha. It is
likely that the increase occurred mainly in the 1970s.
In regard to cropping patterns of plantation agriculture, it is stagnation
rather than change that has characterised the 1970s. For several years after
the commencement of the agrarian reforms, the rates of replanting in both tea
and rubber showed a distinct downward trend (Table 7). Fertilizer consumption in these crops as well as in coconut also dropped sharply. In the
minor export crops, despite buoyant prices, there is no evidence (from production data) for any increase in cropping intensities, except in the case of
cinnamon in which, there appears to have been an intensification of effort
towards the end of the decade. Taken as a whole, the plantation cropping
patterns of the post-reform phase show a retardation of the pace of improvement that featured the pre-reform phase.
Production and Productivity
Production and productivity in plantation agriculture are notoriously
prone to short-term oscillations that are caused by the complex interplay of a
large variety of factors. The exact influence of any one such factor on output
and yield of a plantation crop in a given year cannot, usually, be disaggregated
and measured. Nevertheless, the long-term trends of production and productivity of the three main plantation industries of Sri Lanka, tabulated below
(Tables 8 & 9) can, in general terms, be correlated to the transformations
within the plantation sector which we have hitherto discussed.
"
Ahmed, M.M.A., Socio-Economic Studies of the Ritigaha Oya Catchments,
ADP, Peradeniya (mimeo.), 1973.
Eliman, A.O., and Wijekoon, L.D., Socio-Economic Survey of River Catchments, ADP, Peradeniya (mimeo), 1973.
Moll, N.A.J., Economic Assessment of the Diversification of Tea Land in
the Mid-Country, ADP, Peradeniya, 1976.
47
PLANTATION AGRICULTURE IN SRI LANKA
Over the past three decades, in tea and rubber, there has been a
fluctuating upward trend in production, the upward movement being identifiable only in a comparison of the early 1950s with the late 1970s. It may be
recalled that during this period the extent under these two crops did not
record an appreciable change. Hence, the general elevation of production can
be attributed to yield increase, which in turn is known to be a result of the
adoption of improved technology (mainly, the use of high-yielding planting
material and chemical fertilizer). Disregarding level of production in any
particular year, it could be said that over the years, in the tea and rubber
industries of Sri Lanka, the potential for a higher level of productivity has
been gradually created.
TABLE 8
Production Trends of the Principal Plantation Crops
(1950 to 1980)
Annual percentage variation of production
1950 production
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
Tea
Rubber
Coconut
139 mi.kgs
99 mi.kgs
2,262 mi.nuts
+ 6.5
- 2.8
+ 8.2
+ 7.0
+ 3.5
7.0
8.4
+ 13.4
+ 10.1
+2.0
-5.0
0.0
-5.2
.
-
2.9
15.1
-
-
.1.1
±2.1
+ 5.9
+ 3.8
± 2.1
+ 3.1
0.0
-8.9
+ 14.3
+ 5.8
+ 6.5
65
-3.8
-
17.8
-6.6
1961
1962
1963
1964
1965
+ 4.6
. 1.4
+ 18.5
+ 2.6
+ 3.9
+ 6.5
+ 4.8
0.8
+ 6.4
+ 5.6
+ 7.9
- 8.8
+ 15.0
- 9.0
1966
1967
1968
1969
1970
-2.6
+ 10.7
-
-0.8
-0.6
+
+
+
+
+ 1.6
-2.2
-
3.3
9.7
3.4
1.2
5.4
-9.4
-0.6
+ 6.1
-2.7
-2.8
(contd.)
48
CHANGE IN PLANTATION
TABLE 8
(Continuation)
1971
1972
1973
1974
1975
+2.8
-11.5
±9.1
- 1.9
- 1.1
- 3.4
- 0.7
+ 10.3
+5.7
-29.2
+ 4.7
+ 12.3
1976
1977
1978
1979
1980
-9.1
+ 3.9
-2.4
+ 3.5
+ 2.4
- 14.7
- 7.3
+ 9•9
+ 18.1
- 3.9
-3.2
-9.0
+ 6.8
+ 18.1
- 1.9
- 13.1
- 19.0
-3.2
Decennial Cumulative Percentage Change
of Production (1950 to 1980)
1950 to 1960
1961 to 1970
1971 to 1980
+ 36.8
+ 8.0
-8.0
- 13.5
+ 6.1
+ 46.7
-12.7
+ 14.2
-
15.0
Sources: (Compilation based on data from the Statistical Abstract of Ceylon,
Annual Reports of the Central Bank and the Administration Reports of
the Tea Controller and the Rubber Controller.)
The overall production gain in tea and rubber, however, has not been
temporally regular and persistent. As shown earlier, the rate of adoption and
the level of application of new technology which the rehabilitation programmes in tea
rubber attempted to foster have tended to vary from time
to time.
Accordingly, in the tea industry there was a sharp increase of production
in the 1950s, the cumulative annual percentage change in the total output of
tea during the decade being + 36.8 percent. This movement towards higher
production was maintained, though at a somewhat slower pace, during a
greater part of the 1960s, production reaching peak levels in 1965 and 1968.
During this decade too there was thus a cumulative change of + 8.0 percent
in the output of the tea industry. Thereafter, there has been a clear reversal
of earlier trends, reflected in the fact that by 1980 the cumulative percentage
change during the preceding decade had become—12.7 percent.
The production trends of the rubber industry differ significantly from
those of tea only in respect of its record during the 1950s when, in contrast
to the contemporary trends in tea, there was an overall 13.0 percent lowering
of output. This was largely due to the unavoidable negative effects on production the replanting programme (launched in 1953) had in its early stages
49
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 9
Yield Trends in Tea and Rubber
Average yield per
ha in production
Percentage change of
yield from previous year
(kgs)
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Tea
Rubber
837
869
886
926
912
949
921
911
930
976
878
467
479
488
493
504
628
680
725
752
754
793
736
738
778
901
882
872
844
884
813
864
Tea
—
+ 3.7
+ 1.9
+ 4.6
Rubber
—
+ 2.3
+ 1.8
+ 1.1
-1.5
+2.2
+ 4.1
+ 24.4
-3.0
-1.1
+8.3
+6.5
+ 2.1
+ 4.9
+ 3.7
+ 0.2
+ 5.0
- 10.1
+2.7
-2.1
-7.1
-0.1
711
-3.2
+5.4
-8.7
775
790
795
+ 4.8
+ 8.9
-8.1
+2.0
+ 6.3
+ 0.5
-Li
Source: Same as table 8.
when, as replanting progressed, there was a drop in the extent of rubber
under tapping. By the 1960s, as more and more replanted high-yielding
rubber reached tappable maturity, there commenced a major upsurge of the
production level resulting in a massive + 47.0 percent cumulative change in
output during the decade. For the rubber industry too, the 1970s have been
a period of deteriorating production levels. For instance, had the trends of the
preceding decade been maintained, the totaloutput of the rubber industry in
1980 would have exceeded 225 million kgs instead of the recorded actual
output it had of approximately 136 million kgs.
In the period under review, coconut production in Sri Lanka showed no
distinct long-term trend. Prior to 1975, in most years, the estimated total
production appears to have ranged between 2,500 million and 3,000 million
nuts. But in the more recent past, the output has tended frequently to sink
below this level. In view of the 20 percent increase of the extent under
50
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
coconut during the period after independence the sluggish coconut production trends may be interpreted as a deterioration in the level of productivity.
Furthermore, in percentage terms, it is seen that the annual production of
coconut has oscillated over a wider range than has been the case in tea and
rubber. This may be due partly to coconut being relatively more vulnerable to
variations in its climatic and biotic environment and partly to coconut producers (most of whom are small holders) reacting more sharply to price
variations by varying their levels of input (especially fertilizer) in accordance
with the movement of prices.
On the minor export crops, annual production data are not available for
the period before 1970. Hence, the present observations on these crops have
to be based partly on the patterns exhibited by their export trends (on the
assumption that the trends of internal consumption did not differ significantly
from those of exports). In the cocoa planting industry, production appears to
have recorded a steady decline since the early 1950s, at which time the total
annual output of cocoa in Sri Lanka was about 50,000 tons. In the past few
years the output has remained below 15,000 tons. Citronella production
which in the 1950s was around 0.91 million kgs. per annum, soared to a peak
of about 1.82 million kgs. in the early 1960s and gradually dropped thereafter
to less than half a million kgs at which level it has remained until the late
1970s. In cinnamon a distinct upward movement of production levels is
discernible from around the late 1 960s to the present (probably, and at least
partly, a result of some conversion of land from rubber to cinnamon in interior
lowlands of the wet zone). Cardamom appears to have been characterised
both by the absence of a distinct production trend as well as by wide shortterm fluctuations of production levels. In the case of the minor export crops,
among the main causes for the crop-wise diversity of production trends are
vageries of weather, neglect of plantations during prolonged spells of low
price and fiscal concessions granted at various times by the government to
exporters of these crops which to some extent have had beneficial effects on
the producers as well.
In general then, in the plantation sector as a whole, the long-term trends
of production and productivity also seem to conform to our scheme of the
'pre-reform phase' and the 'post-reform phase', the former characterised by
improvement and upward mobility and the latter by stagnation or deterioration.
To what extent the deterioration in production and productivity of the
plantation sector during the recent past is a consequence of the agrarian
reforms of the early 1970s is a question that looms large in a study of the
trends of plantation crop production in Sri Lanka. Given the short time-span
available for scrutiny, it is not possible to attempt a precise assessment of the
impact of changes in ownership, management and scale that accompanied the
reforms on plantation production and yields. In any such attempt it has to be
51
PLANTATION AGRICULTURE IN SRI LANKA
recognised that a major re-structuring of the agrarian base (as witnessed in the
early 1970s) could be expected to involve an "abnormal" period of gestation.
Apart from this, in the short-term, it is not possible to isolate the effects of the
reforms from those of other variables such as weather, costs of inputs and the
price of the commodities produced. Hence, the records available on production and related aspects of plantation agriculture can only be used here for
qualified speculation and conjecture.
In examining the production trends of tea and rubber, it is important to
note that in both these commodities there is some short-term elasticity of
supply. Past performances indicate that coaser plucking (of tea) and increased
tapping intensity (in rubber) enable the producers to respond positively to
sustained price increases in the market. For several years in the late 1970s,
unusually high prices prevailed in tea and rubber. The output, however,
showed no response. It is therefore the persistence of low output even amidst
boom conditions (a departure from the past pattern) that points to the
probability that the changes associated with the reforms have had adverse
effects on productivity. It is this that also makes other possible explanations
for the lowered output (adverse weather conditions, neglect of plantations by
former owners in anticipation of dispossession, increased cost of fertilizer)
seem somewhat tenuous.
There can be hardly any dispute on certain adverse effects of the reforms
on production and yields in plantation agriculture. For instance, losses in
production have occurred as a result of the conversion of some plantation
land (approximately 40,500 ha to small allotments through distributive alienations which, given the size of the allotments so distributed, has invariably
entailed the conversion of land from 'agricultural use' to 'residential use'.
Mismanagement and inefficiency which were rampant in the cooperative
farming ventures begun on land acquired by the government during the early
part of the reform would also, at least for a time, have contributed to a decline
in production. Further, the post-reform fall in production is likely to have been
contributed to by the uncertainties that affected the 'residual properties' over
which there was no effective management either by the government or by
their former owners for a considerable length of time due to dalays in the
demarcation of such properties.
What were the productivity effects of the replacement of the former
private sector system of management with management through the SPC and
the JEDB? On this crucial issue, to which the available statistical data cannot
provide a precise answer, expert opinion is also sharply divided. Evidence of
deteriorating standards of plantation management (absence of personalized
accountability among those in managerial positions, their loss of authority,
cumbersome and dilatory procedures within the SPC and the JEDB, corruption and malprcatices, etc.) has often been cited to support the claim that
the managerial changes which accompanied the reforms were largely res52
3
6.4
Number of
bought leaf
factories
Number
Employed
('000)
Source : Central Bank of Ceylon.
— Loss
(Rs.'OOO)
—238
3.4
Total Extent
('000 ha.)
+ Prof it/
12
Number
of plantations
1963-64
+ 14
6.5
3
3.4
12
1964-65
TABLE 10
+ 78
6.8
3
3.5
12
1965-66
—483
6.6
3
3.5
12
1966-67
+ 295
9.0
4
5.9
15
1967-68
+ 11
7.7
4
5.8
15
1968-69
in the Pre-Reform Phase: 1963/64 to 1971-72
— 115
6.5
4
5.3
13
1969-70
The Performance of the State Plantation Corporation
+ 477
7.0
4
5.2
13
1970-71
+ 1,606
18.4
4
13.0
26
1971-72
o
m
C
for the
in
The
the
are
has been
of
of the
the
in
of
the
the 1970s
the
the
the
a
the
have
of
a
in
and
on
in the plantation sector
have
their
the lack of comprehensiveness. The foremost among such problems is that since the data are
based on returns furnished by certain estates to the Department of Labour,
the year to year variations in the composition of the estates furnishing returns
(in
of the crops they produce) can distort the final computations on
plantation employment. Moreover, the returns so furnished relate to the
"number registered in the checkroll" on a specific day of the year. Hence,
they cannot portray the intensity of the employment of 'casual' labour and
related variations in the plantation sector.
The data as they are presently available, however, can form the basis of
several general observations on employment in plantation agriculture. In the
first place, the data show that about 97 percent of the total number of
employees in the plantation sector belong to the "labourer grades" engaged
in field and factory operations, but that in absolute numbers (in relation to
acreage) the non-labourer grades of employees (managerial, clerical and
technical) have increased substantially during the recent past. Secondly, in the
estate sector, the ratio of female workers to total workforce has always been
higher than in the other areas of the economy. In the past few years this ratio
has been increasing, following a drop during the early 1970s. Thirdly, in
estate employment, there have been wide variations from time to time and
from crop to crop in the number of 'work-days' on which the "registered"
employees have been provided with work. The average number of
'work-days' in the tea and rubber industries recorded a sharp decline from
around the late-1960s, but has risen once again in the latter half of the 1970s.
Among the other observations that could be made on the basis of the data
available are that the two main plantation industries obtain at present a higher
level of productivity per worker than they did during the early part of the
period under review, that the real wages in the plantation sector have remained more or less constant for a greater part of the period but that, largely
on account of a lowering of under-employment among those resident on
estates their real family earnings have been increasing during the past few
years.
54
STRUCTURAL CHANGE IN PLANTATION AGRICULTURE
The agrarian changes of the early 1970s, though relatively unimportant
in their impact on the land-labour rations in the plantation sector, did cause
some important changes in the composition of the plantation workforce. The
establishment of co-operative farms on plantation land at the early stages of
the reforms, in most instances, resulted in the eviction of resident plantation
workers from such land. Furthermore, the policy of "Estate-Village Integration" which was pursued as an important aspect of the reform programme
often meant an increase in the employment opportunities for village labour on
estates. Since the implementation of the reforms was concurrent with an
enhanced pace of repatriation of the workers of "Indian Origin", in certain
parts of the country, the share of the 'resident workers' and that of the
"Indian Tamil" population in the total plantation workforce have fallen substantially during the recent past.
55
Three
INTERNATIONAL TRADE MOVEMENTS AND
THE PLANTATION CROP SECTOR
P. Athukorala
Introduction
During the past two and a half decades the performance of the plantation sector of Sri Lanka has been constrained by two major problems — adverse
movements in prices fetched by the plantation produce in the world market,
and the unsatisfactory expansion of production. These two problems are
closely inter-linked in a vicious circle. On the one hand, adverse price
movements, defined so as to imply both the unfavourable trend and shortterm oscillations around that trend hampered various attempts towards the
expansion of production. On the other hand, it is mainly because of the low
productivity that the plantation sector was more vulnerable to such price
movements.
The purpose of this paper is three fold: (a) to analyse the nature and
underlying causes of variations in prices of plantation crops in the world
market, (b) to examine the impact of these price movements on the plantation
sector, with special reference to employment and income generation aspects
and (c) to discuss possible ways of cushioning the plantation sector against
adverse price movements while enhancing its long-term viability.
In Sri Lanka, the term plantation crop sector is commonly used to refer
to the production of various crops, on both large and small units, mainly for
trade!" However, the focus of this paper will be limited only to the two major
1/
Peiris,
GH., "Plantation Agriculture" in KM. de Silva, ed, Sri Lanka: A
Survey. London: Hurst and Company; 1977, 213-135.
57
PLANTATION AGRICULTURE IN SRI LANKA
plantation crops, tea and rubber, due to two main reasons. First, because of
the data limitations a meaningful analysis can be undertaken only in these two
cases. Second, it is mainly, though not solely, the tea and rubber sectors
which have been affected by adverse price movements. In other cases, the
accepted position is that their prices have been relatively more satisfactory
and the major problem has been supply bottleneck due to structural rigidities
and institutional limitations."
Price Movements
The problem of primary commodity prices has two major aspects— the
unsatisfactory growth trend, and short-term fluctuations around that trend.
These two aspects have to be treated separately since both underlying causes
and alleged consequences of these movements tend to be different.
The analysis of price movements therefore calls for, as the first step, the
separate identification of the trend and the instability component for each
price series. There are a number of afternative methods of measuring the
trend (growth factor), and depending on the way the trend is measured the
method adopted in summing-up the deviations from that trend, the instability
index can be constructed in a number of ways.2"
In this study, a log-linear trend function of the form log X=a + bT, where
X stands for commodity price and T for years, fitted by Ordinary Least
Squares is employed for isolating the trend and measuring instability. This
trend form has the advantage that the estimated value of the slope coefficient
(b) can be directly interpreted as the annual percentage rate of increase (the
trend rate) of the given price series. The instability index is estimated as the
average of the absolute percentage differences between the observed (given)
prices, and the prices estimated using the fitted trend equation.3" Such an
1/
Peiris, Gil., op. cit., and S. Tilakaratne and U.V.H. Perera, An Economic
Study of the Coconut Industry in Sri Lanka, People's Bank Research Depart-
2/
3/
ment, Colombo, 1981.
A sizeable body of literature exists on the subject of measurement of export
instability, and we therefore do not intend to go into detail. See, for instance,
Stein, L., 'Export Instability and Economic Development: A Review of Some
Recent Findings', Banca National Del Lavoro RevIew, 30(2): 1978, 279—280
and the work cited there of.
The calculation procedure is summarised in the following formula:
100.00
lOX
Where, IDX = Instability index
X
X
N
= observed price
= trend (estimated) price
= number of years
58
EFFECTS OF INTERNATIONAL TRADE MoVEMENTs
index is easy to understand because it simply shows in percentage form, for
the period considered, the average annual fluctuation of commodity prices.
Appendix Table A-i sets out international market prices of Tea and
Rubber for the period 1950-80. In addition to actual current prices constant
(1979) prices are also given in order to indicate the movement of the prices
of these commodities relative to the international prices. Instability indexes
and growth rates calculated on the basis of these data are given in Table 1.
In current terms, both tea and rubber prices indicate positive trend rates
of i.92 and 2.57 respectively during the period 1950-80. However, this is
mainly a reflection of the "abnormal" market situation that existed for both
commodities during the periods 1950—55 and 1973—79.
When these two periods are excluded, both commodities indicate
negative trends. Trend rates pertaining to the past ten years (1970-80) are
remarkably higher compared with the previous years. The picture given by
trend estimates pertaining to the constant price series is a rather different one.
Not only for the period 1956.72, but also for 1950-80 and 1970-80, these
price series indicate negative trend rates. It seems that in recent years the
annual rate of decline in relative prices has been somewhat arrested. However, the absolute levels of prices still remain at a rather low level for both
commodities compared with those prevailing in the 1950s and early 1960s.
Thus compared with other internationally traded commodities tea and rubber
prices have behaved rather unfavourably in the world commodity market.
Tea and rubber prices (both current and constant) indicate a relatively
higher degree of stability during the 1956-72 period compared with the
overall period as well as with 1970.80. The degree of instability in rubber
prices seems to be significantly higher than that in tea prices. This difference
has been reduced in the period 1970-80 compared with previous years. For
both commodities the differences between constant and current price instability indexes are only marginal in 1950—80. However, a noteworthy difference between these indexes can be observed in the period 1970-80. This is a
reflection of the vast differences that could be observed in the time pattern of
prices of different commodity groups in recent years, notably after 1972k"
'I Cooper, N. and Lawrence, Z. The 1972—75 Commodity Boom' Brooking
Papers on Economic Activity, No. 3, Brooking Institute, Washington, 1975.
59
PLANTATION AGRICULTURE IN SRI LANKA
TABLE
1
World Market Prices of Teaand Rubber: Trend
Rates and Instability Indexes 1950-1980
Tea
Rubber
TREND RATE
Current Price
1950—80
1956—72
1.92
2.57
—1.86
—3.09
1970—80
8.42
14.68
—4.72
—2.68
—1.77
—4.97
—3.15
—1.31
6.98
17.57
3.31
10.51
8.07
15.29
1950—79
5.78
14.11
1956—72
1970—79
2.49
15.20
7.91
19.15
Constant Price
1950—79
1956—72
1970—79
INSTABILITY INDEX
Current Price
1950—80
1956—72
1970—80
.
Constant Price
Source: Appendix Table A—i
Table 2 sets out trend rates and instability indexes calculated for current
prices of tea and rubber in the Colombo Market. In making these estimates,
rupee values have been converted into SDRs in order to avoid distortions due
to the devaluation of the rupee at various times before November 1977, and
the gradual depreciation of its value under the floating exchange rate system
thereafter. In general, the magnitude and changes over time of the trend and
instability estimates pertaining to the woridmarket price and Colombo market
price of rubber indicate a close similarity. The marginal differences can be
attributed to variations in exporters' margins, export duties, freight charges
etc. The same comment is valid for trend and instability estimates for tea
prices during the period 1956-72. However, for the period 1970-80 a noteworthy difference can be observed. An analysis of the time pattern of prices
of tea belonging to the three major sub-categories - high-grown, mid-grown
and low-grown - sheds light on this observed difference. This data is given in
Appendix Table A-3. As can be seen in the Table, the relative price patterns
of these three categories of tea have undergone a drastic change since about
1976. Prior to this period high-grown tea continuously fetched higher prices,
60
EFFECTS OF INTERNATIONAL
MOVEMENTS
Colombo Market Prices of Tea and Rubber:
Growth Rates and Instability Indexes, 1950—80
TABLE 2
Tea
Rubber
Trend Rate
1950—80
1956—72
1970—82
Instability Index
1950—80
1956—72
1970—80
.
2.20
2.92
— 2.01
— 3.20
14.57
13.92
8.35
16.55
3.62
9.63
15.35
14.82
Source: Appendix Table A —2 (Rupee values given in the Table were converted
into SDRs using annual average SDR — Rupee rates given in Central Bank
of Ceylon, Annual Report).
but from 1975 to 1980, with the single exception of 1979, low-grown tea
fetched the highest prices. Prices of medium grown tea are still lower than the
other two categories, but the difference has been narrowed down dramatically. In view of this change, it is not surprising that the pattern of prices in the
London tea market, which is predominantly a market for high grown tea, has
tended to differ from that of the Colornbo tea market.
A brief discussion on the underlying causes of these price patterns for tea
and rubber is now in order. It is convenient to consider trend and instability
aspects sesparately.
Price Trend
The nature of the price trend of a commodity is determined through the
interaction of supply and demand forces. During most of the period under
study, both supply and demand forces for tea have continuously behaved in
a way which weakens its price prospects. In developed countries, where 75
per cent of the world's black tea is consumed, the volume of tea consumption
has recorded a noticeable decline both in absolute and per capita terms, due
largely to competition from other beverages. For instance, in 1952 the U.K.
and the Republic of Ireland absorbed more than half of the total tea ex-
ports from LDCs. By 1979, this share had reduced to 25 percent. The
per capita consumption of tea in the U.K. decreased from 4.5 kg in 1958
to 3.2 kg in 1979. /
M., The Tea Industry of Sri Lanka: Some Economic Aspects
and a Short-Term Time Series Analysis of Supply Responses, Unpublished
Susiriwardana,
Master's Dissertation, University of Lancaster, 1981.
61
PLANTATION AGRJCULTURE IN SRI LANKA
While the demand stagnated, world production and exports have
increased unabated since the end of the 1950s, due to the rapid expansion of
tea cultivation in the East African countries, mainly in Kenya. Over the period
from 1965-66 to 1978-80, East African tea exports increased approximately
ten-fold leading to a rise in their world export share from 6.5 percent to about
14.5 percent." Although traditional tea producers - India, Sri Lanka and
Indonesia - lagged behind in output expansion, their exports also indicated
positive growth trends. In a context where world supply was growing too fast
for world demand to absorb, a decline in world market prices was only to be
expected. According to available market forecasts, world tea exports are
expected to grow rapidly in the coming years - from 0.8 million metric tons in
1978 to 1.2 million metric tons in 1990. Since a commensurate increase in
world demand is unlikely to take place tea prices are expected to decline
further.21
The only hope for arresting the decline of future prices seems to be the
increase in demand for tea in centrally planned economies (CPEs) and less
developed countries (LDCs). According to available estimates, income
elasticity of demand for tea in these countries (notably in LDCs) is relatively
higher than that in DCs.3" Therefore an increase in the level of consumption
as income rises can be expected. Per capita consumption of tea in the USSR
increased from a level of about 0.30 kg in the mid-sixties to 0.54 by 1978.
Total consumption of tea in Pakistan increased from 39.4 metric tons in 1972
to 66.0 metric tons in 1979 making her the third largest tea importer in the
world.4" Similar favourable growth trends have been recorded by oilexporting
Under these demand conditions, an individual tea
exporting country's ability to obtain a more favourable price depends cru-
cially on the ability to diversify the geographical distribution of exports
towards these expanding markets by appropriate changes in the market mix
of tea exports. The relatively higher price trend of Sri Lankan tea exports
which we have noted in the previous section is an indication of these favourable changes in the world demand pattern. The share of exports to
Pakistan and the Middle East countries in total exports of Sri Lanka has
increased from the level of 5.5 percent in the late 1950s to 53 percent by
"
/
Calculated using data (volume) obtained from FAO, Trade Year Book.
Lakshman, W.D., The Second Window of the Common Fund: Problems and
Prospects in Relation to Tea and Natural Rubber Sectors in the Economy
of Sri Lanka, Colombo: Marga Institute, 1982.
Majumdar, S., 'Problems of Quality Variation, International Substitution, and
Dynamic Adjustments in Primary Trade: The Case of Tea', The Developing Economies, XV (3) 1977, 293—319. and
UNCTAD, Econometric Model of the World Tea Economy, TD/B/IPC/
'i"
TEA/AC/A add. 1, 1979, Geneva.
Susiriwardana, op. cit., p. 39.
/ Majumdar, op. cit., p. 287.
62
EFFECTS OF INTERNATIONAL TRADE
1980. The relatively higher growth rate of low-grown and medium grown tea
exports from Sri Lanka is mainly a result of the preference of these buyers for
these teas over traditional high-grown tea.
Being an important raw material used in the production of goods for
secondary needs, natural rubber has a higher degree of income elasticity of
demand than tea." However, throughout the past three decades, possible
increases in price in line with the expansion in world incomes were constrained by expansion of and technological improvements in the synthetic
rubber industry.
By the second half of the 1 960s, synthetic rubber had already dissolved
the market strength of the natural rubber producers. "As synthetic rubber
became more and more important in the world market, its prices set the
overall trend of rubber prices, and natural rubber producers became, to large
extent, price takers".2' Therefore, when synthetic rubber prices tended to
decline because of economies of scale of production, natural rubber prices
followed suit.
The world rubber market has profoundly changed in recent years in
favour of natural rubber, owing to two major factors. First, the onset of the oil
crisis in 1973 and the subsequent sharp rise in crude oil prices led to a major
change in the cost structures and production economies of the synthetic
rubber industry which depends on petro-chemical feedstocks. Second, the
outlook for natural rubber consumption has been further enhanced by the
advent and growing popularity of the radial tyre (which uses a higher proportion of natural rubber than the traditional tyre) in the passenger car tyre
market.3' According to these indications it is believed that there will be a fairly
substantial shortage of natural rubber by the end of 1 980s further strengthening the producers' position 4I
Instability
The degree of price instability experienced by an export commodity is
determined by two major factors : the degree of price elasticity of export
demand and supply, and the frequency and the magnitude of the shifts in
supply and demand. The more inelastic the demand and supply curves, and
"
According to estimates by Grilli et. al., Income elasticities of natural rubber
demand in the major consuming countries are of the order of from 0.6 to 0.8.
See, The World Rubber Economy: Structure, Changes and Problems,
2
/
3/
Baltimore, John Hopkins UP, 1980.
Grilli, E., et. al., ibid.
Mingst, K.A., 'Economic Determinants of International Commodity Regulations', Journal of World Trade Law, 13(2): 1979, 158—169.
/ Grilli, E., et. al., op. cit.. pp. 6—7
63
PLANTATION AGRICULTURE
SRI LANKA
the more frequent their periodic shifts, the higher the degree of price
instability."
In view of the long gestation period involved between planting and
maturity, and the physiological characteristic of the plant which limit the
expansion of output on the basis of the existing matured acreage, production
of both tea and rubber tends to be highly price inelastic in the short-run.21 On
the demand side, price elasticity of demand for tea can be expected to be
In most of the rubber consuming industries the cost of rubber input
forms only a small portion of the total cost of the final product, and hence the
changes in price of rubber rarely affect the price of the final product appre-
ciably. Also changing the input mix in favour of one variety of rubber is
time-consuming and involves technical adjustment costs. Moreover, rubber
consuming industries, notably tyre-makers (the largest users of rubber), are
integrated backward with the synthetic rubber industry. Therefore, they tend
to resort to their own supplies whenever possible. These factors lead to a low
short-run price elasticity of demand for rubber.4"
Given the similarity with regard to the high degree of inelasticity in
demand and supply, the observed differences (Tables 1 and 2) in the degree
of price instability of tea and rubber can be considered as a reflection of the
differences in the magnitude and frequency of demand and supply shifts.
A widely used statistical test of the relative importance of demand and
supply shifts in generating price instability of a commodity examines the
correlation between the deviations of price and quantity series from their
trends.5' If the correlation coefficient between trend deviations of the price
series and that of the quantity series is positive and significant, it implies that
price variations are caused mostly by demand shifts. On the other hand, if the
correlation coefficient between the two trend-corrected series is negative and
1/
2/
MacBean, Al., Export Instability and Economic Development, Cambridge,
Mass.... Harvard University Press, 1966, p. 25.
Grilli et.al. op. cit., estimate price elasticities of supply of rubber in Malaysia,
Indonesia, Thailand and the rest of the world as 0.22, 0.18, 0.25 and 0.19
respectively. The estimates of UNClAD (1979) of the elasticities of supply of
tea in Sri Lanka, India, Kenya and Indonesia are 0.167, 0.125, 0.052 and
0.008 respectively.
UNClAD (1979) estimates of price elasticity of demand for tea are: Eastern
Europe = 0.06, UK = 0.05, and other countries = 0.2.
According to the estimates of GriIIi et.aI. the price elasticity coefficients per-
to various rubber consuming countries are in the order of 0.2 to 0.3,
see Grilli, et. al., op. cit., p. 35.
Brooke, E.M. and Grilli, E.R., 'Commodity Price Stabilisation and the Develop-
ing Countries: The Problem of Choice', World Bank Staff Working Paper
No. 262, Washington: World Bank, 1977.
64
EFFECTS OF INTERNATIONAL TRADE
significant, it implies that supply shifts are the predominant cause of price
instability!"
Pearson Correlation Coefficient (r) between Deviation
from Trend of World Export Quantities and Prices for Tea and
TABLE 3
Natural Rubber, 1954-73 and 1970-80
Tea
Rubber
1954-73
1970-80
0.187
0.486'
0.193
0.631"
Notes:
Significant at the 90% level
Significant at the 99% level
Source:
Estimates
for 1954-73 are from Brooke et.al. op. cit. p.26. Coefficients for 1970-80 were estimated using quantity and unit value
data obtained from FAO, Trade Year Book (1981).
In the case of natural rubber, the correlation coefficient is positive and
statistically significant in both time periods under consideration. This shows
that shifts in demand are important generators of price instability. In view of
the high degree of income elasticity of demand (see above), it is not surprising
that demand for this commodity is quite sensitive to economic activity in the
consuming countries. This is seen by price peaks recorded in the years
1950-51, 55, 59-60 and 1973-74 (see Table A-i). Another important
destabilising factor on the demand side has been the U.S. stock pile operations. (By 1954 the total stock was 1,250,000 metric tons - almost 70 percent
of the world natural rubber in that year.) The periodic disposal of stocks acts
as a major source of market imbalance beyond the control of the natural
rubber producers.2"
"
2/
Insights gained through this type of empirical investigation are crucial in the
choice of an appropriate export stabilisation policy. For instance, when instability originates predominantly on the demand side, the twin objectives of
export price stabilization and export earning stabilization can be achieved
concurrently through international buffer stock operation. On the contrary,
when supply shifts are the major source of instability, price stabilization would
destabilize earnings, and therefore the solution must be found in appropriate
national action on the supply side. See, MacBean, op. cit., and IMF and IBRD,
The Problem of Stabilisation of Prices of Primary Products: A Joint Staff
Study, Washington, 1969.
Barlow, C., The Natural Rubber Industry: Its Development, Technology,
and Economy in Malaysia, Kuala Lumpur: Oxford University Press, 1978,
pp. 94—95.
65
PLANTATION AGRICULTURE IF1 SRI LANKA
For tea, the correlation coefficient is positive, but not significantly difprice oscillations
ferent from zero. Therefore, in the case of this
can be due either to demand shifts, supply shifts or both.
In view of the relatively low degree of income elasticity of demand,
short-run demand for tea in the major consuming countries can expect to be
highly stable. There are no inherent destabilising factors on the supply side
either. Being a "leaf crop", frequent occurrences of supply shifts due to
climatic changes and seasonality of production seem to be rather insignificant
for tea compared with other tropical beverages.21 Also the predominance of
scale plantations in tea production (mainly in India and Sri Lanka)
introduces an element of rigidity into the production schedule. A reduction
in output coming from large-scale plantation can be expected only in the case
of a prolonged and deep-seated price depression.
Given these peculiarities of demand and supply, shifts in supply or
demand are limited to random events which occur at distant intervals. A close
examination of the developments in the world tea market during the past
three decades support this view. There were three distinct price peaks during
this period: 1951-52, 1954-56, 1974-78 (see Appendix Table A-i).
The Impact of Price Movements on the Plantation Sector
This section focuses on the impact of export price movements on the
performance of the plantation sector, in particular on the levels of employment, wages and living standards of the workers employed in that sector. This
impact can take two major forms. Firstly, short-term price movements (price
instability) might result in parallel movements in the above mentioned variables with serious welfare implications for the plantation workers in the
short-run. Secondly, both price instability and long-run adverse price trend
could act as a major constraint on the future expansion and productivity
improvement in the plantation sector jeopardisirig future employment poAnother possibility might be various price manipulations by transnational cor-
porations (See, Wickramasekara, P., Transnational Corporations and the Tea
Export Industry of Sri Lanka, Bangkok: ESCAP (mimeo), 1982) which
2/
weaken the link between supply and demand forces. Five major transnationals
(Brooke Bond, Allied Brewers, Associated British Food, Unilever and James
Finlay) account for more than 80 per cent of world tea purchases, among them
one firm accounts for one—quarter of such purchases (See, l-Ielleiner, G.K.,
London: MacMillan. 1981,
Intra—Firm Trade and the Developing
p. 47). However, we do not yet have conclusive empirical evidence on the extent
to which they influence the market price determination.
Sarkar, G.K., Tea: Some Policy Issues, Discussion Paper No. 142, Institute
of Development Studies, Sussex, 1978.
66
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
tentiality. In what follows, these two aspects are discussed in turn under
separate sub-headings, short-term impact and long-term impact.
Short-term Impact
Estate Secor
Employment: The only continuous data series available on estate sector
employment in Sri Lanka is the one compiled by the Dapartment of Labour
on the number of workers employed in tea and rubber estates which employ
Labourers of Indian descent (Table 4). This series, which is compiled using
returns made available by these estates,1" has two major limitations. First,
employment in the small holder sector and in estates which employ only Sri
Lankan labour is completely left out, and there are strong reasons to believe
that employment patterns in these sectors tend bo be different from that of
large plantations which employ Indian labourers.2" Second, as column 2 of the
Table indicates, the area coverage of total number of estates reporting has
varied from year to year with a marked decline in recent
Therefore
part of the variation in the employment series is due to the fluctuations in the
sample coverage.
The first limitation is beyond our control, but the bias due to the second
limitation can be minimised by using labour per hectare (column 4), and not
the total employment given in the original source, as the indicator of labour
variation. This, however, does not reflect actual numbers employed, but the
available registered workforce which has remained constant throughout apart
from recent increases reflecting the priority given to the employment objective under state ownership. Price fluctuations have not affected the registered
workforce in any significant manner.
"
The coverage of this series for selected years is given below:
Percentage Coverage of the Total Area Under
Year
1950
1960
1970
1975
1978
Rubber
41.93
34.60
35.26
31.23
30.88
Tea
80.34
76.30
73.51
52.13
48.42
These estimates are based on the area figures of responding estates (Statistical Abstract, 1978: P. 104) and area under cultivation figures given in appendix Tables A—4 and A—5.
2/
3/
The data source used gives figures for female and casual workers too. In view
of the close similarity among these three series with regard to the time pattern,
only the series pertaining to male workers is used here.
Given the relative stability of the area under cultivation of both tea and rubber
(Appendix Table A—4).
67
PLANTATION AGRICULTURE IN SRI LANKA
Number of Workers on Tea and Rubber Estates
Employing Indian Labour (a)
TABLE 4
Extent under
Cultivation
Year
—
Workers
Registered
Number of
Workers
per hectare
reporting
estates (ha)
(1)
(2)
(3)
(4)=(3)/(2)
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
291,609
293,383
295,329
288,587
285,779
286,814
286,437
227,694
276,099
277,322
271,518
273,290
269,268
269,334
259,479
264,106
262,939
260,818
260,713
259,154
258,834
250,355
238,555
219,962
223,374
196,260
183,393
167,679
173,784
182,723
559,541
5g8,224
605,463
577,044
280,883
577,913
595,142
594,942
587,473
585,959
576,155
581,974
584,668
572,545
571,852
580,574
575,453
574,695
576,600
573,081
557,281
570,870
523,176
488,338
492,976
425,283
377,653
363,352
454,750
442,367
1.92
2.00
2.05
2.00
2.03
2.01
2.08
2.61
2.13
2.11
2.12
2.13
2.17
2.13
2.20
2.19
2.19
2.20
2.21
2.21
2.17
2.28
2.19
2.22
2.21
2.17
2.06
2.17
2.61
2.42
Source : Department of Census and Statistics,Statlstlcal Abstract, 1979, Table 56
(p.104)
Note: (a) Figures relate to the number of workers on estates furnishing returns.
68
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
Although the plantation worker is paid monthly, the calculation of his
pay is on a daily or hourly basis. Therefore, the possibility exists for em-
ployers to keep the same number of workers on the pay roll while varying the
number of working days/hours. Therefore the number of man-hours employed is a better yardstick of the level of employment than the number of
workers on the pay roll. Unfortunately this type of data is not available for the
entire period under study. The existing data series of average number of
hours worked per month in Wage Board trades, compiled by the Department
of Labour and reported in the Statistical Abstract, extend back only to 1964.
Table 5 presents data on the average number of hours worked during
the months of March and September by male workers employed in the tea and
rubber sectors, together with Colombo market prices of the two products.
Unlike the workers per hectare the average number of hours worked vary
drastically from year to year. This pattern confirms our contention that the
number of workers on the pay roll does not indicate the actual variation in the
level of employment. However, a comparison of the variations in the number
of hours worked with respective annual average market prices does not
indicate any noteworthy relationship for either product.
This again could well be due to the poor quality of data as employment
figures we used for average number of hours worked relate only to March and
September, which may not be representative of the entire year. More important is the fact that these figures relate only to male labour. Since, at least
in the case of tea, any immediate impact of prices should be felt in plucking
which is exclusively female work, a comparison of days/hours worked by
males with prices is inadequate. While these data limitations cannot be
ignored, there are in fact other reasons to expect a high degree of insensitivity
of estate sector employment to price variations in the short-run. Estates are
managed as long-term ventures. Regular upkeep is necessary to preserve the
long-term productivity and, therefore, a large number of male workers should
be employed on a continuous basis.
Although the available data do not lead to any firm conclusions, the
response of the management to price fluctuations could take several forms:
1. In times of high prices, resorting to coarse plucking of tea and
slaughter tapping of rubber which increase the harvesting labour
force and in turn lead to higher use of labour in processing.
2. In times of low prices the tendency would be to cut back on labour
costs for upkeep and maintenance work.
3. Such cut backs would mostly affect unregistered casual labour from
villages.
Such possible drops in the number of days of work offered as a measure
to cut down labour costs led to government intervention through enactment
69
0
149.27
134.18
143.08
131.11
158.97
117.58
135.31
118.75
152.98
131.00
155.61
161.20
1967
1968
3.90
3.02
3.88
3.45
3.72
4.19
4.51
4.45
5.77
7.91
7.70
21.51
16.74
5.38
5.64
March
13.27
14.39
6.50
6.66
10.70
3.81
4.18
4.43
4.71
3.53
4.06
3.74
3.-21
553
5.40
September
Colombo Market
Price (Rs. per kg.
all grades)
•
Including both cultivation and processing.
Source: Number of hours worked — Department of Census and statistics,
(Statistical Abstracts) (Various Issues)
Prices — Central Bank of Ceylon Annual Reports (Various Issues).
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1966
145.03
136.47
134.28
136.19
139.18
145.28
131.10
123.21
136.31
146.98
143.07
162.40
148.02
152.51
152.41
157.16
151.79
159.36
1964
1965
September
March
Year
TEA
Average number of
hours worked
March
2.60
2.56
2.05
1.78
1.89
2.34
2.12
1.76
1.63
2.20
3.17
5.62
4.13
4.30
5.92
September
140.74
144.52
114.17
144.46
120.96
139.85
133.74
120.46
118.20
155.36
116.72
142.91
167.30
168.20
156.90
164.32
172.24
157.70
165.81
143.70
152.99
158.34
170.49
158.73
150.30
170.47
165.82
174.35
168.36
176.17
.
1.81
2.71
2.67
7.10
4.41
4.81
7.61
2.36
2.57
1.87
1.57
1.98
2.40
1.87
1.72
September
Colombo Market Price
(Rs. per kg. RSSI)
March
Average number of
hours worked
RUBBER
TABLR 5. Average Number of Hours worked by Male Workers in
the Months of March and September in Tea and Rubber Sector*
and Market Prices of Produce, 1964—1978
>
C
0z
-I
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
of laws compelling the estates to provide a minimum number of days of work.
Thus in March 1974, the minimum number of days of work was set by law at
109 and increased to 120 in
This safeguard, however, cannot have
a bearing on unregistered casual labour from villages.
Wages and Incomes: Except during the sudden rise in export prices
during the Korean War period, until recent wage revisions in 1977 and 1978,
wages have remained relatively stable, the small gradual increase reflecting
mainly the movements in the cost of living index. This insensitivity of wage
rates to price variations is partly explained by the nature of the existing
mechanism of wage determination. The wages in the plantation industry are
controlled by tripartite Wages Boards decisions.
Because of political pressure and socio-economic considerations, the
government has always used this control over the Wages Boards in order to
prevent wage reduction even at times of drastic price falls. Throughout the
post-war period there was only one occasion when the government approved
a wage reduction. This was in 1949, when due to very low prices prevailing
for rubber, the government agreed to the suspension of the statutory minimum wages in respect of small holder estates of less than 10 ha.21
Though the price fluctuations did not affect the basic wage rate, it is
likely that they had an effect on the incomes of estate workers. As mentioned
earlier, short-term adjustments by the management in terms of reduced work
days/hours and reduced number of workers could have affected total family
incomes. The lack of suitable data does not permit quantification of such
effects.
Bastian, S., The Tea Industry Since Nationalisation, Centre for the Study of
2/
Society and Religion, Colombo, 1981.
Fernando, N.A., 'A Study of the Impact of the Land Reform Laws of 1972
and 1975 on Tea Production in Sri Lanka', Staff Studies, Central Bank of
Ceylon. 10 (1 and 2), 1980, PP. 54—84.
71
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 6
Minimum Wage Rate in the Tea and Rubber Sectors
(Male Workers)
Minimum Average Rate
of Wage (Rs. per day)
Year
Tea
Rubber
(1)
(2)
(3)
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1.55
1.79
2.18
2.20
2.23
2.27
2.35
2.38
2.48
2.42
2.40
2.41
2.44
2.47
2.52
2.55
2.55
2.58
2.96
3.01
3.05
3.10
3.50
3.77
4.02
4.24
4.29
6.68
8.82
1.41
1.73
1971
1972
1973
1974
1975
1976
1977
1978
2.33
2.40
2.43
2.41
2.43
2.53
2.57
2.57
2.55
2.56
2.59
2.62
2.67
2.70
2.70
2.71
3.01
3.06
3.10
3.15
3.30
3.82
4.07
4.29
4.34
9.38
15.51
Source: Department of Census & Statistics, Statistical Abstract
72
(various issues).
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
The Small holder Sector
The
analysis so far relates only to the organised estate sector. The
paucity of data prevents us from extending the analysis to cover the smallholder sector.
A widely held belief is that small holder producers of plantation crops
possess a higher degree of flexibility in production operations than the organised estate sector the operation of which involves an unavoidable "fixed
overhead" If this is the case, the level of employment is likely to shift in
sympathy with price changes. Given the low level of monthly earnings which
does not permit a surplus even in periods with more favourable price levels,
such variations would have serious welfare implications for people involved in
the smallholder sector.
The magnitude of this impact, however, depends on several interrelated
factors such as the prevalence of the practice of hired labour employment in
the production process, the level of the cost of production, and the existence
of alternative employment opportunities or other income sources. If hired
labour use is more prevalent, unemployment caused by the retrenchment of
labour during periods of depressed market prices tends to be more severe
than where predominantly family labour is employed. A relatively low level of
cost of production would assure the continuity of production even at relatively low prices. If there are alternative employment opportunities or other
alternative sources of income such alternatives would absorb the adverse
impact of price instability on employment and the standard of living. Thus the
impact of price instability on the smallholder sector can be meaningfully
studied only through a careful field survey.
Small holdings (defined as those below 4 ha) constitute 21 per cent
and 31 per cent of the total tea and rubber area of the Island. Hired labourers
on amall holdings are not covered by minimum wages legislation and laws
pertaining to minimum days of work. Consequently, during times of low
prices this category of workers are severely affected by loss of work opportunities and by low wages. Given the fact that these workers come from the
poorest segments of the villages, such short term income effects can lead to
serious welfare implications.
Long-term Impact
Existing employment estimates, show that total employment in the
estate sector has stagnated throughout the post-independence period. According to Snodgrass' estimates,2" the total number employed in this sector
For a succinct discussion on various related arguments see Peiris, G.H.,
1972: op. cit.
2
/ Snodgrass, DR., Ceylon: An Export Economy in Transition, Homewood,
Illinois, 1966.
73
PLANTATION AGRICULTURE IN SRI LANKA
increased
from 516 thousand in 1950 only to 560 thousand in 1960. Ac-
cording to Central Bank estimates, this number varied in the narrow range of
422 thousand to 443 thousand during the ten-year period 1971 to 1980!"
As a result, the relative contribution of this sector to total employment in the
economy declined from 26.80 per cent in 1950 to 21.95 per cent in 1975
and, again to 17.38 per cent in 1980. While the number of employment
opportunities stagnated, the quality of employment in this sector also showed
a dismal record, compared with the other sectors of the economy.2"
This poor employment record is a reflection of rather unsatisfactory
expansion in the activities of the plantation sector over the past three decades.
The adverse impact of price movements on the expansion of the
plantation sector is not amenable to a simple statistical test. Investment
cannot be considered merely as a function of price changes, since other
considerations tend to complicate investment decisions. For instance, the fear
of nationalisation pervaded the plantation economy from the late 1950s until
1975, with considerable adverse repercussions for productivity
improvement.31 Similarly, the operation of.the replanting subsidy schemes
would have further weakened the link between market prices and investment
decisions. However, by a priori reasoning, in the light of existing statistical
evidence, we can argue that instability and unsatisfactory trend of export
prices retards the expansion of the plantation sector at least in two ways:
First, investmnet programmes often get distorted by the uncertainty
generated by price fluctuations. It is irrational to argue that producers will
base their profitability expectations on the current prices, for cultivation of
However, if the price trend is
perennial crops is a long-term
continuously on the decline and there are no signs of its reversing, then
investment will be discouraged. This view is at least supported by Sri Lanka's
experience under both tea and rubber replanting programmes. During the
initial period of the operation of these programmes, until the early 1960s,
replanted acreage increased continuously. Since then the trend has been on
Snodgrass's estimates are based on Wages Boards data; Central Bank figures
(given in Economic and Social Statistics) are for emoloyees registered under
the Employees' Provident Fund. Neither estimates give a full coverage of
2
/
plantation sector employment.
Bastian, 1981 op. cit., Jayawardena, K., 'Basic Needs, Workers' Organisation,
and Labour Policies in the Plantation Sector', in ILO—ARTEP (1980), Employ-
ment, Resource Mobilisation and Basic Needs Through Local Level Planning in Sri Lanka, Bangkok, 1980.
Robinson, D., Report on Conditions of Estate Workers, Ministry of Planning
3/
and Economic Affairs (mimeo), Colombo, 1977.
Fernando, NA., 1980, op. cit.
Caine,
Sir S., Prices for Primary Commodities, Hobart Papers No. 24:
Institute of Economic Affairs, London, 1966.
74
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
the decline despite several upward revisions in the amount of the subsidy
payment. With the improvement of market prices since the mid 1970s, a mild
upward trend has been recorded (Tables A-4 and A-5). A recent survey of
smaliholder rubber
has in fact found price uncertainty as a major
factor which discourages replanting programmes.21
Price uncertainty can induce producers to shift to other crops which
exhibit more favourable price trends at the time. For instance on the basis of
the information collected through field surveys the study group of the Rubber
Master Plan reports, "analysis of changes in land use shows that some 16,000
ha. out of the total estimated rubber land of 268,700 ha. was (sic), at the time
of survey, out of production f or one reason or other. Some of this land had
been lost to tea (1616 ha.) and coconut (3374 ha.) or had been lost to other
non-specified land use. Shifts into other crops that had occurred was (sic)
justified on the basis that they were more
Furthermore, an adverse price trend, unless offset by compensatory
movements in cost of production, corrodes producer margins. A declining
producer margin in turn retards the expansion of the plantation sector in two
ways. On the one hand, it induces producers to shift over to more profitable
sources of investment when profit margins are low the industry is especially
sensitive to variations in prices. It is more likely too that marginal lands will go
out of production when not even the variable cost is covered. On the other
hand, low margins reduce producers' cash flow and hence limit investment for
future expansion of the industry. This limitation would be more acute in the
case of the private estate sector which depends overwhelmingly on internally
generated funds rather than on government subsidies for investment
Table 7 presents estimates of gross profit margin for the two industries.
In general, a dramatic decline in profit margins over the period is evident.
Moreover, for both industries the behaviour of the margin is more closely
related to the price trend than to the variation cost of production. The rise
Jayasena, W.G. and H.M.G. Herath, Socio—economic Conditions of Rubber
Smaliholiders in Sri Lanka. A Project Study of the Ratnapura, Kalutara.
and Kegalle Districts, Agrarian Research and Training Institute (mimeo),
2
/
3/
/
Colombo, 1982, P. 92.
This survey covers Ratnapura, Kegalle and Kalutara Districts which cover 68
percent of the total rubber cultivated area. The sample chosen consists of 900
smallholder producers — 300 from each district.
Commonwealth Development Corporation, Report on the Rubber Industry
Master Plan Study, Vol. V — Economic Studies, London, 1979, p. 7.
For instance, in 1980 the replanting subsidy covered only 25 percent and 7.9
percent of the replanting expenditure of Janatha Estates Development Board in
the rubber and tea sectors respectively. The two percentages for the State
Plantation Corporation were 28.7 percent and 7 percent. See, Lakshman, 1982,
op. cit.. p. 40.
75
PLANTATION AGRICULTURE IN SRI LANKA
in wage rates as a result of continuing inflation, escalation of cost of imported
inputs and various forms of government taxation are the factors behind
unabated increase in cost of production.'t and most of these factors are
beyond the control of the plantation sector. However, had productivity increased at a satisfactory rate, increase in unit cost of production could have
been arrested. This has not happened. After the production peak recorded in
1965, the trend of tea production was on the decline (Table A4.) Rubber
production showed a satisfactory growth rate during the period from the late
1950s until the early 1970s, but since then the growth has been rather slow.
As we have already noted, adverse price movements, by retarding replanting
and other measures of productivity expansion, have contributed towards this
pattern of low productivity growth.
There are reasons to believe that producer margins in the smaliholding
sector tend to behave in a different manner from those of the estate
While wage labour accounts for the biggest share in the cost structure of the
estate sector, family labour accounts for a considerable share of the total
labour requirements in the smallholder sector. Various other cost items such
as cost of machinery and the upkeep of factory buildings never enter the
production cost calculations of the latter. Moreover, the smallholders are
generally outside the scope of income and other direct taxes which depress
profit of estates. These cost advantages would lead to a respectively higher
profit margin for them at given market prices. However, on the receipt side
they are at a relative disadvantage mainly because of the intervention of
middlemen in the marketing of the
Jogaratnam, T. et. al. Report on Pricing and Subsidy Policies Affecting Tree
Crop Production in Sri Lanka, Study prepared for IBRD, University of
Peradeniya (mimeo), 1979.
2/
3/
Lakshman, W.D., Terms of Trade, Public Policy and Economic Development of Ceylon, 1948—58, Unpublished Ph.D. Dissertation, Oxford University,
1973.
Ministry of Plan Implementation, Report of the Committee Appointed to
Study the Constraints and Problems of the Tea Small Holder Sector,
Colombo, (mimeo), 1980, pp. 11—12 and Jayasena and Herath, op. cit..
pp. 68—73.
76
EFFECTS OF INTERNATIONAL TRADE MoVEMENTS
TABLE
7
Tea and Rubber: Cost, Price (As. per kg.) and Gross
Producer Margins 1950, 1960, 1965 and 1970-80
Tea
Year
Colombo
Market Cost of
Price
Produc—
tion
(all
tea)
(1)
(2)
(3)
1950
1960
1965
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
5.21
4.43
4.03
3.77
4.14
4.41
4.41
6.72
6.90
9.25
16.34
14.26
12.30
18.33
3.03
3.21
3.23
3.35
3.39
3.52
4.47
5.55
6.72
7.44
7.98
10.50
12.70
15.50
Note: a) Producer Margin =
Rubber
Gross
Producer
Gross
Colombo
Producer
Market
Cost of
Margin
Margin
Price
Production as of %
as % of
(RSS))
Cost of
Cost of
Production
Production
(4)
(5)
71.95
38.01
24.77
12.54
22.12
25.28
3.41
2.81
2.01
2.01
1.74
1.78
2.59
—1.34
2.82
2.88
4.34
4.53
6.39
9.15
10.62
21.08
2.68
24.33
104.76
35.81
—3.15
18.26
(6)
(7)
—
—
1.65
1.61
70.30
24.84
32.24
1.52
1.62
1.68
2.18
2.74
2.76
3.28
3.75
4.80
11.00
10.71
7.41
5.33
18.81
2.92
4.35
32.32
20.80
44.38
—16.82
—0.84
— Cost of Production) X 100.00
Cost of Production
Source :1950 and 1960: Snodgrass, op.cit Tables 6—7 and 6—11.
(Price
For rest of the years, Central Bank of Ceylon, Review of the Economy
(various issues).
77
PLANTATION AGRICULTURE IN SRI LANKA
Table
8 presents unit cost, price and profit margin for the rubber
smaliholder sector calculated on the basis of the findings of the above cited
survey on the rubber smallholder sector.3' A comparison of these estimates
with the estimates
in Table 7 shows that smallholders enjoy a relatively
higher gross profit margin. For the three districts, this estimate is closer to 40
percent whereas the estimate (1980) for the total rubber sector is negative. It
seems that relative cost advantages have compensated for price disadvant-
ages. If this is the case one can argue that the smallholder sector is less
affected by adverse price movements compared with the estate sector.
However,as we have already mentioned, there are other factors which affect
the nature of this relationship.
TABLE 8
Rubber Small holder Sector: Cost, Price (Rs. per kg.)
and Per Cent Gross Producer Margin, 1981
Price
District
Costa)
Gross
Margin '
6.90
6.88
(1) Ratnapura
(2) Kalutara
(3) Kegalle
Note :
7.01
4.96
4.94
4.95
(%)
39.11
39.27
41.62
a) Includes cost of family labour estimated using existing market
wage rates.
b) method of calculation is as in Table 7
Source: Compiled using tables 3.21, 4.10 and 4.12 of Jayasena and Herath,
1982, op.
'I
Jayasena
cit.
and Herath, 1982, op. cit.
78
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
Policy Options
As with the case of most "small" LDCs which depend on plantation
crops, Sri Lanka's ability to reduce the degree of price instability or to reverse
the adverse trend through unilateral actions seems to be rather limited. These
price movements originate exogenously, in line with international trade
movements. Therefore, as far as the objective of reducing price fluctuations
through direct market intervention is concerned, Sri Lanka's ability is limited
only to supporting international collective attempts. Indeed, throughout the
post.independence period, Sri Lanka has shown an active interest in this
sphere."
The formulation of international commodity agreements (ICAs) for the
major primary commodities including tea and rubber, has been a major issue
in international trade policy discussions under the auspices of the UN,
throughout the post-war period but there was little progress.2' Despite this
poor historical record, interest in this sphere has taken on renewed impetus
in recent years with the adoption of the Integrated Programme of Commodities (IPC) in
To date, however, progress in implementation of the proposed IPC
leaves no room for optimism. The international control attempts, even if they
become fully successful, do not provide a long.term solution to the commodity
problems faced by a given LDC. They are merely interim measures aimed at
facilitating appropriate national action.
The impact of price fluctuations on the plantation sector is not a matter of
the degree of such fluctuation. It is mainly the structural rigidities and the low
productivity of the plantation sector which make this sector more vulnerable
to adverse repercussions. Therefore, in Sri Lanka, a concerted development
strategy aimed at reviving this sector should incorporate two pivotal policy
objectives. These are: (a) the reduction of cost of production of plantation
produce through the appropriate utilisation of improved methods of cultivation and production, and (b) the diversification of the product mix of
plantation crops to gain price advantages which have been generated by
changing demand patterns in international commodity markets.
As was noted earlier, a major factor which limits the productivity improvements in the plantation sector is the low producer margin. On the other
hand, low producer margin is a result of low productivity. Given the practical
"
2
/
Chanmugam, C., 'Inter—Governmental Consultation on Tea and Rubber',
Marga, 3 (2), 1976, PP. 69—82.
Brown C.P., The Political Economy of Commodity Control, MacMillan,
London, 1980.
Lakshman, 1982, op. cit.. pp. 2—4.
79
PLANTATION AGRICULTURE IN SRI LANKA
limitations of lowering taxation" and the rigidities of other cost elements, the
only hope of breaking this vicious circle lies in a well conceived production
subsidy scheme. A merit of a subsidy scheme is that its burden on the
government budget can be relieved through foreign financing. Smallholder tea
expansion schemes in African countries" and the Accelerated Rubber Replanting Project in Thailand31 are considered as examples of successful utilisation of this financial avenue; With the adoption of Tea and Rubber Master
Plans and the Small holder Rubber Rehabilitation Schemes, Sri Lanka has
already taken initial steps in this direction.
As far as the second policy option, diversification of the product mix, is
concerned Sri Lanka's achievements so far have not been so satisfactory. For
instance, in the case of tea, bulk tea still accounts for nearly 82.5 per cent of
the total tea
of the economy. Therefore, further diversification into
more processed forms of tea such as packeted tea, tea bags, instant tea and
scented tea should be an important policy objective. As Sri Lanka has been
successful in achieving a higher degree of market
and
reducing the direct multinational corportation involvement in the country's
tea export trades,6' prospects for the expansion of these product lines
seem to be more favourable now, than was in the 1970s.
In the case of rubber, sheet rubber and latex crepe still account for nearly
88 percent of Sri Lanka's total rubber exports. So there is an unexploited
opportunity for the expansion of the exports of block rubber and technically
specified rubber which fetch higher prices. Unlike the case of tea, there are no
market barriers imposed by MNC involvement since "rubber is sold in international markets under conditions approaching perfect
'I Lakshman, 1982, op.
2/
cit., p. 53.
Sarkar, 1978, op. cit., p. 7
Grilli, et. al., 1980, op. cit., p. 77.
Central Bank of Ceylon, Review of the Economy, 1980.
Lakshman, 1982, op. cit., p. 53.
/
Wickramasekara, op. cit., p. 29.
Percentage contribution (1977) of block rubber and technically specified
rubber in total ruber exports of the major rubber producing countries are as
follows:
Malaysia 33.6
Indonesia 62.2
Thailand 42.0
Sri Lanka 1.8
8/
Source: Grilli et.al., 1980, op.cit., Table 547.
Grilli, et.al., p.35.
80
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
TABLE A—i
Tea and Rubber Prices in the World Market
Tea (US $ MT)a
ConstantC
Current
(1979)
Year
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
—
—
1,186
1,188
1,237
1,633
1,654
1,703
1,497
1,523
1,564
1,530
1,443
1,456
1,343
1,379
1,327
1,325
1,345
1,100
1,091
1,133
1,111
1,148
1,128
1,436
1,399
1,511
2,767
2,219
2,221
2,254
4,161
4,069
4,418
5,938
5,928
5,893
5,007
5,060
5,196
4,968
4,655
4,758
4,360
4,420
4,121
4,077
4,076
3,560
3,497
3,294
2,986
2,800
2,307
2,358
1,996
2,116
3,608
2,513
2,221
—
Rubber (Singapore $ MT)b
ConstantC
Current
(1979)
2,385
3,738
2,118
1,487
1,484
2,517
2,133
1957
1,769
2,239
2,385
1,842
1,724
1,597
1,502
1,544
1,442
1,192
1,171
1,539
1,244
1,016
935
1,667
1,820
1,346
1,931
2,007
2,256
2,809
3,068
9,938
13,112
7,252
5,312
5,396
9,021
7,380
6,739
5,877
7,436
7,744
5,942
5,634
5,185
4,815
4,794
4,433
3,611
3,791
4,934
3,615
2,730
2,278
3,409
2,988
1,921
2,703
2,617
2,554
2,809
—
Sources: Tea: World Bank, Commodity Trade and Price Trend (1980)
Rubber: International Rubber Study Group, Rubber Statistical
Notes:
Bulletin (Various issues)
(a) Prices of Sri Lankan tea at London auctions
(b) RSS No.1 Singapore spot price
(c) Current prices have been deflated by an all — traded commodity
index
81
PLANTATION AGRICULTURE IN SRI LANKA
TABLE A—2
Year
and Rubber: Colombo Market Prices (Rs.per kg.)
Tea
(All grades)
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
5.21
4.79
4.32
4.74
6.44
5.43
5.43
4.59
4.27
4.56
4.43
4.25
4.10
3.88
3.90
4.03
3.55
3.48
4.03
3.55
3.77
4.14
4.41
4.41
6.72
6.90
9.25
16.31
14.26
12.30
18.33
Rubber
(RSS No.1)
3.41
4.73
3.04
2.97
2.44
2.81
3.19
2.55
2.05
2.75
2.73
2.22
2.16
2.04
1.98
2.01
1.96
1.74
1.94
2.29
2.01
1.74
1.78
2.59
2.82
2.88
4.34
4.53
6.93
9.15
10.62
Sources: 1950—1970, Central Bank of Ceylon, Annual Report (1974, Table 54)
1970—1980, Central Bank of Ceylon, Economic and Social Statistics
of Sri Lanka. (1979 June, and 1981 June).
82
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
TABLE A—3 Average Colombo Auction Prices of Major Categories
of Tea, 1970—80 (Rs. per kg.)
1-11gb grown Medium grown Low grown
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
4.59
4.81
4.96
7.21
7.15
9.71
16.71
14.24
13.66
18.43
3.86
4.10
3.97
6.24
6.36
8.75
15.12
10.85
10.50
15.90
4.1
4.39
4.03
6.75
7.26
9.27
16.97
17.36
12.57
20.26
Total
4.14
4.41
4.41
6.72
6.90
9.25
16.31
14.26
12.30
18.38
Source: Central Bank of Ceylon; Economic & Social Statistics of Sri Lanka,
Vol. IV No.1 (1981) and Vol.2 No.1 (1979).
83
PLANTATION AGRICULTURE IN SRI LANKA
TABLE A—4
Year
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
Tea: Area Cultivated, Production and Yield per Hectare
Area under cultivation
(ha)
Production
(1000 M.T)
Yield per
hectare (kg)
227,138
229,671
231,582
232,490
232.998
269,680
230,551
231,001
231,862
234,676
235,555
237,814
239,319
237,804
239,671
240,611
241,476
242,435
241,899
241,504
241,902
241,770
241,962
242,405
242,294
241,980
280,681
242,115
243,006
244,203
244,813
139.2
148.3
144.0
155.5
166.6
172.7
170.6
180.7
187.7
187.7
197.5
206.9
212.2
220.2
218.9
228.6
222.7
221.1
225.2
220.0
212.6
218.2
213.0
211.6
204.4
213.6
196.6
208.5
198.9
206.4
191.3
613
646
622
669
715
640
740
783
810
799
837
870
887
996
914
951
923
913
931
911
879
903
884
873
844
883
817
861
821
846
779
Source: The Tea Controller: Administration Reports
84
EFFECTS OF INTERNATIONAL TRADE MOVEMENTS
TABLE A—5
Year
Rubber: Area and Production
Area under cultivation
(ha)(actual)
Replanted
in each
Year
Production
(1000,MT)
265,213
265,300
265,800
266,100
266,800
267,532
268,783
267,435
269,123
270,352
270,400
230,931
230,769
229,997
230,432
230,834
230,384
230,540
230,413
230,448
230,178
229,957
229,555
228,673
228,099
227,730
227,073
226,659
226,420
226,696
227,481
1,608
1,751
1,827
2,348
7,472
8,764
9,953
9,809
8,355
7,503
7,244
7,565
7,123
6,442
5,487
5,061
4,689
4,083
5,156
4,892
4,145
3,431
3,539
2,945
2,864
3,230
2,550
2,616
3,226
4,168
5,436
115.5
106.8
98.2
100.5
95.5
95.5
95.0
100.0
101.8
93.2
99.1
97.7
104.1
105.0
111.8
118.7
159.1
143.6
149.1
151.4
159.5
141.8
140.5
115.0
132.0
148.8
152.0
146.1
115.6
153.0
133.1
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
Sources: Central Bank of Ceylon, Annual Report and Review of the Economy
(various issues).
85
Four
LABOUR AVAILABILITY AND LABOUR DEMAND IN THE PLANTATION SECTOR
Recent Trends
M. Sinnathamby and P. Wickramasekara
The plantation sector of Sri Lanka employs around 530,000 persons
(1980) which is about 18 percent of the total employed population in the
country." The tea sector accounts for the bulk of this employment. During
the last three decades or so, substantial productivity gains have been experienced by the tea and rubber sectors but crop acreages have been more or
less stagnant. Adverse international trends in export demand and prices have
been a recurrent feature in recent decades. The land reform movement of the
1970s has brought a sizeable share of the plantation crop sector under direct
state control. The objective of the present paper is to examine the problem of
labour imbalance in the plantation sector against this background. The first
two sections deal with labour supply and demand aspects while the third
section considers the alleged imbalances. Next, strategies adopted by the
estates to deal with the problem are outlined. The final section examines the
implications of the emerging situation for labour households.
In recent years, attention has been drawn to the problem of labour
shortages as a production constraint in the plantation sector. This situation
has especially been observed in regard to plucking labour in the tea sector. At
the same time, estates in certain areas have experienced a labour surplus,
leading to unemployment and underemployment of labour. In view of the
larger share of estates in tea cultivation, the labour imbalance problem has
been particularly felt in this sector.
Discussion
in this paper is confined mainly to the estate sector.
87
PLANTATION AGRICULTURE IN SRI LANKA
A comprehensive analysis of this topic is a subject for a major study
involving intensive field research. Such a study would have demanded larger
resources than available to the authors. The present paper therefore, mainly
draws upon several previous works, supplemented by limited field inquiries.
The major studies are the Tea Master Plan Study,1' National Institute of
Business Management Study of the Nuwara Eliya District21 and the Sri Lanka
Foundation Institute survey data on tea and rubber estates (SLFI,
Records of the Janatha Estates Development Board (JEDB) pertaining to the
labour situation in the Nuwara Eliya and Kandy districts were also consulted.
In addition, discussions were held with several JEDB officials and estate
managers. We have concentrated on the tea industry since the problem of
labour imbalance is more acute here than in other plantation crops.
State management of the bulk of the estate acreage has led to more
systematic collection of production and labour data. In the course of our
analysis however, we noted that the data collected on a routine basis by these
agencies were not the best suited for meaningful economic analysis. The
accuracy of reported labour availability data was also questioned
the TMP
study. The quality of data collected by annual employment surveys of the
Department of Labour is also limited as they pertain to estates employing
labourers of Indian descent only and their coverage also has declined recently.
Improvements in the system of data collection and processing are an urgent
need. Little is known of the condition of estates which still remain private
hands.
Supply of Labour
Categories of Labour
Plantation labour can be categorised according to several criteria.
(a) Ethnicity—The major division between Tamil labourers of Indian
origin and Sinhalese labour. Import of cheap unskilled labour from South
India was resorted to by British planters during the nineteenth and early
twentieth centuries. They form the bulk of the permanent labour force in the
tea sector.
'I Canadian International Development Agency (CIDA), Tea Master Plan Study
(IMP): Position Paper No. 4, 1987 and Tea Master Plan, Vols. 1—VI;
2/
3j
1979/80.
Plantation Labour Situation In Nuwara-Eliya District, Vols.I and II,
NIBM,
Colombo, 1978.
This data was kindly made available by Dr. D. Wesumperuma (Director) and Mr.
Sudatta Ranasinghe (Research Officer) of the SLFI.
88
AND DEMAND
LABOUR
(b) Residence—Labour resident on the estate itself and non—resident
labour are the two major groups. This division broadly corresponds to the
ethnic difference since practically all of the immigrant Tamil Labourers are
resident while village labourers are non-resident. About 80 per cent of the
work force resides on the estates. In the Nuwara-Eliya region the resident
proportion is as high as 95. per cent.1'
(c) Conditions of Employment—The plantation workers may also be
classified into permanent, temporary and casual categories. According to
Table 1, 83.3% of the workers are permanent while the casual workers form
about 12% of the workforce. Workers who are not registered are termed
'casual'. But if they report for work regularly (218 days or more a year) for
two or three years, they are eligible for registration. Once registered, the
employers have an obligation to provide them with a minimum number of
work days per month. It is a common practice for employers to rotate
individual casual workers in such a way as to deny them eligibility for registration. The plantation owners therefore, find it advantageous to maintain a
relatively large pool of casual labour.
(d) Sex — There is a high degree of task differentiation in the tea industry
with plucking done almost exclusively by female labour. Even in the case of
rubber, females are very important for tapping. The more arduous or physically strenuous tasks of pruning, forking, weed control, manuring, ridging,
etc. are done by males. The proportion of female workers is highest in the tea
sector at 53% of total labour. Females comprise 52.7, 43.5 and 32.4 in tea
rubber and coconut sectors respectively (Table 1).
Factors affecting supply of labour
It is useful to distinguish between the total stock of labour and the actual
supply of labour during a given period of time. While the resident or
registered labour force can be readily quantified, the casual labour force is
more volatile. Actual labour availability will be governed by the total
potential supply, labour force participation and labour turnout among other
things. Since the two major components of the labour force are resident Tamil
labour and village labour, it is necessary to discuss these components separately.
Resident Tamil Labour
The crucial importance of Tamil labour for the plantation sector was
mentioned earlier. The total number available depends on the total population and its regional and age and sex distribution, repatriation and outmi-
gration.
Central Bank of Ceylon, Social and Economic Statistics: Sri Lanka, Colombo, 1980.
89
PLANTATION AGRICULTURE IN SRI LANKA
In 1971, estate population formed 9.2 per cent of the total population
with Tamils of Indian origin accounting for 82 per cent of this. Four-fifths of
them lived in five districts, namely, Kandy (24.4%), Nuwara Eliya (20%),
Badulla (18.8%), Ratnapura (9.6%) and Kegalle (6.1%) according to the
Population Census of 1971.
The growth of the estate Tamil labour population has been slow and this
may be due to lower birth rates resulting from higher levels of participation in
economic activity and unsatisfactory health and other welfare facilities. The
different ethnic background and the fact that the bulk of them were not given
citizenship till recently are contributory factors. This labour group has been
subject to unionisation for some time but the bargaining power of the unions
has been low due to their weak position in the political arena. The Tamil
labourers have restricted mobility for several reasons: their different ethnic
background, non-citizenship and absence of an ordinary rice ration book have
been important in this context."
TABLE 1 A.
No. of Employees — Permanent, Temporary
and Casual
Permanent Temporary
Casual
Learners
Total
Tea Cultivation
Rubber
Cultivation
Coconut
Cultivation
Total
356,328
20,441
53,719
762
431,185
61,145
1,903
5,199
115
68,362
7,041
1,094
2,102
41
10,278
424,514
23,438
61,020
918
509,825
" Richards, P.J. and Gooneratne, Wilbert, Basic Needs, Poverty and Government Policies in Sri Lanka, ILO, Geneva, 1980.
90
9,468
435
216,924
29,295
3,275
249,494
194,431
38,197
6,801
239,429
Tea
Rubber
Coconut
Total
431,185
68,362
10,278
509,825
Female
227,286
29,730
3,331
260,347
203,899
38,632
6,947
249,478
10,362
435
56
10,853
Total
Male
All Employees
Female
Source: Department of Labour, Annual Employment Survey 1977.
10,049
146
Male
/
Female
Young Persons
Number of Employees by Sex
Male
Adults
Table 1 B.
z
t,1
z
PLANTATION AGRICULTURE IN SRI LANKA
The pattern of distribution of the Tamil estate labour population has
been affected by several factors over the past two decades or so.
(a) Repatriation—Repatriation was common during the l930s, but
slowed down later and it was only with the Sirima-Shastri Pact of 1964 that
a fresh start was made. The actual repatriation programme was implemented
in 1968 and has gathered momentum since the beginning of the 1970s. By
the end of 1981, according to the Central Bank, the number issued with
Indian passports had risen to 381,326 of whom 285,000 adults had left the
island.
(b) Land reform programmes of 1972 and 1975—The post—reform
organisation of estates vested in the Land Reform Commission took several
forms. A number of state and semi-state agencies and cooperative organisa-
tions were set up to manage the estates taken over. The USAWASAMA
(upcountry cooperative organisation) and the Janawasas (collective farms)
had cooperative forms of management. Non-citizen Tamil workers were not
eligible for membership of these cooperatives. The National Agricultural
Diversification and Settlement Authority (NADSA) which planned for settlement of families on 24,000 acres of marginal land also displaced some Tamil
workers (about 1,400) who were non-citizens.1" The bulk of the acreage and
the most productive estates came under the two state agencies-the JEDB and
the SPC and the labourers resident on these were not displaced.
(c) Communal disturbances of 1977—These disturbances resulted in
outmigration of labourers to Tamil—populated areas in the north and the
eastern regions or to more secure areas within the plantations, though the
exact number involved is not known. They may also have acted as an
inducement to outmigration from the country.
As a result of all these developments, the size of the estate Tamil
population in Sri Lanka has undergone significant changes between 1971 and
1981. They numbered 933,500 at the Census of 1981 which was 6.3 per
cent of the total population of Sri Lanka as against 9.2 per cent in 1971.
There has been a decline in the absolute numbers as well as in their share of
the total population between the two census years. This change is also
reflected in the distribution of estate Tamil population in the different districts
of Sri Lanka. In all districts excepting Nuwara-Eliya, the proportion of estate
Tamil population has declined between the two years. In the Nuwara—Eliya
district it has risen from 56.5 per cent to 59.8 per cent indicating net
migration of people from other districts.21
Coordinating Secretariat for Plantation Areas, Memorandum, Kandy, May 1980
2/
and Department of Labour, Annual Employment Survey, 1977, Colombo.
Census and Statistics Department, Census of Population and Housing: Sri
Lanka, 1981, Preliminary Release No. 2, Colombo, February 1982.
92
LABOUR AVAILABILITY AND DEMAND
Village Labour Supply
Village labourers have been actively involved in estate work for a considerable time although they were averse to being permanent residents on the
estates." The supply of village labour depends on several factors. The degree
of landlessness and the relative absence of gainful employment opportunities
within the village operate as "push" factors while high wages relative to
village wage levels and other incentives may operate as "pull" factors. The
supply of village labour also fluctuates seasonally. During peak periods of
paddy cultivation, the numbers offering themselves for estate wage work
appear to fall. The general trend has been for village labour to participate
increasingly in estate work. This tendency has been pronounced since the land
reforms and the drop in available labour on estates due to repatriation. The
proximity of the villages to the estate areas also is very important.
Wage Rates and Other Incentives
Daily wage rates on estates have been under minimum wage legislation
since the 1930s. The wage rates compared favourably with the non-estate
sector rural wage rates initially. In times of export boom, wage rates also have
increased in money terms. Yet the increases in cost of living have often
arrested the growth in real wage rates. In the late 1970s there has been a
sharp increase in the money wage rate index from 140 (1970) to 712 by
1981 for workers in plantation agriculture. In real terms, however the increase has been much less indicating a change from 102 to 190 only.21 Yet
this index applies only to minimum wages and does not represent actual
earnings which may be enhanced by bonuses, overtime and overpoundage
payments. As discussed later, a number of incentive schemes are in operation
in the tea sector. The land reform programme also converted the bulk of the
estate labour into state employees and this move has led to some increases in
wage rates though not to the extent anticipated.
So far we have looked at the potential availability of labour in the
plantation sector, but the effective supply of labour is not a matter of mere
physical numbers available. It depends on the rate of participation, labour
outturn as well as the degree of utilisation of labour and worker productivity.
For example, increased worker productivity and improved labour utilisation
could substantially reduce labour requirements for a given area under cultivation. Sri Lanka's average labour supply of 3.46 workers per hectare is
higher than South India's level of 2.5 workers per hectare while our yield is
much lower.3'
Silva, S.B.D. de. The Political Economy of Underdevelopment, Routledge
2/
3/
and Kegan Paul, London, 1982.
Central Bank of Ceylon, Annual Report, 1981.
TMP Study, 1978, op. cit.
93
PLANTA11ON AGRICULTURE IN SRI LANKA
Labour Force Participation
According to the Labour Force Participation Survey of 1973, the overall
participation rate is very high in the estate sector compared with the other
sectors of the economy. The 1978/79 Socio-Economic Survey of the Central
Bank" estimates the crude activity rate in the estate sector at 53.9 per cent
while for the urban and rural sectors it is 34.5 per cent and 39.2 per cent
respectively. Male participation at 52.2 per cent (1973) is slightly higher than
the national rate of 48.8 per cent. The rate of female participation is
remarkably high and is the highest for all sectors (Table 2).
TABLE 2
Sectoral Labour Force Participation by to Sex, 1973
Sector
Male
Female
Estate
Rural
Urban
52.2
48.4
48.3
48.8
53.3
38.6
41.9
40.7
All Island
Source: Central Bank of Ceylon, Report of the Survey of Consumer Finances
(1973), Colombo, 1974.
The employment of under eighteens is also high. The legal minimum age
for employment as "casual" daily workers is 14 for girls and 15 for boys.
Females and males are classified as adult workers respectively at the ages of
15 and 16. In some estates children below 14 years are also employed. Of the
total number of under eighteens employed in Sri Lanka, the tea sector alone
accounted for about 62 per cent and of which girls formed 60 per cent. But
over the years a perceptible decline in child labour is evident. In the fifties, the
industry employed for every 100 adult males as many as 20 to 40 young
workers. In 1977, the plantation sector employed 20,900 young persons of
whom 10,853 (or 52%) were girls. Today children below 18 years form 4%
of the work force employed in the sector.
The high level of participation of females and children needs some
explanation. Tea plucking has traditionally been the preserve of females. The
estate provides work opportunities for females and children in the vicinity of
their place of residence. It is also economically important for family members
to supplement the earnings of the head of the household because of the low
Bank of Ceylon, Report on Consumer Finances and Socioeconomic
Survey,. 1978/79, Sri Lanka, Part 1, Colombo, March 1983 and Census and
Statistics Department, Census of Population, 1971, General Report, Colombo,
Central
1971.
94
LABOUR AVAILABILITY AND DEMAND
wages and earnings. In the early days the wages were so low that it was
imperative for females and children to work and contribute to the household
income. The owners of the plantations found it profitable to employ females
and children as their remuneration was lower than that of men. For instance,
the minimum wage rate for women has been around 20% less than that for
men although women work longer hours. Children's wages are still lower.
Another reason for the employment of women and children in large numbers
could be that they are more "docile" than the male workers and, therefore,
are more easily manageable.
Labour Turnout
Labour turnout is the measure of the proportion of workers who report
for work on days when it is offered to them. Labour turnout is affected by
many factors such as personal health, illness in the family, weather conditions,
domestic problems and social obligations." The NIBM Study (1978) revealed
the following characteristics of labour turnout in Nuwara-Eliya District.
(a) The labour turnout of resident workers was much higher than that of
the non-resident workers. This assessment is confirmed by the TMP
Study (1978).
(b) The male labour turnout was lower than that of female labour.
(c) There is wide disparity in labour turnout between estates in the
region.
(d) There was a marked seasonal variation in attendence behaviour
especially among the non-resident workers. During times of peak
demand in the subsistence sector, the absenteeism rate is rather
high. This type of seasonal shortage of labour is known to be a major
problem in the low country estates. The problem of employing
non-resident labour on estates is highlighted by this. If the 'flush'
season in the estates coincides with the peak season in paddy the
labour situation can really worsen. While some adjustment of male
labour requirements to suit availability is possible this is not the case
with female labour requirements because they are a function of
green leaf yields.
Our investigations in some estates in the Flatton region reveal that low
labour turnouts are recorded during periods of adverse weather conditions,
occasional festivals and illness. At least one estate manager attributed low
turnout to the laziness of workers. However, in many estates in the region the
labour turnout is reported to be over 80%. Absenteeism due to illness among
workers is a field for further investigation.
Government of Ceylon, Report of the National Wages Policy Commission.
Sessional Paper No. VIII, Colombo, 1961.
95
PLANTATION AGRICULTURE IN SRI LANKA
Demand for Labour
The labour requirements of a perennial crop are basically of two categories:
(a) Current labour demand: for cultivation and processing operations.
(b) Capital labour demand: labour required for build-up of capital such
as replanting and land improvement.
Total demand can vary widely between estates depending on the age of
the growing stock, standards of management and pattern of investments.
With regard to tea, the major current labour requirements can be
categorized as follows:
(a) Field operations: cultivation and maintenance labour. Land preparation, fertiliser and agro-chemical application and weed control
are important here.
(b) Harvesting labour: plucking of tea.
(c) Processing of produce: manufacturing of black tea from green leaf
under factory conditions.
The relative importance of the different components in the case of tea
depends largely on the yeild. Plucking of tea leaves is the most important
operation accounting for about 65.4 per cent of total labour at a yield level of
1,000 kgs./made tea/ha. and this proportion rises as follows:
Yield level (kg/mt/ha)
Ratio of pluking labour (%)
1,000
1,500
2,000
2,500
3,000
3,500
4,500
65.4
70.6
73.3
74.9
76.0
77.1
78.2
Source: TMP, 1979/80 op. cit.. Wickramasekara, P., Transnational Corporations and the Tea Export Industry of Sri Lanka, Joint UNCTC/
ESCAP TNC Unit, Bangkok, March, 1982, (mimeo) and
Wickramasekara, P., Manpower and Labour Absorption in Kegalle
District, Annexure, ESCAP/GOSL IRD Plan for Kegalle District,
Bangkok, October 1982.
96
LABOUR AVAILABILITY AND DEMAND
Direct labour costs accounted for 42 per cent of total production costs
(1976) and the relative shares of the different components in total labour
costs according to the IMP study were as follows:
Plucking labour
57.4%
Field sundry labour
30.2%
Factory labour
11.7%
1.2%
Drivers and cleaners
The lower share of plucking labour in production cost is explained by the
fact that plucking is mostly done by female labourers who receive lower
wages.
The capital labour demand is mainly for the purposes of improving the
quality of the growing stock by replanting and land improvement measures.
Replanting of seedling tea with clonal verieties is a major capital investment
for the tea sector. Replanting labour consists of operations such as removal of
old trees, soil reconditioning, planting and upkeep and maintenance for 2-3
years. The Agency Houses Commission Report'1 noted the tendenc'y on The
part of some private estates to run down capital assets by non-maintenance
and reduction of reinvestment. The situation after the land reforms has
improved since the state takes a longer term view of profitability.
Factors Affecting Demand for Labour
The following factors determine the demand for labour, in the tea sector.
(a) Level of yields—There isa direct proportionate relationship between
the demand for plucking labour and the level of yields per hectare. The IMP
study (1979/80) hypothesised the following functional relationship between
plucking labour demand and the level of yield on the basis of sample data for
155 estates from different regions.
P = 3.6
(Y)°664
Where P = number of plucking days/ha/year
Y = yield in kys/made tea/ha.
The higher the yield level therefore, the higher is the number of required
plucking labour days.
(b) Technology—This refers to both cultivation and processing technology. It is hypothesised that the adoption of improved practices (fertiliser
"
Government of Sri Lanka, Report of the Commission of Enquiry on Agency
Houses and Brokering Firms, Sessional Paper No. XII of 1974. Government
Press, Colombo.
97
PLANTATION AGRICULTURE IN SRI LANKA
use, weed control, soil conservation, etc.) would result in higher labour
requirements. For instance, the labour demand in estates replanted with
clonal varieties is higher due to higher yields and plant density. In processing,
there has been no major technical breakthrough in recent times.
(c) Profitability as reflected in output prices and producer
margins—Wage and other costs have been increasing over time while tea
export prices have not improved much in real terms." This exerts a disincentive effect on further investment and management standards. The decline
of tea prices in the 1960s led to widespread neglect of most mid—grown tea
which resulted in a reduction in labour demand. The Agency Houses Commission Report noted that even large estates were trying to maintain profit
levels by neglecting maintenance and upkeep in the face of high taxation and
the threat of nationalisation. The two state corporations have also been
subject to extreme pressure due to declining producer margins in recent
years. Changes in wags rates, therefore, exert an important influence on the
demand for labour.
(d) Replanting and rehabilitation programmes—The Government has
been operating subsidy schemes for both tea replanting and rehabilitation in
the sense of filling vacancies and improved maintenance. The total area
replanted over the years amounted to only 16 per cent of the total acreage.
Private sector performance has been especially unsatisfactory while the state
agencies have stepped up replanting rates.21 A high rate of replanting will
generally result in a greatly expanded demand for labour.
(e) Seasonality—There is some degree of seasonality in the demand for
tea labour with yield variation over the year but it is not as pronounced as in
the case of paddy.
Labour Demand Estimation Models for Tea
The TMP (1978) has undertaken a detailed analysis of the demand for
labour in terms of per unit of land (hectare) under tea cultivation. We shall
outline this analysis here. In constructing the model, the TMP study assumed
that all plucking labour was female and all other labour was male, even though
some male labour is used for plucking and similarly some female labour is
used for factory work. The individual components of the total demand for
labour was analysed separately and the aggregate labour demand was arrived
at as a summation of these components.
(a) Plucking labour demand—The following
estimation of plucking labour demand:
2/
P. Wickramasekara, 1982, op. cit.
Central Bank of Ceylon, Annual Report, 1981.
98
formula was used for the
LABOUR AVAILABILITY AND DEMAND
Women days = Estate Average Yield x
1
1
% of turnout of tea Kg. of green leaf/
plucker per day
to green leaf
The average daily intake per plucker obtained from a sample of 155 estates
was 12.82 kgs of green leaf per day. The combined JEDB and SPC elevational averages were:
12.25 kgs/day
11.85 kgs/day
15.70 kgs/day
High—grown
Medium—grown
Low—grown
The typical daily norm as reported by estates was generally in the range
of 14 to 18 kgs/day and thus it was noted that the high and medium—grown
averages were well below typical daily norms.
(b) Field sundry labour demand—This includes all labour other than
plucking. It was found that field sundry expenditure was essentially a fixed
cost, irrespective of estate average yield level. Field sundry labour demand
ranged from 125 to 175 mandays/ha/yr. Assuming an average of 250
workdays per year, it would require an average of one sundry labourer for
every 1.5 to 2.0 hectares.
(c) Factory labour demand and factory labour productivity — The
TMP
study did not find any correlation between factory productivity and estate
yield or with factory capacity.
The factory labour component of the aggregate labour demand curve
was constructed using an assumed productivity of 30 kgs/day for low country
estates and 35 kgs/day for high—elevation estates.
(d) Drivers and cleaners labour demand—A nominal number of mandays
was added in this respect. Aggregate labour demand was estimated by adding
the four component labour demand projections referred to above. The aggregate labour demand projection presented the component and aggregate
labour demand in terms of work days per year over the yield range from 500
to 5,000 Kg/ha. It varied from 390 to 1,306 labour days per hectare per year
in high
and mid—grown estates and from 423 to 1,351 in low—grown estates.
The female plucker demand varied from 233 to 1,027 women days per
hectare per year for estates at all elevations. Male labour demand varied from
167 to 279 mandays per hectare per year in high and mid—grown estates and
200 to 324 in low—grown estates. Assuming that both males and females
work an average of 250 days/year, the number of labourers required corresponding to the labour demand model was obtained as shown in Table 3.
The information contained in Table 3 can be converted into the number of
labourers required by estate, district or region by taking into consideration the
area under cultivation, yield distribution and making adjustments for peak
harvest labour requirements. However, it is noted that the number of Ia99
0
0
0.67
0.72
0.77
0.82
0.87
0.92
0.96
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2.59
2.92
3.24
3.54
3.83
4.11
1.41
1.85
2.24
0.89
Female
Labour
3.06
3.46
3.84
4.20
4.55
4.90
5.23
1.85
2.24
2.59
2.92
3.24
3.54
3.83
4.11
5.41
4.00
4.37
4.72
5.07
3.61
3.20
1.69
2.26
2.76
1.41
0.89
0.80
0.85
0.91
0.96
1.02
1.08
1.13
1.18
1.24
1.30
Labour
1.56
2.13
2.62
Total
Labour
Female
Male
Labour
Labour
Source: TMP Study, Final Report, Vol. IV, March 1980, Table 2—19, p.72.
1.12
1.01
1.07
Male
Labour
Yield
(kg/ha)
Total
Low—country
Labour Input by Level of Yields. (Labourers/ha)
High & Mid—country
TABLE 3
LABOUR AVAILABILITY AND DEMAND
bourers per hectare calculated by this method would not correspond to the
size of workforce required. They represent only the number working on the
basis of 250 workdays per year. In order to obtain an estimate of the labour
force required, the latter will have to be adjusted upwards by the average
turnout of workers and a further allowance made for peak labour requirements during periods of higher yields.
The Labour Demand—Supply Balance
The labour demand and supply levels could be assessed at a
macro—level or at regional or individual estate levels. Due to problems of
labour mobility, national or broad regional level comparisons may not convey
the situation at the micro—level and should be supplemented by more disaggregated information. Such comparisons will show the seriousness of the
problem of imbalance between demand and supply.
The IMP Study has made a comparison at the regional level between
demand and available supply of labour based on the sample of 155 estates.
The estimated supply is shown in Table 4. Labour supply as defined here
includes all types of labour (registered and casual).
The overall average labour supply (labourers per hectare) for both the
state corporations is almost the same, 3.44 for the JEDB and 3.47 for the
SPC.
TABLE 4
Average Yield, Green Leaf Intake and Labour Supply
in Estates 1978.
Ownership/Elevation
Average
Yield
(Kg/ha/yr.)
JEDB — High—grown
Mid—grown
Low—grown
Total JEDB
SPC — High—grown
Mid grown
Low—grown
Total SPC
Composite JEDB & SPC
1,232
1,054
1,430
1,217
1127
840
1,522
1,133
1,177
Green Leaf Reported
Total
Intake
(Kg/ha/yr.) Labour Supply
(Labour/ha)
12.09
11.88
16.43
12.63
12.53
11.82
15.31
13.09
12.82
Source: IMP Study, Final Report Vol. IV. Table 2—20, p.74
101
3.41
3.47
3.56
3.44
3.13
3.23
4.25
3.47
3.46
PLANTATION AGRICULTURE IN SRI LANKA
Although yield averages are considerably lower in mid—grown than in
other elevations, the mid—grown estates of both corporations had greater
labour availability than high—grown estates. Low—grown estates had the
highest rate of labour availability. This may be explained in terms of the
greater proximity of the villages to estates in the low—grown region. These
findings are further confirmed by the SLFI Survey carried out in 427 estates
in different planting areas. In Nuwara Eliya, Hatton and Badulla, the labour
supply per hectare was found to be much lower than in low—country areas
according to this survey.
Thus, the level of availability appears broadly satisfactory except at yield
levels above 2,500 kgs/MT7ha. The TMP findings may be summarised as
follows:
(a) Labour shortage is not a general phenomenon at the macro—level
except, perhaps, to a limited extent in some high—grown areas.
(b) Apparent shortages may not be real shortages. The survey distinguishes between 'perceived' labour shortages and 'real' labour
shortages where 'perceived' shortages merely reflect inefficient utilisation under existing practices
(c) A serious imbalance between the demand for male and female labour
may develop if present labour practices are continued.
In the TMP view, the key to the generation of an adequate labour supply
depends much more on efficient labour utilisation than an increased workforce. Real shortages, however, could occur unless existing labour practices
and traditional management—labour relations are considerably modified.
The NIBM (1978) Study of the Nuwara—Eliya District worked out a total
labour balance sheet based on the assumption that there is:
(a) Perfect substitutability of male for female labour, and
(b) Perfect inter—estate mobility of labour within the region.
It was found that at the macro level there was a surplus of 2,379 labour
units in 1979 with only Kotmale electorate experiencing a small shortage.
However, the survey predicted that by 1983 labour shortages would develop
in the electorates of Nuwara—Eliya, Walapane and Kotmale. On the other
hand, Welimada electorate would have a
surplus and, therefore, at the
macro level it was argued that there was no reason for alarm.
This picture of the total labour balance sheet indicates that the intensity
of the problem was insignificant at macro level. However, the conclusion is
dependent on the tenability of the two assumptions that underlie this analysis.
The validity of these assumptions will be discussed later.
* Made Tea.
102
LABOUR AVAILABILITY AND DEMAND
Thus, the weight of evidence seems to indicate that the shortage of
labour at the macro—level is marginal and that observed shortages are partly
the result of inefficient use. Although the tea sector has experienced large
gains in land productivity through the use of improved planting material and
other technological improvements, labour productivity has increased only
marginally over the years. Various imperfections such as limited substitution
possibilities between male and female labour in plucking and limited mobility
between estates and regions generate shortages in certain regions although
the supply and demand do not deviate much at the macro—level.
In the absence of any rationalisation of available labour, the observed
labour imbalance in certain areas has caused some concern among policy
makers and plantation management. In the Nuwara—Eliya and Badulla regions, the shortage of pluckers has caused difficulty in certain estates at the
'flush' periods. In the Nuwara—Eliya region a shortage of 16,500 labour units
was expected in 1984 if repatriation went on at the projected rate11. For
Badulla it was claimed that the shortage would be in the region of 11,900
labour units.2" According to JEDB data for Hatton and Nuwara—Eliya (June
1982) there was a shortage of 1,179 and 986 labour units respectively. JEDB
data for the Kandy region reveal a shortage of 202 labour units, but estates
in that region have a large number of casual workers. The low—country
estates record an excess of labour availability. Most of the low—country
estates have a large replanted acreage which gives yields over 2,500 kgs/
hectare and it has become necessary to maintain closer plucking rounds. If
four—day rounds are maintained fields will be plucked nearly seven times per
month which means higher demand for plucking labour. In areas like Deniyaya and Morawak Korale there is a seasonal shortage of labour because the
non—resident Sinhalese labour in the area is engaged in paddy
Strategies for Dealing with Labour Imbalance
The problem of labour imbalance has two aspects; that of labour
shortage and labour surplus. From the viewpoint of estate management, both
are problems especially if the surplus labour is resident and registered. Yet,
the main concern of management recently has been with problems of labour
shortage. We shall take up this aspect here and deal with the implications of
surplus labour in a later section.
Several strategies are available to counter labour shortages:
(a) Improving or raising the intensity or efficiency of use of existing
labour supply. This could be attempted through incentive schemes
and reducing sexual task differentiation, especially in plucking.
Ministry of Plan Implementation, (MPI), Performance — 1978, Colombo, 1978.
2IIbid.
3/
Information obtained from the State Plantation Corporation, Head Office.
103
PLANTATION AGRICULTURE IN SRI LANKA
(b)
Increasing the total supply of labour by planned migration or transfer
and attracting new labour from the villages.
(c) Increasing labour productivity through means such as mechanisation.
Mechanisation of tea cultivation, especially harvesting is conspicous by
its absence. The difficult terrain and the need for selective plucking of leaves,
availability of cheap labour and the traditional arrangement of the tea bushes
(which are planted close together) have been important impediments to
mechanisation."
In general, estates suffering from labour shortage have adopted several
strategies in the past to overcome this problem.
i.
incentive schemes:
To increase labour output, the estates offer payment of over — poundage
for quantities plucked in excess of the accepted norm for cash plucking. The
over—poundage rates differ from district to district but the basic rate is now
around 22 to 40 cents per kilo and is raised to 50 cents if labour turnout is
over 80 per cent. This rate provides insufficient incentive for pluckers, except
those in desperate need of additional income, to put in maximum effort as it
is around 40 per cent less than the rate for the standard poundage.
If the over — poundage rate is to be effective it needs to be higher than the
rate for standard poundage, where the standard rate is equal to the standard
wage divided by the plucking norm. In the present state of the tea industry,
where plucking productivity is low this, however, is not economically
feasible. If the present norm of 12 or 14 kg/worker could be raised, it would
be possible to pay enchanced over—poundage rates.
Cash plucking is done during the seasons when the workers have to
work more than eight hours a day and are paid at a slightly higher rate. The
rates vary from 40 cents/kg to 60 cents/kg.
ii.
increasing the availability of labour:
This can be achieved in several ways: by planned migration of workers
from one estate to another within the same locality or from mid—elevation
labour surplus estates to high—elevation labour shortage estates; by inducing
Sinhalese villagers to migrate to the estates and by registering children within
the estate who reach the stipulated age for registration as child workers.
(a) Planned migration. Inter—estate migration of workers has been slow in
the past. This can partly be attributed to the method of recruitment through
"
Wright, S.J., Report on the Possibilities of Mechanising Tea Cultivation in
Ceylon', Tea Quarterly, 24, September 1953 (cited in Silva, S.B.D. de,
op. cit.
104
LABOUR AVAILABILITY AND DEMAND
the Kangany System followed by the early planters and the network of kinship
and social affiliations established in the estates as a result of such a method of
recruitment. Management very often finds it difficult to induce workers to
move from one estate to another in order to overcome the problem of labour
excess/shortage. Only a deep sense of insecurity and threat to their livelihood
could induce workers to migrate in large numbers, as is revealed by recent
trends of internal migration.
Estates in higher elevations especially in Badulla and Nuwara—Eliya
have received migrant families from mid and lower elevations. In JEDB
estates in the Kandy region, workers are paid a financial incentive to migrate
to labour shortage estates at the rate of Rs.1,000 for workers shifting to other
estates within the region and Rs.2,000 for those shifting to estates outside the
region. However there is no systematic follow—up work for effective
inter—estate transfer of surplus labour.
Some consider the planned migration of Tamil estate workers from mid
to high—elevation estates as a measure that contravenes the Government's
policy of racial integration. In this view such migration would intensify the
already heavy concentration of Tamil workers in high — elevation estates.11
(b) Encouraging the supply of village labour. In recent years, the State
has attempted to increase the supply of Sinhalese labour on the estates as a
means of providing greater employment opportunities to villagers. In those
mid—country and low—country estates which are situated within easy reach
of the villages, Sinhalese labour has already reached sizeable numbers. The
TMP Study reveals that the Sinhalese labour component in five mid—country
estates ranged from 8 to 25 per cent. In the low—country it was as high as 53
per cent.2' Most of the up—country estates, however, rely mainly on permanent, resident Tamil labour. For instance, Kirkoswald estate in the Flatton
region, with a labour force of 2,065, has only 36 Sinhalese workers of whom
5 are non—resident. Similarly, on Pedro Estate in the Nuwara—Eliya region,
Sinhalese workers number only 8 out of a total workforce of 1,297. It is in the
high—grown estates in Hatton and Nurawa—Eliya areas and to a lesser extent
in Badulla that there is an inadequate supply of village labour.
The villagers are generally disinclined to live in estate line rooms along
with Tamil workers. The NIBM Study identified four major inducements as
essential pre—requisites for attracting villagers to settle on the estates.
1. The provision of better housing facilities.
2. Employment for all unemployed persons in the family.
3. Minimum number of days of work to ensure a steady family income.
2/
NIBM, op. cit.
TMP Study, op. cit.
105
PLANTATION AGRICULTURE IN SRI LANKA
4. Proper educational facilities for children.
This
of course means that the resident workers who are already on
estates would also have to be provided with similar facilities.
iii.
Substitution of male labour for plucking operations
Most estate managers are unwilling to use male labour for plucking and
give the following reasons:
lower, the use of male labour would raise
plucking costs and hence reduce profit margins.
(a) Female wage rates being
labour would not treat the plucking table with the same tender
care shown by females.
(b) Male
(c) Plucking done by males is of low quality and less productive.
(d) Men are unwilling to pluck tea.
Some of these arguments do not have any validity. In many estates male
labourers are used and their quality of plucking is found to be as good as that
of female workers. That the use of male labour would increase cost of
production is only one side of the argument: the fact that additional leaf
pucked will also add to the profitability of the estate should be taken into
consideration.
In actual practice, a combination of methods have been employed. Thus
estates in the Badulla region that suffered from a shortage of labour sought to
meet the situation through:
(a) Recruitment of as many casual labour units as possible.
(b) Transfer of workers from estates through the offer of incentives such
as the payment of Rs.100 to meet any incidental expenses and the
payment of travelling expenses or the provision of lorries for transport.
(c) Transport of labour from surrounding villages either by the use of
estate vehicles or by subsidising the cost of transport by public
conveyances.
(d) Offering cash plucking during 'flush' periods.
(e) Employment of children even below the stipulated age of 14 years.
The adoption of these measures seems to have eased the situation to some
extent. The greater availability of village labour following wage increases,
slowing down of repatriation and the movement of some surplus labour to
deficit areas are also reported to have improved the situation.11
Central Bank of Ceylon, Annual Report. 1978.
106
LABOUR AVAILABILITY AND DEMAND
The Social Implications of Unemployment, Underemployment and Labour Surplus
This study would be incomplete without some reference to the implications for the workers of the problems of unemployment, underemployment
and labour surplus which co—exist with labour shortages. The issue of labour
surplus receives insufficient attention in studies of availability of labour in the
tea sector. While unemployment and underemployment have serious implications for the workers, management naturally gives priority to the problem
that is of immediate concern to it.
According to the Socio—Economic Survey of 1969/70" (CSD, 1971),
51,000 people were unemployed in the plantations and this accounted for
10% of the total number of unemployed persons in the Island. The rate of
unemployment among the 15—24 age group was the highest on the estates,
90.% of this group were unemployed as against 83% in the other rural areas.
Female unemployment was very much less compared to the national average,
being 3.5% for the estate sector as against 21.% for the whole Island. This is
due to greater employment opportunities in plucking for females.
The recent Socio—Economic Survey of the Central Bank puts the rate of
unemployment among plantation workers at 3% of the estate population and
6% of the estate workforce. Although the rate of unemployment among
plantation workers is the lowest in the country, the rate of underemployment
seems to be relatively high (Table 5). Underemployment here is defined as the
total number of man—days lost due to non—availability of work expressed as
percentage of total number of man days available for work. Between 1973
and 1978/79, the average numberof days worked has declined by 9% in the
TABLE 5
Unemployment and Under—employment by Sectors,
1978/79
Unemployment
Urban
Rural
Estate
As a % of
Population
As a % of
Workforce
7.14
5.42
3.0
20.72
14.57
12.8
23.5
5.57
33.4
Under—employment (%)
Source : Central Bank of Ceylon. 1983, op. cit.
Census and Statistics Department, Report of the Soclo—Economic
Survey 1969—70, Colombo, 1971.
107
PLANTATION AGRICULTURE IN SRI LANKA
estate sector while there has been an increase in the urban and other rural
sectors. In many estates which suffer from a surplus of labour, one strategy
adopted by the management seems to be to reduce the number of work— days
offered so as to distribute the available volume of work more evenly. The
plantation workers are completely dependent on estate work for a living so
that any reduction in the number of days work offered diminishes their
earnings and exposes their families to undue hardship. According to the TMP
Survey, the average number of days work offered in April 1978, varied from
17 to 19 in five mid—elevation estates and from 16 to 19 days in three
low—elevation estates. The monthly family incomes varied from Rs. 251 to
Rs. 516 in the mid—elevation estates and from Rs. 325 to Rs. 426 (net of
Employees Provident Fund) in the low—elevation estates. The percentage of
resident families with an earning capacity of below Rs. 300 per month and
receiving the food subsidy ranged from 32.8 to 59.1% in the low—elevation
estates. If one considers that Rs.300 is the official poverty line (a rather
unrealistically low figure), over 40% of the families live in absolute poverty.
The poverty of the plantation workers is reflected in statistics relating to
their general health — the relatively higher incidence of diseases and malnutrition among them. Severe anaemia, protein deficiency, chronic malnutrition and under — nutrition are widespread among the plantation workers
and their families. According to the Sri Lanka Nutrition Status Survey, only
35% of the estate children (aged 6—7 months) were not affected by nutrition
related problems compared to 62% for the country as a whole.
TABLE 6
Average Number of Days Worked During a Period of
60 Days
Sector
Urban
Rural
Estate
All Island
Source: Central Bank of Ceylon, 1983, op. cit.
IMP Study, op. cit.
108
1973
1978/79
41.68
38.59
40.66
39.43
47.76
41.54
37.10
42.14
LABOUR AvAILABIuTv AND DEMAND
The crude death rate, the infant mortality rate and the maternal mortality rate for the estate Tamils are also much higher than among the other
communities. In recent years many health, medical and nutritional programmes have been launched in the estate areas but unless the economic
conditions and the educational levels of these workers improve, the above
programmes are unlike'y to succeed.
Conclusions
Various developments during the past decade have created a situation
of labour imbalance in the plantations: some areas experience shortages
while others suffer from a surplus. The overall situation seems to be one of
surplus labour. Flowever; there is a serious regional imbalance in the distribution of the workforce. Even among estates within the same region there
is an imbalance in the ratio of males to females.
Estates have adopted several strategies to overcome the problem of
labour shortage or excess. Transfer of workers from surplus regions or estates
to shortage regions or estates, the increasing use of non-resident village
labour, attracting village labour to become permanent residents by the provision of better living conditions on the estates and the use of incentive
schemes are some of them. These measures have been successful in meeting
the problem to some extent. Yet the shortage of labour, especially of plucking
labour persists in some of the higher elevation estates.
Increased use of male labour for plucking, the introduction of more
realistic incentive schemes and a more effective system of recruiting village
labour are possibilities. Furthermore, the strategies adopted should not be ad
hoc measures designed to meet immediate problems, but should take into
account long-term considerations of the sector. Much more information is also
needed on the nature of unemployment and underemployment among
plantation labour for the design of strategies consistent with their welfare.
109
Five
LAND REFORMS IN THE PLANTATION SECTOR
— THE EMPLOYMENT AND INCOME EFFECTS
N.A. Fernando
The Land Reform Law of 1972 (LRL'72) together with its Amendment
of 1975 mainly affected the plantation lands.
As shown in Table 1, about 272,359 ha or 69 per cent of the total area
vested in the Land Reform Commission (LRC) were in the three major
plantation crops — tea, rubber and coconut. About 63 per cent and 32 per
cent of the area under tea and rubber, respectively, were vested in the LRC.
The extent of coconut land vested was around 11 per cent of the estimated
area under this crop. The reform programme had the twin primary objectives
of increasing employment on, and productivity of, the lands expropriated.
The main purpose of this paper is to discuss the effects of the reform
programme on employment and income in the plantation sector. The paper
consists of two sections. In the first, the pre—reform employment and income
situation in Sri Lanka's plantation sector is discussed. The employment and
incomes case for land reform is also outlined in this section as background for
the analysis of employment and income effects of the programme presented
in the second section.
It
is important to note at the outset several problems one faces in
discussing the impact of the land reform programme on these two variables.
Firstly, employment data are difficult to obtain. Secondly, the figures that do
I wish to thank staff in the Agriculture Division of the Department of Economic
Research at the Central Bank of Ceylon for their assistance in preparing this paper.
Also
I am grateful to Dr. Nimal Sanderatne and Professor G.H. Peiris for their
comments on an earlier version of the paper.
111
a! data for 1975
b/ data for 1973
Estimated cultivated extent
Extent vested as a % of
cultivated extent
Tota'
1) Under 1972 law
2) Under 1975 law
TABLE 1
32
71,792
38,379
33413
Rubber
11
48,130
451485b/
45,537
2,592
Coconut
30
920,397
272,470
135,346
137,124
Sub—total
397,150
228,005
169,145
vested
Total extent
(Hectares)
Sources: Central Bank of Ceylon; Land Reform Commission; Census of Agriculture, 1973.
63
241,882a
152,548
56,396
96,152
Tea
Commission under the Land Reform Programme
Extent of Plantation Land Vested in the Land Reform
I
C)
0
z
>
r>
EFFECTS OF
REFORMS
exist have serious defects. A major problem relating to income data in money
terms is that conversion into real terms is difficult owing to the absence of an
appropriate price index for the estate sector. Therefore, both income and
employment data have to be used with great care.Besides, it is difficult to
isolate net effects of the land reform on employment and income as there
were many other factors influencing them. The paper will not attempt to
quantify these effects.
Pre— Reform Context
Employment on Estates
The available data suggest that per hectare employment in the three
sub—sectors varied markedly. In the case of tea, employment per hectare has
been estimated generally to be in the range of 2.1 to 3.7 labour units, the
latter being applicable to well developed plantations.'1 Rubber estates gen-
erally utilize about 1.2 labour units per hectare. Among the three
sub—sectors, the lowest labour utilization rate (i.e.labour units per hectare) is
reported by the coconut estate sub—sector, where it is only 0.25.
In the 1960's, prior to the land reform programme, employment opportunities had not kept pace with the growth of the labour force in the
plantation sector. In tea—growing, where plantations were predominant,
production had been on a declining trend since 1968. The yield per hectare,
too, showed no significant improvements from the late 1960s, in contrast
with the 1950s and early 1960s. Falling producer margins due to unfavourable export prices, rising taxes and cost of production depressed capital
development work on many estates. Uncertainty over future ownership of
estate land owing to the threat of nationalization also had a bearing on the
decline in production and poor level of capital development. These changes
amidst a growing labour force resulted in higher open unemployment and
under—employment. The Socio—Economic Survey (1969/70) put the unemployment rate in this sector at 7.5 per cent and the absolute number of
unemployed at 51,100. Others have estimated the number of unemployed in
1969 at 110,000, much higher than the Socio—Economic Survey figure.2"
The Consumer Finance Survey (CFS) of 1973 reported an increase in open
unemployment from 7.5 per cent in 1963 to 12 per cent in 1973.
The worsening employment situation on estates was also reflected in
rising under — employment which was greater among males than among fe-
males. According to one source, the average number of hours worked by male
" ILO: Matching Employment Opportunities and Expectations, Technical
2
/
Papers,
Geneva, 1971 (a).
Richards, P. et. al., Employment in the Estate Sector—Repatriation of Persons of Indian Origin (A preliminary analysis), (mimeo), Ministry of Planning
and Employment, Colombo, 1971.
113
PLANTATION AGRICULTURE IN SRI LANKA
workers per month dropped from 160 in the late 1950s to 140 in the late
1960s, i.e., by about 13 per cent." In 1971 almost one quarter of the
agricultural workforce on estates was underutilized,21 The deterioration in
producer margins put many estates on a 'maintenance' management basis
leading to cutting down expenditure on several labour consuming cultivation
practices. It is worth stating that this deterioration in the employment situation would have been more rapid and severe had it not been for the repatriation of nearly 68,000 persons during the period from 1969 to 1972 under
the Indo—Ceylon Agreement of 1964.
The poor quality of life of the plantation workers and their dependents
was another highly unsatisfactory aspect of estate employment. About 40 per
cent of the estate population was illiterate, in contrast to the corresponding
rate of 20 per cent for the whole island. The educational system remained
more or less what it was during the early decades of this century. Housing
facilities were highly unsatisfactory and majority of the estate population lived
in overcrowded old-style back-to-back lines. The estate sector was also cha-
racterized by higher rates of both maternal and infant mortality than other
sectors of the economy.31 An important point is that there was no systematic
programme for a significant improvement in any of these areas of health,
education and housing, except for a few isolated attempts on particular
estates.
Income of Plantation Workers
In general, available data on incomes of plantation workers show that
they have been among the 'poorest' groups in the country. The average
minimum daily wage rates of workers increased only marginally from Rs.2.68
to Rs. 2.87 during the period from 1968 to 1972. The male-female wage
differential, which was a legacy of the colonial period, remained unchanged
with male wage rates being a little higher than those of females.
The Consumer Finance Survey, 1973, estimated the median two-month
income per income receiver in the estate sector at Rs. 175. The corresponding figures for rural and urban sectors were Rs.394 and Rs.510 respectively.
"
/
Richards et. al., op. cit.. p. 6.
ILO: Matching Employment
Opportunities and Expectations, Report, Geneva,
1971(b)
NA., Continuity and Change in Plantation Agriculture, A Study
of Sri Lanka's Land Reform Program on Tea Plantations, Ph.D. Thesis,
Fernando,
University of Wisconsin, 1980.
Jayawarder,a, V.K., The Rise of the Labour Movement in Ceylon, Durham,
North Carolina, University Press, 1972.
Report of the Commission of Inquiry on Agency Houses, Government
Press, Colombo, 1971.
114
EFFECTS OF LAND REFORMS
Table 2 presents data on average earnings per month in the tea, rubber
and coconut plantation sub-sectors for unskilled workers. In the tea plantation
sector, average earnings per month of both male and female workers have
increased but in the other two crops, earnings have fluctuated. In all three
crops, however, earnings remained low in the range of Rs. 50 - Rs. 64 for
males and Rs. 37 - Rs. 75 for females.
TABLE 2 Average Earnings per Labourer per Month in the Estate
Sector
(As)
Rubber
Tea
Year
1967 September
1969 September
1971 September
Coconut
Male
Female
Male
Female
Male
Female
50.00
55.00
75.00
42.00
45.00
62.00
57.00
68.00
55.00
46.00
56.00
40.00
52.00
61.00
64.00
37.00
43.00
39.00
Source: Labour Department, Colombo.
Data rounded off to the nearest rupee.
Since, generally there are more than one income earner per estate
family, total family income would have been higher. The Socio—Economic
Survey, 1969/70 estimated the family income in the estate sector at Rs.
211 per month.
Though the above data reveal that money incomes increased to some
extent during the 1960s it is not possible to conclude that real incomes
followed the same trend owing to the absence of an appropriate price index
for the estate sector. Given the general rise in cost of living in the country it
may be assumed that real income of estate workers did not improve during
the 1960s.'1
In discussing the incomes of estate workers, it is important to note the
considerable sectoral differences in the level of income. In 1963, the median
two-month in the rural sector was a little over 1.5 times higher than in the
estate sector; by 1973 it was about 2.2 times higher. If there had been no
change in the sample to include more estate management personnel in 1973,
the sectoral gap would have been wider. Furthermore, the method of income
computation in the CFS under-estimates the sectoral differences between the
estate and non-estate sectors. For instance, in 1973 the value of free governmental facilities, such as educational and medical, was excluded from
income. Since the bulk of these facilities are enjoyed by the non-estate sector,
the exclusion of them in computations leads to an under-estimation of the
income of the non-estate sector.
Colombo Consumers' Price Index (1962 = 100) increased from 104.8
in 1961 to 150.8 in 1972.
The
115
PLANTATION AGRICULTURE IN SRI LANKA
The Employment and Incomes Case for Land Reform in Plantations
In Sri Lanka, the employment and incomes case for land reform in
plantations is based on increasing labour use and income on existing units
through different modes of production more than through a wholesale redistribution of land already under plantations. The latter course of action is
more likely to dislocate production and depress both income and labour use
in Sri Lanka's context."
First, with a carefully designed and systematically implemented land
reform programme there exists a potential to increase yield of existing crops
in plantations. Although, in general, average yield on plantations had been
higher than that of smallholdings, a large number of plantations failed to
achieve their potential yield, with already available high yielding planting
materials and known improved cultivation practices. / Secondly, mixed
farming can be encouraged on a large scale in coconut and rubber plantations.
The plantations in Sri Lanka, like those in many other countries, have necessarily been mono-crop production units. This has led to a higher level of
under-employment among workers and a greater seasonality of their earnings. Private owners have failed to take positive measures to improve this
situation partly because the burden of unemployment, under-employment and
fluctuating low incomes of workers falls on the workers themselves, not on the
owners. Thirdly, capital development work on plantations such as replanting
and soil conservation may be improved. Fourthly, with land reform, hitherto
uncultivated but arable land may be brought under cultivation.31 Fifthly,
supplementary sources of employment and income, such as food crop culti-
'I The ILO employment mission to Sri Lanka in 1971, thus stated that the technoeconomic case for redistributive reform is weak in the case of tea and rubber
holdings over 20 ha because in tea and rubber it was the bigger, not the smaller
units, that were higher yielding,more labour intensive and better managed. (ILO,
1971b, p. 96). See also for a brief discussion of the issue of sub—division of
existing estates, Fernando, N., Land Reform in Plantation Agriculture. An
Analysis of the Case of Sri Lanka with Special Reference to Tea Plantations, Research Paper No. 72, Land Tenure Center, University of Wisconsin,
1978.
2/
Though plantations generally report higher yield per unit of land than small
holdings, the potential for further improvements in yield on plantations is great.
See Commission on Agency Houses, op. cit.
/
According to the Planters' Association of Ceylon there were about 6,070—8,094
ha of completely un—developed scrub jungle and high jungle belonging to
coconut estates. Another 40,469 ha of coconut estate land were under—developed, marginal or badly managed. In the case of rubber about 42,493 ha
had been neglected and virtually become jungle. There are no estimates for the
tea estate sector, but it appears here also there was a considerable extent of
unutilised land. See, Planters Association of Ceylon (undated), Maximum
Utilisation of Coconut Lands, Colombo, (mimeo) and Ceiling on Ownership
of Land, Colombo, (mimeo).
116
EFFECTS OF LAND REFORMS
vation on home gardens and small scale poultry farming, may be developed
on estates. All these would lead to a significant increase in labour use with
consequent reduction in unemployment and underemployment. Sixthly, social infrastructure development programmes, which private owners had hitherto neglected to a large extent, may be initiated on many post-reform
estates to increase employment opportunities and quality of life of the
workers and their dependents.
Employment and Income Effects of the Land Reforms
The land reforms may influence employment in the estate sector directly
to the extent that they affect the level and/or technology of production and
the level of capital and social infrastructure work. Besides, the political forces
associated with reforms may influence the level and structure of employment
without a change in any of the above variables. The changes in level of
employment (including under-employment) can in turn bring about changes in
incomes. For instance, a greater availability of work would result in higher
income, provided daily wage rates are not depressed. In the absence of
relevant time series data on employment on the estates taken over, direct
employment effects may be assessed largely by examining the production
effects and other development work on these estates. The analysis of employment effects provides a background for the subsequent discussion on
income effects of the land reform programme.
Employment Opportunities for Resident Labour
Since the process of take over of land and the nature of post-reform
management institutions associated with the LRL of 1972 and the amendment of 1975 were different, effects on employment opportunities for resident labour of the two phases of reform are discussed separately despite the
fact that there were also certain common factors. The LRL of 1972 required
those who owned land in excess of the stipulated ceiling of 20 ha (10 ha in the
case of paddy) to declare to the LRC the total extent of land owned by them.
About 86,199 ha of tea, 65,156 of rubber and 91,461 of coconut land were
declared by the owners, accordingly. However, this total area did not constiture the extent to be expropriated. The law was such that the declarents
were not certain as to which portion of their land they would retain. As a
result, they tended to neglect proper maintenance of the entire extent declared.
In some cases the final vesting of the land in the LRC took around two
years. Though hard data are not available, it may be argued that both
unemployment and under-employment on estates increased during this period.
117
PLANTATION AGRICULTURE IN SRI LANKA
The LRL 1972 finally expropriated 56,396 and 33,413 ha of tea and
rubber land, respectively, and 45,537 ha of coconut land. A sizeable proportion of these lands was initially distributed to Usawasama," Electoralievel
Cooperative Societies, Janawasas21 and District Land Reform Authorities.
The Sri Lanka State Plantations Corporation (SLSPC) was also given some
lands. Usawasama did not receive any coconut lands.
Of these institutions, the Usawasama, managed nearly 240 properties
covering about 35,208 ha. Most of these lands were in tea and rubber in the
upcountry. Overall, the performance of Usawasama was a dismal failure.
Since many of these estates were subject to a lengthy period of neglect, their
development required a proper development plan, an efficient management
and considerable additional investment. But, none of these were available
with the Usawasama. One of the most undesirable features of the Usawasama
management was the replacement of some of the experienced managers by
persons with little or no experience in estate management.
On certain estates, attempts were made by the Usawasama to diversify
production by uprooting existing plantation crops for fruit growing and pasture cultivation for dairy cattle.3t But these attempts were ill-planned and ill
conceived and did not meet with any success. According to one source,
average yield on many Usawasama tea estates in 1977 was as low as 505 kgs.
per ha and some tea lands had been abandoned.41 The fall in production, yield
and capital development led to a deterioration in employment for resident
labour on these estates.
Another important post-reform estate land management institution was
the electoral level co-op which managed about 68,798 ha of estate land.
Nearly 62 per cent of this area was in tea and rubber while another 30 per
cent was in cocount. Available evidence shows that the co-ops were also beset
with severe management and financial problems and were unable to expand
production on their estates.
In early 1977, a committee appointed by the Government stated:
(From) the evidence led, and also from a per.isal of the returns received
from the Electoral Co-operatives, we have grave doubts as to whether the
majority of them are managing these plantations in the best possible
man
Udarata Watu Sanwardana Mandalaya (upcountry estate development Board).
/
Coopertive
3/
Central
/
Farms.
Bank of Ceylon, Report of the Land Reform Survey, Unpublished
Typescript, Colombo, 1974/75.
N. Fernando, 1980, op. cit.. p. 266
Ministry
of Agriculture and Lands, Committee on a Uniform Scheme of
Recruitment, Salaries, Designation, Training, Colombo, 1977, p. 9.
118
EFFECTS OF LAND REFORMS
The committee recommended abolition of the inefficient co-ops. Subsequent
to the LRL of 1972, an attempt was made on some estates to dismantle the
old estate system and set up Janawasas or co-operative settlements. In early
1977, there were some 195 Janawasas covering an area of about 20,000 ha.
Available evidence shows that these Janawasas, too, were beset with severe
management and financial problems. In one Janawasa tea land, yield had
dropped by 45-50 per cent from an approximate 1,123 kgs. per ha realised
in the pre-reform period."
Deterioration of the rural economic situation in 1973 and 1974, due to
several external factors, increased political pressure to provide estate employment for villagers. Greater control over estate land gained by the political
authorities under the land reforms, coupled with reduced bargaining power of
the plantation trade unions during this period, made the substitution process
easier. Yet, it often meant a partial shift of unemployment or underemployment from villages to estates.
The other significant process which dampened employment opportunities of resident labour was the redistribution of cultivated estate lands among
villagers. In discussing the issue of displacement of resident labour at least two
factors are important. One is that bulk of the resident labourers on tea and
rubber estates were Indian Tamils and the majority of them were not consi-
dered Sri Lanka citizens. Non-citizens were debarred from receiving land
under the LRL, 1972. The other was that even Indian Tamils with Sri Lankan
citizenship lacked strong political muscle to avoid displacement or to receive
redistributed land. As a result, some resident labourers on redistributed
estates lost their employment and
This was particularly evident in some of the tea and rubber estates in the
mid country region.21
Thus,
despite the stated employment objective of the LRL 1972, it had a
negative effect on employment of resident labour.
The second phase of land reform affected estate land owned by public
companies. In this phase 96,152 ha of tea, 38,379 ha of rubber and 2,592 ha
of coconut land were vested in the LRC. In addition, about 31,971 ha of
plantation land under other crops (and including uncultivated land) were
vested.
Several problems emerged during this phase:-
First, the sudden expansion of area under the management of SPC
created considerable managerial problems. Secondly, the Janatha Estates
Development Board (JEDB) — the new land management institution created
/
N. Fernando, 1978, op. cit., p. 226.
Wanigaratne, RD. and Samad, M., Land Alienation Under Recent Land
Reforms, ARTI, Occasional Publication No. 19, Colombo, 1980.
119
PLANTATION AGRICULTURE IN SRI LANKA
numerous management and organisational problems both in
1976 and 1977. Thirdly, the reform programme had a tremendous adverse
in 1976 — had
effect on the morale of the managers at the estate level.V Fourthly, there were
frequent changes in the institutional structure in the estate sector. These
changes involved constant reshuffling of estates among various institutions
and there were frequent changes in size of individual estates owing to
sub—divisions, amalgamations and de—amalgamations of estates both in the
SPC and JEDB.
The changes led to considerable uncertainty within the reformed estate
sector,, both among managers and various institutions. A major result of this
was the adverse effect on production and development of estates. Thus, the
SpC2" plainly admitted: —
factors created an atmosphere of uncertainty retarding
development programmes of the plantations. These changes had
adverse effects even on the estates which did not come under such
changes as the personnel of such plantations, in anticipation of
changes in the management, did not give the desired attention to the
development of the plantations.
(these)
Both in 1976 and 1977 replanting work in SPC and JEDB estates was
at a very low level and this may have depressed availability of work, particularly for male workers on tea estates.
Redistribution of estate lands to villagers as small holdings also resulted
in a reduction of employment opportunities for resident estate labour. The
available data show that about 8,094 ha of cultivated estate land have been
redistributed in this way. As data are not available on the number of resident
workers previously employed on these lands, the decline in employment of
resident labour cannot be assessed. 1-lowever, redistribution of tea and rubber
estate land particularly in regions such as Badulla, Nuwara Eliya, Kandy and
Kegafle, probably led to displacement of resident labour. There were a few
instances, such as the redistribution of Choisy and Balapokuna estates,31
where entire estates were allocated among villagers, displacing resident
workers on those estates.4t Allocation of estate lands to the National Agricultural Diversification and Settlement Authority (NADASA) had a similar
effect on resident labour employment on certain estates.
Central Bank of Ceylon, Study of Management of State—Owned Tea Plantatlons, Unpublished Typescript, Colombo, 1979.
2/
Sri Lanka State Plantations Corporation, Institutional Structure of the State
Sector of the Plantation Industry, Memorandum forwarded to His Excellency
the President, Colombo, 1978.
Areas involved were about 202 and 81 ha respectively.
/ Gooneratne, M.H., The Plantation Raj, H.W. Cave and Company, Colombo,
1980.
120
EFFECTS OF LAND REFORMS
The forces which depressed productive employment opportunities for
resident labour were confined largely to the early phase of the 1975 reform.
The available evidence indicates that subsequent developments on the public
sector estates led to significant improvements in the employment situation of
resident labour.
Table 3 presents employment data from several estates in each elevation
for the years 1975 and 1978. Employment of resident labour increased in
each elevation, though there appear to have been regional variations. On
high—grown estates resident labour employment grew at the same rate as
total employment. Many high—grown estates are located far from villages.
Therefore, it is difficult to absorb village labour into these estates. In mid—and
areas the growth rates of resident labour were generally much
lower than those of non—resident labour.
low — grown
Employment Growth Between 1975 and 1978, Public
TABLE 3
Sector Estates
Elevation and Estate
High
Yuillefield
Crop
Tea
Diyagama West
,,
Hautevillie
Bearwell
,,
,,
Percentage Growth in
Employment
Non — Resident
Total Resident
Labour
Labour
+ 8.9
+ 3.0
None in 1975 and
46 in 1978.
+ 0.26 + 0.26 No non—resident
Labour.
+ 28.6 + 28.6 All Resident
+ 12.9 + 13.3
+ 2.7
Mid
Helbodde
Passara
Cannevarella
,,
,,
Dickwella
Hantane
,,
Delta
Cecilton
Low
Talgaswella
Kelani
Galboda
Note:
It
,
,,
Tea & Rubber
,,
,,
+ 18.7 + 8.2
+ 30.2 + 21.9
+ 55 + 5.2
+ 86.8 + 62.9
+ 15.7 + 15.7
+ 14.5 + 6.2
+ 13.1
+ 9.8
+ 1.3
— 1.6
— 8.2
— 6.1
± 375 + 29.0
+ 131.5
+ 500.0
+
+ 230.9
All Resident.
+77.4
+ 27.2
+ 11.3
+ 19.0
+ 52.0
is important to note that data in this Table do not indicate what
happened to employment in between these two years.
Sources: Central Bank of Ceylon and Tea Master Plan Position Paper No. 4.
121
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 4
Replanting and New Planting - JEDB & SPC Estates
(ha)
New Planting
Replanting
Year
Rubber
Tea
1977
446
1978
1979
1980
1981
1,183
335•
1,893
2,619
3,194
2,864
1,917
1,521
2,060
Tea
Rubber
—
—
96
253
384
320
116
109
458
665
Sources: Janatha Estate Development Board; Sri Lanka State Plantations Corporation.
• Includes area under new planting and the figures refer only to JEDB estates.
As shown in Table 4 both replanting and new planting in public sector
estates increased from 1978 onwards. This would have benefitted largely
male resident labour which is the predominant type of labour for such work.
In contrast to the early post—reform years, improved production performance in the post—1978 period may also have had a positive effect on
resident labour employment. Table 5 presents data on production and
average yield on SPC. and JEDB estates. Though both production and yield
have fluctuated, there had been tangible improvements on the average. These
developments undoubtedly resulted in expansion of resident labour employment owing to the high positive correlation between labour use on one hand
and production and yield on the other.
TABLE 5
Production and Yield of Tea and Rubber: SPC & JEDB
Estates
Year
1978
1979
1980
1981
Tea
Production
(Mn. kgs.)
Average Yield
(per ha/kgs)
146.6
163.6
155.4
166.2
2,091
2,296
2,185
2,438
Rubber
Production Average Yield
(Mn.kgs)
(per ha/kgs)
44.6
47.0
50.6
50.3
1,838
1,897
2,009
2,143
Sources : Ministry of Janatha Estates Development; Ministry of State Plantations.
122
EFFECTS OF LAND REFORMS
In summary, the reform programme had both positive and negative
effects on employment of resident labour. Negative effects were largely
concentrated in th early period of post-reform. The net longer-term effect
appears to be positive although difficult to quantify.
Employment Opportunities for Village Labour
The net impact of the reform on village labour is not clear for several
reasons, First, despite a low-level of economic activity on certain estates,
employment was given to village labour under political pressure. Secondly,
hardly any information is available on how available work was distributed
between resident labour and village labour. Thirdly, re-distribution of estate
land to villagers enhanced their employment opportunities to the extent that
such land was allocated to the previously unemployed. These factors complicate the issue and make it difficult to discuss net employment effects on
village labour.
Most of the new jobs created, particularly at field supervisory and estate
office levels, on many Usawasama and co-op estates, were given to villagers.
Excess labour was a general phenomenon in Usawasama and many co-op
farms during the early post-reform period." Similar excessive recruitment of
village labour has been reported for estates managed by Janawasas.
Great importance was given to both electoral level co-ops and Janawasas
as major sources of new employment for the villagers. This was partly
because these institutions together managed about 20,639 ha of coconut land
on which a regular resident labour force was not available to the same extent
as on tea and rubber lands. Moreover, there was a vast potential to expand
employment opportunities on coconut lands through inter-cropping and
under-planting.
Performance of both electoral level co-ops and Janawasas was, however,
disappointing, particularly in terms of productive employment creation. A
survey done in mid-1977, covering six coconut estates managed by electoral
level co-ops, revealed that the estates under these co-ops had not undertaken
any land and crop development work resulting in a 3050% drop in production. The development of inter-cropping or livestock had not taken place and
overall employment had declined.21
In one estate, it has been pointed out, there were 45 watchers, mostly villagers
when 5 could have done the job. In another there were 24 watchers to look
after 50 ha of tea. In another Usawasama estate 66 labour supervisors were
added to the work force during the post — reform period and 90 per cent of them
2/
were redundant.
ARTI, Land Reform and the Development of Coconut Lands, Colombo,
1977, p. 27.
123
PLANTATION AGRICULTURE IN SRI LANKA
Available evidence reveals a similarly dismal picture of the performance
of the coconut Janawasas. A study of several of these revealed that in 1975
all of them lacked long—term development plans and funds not only for
long—term development but even for immediate purchases like fertilizer,
essential equipment and tools."
In May 1977, there were 17,771 ha of tea, rubber and coconUt land and
another 2,018 ha of undeveloped land under 195 Janawasas. The area of
coconut land alone amounted to 10,844 ha. The total labour force on the
Janawasas including non-members (non-citizens who were on these estates
were denied membership) in May 1977 was 17,195. Accordingly, the average labour absorption in cultivated land (including tea and rubber) works out
to 1.01 persons per ha. This labour absorption rate may still be considered
relatively high, given the fact that a substantial proportion of the land was
under coconut and land under tea and rubber were not well-developed enough
to report high labour absorption rates.
It has been estimated that net employment creation of all the Janawasas
was in the range of only
About 65—70 per cent of this was
in coconut Janawasas. However, it was not always productive employment, particularly because of cut back in development work and consequent
lowering of output.
The performance in the second phase of land reform with regard to
employment creation for village labour appears to have been somewhat
different. In 1977, the Ministry of Plantation Industries issued a directive to all
public sector estates to increase their employment rates to 3.71 labour units
per ha of tea and 1.85-2.47 labour units per ha of rubber. In response to this,
many JEDB and SPC estates increased employment in 1977 and 1978 by
recruiting more village labour, though in many cases this may have led to
redundant labour.31
Absorption of village labour was greater in low-grown and mid-grown
areas where villages are located in close proximity to estates. The data in
Table 3 presented earlier show that on estates in both these areas, the growth
rate of non-resident labour significantly surpassed that of resident labour.
Higher rate of village labour absorption resulted in a marked change in the
composition of labour force on certain estates (Table 6).
"
/
/
ARTI, 1977, ibid..
p.
30.
N., The Emerging Role of Joint Farming in the Agricultural Development of the Developing Countries with reference to Sri Lanka,
Shanmugaratnam,
Unpublished Ph. D. Thesis, University of Ceylon, Peradeniya, 1978.
Corporation, Circular No. 6, September, 1977
and Circular No. 21, November, 1977.
See Sri Lanka State Plantations
124
EFFECTS OF LAND REFORMS
TABLE 6
Estate
Changes in Composition of the Labour Force,
1975 & 1978
(Percentage of total labour force)
1975 (pre — reform)
Non — resident
Resident
Sinhala
Allerton
Helbodde
Delta
Kelliawatte
Passara
15
9
11
Dickwella
14
0
2
Tamil
85
91
89
100
98
86
1978 (post — reform)
Non — resident
Resident
Sinhala
Tamil
22
78
86
83
80
92
75
14
17
20
8
25
Source: Tea Master Plan Study; and Central Bank of Ceylon.
The increase in employment of village labour on public sector estates has
to be interpreted with great care, chiefly because village labour has a considerably lower turnout than that of resident labour.
the increase in
effective employment may be lower than the increase in the number of
villagers registered.
Another aspect of employment on public sector estates is that a large
proportion of village labour is employed on a casual basis. It has been found
that the JEDB estates in Nuwara Eliya region employed 6,644 non-resident
labourers in 1978, of which 45 per cent were casual labour.'1 At the end of
1981, the JEDB had a field labour force of 241,302, 15 per cent of which
was employed on a casual basis. The SPC used 25,951 casual labourers in
1981.
Available data show that about 8,094 ha of cultivated land were redistributed among villagers. Since the land redistribution to villagers was not
done systematically and not combined with a programme of providing necessary ancillary services, productivity on such land dropped significantly
during the post-reform period. Therefore, it is doubtful whether the redistribution of estate land to villagers resulted in productive employment that
can be sustained in the long run.
A major source of employment for village labour was the social infras-
tructure development programmes in the post-reform estates. With the
transfer of ownership of the estate land from private sector to public sector,
the State became directly involved in this hitherto neglected field. The
programmes included three major projects. First was "upgrading the creThe Ministry of Janatha Estates Development, Colombo.
125
PLANTATION AGRICULTURE IN SRI LANKA
ches". Second was the appointment of newly trained attendants to each
upgraded creche. This programme has provided permanent employment for
nearly 600 village girls as Creche Attendants. Third was the building of new
twin-type cottages and renovation of part of the stock of old line rooms.
During the period from 1978 to 1981 over 4,000 twin-cottages have been
built on the JEDB and SPC estates. There were about 213,000 semipermanent houses and 6,900 temporary houses in the estate sector in 1971.
These need to be upgraded and such a programme is likely to create more
employment.
Effects on Wages and Income
The mechanism of wage rate determination did not undergo any change
as a consequence of the land reform. As in pre—reform times wages of
plantation workers are determined by the Wages Boards set up for the
purpose under the Wages Boards Ordinance of 1944. As shown in Table 7
money wages of plantation workers increased considerably during the post
reform period. The crucial question is whether this could be attributed to the
land reform process.
The wage increases in the early years of the land reform were largely a
result of the increase in Interim Devaluation Allowances (IDA). In addition, the
introduction of the Plantation Workers Additional Special Allowance
(PWASA), Private Sector Additional Allowance (PSAA) and the Price Wage
Supplement (PWS) in 1975 raised the wages of plantation workers. These
allowances were not confined to the nationalized estates; both the PWASA
and PWS were granted to workers on private estates while all other allowances including IDA were granted to workers in other trades for which there
were Wages Boards. For instances, workers in the Motor Transport Trade
were also granted IDA and PSAA. It is difficult, therefore, to consider these
as a result of nationalization of estates. Moreover, the basic wage of the estate
workers remained at a constant low level during this period, ranging from Rs.
1.40 per day for males on tea estates to Rs. 1.20 per day for females on
coconut estates.
126
EFFECTS OF LAND REFORMS
TABLE 7
Average Minimum Daily Wage Rates of Plantation
Workers (Inclusive of Special Allowances)
Year
1972 December
1973 November
1974 December
1975 October
Te a
Male
Female
Rs. cts. Rs. cts.
3.49
3.90
4.18
4.27
2.67
3.06
3.13
3.19
Rub ber
Coconut
Female
Male
Female
Male
Rs. cts. Rs. cts. Rs. cts. Rs. cts.
3.54
3.90
4.23
4.32
2.82
3.06
3.28
3.34
3.54
3.90
4.22
4.32
2.72
2.96
3.18
3.24
Source: Labour Department, Colombo.
The other important consideration is the total income of workers which
is a product of the daily wage rate and the number of days worked during a
given period. Thus, higher wage rates will result in higher incomes only if their
impact is not negated by a reduction in the number of days worked.
There are hardly any data on the number of days worked by labourers
on Usawasama and various other co—operative estates during the first phase
of the land reform. However, the evidence on employment trends dliscussed
in the preceding sections indicate that some labourers were displaced and
some were not able to obtain full employment due to partial substitution of
village labour.
The member workers on the co—op estates were initially paid a daily
allowance of Rs. 3.50 a day. In theory, this allowance was considered an
advance payment to be deducted from the members' share of profits at the
end of the year. In fact the co—ops generally made losses or a very modest
profit and members, therefore, gained very little or no additional income at
the end of the year. The dialy allowances of workers on co—op estates were
well below the daily wage rate determined by the Wages Boards for plantation
workers. Though the allowance was raised to Rs. 5.00 per day in June 1975
it continued to be inadequate.
An analysis of the price movements and availability of basic wage goods
indicate that real wages and income of plantation workers deteriorated considerably during the period from the last quarter of 1973 to the end of 1975.
Table 8 presents data on prices and rations of rice, flour, and sugar - three
most important wage goods in the estate sector. The price of rice under the
ration scheme increased during this period, while the amount issued per
ration card holder decreased.
The increase in the price of flour had a more dramatic adverse effect on
workers real wages, because flour was perhaps the most important single
wage good of the bulk of the estate workers in Sri Lanka. In early 1973,
127
I-
.
.
First pound at
Rs.0.72 a pound.
Any quantity over
1 pound sold at Rs.1.50
a pound. (1.2.1973)
2 pounds free
2 pounds optional
at Rs.0.70 a pound
(12.3. 1973)
at Rs.0.72 a
pound. Any quantity
over this sold at Rs.2.0 a
pound (1.10.1973)
First 3/4 pound
1 pound at
Rs. 0.70 a
pound (1.10.1973)
1 pound free,
1 pound optional
at Rs. 1.00 a
pound (29.10.1973)
First pound at
Rs. 0.72 a pound
Any amount over
this is sold at
Rs.5.0 a pound.
(1.3.1974)
pound. Other
price reduced
to Rs.6.00
(6.11.1975)
for first 3/4
Same price
•
Price of
optional
pound reduced
to Rs. 1.00
(17.11.1975)
4. Dates these changes became effective are given in parentheses.
Source: Food Commissioner's Department, Colombo.
2. Flour was brought under the ration scheme on 1.10.1973. Prior to that unlimited quantities were available in the open market. Price of flour In
mid-1973 was only 0.48 cents a pound. Data on flour refer to quantity Issued per person per week.
3. Data on sugar refer to quantity issued per person per month. Price of optional amount was increased to Rs. 7.50 a pound on 5.9.1974.
over this is sold
at Rs.7.50 a
pound (1.10.1974)
First 3/4 pound
at Rs.0.72 a
pound. Any amount
1 1/2 pounds at
Rs.1.10 a pound
(23.12.1974)
1/2 pound at
Rs.0.70 a
pound. (8.4.1974)
1 pound free,
1 pound optional
at Rs. 1.10 a
pound (23.12.1974)
1 pound free,
1 pound optional
at Rs. 1.25 a
pound (8.7.1974)
Sale• of Basic Wage Goods in the Estate Sector Under the Ration Scheme
Notes: 1. Free rice is Issued to non-income taxpayers only. Data refers to quantity Issued per person per week.
Sugar
Flour
Rice
TABLE 8
Z
C
>
>
EFFECTS OF LAND REFORMS
before the price rise, per capita flour consumption in the estate sector was
estimated at 24 pounds every two months.11 The increase in the flour price
from 0.48 cts. in October, 1973 to Rs. 1.10 per pound in August 1974,
therefore, largely negated the effect of money wage increase during the
period. Thus the first phase of the land reform appears to have failed to bring
about improvements in real income of estate workers.
The second phase of the land reform was also associated with rapidly
rising wage rates of the plantation workers. As may be seen from Table 9
wage rates of male tea workers almost doubled between June 1976 and
August, 1981. Similar increases were evident in wage rates of rubber and
coconut estate workers.
TABLE 9
Year Month
Daily Wage Rates of Workers on State—owned
Plantations (All inclusive)
Tea
Ru bber
Coconut
Female Male
Female Male
Female
Rs. cts. Rs. cts. Rs. cts. Rs. cts. Rs. cts. Rs. cts.
Male
1976 June
1977 June
1978 June
1979 June
1980 June
1981 August
6.49
6.56
9.73
11.56
14.00
14.00
4.95
5.00
7.58
9.28
11.69
11.69
9.53
8.72
12.74
15.18
17.75
17.75
8.12
7.27
10.75
13.04
15.59
15.59
6.40
6.48
8.66
11.09
13.70
16.20
6.18
6.25
8.40
10.83
13.41
15.91
Source: Ministry of Janatha Estates Development
From 1978 onwards, partly as a result of the reform, capital
ment work on estates improved significantly thus increasing the number of
days work available. Average yield per ha on public sector estates also
showed improvements. Along side these developments workers income
seems to have increased. Table 10 shows that in all crops workers income on
public sector estates exceeded that of the workers on private estates by 13-54
per cent by June 1979.
An important change which occurred in estate workers income owing to
land reforms is not reflected in the above income data. This was the improvement in income which resulted from the introduction of a bonus
scheme for workers on state owned plantations. It is estimated that in 1979
I/
Survey of Sri Lanka's consumer Finances, 1973, op. cit.
129
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 10
Average Earnings per Worker per Month-Public and
Private Sector Estates
Average Earnings per Month (Rupces)
Public Sector
Year
Rubber Coconut
Tea
85.18 153.70 117.33
117.22 144.89 88.75
170.05 205.01 156.43
189.98 238.39 192.35
1976 June
1977 June
1978 June
1979 June
Tea
Private Sector
Rubber Coconut
104.45 158.78 94.48
109.12 104.86 100.71
147.81 167.12 130.84
146.76 108.68 169.98
Source: Labour Department, Colombo.
an average of 30 to 40 per cent of the workers on these estates enjoyed bonus
payments ranging from Rs. 150/—to Rs. 300/—per worker per year.
This may be directly attributable to the land reform programme. Although
the inerease in income resulted from the bonus was modest, it was important because prior to the reform workers did not enjoy any right to share
in the profits.
While the available data are not conclusive, it appears that real income
of workers has some what improved along with money income despite the
rise in prices of certain wage goods. Table 11 presents relevant figures. The
fact that flour consumption has nearly doubled without a drop in consumption
of rice, indicates better consumption levels.
TABLE
11
Per Capita Consumption of Selected Wage Goods
Estate Workers
Consumption
Goods
Unit
Measures
Rice
(1
Wheet Flour
Bread
Eggs
Note:
measure =
1973
1978/79
16.46
17.8
24
36
02.8
42.0
20.7
02.9
2 lbs.
Pounds
Ounces
Number
1973 data refer to tea and rubber estates while data for 1978/79
refers to 88 households consisting of 401 persons on 12 public sector
tea estates.
Sources: Consumer Finance Survey, 1973; Consumer Finance and Soclo
Economic Survey, 1978/79.
130
EFFECTS OF LAND REFORMS
Quite apart from its impact on workers' real income, the land reform did
not bring about a fundamental change in the methods of remuneration. The
only important change was the introduction of a bonus scheme for the
workers. Aside from this, there were no attempts to introduce any profit
sharing system, to alter incentives or to develop supplementary sources of
income. The Janawasa experiment was an exception, but it was short lived.
As in pre-reform times workers' monthly income continued to show a high
degree of seasonality with fluctuations in number of days work offered per
month." No attempts were made to eliminate the male/female wage differential which had been a characteristic of the plantation wage system for over
a century.
Concluding Remarks
Employment and income effects of the first phase of land reform were
undoubtedly disappointing. Despite the vast potential for employment generation, which existed on estates vested in the LRC, the programme failed to
have a positive effect on either employment or income. The first phase of
reform was characterized by a serious lack of planning, which led to a
deterioration of employment and income, in contrast to the stated objectives
of the reform programme of generating productive employment and improved income.
The second phase, too, initially had a depressing effect on employment
and income. Under-employment appeared to have increased at the early
stages on post-reform estates. The situation changed with resumption of
capital development and social infrastructure development work on many
estates. Both resident workers and villagers benefitted from the programme
during the latter phase.
The reform programme on the whole has not led to any fundamental
changes in the plantation system. Mono-crop culture on plantations remain
more or less as it was during the pre—reform period. There is still a high degree
of under—employment on estates, despite the impact of repatriation and the
development of ancillary activities has received very little attention. The land
reform programme has led to significant changes in social infrastructure
development on estates and this should alter the quality of employment. The
impact of some of these measures, e.g., health development programmes, will
be felt by workers if they are expanded and continued systematically.
Although the second phase of the reform programme appears to have
had a positive effect on workers' income, the reform exercise, on the whole,
failed to provide a stable monthly income to the workers. Nor was any change
brought about in the discriminatory system of wages under which females are
paid less than males even for similar work.
Legislation
to offer a minimum of 240 days of work to registered labourers
is now in existence.
131
PART THREE
PROSPECTS FOR EMPLOYMENT
PROMOTION
Potential for Raising Employment and Incomes in the Estates
Sector
Employment and Development Problems of the Tea and Rubber
Small Holdings Sectors
Development of Uneconomic Tea and Rubber Lands
Potential for Agricultural Diversification of Lands under Coconut
to Increase Productive Employment
Six
POTENTIAL FOR RAISING EMPLOYMENT AND
INCOMES
IN THE ESTATE SECTOR
N. Sanderatne
Introduction
This paper discusses the possibilities of increasing employment opportunities and raising incomes in the plantation sector within the framework of
an estate organization. ihe discussion will focus on achieving these objectives mainly by the following three strategise:
(a) Productivity increases
(b) Agricultural diversification
(c) Other income generating activities.
Agricultural diversification falls within the scope of this paper only as a
supplementary activity on the estates. The break-up of estate lands into
smaller units for diversification or other ancillary activities will not be dealt
with.
The estate sector has been variously defined in Sri Lanka. Sometimes,
only tea and rubber holdings of over 40 ha are considered as estates, though
smaller areas of coconut are included. One definition encompasses tea and
rubber holdings over 20 ha and coconut plantations over 4 ha. After the Land
Reform Law of 1972, which entitled an individual to own land (except paddy
lands) up to a ceiling of 20 ha, there is a tendency to define units of over 20
ha as estates. Yet another approach, which will be generally followed in this
I am very thankful to my colleague, Dr. Nimal Fernando, for many valuable suggestions given during the preparation of this paper.
135
PLANTATION AGRICULTURE IN SRI LANKA
paper, is to consider as 'estates' all land units over 4 ha and those below 4 ha
as small holdings.
The size of the estate enterprise as wall as its organizational nature have
an important bearing on the issue of raising employment and income in the
sector. From this perspective estates may be considered in two ways. Large
holdings (over 20 ha but generally much more) managed by a Superintendent
or Manager and other staff and employing wage labour, who are generally
resident on the estate itself, is one category. The managements of these
estates have no ownership rights as most are in the state sector. In the second
category are the privately owned estates which may be less than 20 ha but are
sufficiently large to need hired labour, either resident on the estate itself or
drawn from neighbouring villages. This latter type of estate predominates in
coconut cultivation and mixed crop farming and is least in evidence in tea
cultivation.
The size of estates, their ownership, the method of organization and
management, their financial strength and access to resources have an important bearing on the capacity for intensified cultivation and the undertaking
of other activities which could increase employment and raise incomes. The
state ownership of a significant proportion of estates, which were owned
earlier by public and private companies, is also an important factor bearing on
the issues discussed here.
Rather than attempting to make precisely quantified estimates this
paper is confined to suggesting broad possibilities. This is mainly due to the
lack of satisfactory data on employment and cultivation conditions on the
estates. The main thrust of the paper is to indicate the kind of policies that
would result in an increase in income and employment. Where estimates are
given, they are meant to indicate, in very broad terms, the likely impacts of
suggested policies.
The next section deals with the issues relevant to the discussion in the
paper. As the potential for the above three strategies varies with the main
crop under cultivation, the discussion in the third, fourth and fifth sections,
are each devoted to the possibilities in each
the three main estate crop
sectors, tea, rubber and coconut, respectively. The sixth section briefly discusses other plantation crops and mixed crop cultivation. The final section
summarises the discussion and makes some concluding observations.
Issues
The system of plantation management or the estate mode of production
has an important bearing on land and labour utilization of estates. Three
aspects of the plantation system of organization which have a bearing on the
pqtential for raising employment and incomes are the current level of
underutilization of lands; the capacity of estate management to undertake
:
136
POTENTIAL IN THE ESTATES SECTOR
intensive land and labour use under different cropping patterns; and the
constraints on the availability of labour on estates and the difficulties of
augmenting the labour supply.
Land Utilization
The under-utilization of land on estates has been a noteworthy characteristic of plantations the world
In addition to cultivable land within
estates lying uncultivated, there is a lack of intercropping on lands which have
such a capability. The development of ancillary agricultural enterprises is also
generally minimal on estates. In Sri Lanka, over 30 per cent of land vested
under the Land Reform Law of 1972 was jungle, patna (wild grass) or
uncultivated.2" Whatever the reasons, the availability of a sizeable extent of
unutilized or under-utilized land, provides the basis for a more intensive
exploitation, which would raise employment and increase incomes in the
estate sector. Such under—utilized land could be categorised as follows:
(a) Land suitable for the main crop
(b) Land not suitable for the main crop but cultivable with other economic crops
(c) Small areas of land, such as ravines and marshes, which could be
utilized for other crops
(d) Land in which utilization is not intense due to vacancies not being
filled or spacing of crops being too wide.
(e) Land mono-cropped but capable of being intercropped.
(f) Land not suited for any of the above categories or needing to be left
in forest cover for environmental reasons.
Estate Management
The estate system of management has several advantages over smallholdings for more intensive use of lands and for undertaking ancillary economic activities. This is not to imply that the advantages accrue necessarily
because of the largeness of estates or that small-holdings are inherently
See Barraclough, S. & Domike, A., 'Agrarian Structure in Seven Latin American Countries', Land Economics, Vol. 42, pp. 391 —424.
Adamson, A.H., Sugar without Slaves: The Political Economy of British
Guinea, 1838—1904, Yale University Press, New Haven, 1972.
Boorstein, E., The Economic Transformation of Cuba, Monthly Review Press,
New York, 1968.
Government of India, Report of the Plantation Inquiry Commission, 1956.
2/
Beckford, G.L., Persistent Poverty: Underdevelopment in Plantation Economies
of the Third World, Oxford, 1972.
Central Bank of Ceylon, Review of the Economy, Colombo, 1975.
137
PLANTATION AGRICULTURE IN SRI LANKA
incapable of attaining these objectives. However, it is undeniable that small-
holdings in countries like Sri Lanka, are in fact not institutionally supported in
ways which enable them to undertake more intensive and productive agriculture. It is largely for this reason that most small-holdings in tea, rubber and
coconut in Sri Lanka have a lower productivity.
Foremost among the advantages of an estate system is its ability to
mobilise adequate capital to undertake new enterprises. The need for capital
arises for several reasons. New cultivation, especially of perennials, has a long
gestation period during which there is expenditure for the upkeep of the land
but no returns. More intensified cultivation, as well as bringing new lands into
cultivation, involve large investments. Intensified exploitation requires greater
fertilizer use and often requires hired labour and machinery. Estates could
mobilize the required capital either from the profits of existing activities or in
the form of credit from the banking system or other financing agencies. The
second advantage of estates is that when new crops are grown for which the
'know how' is not readily available, the estate organization may be in a better
position to acquire the technical knowledge, employ agricultural personnel or
have greater access to limited extension facilities. The third advantage is that
the estate organization could itself be involved in the processing or marketing
of produce. It could establish a processing unit or organize a marketing link-up
either for retail distribution or for direct export.
Estate management also poses problems. The psychological orientation
of large estate managers is not always appreciative of the need for intensified
land use by multi-cropping and undertaking ancillary economic enterprises on
plantations. Traditionally, the typical planter has been mono—crop orientated.
This is not merely because his technical expertise has been for a particular
crop, but also because the mainly mono-crop system on large plantations has
prejudiced planters against the cultivation of other'.crops. Problems of labour
management and the lack of incentive oriented systems of payment, which
reward planters for the additional work involved in such enterprises, are
further reasons for the reluctance to undertake such work. This attitude is
however waning and the new generation of planters, in particular, can be both
trained and oriented toward a multienterprise esbte.
By contrast, managers of privately-owned estates, particularly those of
medium size, have greater incentives to undertake intensified cultivation as
the increased returns generally accrue to the owner-managers themselves.
Even when hired managers are employed, the proprietors tend to take a close
supervisory interest to ensure such intensified land use. However, it must also
be noted, that absentee landlords whose main economic interests are elsewhere may be satisfied with a minimal return on their properties and may not
undertake such activities.
In the very large land holdings intensified cultivation and undertaking
ancillary activities could prove burdensome from a managerial point of view.
138
POTENTIAL IN THE ESTATES SECTOR
When holdings are small these problems are less and the desire to undertake
activities to increase the total output and income is greater. Consequently
there may be a case for an optimum size of holding which is not very lerge.
Labour
A major problem of intensified cultivation and inter-cropping on estate
lands is that there is a need for constant supervision of labour activities.
Labour supervision is particularly important as the activities resulting from
new cultivation may not be as streamlined as regular cultural practices on the
monocrop. Further, the requirements of labour in terms of skill, knowledge
and other abilities for the subsidiary crop cultivation may be initially lacking
and closer guidance and supervision would be required. These features of
labour use on estates may prove a constraint in intensified land use and the
undertaking of ancillary agricultural enterprises.
A labour shortage has also arisen on some tea estates in high-grown
areas in recent years owing to the repatriation of Indian labour. Between
1969 and 1981, about 375,000 persons of Indian origin were repatriated to
India. Of these about 284,000 were adults. In many high grown areas estates
are an enclave cut off from villages, and it is not feasible to increase or
augment labour supplies on a commuting basis. The estate resident labourers
live in housing provided by the estate and thus an increase in the work force
implies provision of additional housing which has not been forthcoming on an
adequate scale.
Under-employment
The issue of increasing incomes and employment in the estate sector
must be viewed in a context of under-employment in the plantations.1" Al.
though the estate sector in Sri Lanka has the highest rate of employment,
paradoxically, it also has the highest rate of under-employment. This high rate
of under.employment, particularly on tea and rubber estates, arises because
the number of days of work offered is considerably less than the number of
days workers are available. Therefore, efforts to increase incomes in the
estate sector must include avenues for increasing the number of days of work.
To reduce under-employment, the available labour force must be deployed in more intensive cultivation practices as well as in ancillary activities.
The specific strategy to be adopted depends on the structural conditions on
International Labour Organization (ILO), Matching Employment Opportunities and Expectations — A Programme of Action for Ceylon — Report,
Geneva, 1971; Liyanage M. de S., 'Some Useful Guidelines Towards Organized
Intercropping', Ceylon Coconut Planters Review, Vol. 7 (2), pp. 93—97, 1974;
Ministry of Finance and Planning, A Study of lntercropping in Coconut Lands,
See,
Colombo, 1981.
139
PLANTATION AGRICULTURE IN SRI' LANKA
particular estates. In estates which have a high labour land ratio and the
cultural practices already adopted are optimum, there would be limited scope
for increasing employment or work offered to the existing work force. Climatic factors also have a bearing on this, particularly in rubber growing,
where it is not possible to use labour on rainy days. In such cases, it may be
necessary to deploy labour on ancillary activities. Besides, the underemployed work force could be given opportunities to employ themselves in
private vegetable plots, dairy farming or bee keeping, thereby reducing
under—employment without increasing the deployment of labour on the
estate enterprise itself.
Ancillary Employment
The kinds of enterprises that are envisaged in such a strategy include
allotting small areas of land, especially those in ravines and marshes, and
uncultivated land near housing units, for growing vegetables and fruits on a
home garden basis.
The estate organization could play an important role in making such
agricultural exploitation a success, by providing extension facilities, inputs on
credit terms and, where possible and feasible, organising the marketing of the
produce. It could also assist by providing credit guarantees to financing
agencies for the reguired capital investment. Cultivation on this basis could be
very productive as the several advantages which estates have are coupled
with a highly incentive-oriented system with the benefits of such exploitation
accruing directly to the cultivator. Besides crops, the system could also be
used for raising livestock and poultry.
The strategy of providing resources for estate workers to undertake
ancillary activities without direct estate involvement in the production process, is of special significance as the raising of incomes in this way makes
estate employment a remunerative and attractive occupation even with low
wages. It makes under-employment on the estate itself acceptable. Moreover,
this kind of strategy is largely without any additional cost to the estate
enterprise itself.
Given the low income levels of this sector, significant improvements in
real incomes could be achieved by undertaking such activities (in particular
food crop cultivation, livestock and poultry keeping). They will also help to
improve the nutrition levels of estate workers and dependents.
Relationship Between Productivity Increases, Employment Genera
tion and Incomes
The relationship between productivity increases and increases in income
are not necessarily direct as estates are not owned by the workers nor are
there profit sharing arrangements. Therefore, productivity increases would,
140
POTENTIAL IN THE ESTATES SECTOR
in the first instance, increase the revenues of the enterprise rather than wage
rates.
Productivity increases have an impact on incomes when they involve
larger inputs of labour. Tea plucking and rubber tapping, for example, are
cases in which labour input varies directly with output. The immediate impact
of productivity increases on incomes is thus likely to arise from increased
labour inputs rather than as a distributional effect. In the short-run, higher
incomes would follow from decreasing under-employment, more days of work
and incentive payments related to enhanced labour inputs and turnout rather
than increased wage rates.
In the long run, however, the financial viability of the estate should have
a bearing on wages. The increased productivity should generate revenues for
the estates which in the long run would enable them to pay higher wages.
Conversely, Trade Unions' pressures for increased wages may be resisted
when the industry is faring badly.
It is important to realize that productivity increases and employment
generation cannot be achieved immediately. The resources required may not
be forthcoming at once and consequently, the potential for increased productivity and employment would have to be fulfilled in stages. In practice, the
employment generation would be phased according to the availability of
financial resources, techinical possibilities and managerial abilities. Apart
from this, productivity increases could arise only after a certain gestation
period of investment.
Tea Estates
Unlike in the rubber and coconut sectors, a very large proportion (78.5
per cent) of tea lands fall into the category of estates (land holdings of over 4
ha). Since state organizations predominate in the management of tea estates,
the task of increasing incomes and employment on tea estates rest largely
with them. Private sector estates are, however, not insignificant as they
account for 41,300 ha of the lesser exploited tea lands (Table 1).
Productivity Increases
The potential for increasing employment on tea lands is mainly through
higher productivity rather than diversification, inter-cropping or ancillary
activities. The strategies that need to be adopted consist of filling in vacancies,
where the density of tea cultivation is low, replanting of old seedling tea with
Vegetatively Propagated (VP) teas, and the adoption of proper cultural
practices such as fertilization, weeding and adherence to the correct pruning
cycle.
141
PLANTATION AGRICULTURE IN SRI LANKA
TABLE
Distribution of Tea Lands in Estates and Small Holdings
1
1981
Estates
Extent (ha)
State
Sector
Private
Sector
Small
holdings
Total
Total
150,951
41,279
192,230
52,610
244,840
61.6
16.9
78.5
21.5
100
78.5
21.5
100
—
—
Percent of
Total Tea
Lands
Percent of
Estate Lands
Note:
A Number of State organizations own/manage tea estates. The
Source:
JEDB manages 76,080 ha and the SLSPC manages 65,560 ha. Therefore these two organisations manage about 74 per cent of estate lands or
93 per cent of public sector estates.
Sri Lanka Tea Board.
One of the important observations of the Tea Master Plan is that, in the
past decade, there has been a failure to maintain tea bush density.V This is
mainly attributed to a mistaken emphasis on replanting. Other factors such as
taxation, low prices, uncertainty of the future of tea properties, too had an
important bearing on the failure to fill vacancies. The most seriously affected
were the midgrown tea estates. A sample of 36 estates in the midcountry
covering about 9,100 ha disclosed that about 25 per cent of the area had a
vacancy rate of over 50 per cent and the other 75 per cent had vacancy rates
2/
of 20.30 per cent.
The economics of filling vacancies is indisputable as, in contrast to
replanting, there is no loss of production. It improves fertilizer efficiency,
prevents soil erosion, plucking is more economic and weed growth is less.
Further, the failure to uproot dead tea bushes results in these acting as hosts
2/
i-f.M. Associates, CIDA/Government of Sri Lanka, Tea Master Plan, Colombo,
1979.
i-f.M. Associates, CIDA/Government of Sri Lanka, Labour Availability, Tea
Master Plan Position Pepar No. 4, Colombo, 1978.
FAO,
An Inventory Study of Tea Lands and Factories in Matale and
Kandy Districts, Rome (mimeo), 1978.
Fernando, Ninial A., Continuity and Change in Plantation Agriculture: A
Study of Sri Lanka's Land Reform Programme on Tea Plantations, Ph.D.
Thesis, University of Wisconsin. 1980.
142
POTENTIAL IN THE ESTATES SECTOR
for spore-transmitted root diseases which kill surrounding tea bushes. Failure
to fill vacancies, therefore results in a continuous decrease in bush density and
hence low yields.
Precise estimates of labour requirements for filling vacancies are difficult
to make as they vary with the terrain, location of vacancies and soil conditions. A program of filling vacancies implies labour for uprooting dead bushes,
holeing, weeding and fertilizer application. Apart from labour for the initial
stages, labour is also needed for re-supplying casualities in the first two years.
Yet, the significance of filling vacancies for labour absorption lies not in an
increase of labour for this process per Se, but the continuous increase in
labour input on tea lands with a high stand density owing to higher plucking
requirements. The subsequent increased productivity of such lands gives the
estates a financial capacity to undertake all cultural practices. Therefore,
filling vacancies is an initial step towards a self-sustaining higher labour
absorption in tea cultivation.
Replanting has been the major strategy adopted for increasing tea
production. The rapid increases in production and productivity achieved
between 1950 and 1965 were largely due to the replanting of old seedling tea
with Vegetatively Propagated (VP) clones. Although it has been a policy
objective to replant 2 per cent per year of the cultivated acreage with VP teas,
this has not been achieved in recent years. Replanted areas have fallen far
short of the target since the 1960s.
The impact of replanting on productivity is quite dramatic. While
seedling tea yields about 560—780 kgs of tea per ha, VP teas can produce
1,800—2,000 kgs or more per ha. The immediate disadvantages of replanting
are the income foregone by up-rooting and the cost of upkeep till plucking
becomes possible in about 5 to 6 years.
During replanting there is an increase in labour input for up—rooting, soil
rehabilitation and replanting. Labour which was utilized on bearing tea is
deployed for replanting and up-keep but a marginal increase is likely, if the
replanting programme is continuous and the leaf output was low on the
up—rooted tea. Since the fertilizer responsiveness of VP teas is greater, the
labour input for fertilization is higher. There would, however, be a slight
decrease in factory labour needs due to decline in tea output.
The bigger impact on incomes and employment of replanting is after 6
years when the VP teas are ready to pluck. The flush is much greater and,
therefore, areas under VP tea require more labour for plucking, especially
from about the 12th year when VP teas come into full bearing. In fact
plucking is the most labour intensive operation and it is mainly for this reason
that labour input per ha increases with increased output. The increased
output also implies more factory processing. The relationship between yield
and labour absorption is given in Table 2.
143
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 2
Relationship Between Yields and Labour Requirement
in Tea
Labour Requirement
Persons per Hectare
Yie Id per Hectare
.
•
1.98
2.22
2.45
2.69
2.94
3.19
3.41
4.06
900
1,100
1,120
1,230
1,340
1,460
1,570
1,680
Note: Calculated on the basis of a labour requirement of 1.98 units for tea
yielding 900 kgs per hectare and an incremental labour absorption ratio
of .005248 persons per hectare per kg.
It is useful to discuss the potential for increasing incomes and employment on tea lands by the traditional elevation categories of high grown (above
1,220 metres), mid—grown (610—1,220 metres) and low—grown (below
610 metres), as the characteristics of each of these categories vary. Most tea
lands (75 per cent) in the estate sector are in the first two categories.
(Table 3).
TABLE 3
Elevation
High Grown
Mid Grown
Low Grown
Total
Distribution of Tea Estates by Elevational Category— 1981
Extent
Hectare
Percent
of total
extent
Production Percent
Yield kgs
per hectare
Mn. kgs
of total
production
70,875
74,115
47,385
37
38
25
72.2
55.4
63.1
38
29
33
1,020
750
1,330
192,375
100
190.7
100
991
Source: Sri Lanke Tea Board
The mid grown tea areas have been the most neglected lands. Since
these teas fetched low prices, the most serious adverse impact of taxation
policies fell on them. Since a high proportion of these estates were
privately-owned, the financial crunch resulted in neglect and led to the lowest
levels of productivity (Table 3). Labour use has been lower than in the higher
tea areas, owing to poor management. Labour inputs are estimated at 2.5
144
POTENI1AL IN THE ESTATES SECTOR
per hectare, as against about 3.5 persons or more per hectare in the
higher yielding higher-elevation tea lands. Consequently, there is a good
potential for increasing labour use in rehabilitating these lands by filling
vacancies, replanting and better cultural practices. To rehabilitate the midcountry lands for tea growing, many steps in soil conservation, such as good
drainage and the growing of guatemala grass, may have to be taken. Rehabilitation would not bring in returns immediately, though considerable empersons
ployment would be generated. Some of the badly neglected land may have to
be diversified into crops such as pepper, cardamom, cloves and coffee, all of
which would increase incomes and provide more employment than at present.
Programmes of filling vacancies and replanting could easily raise the
labour input on these lands to over 2.97 labourers per ha. Considering the
fact that over 72,845 ha of tea are in the mid—country, and about 48,560 ha
of these have been neglected, the potential for increased labour absorption
would be in the region of 24,000 workers. This is by no means an over
estimate as the addition of a modest 0.49 persons per ha is all that is needed
to bring the labour input up to the new level.
Producitivity could be raised by this strategy from its present levels of an
average of 790 kgs per ha to over 1,200 kgs per ha. As remunaration for
estate workers is related to output via the number of days work offered as well
as output norms and incentive payments, their earnings would increase.
In the high grown areas too, a big potential for filling vacancies has been
identified. However, in these areas soil erosion is less, vacancy rates are lower
and crop diversification is considered undesirable at least for the present.
Even so about 40,500 ha could possibly be filled.
In the low country, considerable productivity increases could be
achieved by replanting seedling tea as well as by filling vacancies. Low-grown
teas have the highest yield potential but owing to poor cultural practices
attained yields are only moderately high.
The estimated extent of land available for filling and replanting in estates
by elevation categories is summarised in Table 4.
TABLE 4
Approximate Estimates of Tea Estate Lands for Filling
&
Replanting by Elevation
Hectares
High
Mid
Low
Total
Replanting
40,470
12,140
30,350
18,210
16,200
24,300
87,020
54.650
Total
52,610
48,560
40,500
141,670
Filling
145
PLANTATION AGRICULTURE IN SRI LANKA
Diversification
Diversification of tea lands into other crops has been one of the most
controversial issues. Pessimism on the prospects of the tea market in the late
fifties and sixties, coupled with the neglect of tea lands, gave an impetus to
diversification as an important strategy for increasing productivity and employment. The concept of diversifying "Marginal Tea Lands"1' was widely
advocated as a rational policy. The establishment of the National Agricultural
Diversification and Settlement Authority (NADSA) to diversify 'marginal' tea
land in the Kandy, Kegalle and Matale districts was an institutionalised expression of this policy. A number of crops such as coffee, cocoa, cardamom,
cloves, pepper are estimated as capable of a higher return and higher
employment than tea.
Several limitations may be mentioned with regard to diversification.
Lands may be considered 'marginal' merely because present yields are low.
Yet low yields may be due to neglect rather than to low potential of the lands.
Tea is a very hardy crop and if yields are low, it may be due to poor soil
conditions. To grow other crops successfully the rehabilitation of the soil
becomes a prior requirement. Large—scale diversification may be a difficult proposition owing to managerial and labour difficulties.
The failure of NADSA, despite considerable financial assistance from
the World Bank, in a sense underscores these difficulties. In any event, the
total extent of land available for diversification may be more limited than one
is led to believe.
Other Income Generation Activities
The use of marginal tea lands and unutiiized tracts of land within estates
for other crops is significant for increasing incomes of estate workers. Although no inventory exists to indicate the total extent of uncultivated land, it
is generally known that larger estates have significant uncultivated areas. For
example, 19 estates in the Badulla area had about 11 per cent of land in
patna, jungle and waste land, while 5 estates in Matale had 22 per cent of
their land in these categories.21 The fact that 30 per cent of lands vested under
the Land Reform Law of 1972 was uncultivated is an indication of the
significant availability of such land for cultivation of other crops. It must,
however, be recognised that the actual area cultivable
be less than these
figures indicate owing to the need to keep some lands under forest cover while
others may not be suitable for cultivation.
2/
Marginal tea lands have been defined variously but are generally considered to
yield less than 560 kgs per ha.
Asian Development Bank, Feasibility Study and Project Preparation for the
Sri Lanka Integrated Tea Development Project, Colombo (mimeo), 1980,
Table 5.2
146
POTENTIAL IN THE ESTATES SECTOR
Lands which are under forest cover may be suitable for the cultivation of
cardamom which requires filtered light. There are fair extents of patna and
grassland which could provide pasture for rearing high milk yielding cattle.
Livestock development" could be on a fairly large scale on these lands as an
ancillary activity to tea cultivation. Sericulture, by growing mulberry, offers
another prospect for labour absorption. Ravines and marshes and lands near
labour lines and cottages could be made to yield valuable output, especially of
vegetables. The estates should consider the development of these lands by the
workers as a part of their activities and offer extension services, inputs, credit
and organised marketing channels.21 Such effective participation by the estates could indeed transform the real income levels of workers.
Rubber Estates
The distribution of rubber lands by estates and small-holdings is given in
Table 5. The Rubber Controller's estimates are considered high as some lands
registered are not in fact cultivated with rubber. An inventory of rubber lands
undertaken by the Rubber Industry Master Plan Study (henceforth Master
Plan) indicated the total cultivated area to be about 25 per cent less at
208,418 ha.31
TABLE 5
Distribution of Rubber Lands
Estates
State
Private
Sector
Extent (ha)
71,631
(67,179)
Percent
of Total
(32)
Percent of
Estates
27
Total
Estates
Total
Small
Holdings
I
105,625 177,256
(41,279) (108,458)
40
67
(20)
(52)
40
60
(62)
(38)
100
(100)
87,009
264,265
(99,959)
33
(208,418)
100
(48)
(100)
—
—
Sources: Rubber Controller
Rubber Industry Master Plan (Estimates in Brackets).
Includes non—estate holdings owned by government.
The dairy development scheme for estate labour sponsored by the Ministry of
2
/
3/
Rural Industrial Development is an example.
See Central Bank of Ceylon, Credit Information Bulletin 2, Dairy Farming,
Colombo, 1982.
Commonwealth Development Corporation, Report on the Rubber Industry
Master Plan Study, London, 1979.
147
PLANTATION AGRICULTURE IN SRI LANKA
The main strategy for increasing employment on rubber estates is by
replanting. It is only by increasing the area of replanted rubber that production can be increased. Interplanting with rubber has been practised only to a
moderate extent but crop budgets indicate increased incomes form intercropping. Diversification from rubber into tea at higher elevations and into
coconut and oil palm at lower elevations may yield higher returns, but there
are no estimates of the extent of land available within rubber estates for
diversification into other crops.
Productivity Increases
Till 1962 the rubber replanting programme proceeded satisfactorily
with about 74,868 ha being replanted between 1953-62. Since then replanting has declined and the Master Plan, estimated that 67,350 ha of rubber
needed replanting in the estate sector.1' When adjustments are made for
progress since then, at least 60,700 ha may require replanting.
The labour absorption in rubber is around 1.2 persons per ha on
average. Aged plantations, which are low yielding, absorb much less than
this. As illustrated in Table 6, per hectare labour inputs increase with increasing yields.
TABLE 6
Relationship Between Yields and Labour Requirement
in Rubber
Labour Requirement
Persons per hectare
Yield per hectare
kgs
0.99
1.16
1.33
1.48
1.66
450
670
900
1,100
1,300
Note: Calculated on the besis of 1.00 person per hectare required on a yield
level of 450 kg per hectare and an incremental absorption ratio of
0.0003838 person per ha per kg.
The labour requirements for replanting under estate conditions are given
in Table 7. These indicate that during the first eight years of replanting labour
requirements per hectare are a maximum of 1.09 in the 1st year and a
minimum of 0.47 in the 6th and 7th years. Therefore replanting per se does
not increase employment in the short-run. In fact replanted areas not in
bearing will absorb less than 1.2 persons per hectare—about 0.7 to 1.0
'I op. cit.. p. 9
148
POTENTIAL IN THE ESTATES SECTOR
TABLE 7
Activity
Year
1
2
3
4
5
6
7
8
Labour Requirements for Replanting Rubber
Man Days per
hectare
Labour Unites
284
257
121
121
131
1.09
1.09
0.62
0.62
0.59
0.47
0.47
0.49
1,389
0.67
Preliminary work
Planting
Up—keep (1st year)
Up—keep (2nd year)
Up—keep (3rd year)
Up—keep (4th year)
Up—keep (5th year)
Up—keep (6th year)
per hectare
161
158
156
Total/Average
Source: Janatha Estate Development Board
persons per hectare. But replanting does increase employment once tapping
commences. Once yields attain about 500 kgs per hectare, employment
grows to 1.5 hectare. At full maturity (14-15 years after replanting) latex
output is much higher. Since tappers are often paid by output, wages and
incomes would rise with increasing yields.
Inter•cropping
Since rubber is often grown at a spacing of 20 X 12 ft., there is a
possibility of growing other crops between the trees. The main constraint for
inter—cropping with mature rubber is the poor light filtration caused by
overhead branches. Also, in many areas rubber is grown on slopes and rocky
terrain which permits other cultivation on a limited scale only. Newly replanted rubber lands have a greater potential for inter—cropping during the
first 6—7 years.
On flat land in the low country areas bananas and pineapple could be
grown, while passion fruit and coffee could also be grown in hilly and
some—what rocky terrain. Cocoa has been successfully inter—cropped with
rubber in Malaysia but the Rubber Research Institute is of the view that in Sri
Lanka inter—cropping with cocoa would decrease rubber yields. Many
small holders do inter—crop their replanted areas with bananas.
Crop budgets prepared by the Master Plan indicate substantial rise in
income for small holder inter—cropping of rubber with bananas, coffee and
pineapple. Calculations of increases in income on an 8 year basis are sum-
marised in Table 8. Yet, the report is cautious about success under estate
conditions.2t
2/
Rubber Industry Master Plan Study, op. cit.
Ibid.. pp. 4—12.
149
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 8
Net Return for Small holder Inter—cropping for an 8
Year Period
Rs. per hectare
Crop
7,700
54,760
27,700
75,000
Only Rubber
Rubber/Banana
Rubber/Coffee
Rubber/Pineapple
Source: Rubber Industry Master Plan Vol. VI Tables 1 & 2 and 10—13.
The
Master Plan considers inter—cropping on estates as being at an
experimantal stage and therefore does not recommend it. It states, inter a/ia:
There is undoubtedly a conflict of interest and opinion in regard to the
desirability of inter—cropping rubber, the rubber field experts considering
that, to achieve a fully productive rubber tree, full effort and investment
should be directed to mono—culture, each crop being grown separately
and intensively.1'
Despite these comments, it is likely that the Research Institutes experimental results could be implemented under estate conditions.
Further, if inter-cropping results in higher total returns, then rubber
replanting should be more widely spaced to permit more sunlight for other
crops, especially coffee and cocoa, as permanent inter-crops. The two state
corporations could undertake inter-cropping and generate the data for a
conclusive economic evaluation under estate conditions.
Other Income Generation Activities
The growing of fodder grass as the basis for a livestock industry is an
important area of investigation. Poultry and pig—raising are other enterprises
which offer possibilities, though not necessarily enjoying special advantages
on rubber estates.
Coconut Estates
Coconut is largely a small holder crop and a significant proportion of
the estimated 0.45 million ha are in home gardens. The Agricultural Census
of 1962 disclosed that nearly 50 per cent of the coconut area was in units of
over 4 ha. Around 27 per cent was in holdings of 20 ha and above.
About 48,600 ha of coconut lands were vested in the State under the
two Land Reform Laws. The two main State Corporations managing planRubber Industry Master Plan Study, oo. cit.. p. ii.
150
POTENTIAL IN THE ESTATES SECTOR
tations have about 48,000 ha between them. A fair extent of coconut lands
are in private holdings of between 4 and 20 ha.
Some salient features of the coconut estate sector may be summarised as
follows:
(a) The estates are predominently mono—cropped lands; there is very
little inter — cropping.
(b) Productivity of coconuts is far below the potential.
(c) Levels of per ha employment are the lowest among major crops.
The potential available for raising both employment and output on lands
occupied by coconuts, through improving the coconut crop and introducing
inter — cropping
and livestock is quite high. This potential is also very high for
small holdings. Since a discussion of these possibilities is the subject of a
separate paper in this volume, this section will raise only the more important
issues relevant to the estate sector.
The estate sector has certain advantages over small holdings which
enable it to undertake development activities on a more systematic and an
extensive scale. Among these the following appear to be the more important
ones.
(a) State ownership of 48,000 ha of coconut lands offers possibilities for
undertaking systematic largescale development programmes for
these lands. Such lands can benefit from the advantages of greater
accessibility to resources, research findings and extension services.
(b) Private estates also can be assumed to have advantages in respect of
credit and 'know how' required for undertaking developmental activities.
(c)
can be organised by large estates due to the large size of
the operation.
(d) The estates also have the advantage of undertaking certain economic activities which the small holders are unable to adopt (e.g.
cultivation of inter — crops with a long gestation period or largescale
development of livestock). They are also in a better position to
specialise in the production of certain crops.
While the above factors seem to offer clear advantages for the estates,
the experience so far has not been very encouraging. Some of these advantages are now being exploited by the estates under state management, but
a large acreage of private estates held by absentee landlords are the most
neglected and least utilized. A solution to this problem appears to be the key
issue in raising productivity of these lands.
151
PLANTATION AGRICULTURE IN SRI LANKA
Other Crops
The discussion of eatate crops is generally confined to the three main
export crops. This is due to their overwhelming importance, the lack of data
on other crops and the fact that most other crops are grown under mixed
cultivation. These other crops include, cocoa, coffee, cinnamon, cardamom,
citronella and pepper. Estimates of the areas grown are given in Table 9.
TABLE 9
Extents Under Other Crops
Hectares
Crops
8,500
22,300
5,300
3,400
9,100
Cocoa
Cinnamon
Cardamom
Citronella
Pepper
The size distribution of holdings of these crops is not available, but it is
generally known that only cocoa can be considered as an estate crop: the
others are grown mainly in small holdings, or as mixed crops on certain
estates.
Cocoa yields are estimated to be in the region of about 250—380 kgs.
per ha which is extremely low by international comparison. Malaysia for
instance has a yield of around 1,300 kgs. per ha. Poor planting material, low
stand per acre, insufficient or excessive shade, senility of significant areas of
cocoa plantations and a virus disease (vein clearing disease) account for the
low yields."
A considerable potential exists for increasing yields by replanting with
clonal variaties and following improved methods of cultivation. It should also
be possible to increase the area planted with cocoa. If inter—cultivation of
cocoa with rubber and with coconut is considered economically advantageous, the area under cocoa could be increased considerably.
The discussion on cocoa is illustrative of the long years of neglect of
other plantation crops. The realization of the export potential of these crops,
the establishment of the Minor Export Crops Department and the development of research and subsidy schemes for several of them should enable new
areas to be planted, old areas to be replanted and a more scientific approach
to cultivation. Since the total extent capable of cultivation under these crops
is not insignificant (perhaps about 81,000 ha), such systematic cultivation
Ariyaratnam, E.A., Development of Cocoa Industry in Matale, Kurunegala
and Kandy Districts, Agricultural Diversification Project, Ministry of Agriculture and Lands, Peradeniya, 1978.
152
POTENTIAL IN THE ESTATES SECTOR
yield substantial increases in output and employment opportunities.
The other aspect that should not go unnoticed is the possibility of growing
new crops such as oil palm on estates.
should
This brief discussion has been included in this paper to focus attention on
the fact that there are other crops whose systematic and scientific cultivation
on estates, either as mono—crops or as inter—crops, could substantially
increase employment and incomes. These include crops already prown on
estates as well as crops which could be newly cultivated. Although more
specific and detailed discussion of these crops is difficult without adequate
data, an overall assessment indicates that their development should afford
significant increases in employment and incomes.
Conclusion
In both tea and rubber estates there is a considerable potential for
increasing incomes and employment through replanting with higher yielding
clones and improved cultural practices. Tea also offers an immediate possi.
bility of increased employment by raising bush density.
The use of unutilised land areas on tea estates also offers possibilities of
reducing under—employment and increasing the real incomes of estate
workers by promoting ancillary activities such as livestock, vegetable cultivation etc. The posibility of exploiting hitherto unutilised land may be more
limited on rubber estates.
In the case of coconuts estates though replanting, under planting, and
improved cultural practices can lead to some increase in employment it is
intensive inter—cropping and livestock development that offer the highest
potential for raising employment and incomes.
The intensification of land use and the undertaking of ancillary activities
on estates would require a drastic change in attitudes and approaches of the
estate managers who are traditionally mono—crop oriented. A new approach
of planning all agricultural activities of the estate with a view to maximising
total output and revenue, rather than the main crop has to be adopted.
Estates would have to be conceived of as farms. Further, estate workers may
have to be involved in these new tasks on a different basis than as wage
labour. This may include leasing land to them, working on a produce sharing
basis or granting the entirety of the benefits to them but assisting them with
inputs, technical knowledge, credit and marketing.
While potential for increased employment and incomes exist in the
estate sector, its realisation would require considerable amounts of financial
resources, scientific research, planning and development of management
skills and incentive systems.
153
Seven
EMPLOYMENT AND DEVELOPMENT
PROBLEMS IN THE TEA AND
RUBBER SMALL HOLDINGS SECTORS
A.B. Dissanayake
Introduction
In both tea and rubber, all holdings below an extent of 4 hectares are
considered small holdings. On this basis 20 per cent and 31 per cent of the
total acreage under tea and rubber respectively comprise small holdings. In
general, the small holdings in both crops have long remained in a relatively
neglected state. Output and employment had stagnated at low levels owing to
poor management, despite various programmes aimed at improving the
performance. Since the tea and rubber small holdings are located in the
densely populated regions of the country, their improvement can have a
considerable impact on employment and incomes in those regions.
This paper attempts to provide an overview of the current status of the
tea and rubber small holdings sector and to examine the potential for improving its performance. Owing to differences in cultivation, harvesting and
processing technologies, the two crops will be discussed separately.
The Tea Small holdings Sector
Structure
Accurate data on the tea small holding sector in respect of tenure and
size of holding are not available for the whole Island. A survey conducted in
1971 estimated the average size of a tea small holding at 0.39 ha. Information
Ministry of Plantation Industries, Sample Survey of Tea Small holdings and
Estates, (mimeo) Colombo, 1971.
155
0',
(71
I-
-
0.8
- 0.4
No. of
6,006
100
17,189
104
1,913
1,361
970
360
398
354
342
308
(ha)
area
73.0
15.4
6.5
1.5
1.3
0.9
0.7
0.6
% of total
12,544
2,647
1,117
265
222
166
124
holdings
Galle District
100
31.8
22.7
16.2
6.0
6.6
5.9
5.7
5.1
area
% of
0.35
0.15
0.51
0.87
1.36
1.79
2.13
2.76
2.96
average
size (ha)
No.of
10,833
198
142
148
103
6,322
2,233
1,405
282
holdings
100
13.0
2.6
1.8
1.3
1.4
0.9
58.4
20.6
% of total
3.59
6.8
100
5,415
7.5
0.50
0.85
0.51
1.35
1.77
2.12
2.74
21.1
22.1
7.0
6.5
5.6
0.20
>
I-
(1)
-z
rn
r
C
>
0
z
size (ha)
23.4
>
Average
area
-I
r
% of
1,265
1,141
1,199
382
351
302
405
370
(ha)
area
Matara District
Size Distribution of Tea Small Holdings in Galle and Matara Districts
Source: Calculated from records of the Tea Controller's Department (lCD.) and
Canadian International Development Agency, Tea Master Plan, Vol.Vl,
1979- 81.
Total
2.4 - 3.2
3.2 - 4.0
2.0 - 2.4
1.6-2.0
0.8 - 1.2
0.0
0.4
(Hectares)
Holding Size
TABLE 1
DEVELOPMENT OF TEA AND RUBBER SMALL
available for the two Southern low country districts of Galle and Matara which
account for 22 per cent of the total small holding acreage of the Island shows
that 73 per cent and 58 per cent of the small holdings in the two respective
districts were less than 0.4 ha in size. Within this group the average size of a
holding was only 0.15 ha and 0.20 ha respectively for the two districts, (Table
1). The position is unlikely to be much different in the other tea growing areas.
Further, all the holdings below 2.0 ha in extent and a little under 90 per cent
of the holdings in the 2—4 ha size class were found to be owner operated."
Thus over 90 per cent of the tea small holdings are operated as family farms.
The greatest concentration of small holdings (57 per cent of the area) is
in the mid—country, primarily in the Kandy district, where tea small holdings
in Sri Lanka first developed on a substantial scale in the 1920s and 1930s.
However, there has been some withdrawal of small holdings from tea production by abandonment and/or inter— planting with other crops. As a result
there may have been a decline in the number and area of tea small holdings
in this region. The extent of small holdings in the low grown region is around
27 per cent while that in the high grown region is only about 16 per cent.
Production and Employment Characteristics
Reliable data on production levels are not available for small holdings.
Hence it has to be arrived at by a process of deduction. Green leaf plucked
from both small holdings and small estates are processed in tea factories of the
large estates. Fortunately these factories keep data on bought leaf. They also
maintain records of the extents of estates and small holdings that supply the
bought leaf. On the basis of data presented in Table 2, the average yield of
made
for both groups was 762 kg/ha/year, for 1977. The district—wise
yields are given in the last column of the table. Assuming that the estates
selling green leaf to large estates in any area have the same production as the
latter, we have calculated (using the average yield of estates in each area) the
production of small estates selling green leaf to large estates for processing.
The estimates are shown in colomn (4) of Table 3. When this amount is
deducted from the total tea produced from bought leaf, (column 5), the
estimated production of small holdings can be arrived at as shown in coloumn
6. On this basis the average yield of small holdings, works out to only 667 kg
3)2I
of made tea per year per hectare (last column, Table
The last column of Table 3 highlights several important points. Firstly,
the average per hectare yield is the lowest on small holdings compared with
large and small estates. It is lower by over 25 per cent of the average yield in
the estate sector. Secondly, in seven out of the ten districts given in the table,
2/
Ministry of Plantation Industries, 1971, op. cit.
The rate of conversion from green leaf to made tea is 4.5:1, so that 667 kg of
made tea is (667 X4.5) 3,000 kg of green leaf per ha per year.
157
L = Low-grown
M = Mid-grown
Note: H = High-grown
Source: Tea Controller's Department
(lCD.)
146,835,457
159,955
Total
Kalutara
Colombo
Galle
Matara
(L)
(M)
(M)
(L)
(L)
(L)
(L)
(H)
16191,847
2,507,792
4,604,520
4,531,280
4,069,664
3,250,988
402,800
Matale
Kegalle
Ratnapura
41,450,712
35,281,457
34,544,397
38,377
48,526
29,964
18,875
5,531
7,059
3,972
3,939
3,338
374
(H)
Nuwara Ellya
Kandy
Badulla
(M)
Quantity (kg)
Area (ha)
Estate tea
918
4,489
21,409
7,613
9,657
2,362
5,556
10,698
11,144
1,688
455
81,051
143
31,945
49,106
(ha)
Total area
SH+estates
Bought leaf tea
1,251
9,600
3,333
4,065
1,539
1,910
5,262
4,462
380
•ates (ha)
Area of est—
3,238
17,809
4,280
5,592
823
3,646
5,436
6,682
1,288
312
(ha)
kg/ha
1,080
727
1,158
858
453
652
1,141
1,083
974
1,077
Area of SH
Average yield
Production of Tea (Estate + Bought Leaf) by Districts 1977
District
TABLE 2
Average
519
844
672
440
282
1,240
1,208
532
426
762
61,736,397
981
yield kg/ha
4,180,770
14,231,596
6,423,886
6,488,334
1,038,421
1,621,965
13,269,291
13,400,811
887,311
193,932
kg
Quantity tea
>
z
(1,
z
m
2
r
C.)
0z
-I
>
-I
;
154,011
1,077
918
143
31945
28,980,570
1,351,080
6,979,200
3,859,614
3,487,770
697,167
1,245,320
6,003,942
4,832,346
370,120
1,080
727
1,158
858
453
652
1,141
1,083
974
9,600
3,333
4,065
1,539
1,910
5,262
4,462
380
61,736,397
193,932
4,180,770
14,231,596
6,423,886
6,488,334
1,038,421
1,621,965
13,269,291
13,400,891
877,311
estates (kg)
(kg/ha)
estates (ha)
1,251
Total quantity
bought leaf (kg)
Estimated
production of
Av. yield of
estates
32,755,827
39,921
2,829,690
7,252,396
2,564,272
3,000,564
341,254
376,645
7,265,349
8,568,545
517,191
Balance from
SH (kg)
Estimated Yield of Tea Small Holdings 1977
Leaf bought
area of
Source: Calculated from lCD. records
Total
Matale
Kegalle
Matara
Galle
Kalutara
Colombo
Kurunegala etc.
Nuwara Eliya
Kandy
Badulla
Ratnapura
District
TABLE 3
49,106
312
3,238
17,809
4,280
5,592
823
3,646
5,436
6,682
1,288
Acreage of SH
from which
bought (ha)
Estimated
667
128
874
407
599
537
415
103
1337
1282
402
av. yield of
SH kg/ha
rn
C
z
-1
PLANTATION AGRICULTURE IN SRI LANKA
the
yield level is below the average yield for small holdings. Only three
districts have recorded yields above the average. Thirdly, two districts have
obtained per hectare yields which are double the national average for small
holdings and the district average of the estate sector. Even more significant is
the fact that the yield levels of the small holdings of these two districts record
the highest for all sectors of tea.
When looked at extent—wise, it is only on 31 per cent of the total extent
under small holdings that the per hectare yields exceeded the average, while
on 49 per cent of the extent the yield was less than 425 kg per hectare. A
closer look at Table 3 also indicates variations in yield levels of small holdings
between major tea producing regions of the country, namely, high—grown,
mid—grown and low—grown. The large region—wise yield variation is clearly
seen from the average figures given below.21
Yield (kg/ha)
Region
Nigh—grown
717.5
Mid—grown
393.6
Low—grown
1,243.8
Precise quantitative data on labour use and employment on the small
holdings in respect of different regions are not available. We have therefore to
resort to an estimation of labour input on the basis of the yield of tea on small
holdings as given in Table 3. The formula used is that employed in Table 5.
It must be noted that in the case of small holdings, the factory labour
requirement does not enter into the total labour input figure, since all small
holdings sell their green leaf to factories.
On the basis of the formula used in Table 5, the average annual labour
input at the current yield level ranges from 350—377 man days. However, as
there are vast differences in the yields among districts, there are notable
The very low yield figure for the mid—country is partly due to the method of
estimation. The total production of mid—country tea is divided by an acreage
which- must be larger than the actual extent in production. Considerable extents
of mid—country tea lands have been utilised for other purposes.
On the other hand in the low country, specially in Galle and Matara districts.
new planting has occurred outside the subsidy schemes and would, therefore.
be unregistered by the Tea Commissioner's Department. Thus the production
of all these lands is divided by the registered acreage (lower than actual acreage)
ijt. calculating the average yield resulting in a much higher figure than the actual
figure. This could partly account for the very high average yield figures for
these two districts. However, even if adjustments are made, the mid—country will
remain the lowest—yielding area and Galle and Matara the highest—yielding area.
160
DEVELOPMENT OF TEA AND RUBBER SMALL HOLDINGS
variations in labour use as well. Since, almost 50 per cent of the small holdings
tea extent yields less than 425 kg/ha, the average labour input on such lands
approximate 230 days/ha per year. On 8 per cent of the tea extent, the
labour input drops to 75 man days/ha per year. In the two high—yielding
districts of Matara and Galle, however, which account for 22 per cent of the
tea small holdings area in the country, the labour use figures stand at
570—600 man days per hectare per year. The performance of the
category, despite possible agro — ecological advantages these
areas enjoy, clearly reveals the potential available for increasing labour use on
a large proportion of the country's low—yielding tea small holdings.
low — grown
Incomes of Tea Small holders
Data inadequacies are even more serious on incomes of tea small
holders. While the major factor influencing their incomes is the level of
production, it is also affected by the quality of the tea manufactured (which is
largely a function of the quality of green leaf), the price of made tea and the
functioning of the marketing system.'1 Net incomes would also vary depending on the proportion of hired labour used. In the absence of reliable data
on the above variables, any discussion of incomes of the tea small holdings has
to be based on estimates of the yield per hectare.
At the 1982 average price of green leaf which stood at Rs.4 per kg, the
annual gross income from a hectare of small holder tea would have been
Rs.12,000 (at 3,000 kg of green leaf/ha). The cost of production of a hectare
of small holding tea at a yield level of 3,000 kg of green leaf is given in Table
4. The table indicates the considerable drop in the cost of production with the
increase in per hectare yield. The labour costs given in the table include cost
of all labour inputs (both hired and family). Thus on the basis of this data the
net profit per hectare of a small holding yielding 3,000 kg of green leaf is only
Rs.540 per year, which is very low. The profit margin will vary depending on
several factors such as: the prevailing wage rates in the area and the cost of
transport. We earlier noted that only 29 per cent of the extent of tea small
holdings obtained a yield exceeding the national small holding average.
The income to the family from the holding will increase if more family
labour is used instead of hired labour. Where the small holding is operated by
the owner, family labour would normally be used for all sundry work and
plucking, and hired labour only where family labour is insufficient and where
special skills are required such as in "pruning"
It is well known that the farm gate prices of small holder tea are far below the
market price owing to middlemen intervention, see, Silva, M.D. de, e.al. Tea
Small holdings Sector Draft Report for the Ministry of Plan Implementation,
1980, and Piyadasa, H., Cost of Production of One Kilogram of Green
leaf, an Internal Report of TSHDA, Galle Region, 1981.
161
a.'
I—
429
21
11,454 ÷ 3,000
10,214
546
250
Kgs.
3.82
1,240
240
1,000
Rs.
Materials
Quantity
Cost
150
4,160
18,332 ÷ 6,000 = 3.06
18,332
14,352
3,980
617
11,454
3,890
7,350
372
260
1,300
1,260
780
390
7,350
372
260
1,300
3,500
3,900
Rs.
Cost
Total
480
30
50
12
10
350
875
Rs.
Materials
Cost
Quantity
786
1,156
4,200
372
260
520
15
Rs.
Man days
Rs.
3,900
Cost
Cost
Labour
Quantity
Total
— Covers the cost of meals provided by the employer.
At the production level of 6,000 kg green leaf/ha, the plucking average has been increased to 17 kg of green leaf per plucker
from the 15 kg/plucker used for the lower production level.
Source: Based on the calculations of Mr. H. Piyadasa, Regional Manager, TSHDA Galle and discussions with small holders.
• The following wage rates have been used
= Rs.21.00
i. Pluckers Rs. 15.00 + 6.00
ii. Pruners Rs. 25.00 + 6.00 = Rs.31.00
iii. Other labour Rs. 20.00 + 6.00 = Rs.26.00
Cost of production per kg. green leaf
Total cost
2. Vehicle charges
1. Leaf
20
Sundry work
Transportation of leaf
200
12
10
156
4,200
372
260
520
6
4,160
Rs.
Man Days
160
Cost
Labour
Quantity
Pruning
Lopping shade trees
2. Application
Fertiliser application
1. Fertiliser
Weeding
Item of Work
Production Level 6,000 kg Green Leaf/ha
Cost of Production* of Green Leaf on Tea Small Holdings (Rs/ha)
Production Level 3,000 kg Green Leaf/ha
TABLE 4
I
0
z
-I
z-I
DEVELOPMENT OF TEA AND RUBBER SMALL HOLDINGS
Factors Affecting Productivity and Employment
Intensity of lobour use in tea small holdings is affected by two sets of
factors. First is the yield of green leaf which strongly determines the quantum
of plucking labour. The second is the intensity of cultural practices adopted
and the development work undertaken to improve the land, which in turn
would determine the overall yield level. The current low yield level of almost
75 per cent of the extent under small holdings is a clear indication of poor
mananagement, i.e. poor cultural practices and inadequate development
work as reflected in low replanting levels, low bush densities, poor levels of
land and soil management and low levels of fertiliser use. Thus, between
85—90 per cent of small holdings had significant bush vacancies, 15 per cent
suffered from heavy erosion and 63 per cent from light erosion. Only 21 per
cent of the holdings applied any fertiliser.1"
Despite the existence of a subsidy scheme for replanting of tea, the rate
of replanting has remained low. The subsidy scheme aims at replanting 2 per
cent of the acreage every year on the basis of a 50— year economic life span
for the tea bush. However, between 1959 and 1981, both years inclusive, the
total extent of tea lands replanted was 38,766 ha which works out to an
average of only 1,686 ha per year. This is only 0.6 per cent of the total
acreage and is far short of the anticipated 2 per cent.
In the case of the small holdings, the situation could certainly be worse.
Besides the inadequacy of the subsidy2t itself, the organisational inadequacies
have prevented many small holders from benefiting from the scheme.
The slow rate of filling of lost or unproductive tea bushes has also been
a major factor contributing to the persistent low levels of productivity on a
large part of the tea small holdings. A subsidy scheme also exists for filling
vacancies and is available to tea lands where the number of bush vacancies
does not exceed 3700 per ha.31 This limit makes those lands with a higher
rate of vacancies ineligible for the subsidy. They are left with no alternative
but to replant (using the replanting subsidy) with consequent loss of income
until bearing. Only a few small holders can afford such replanting.
The application of fertiliser is one of the most important ways of raising
the output of green leaf and, therefore, of labour use. Given good weather
conditions, the impact of fertiliser application is felt immediately. The present
level of fertiliser use in tea small holdings is not known. The record of a central
tea factory in South Sri Lanka indicate that 40 per cent of the small holders
Ministry of Plantation Industries, 1971, op. cit.,
It
has been estimated that the current cost of replanting a hectare of tea is
Rs.50,000. However, the present subsidy is only Rs.30,900/ha.
/ The subsidy is Rs.2 per plant (Rp. 1 at filling and the other
later).
163
1 three years
PLANTATION AGRICULTURE IN SRI LANKA
selling green leaf had applied fertiliser in 1981.1/ However, this is one of the
highest—yielding tea areas in the country. Records of Derangala and Neluwa
factories in Galle district indicate that only 13 per cent and 16 per cent of the
tea small holders who sell their green leaf to the respective factories obtain
their fertiliser requirements from them, despite the issue of fertiliser on loan
to small holders with a two—month repayment period.2' One factor responsible for the low application of fertiliser in recent years has been the high
cost of fertiliser and the lack of an easy credit system whereby the repayment
is spread over a sufficiently long period so that it would not be a financial
strain on the small holder.
Potential
Two major possibilities are available for increasing employment and
incomes on tea small holdings. One is by improving the productivity of the tea
crop and the other by the cultivation of inter—crops.
As seen earlier, accurate data on the extents of small holdings that need
replanting and filling vacancies are not available. However, the current yield
levels shown in Table 3 give some idea of the productivity of small holdings
in different districts and the extents obtaining different yield levels. While
these yield levels may indicate, to some extent, the low levels of fertiliser
application, they nevertheless, also reflect the poor condition of a large extent
of small holdings. Table 3 has also shown that productivity levels are the
lowest in the mid—country regions which account for almost 60 per cent of
the total tea small holding area in the country, with an average yield of only
394 kg/ha per year, (this is only 1/3 the average of the low—grown areas).
Thus there is a tremendous potential for raising the productivity of
tea small holdings. It is also considerable in high grown areas.
Even in the low grown areas, some potential exist for improving productivity
mid — grown
through better management practices. The most important strategies required to increase productivity are:
I.
Increased use of fertiliser,
ii.
Increasing bush density through filling of vacancies,
iii.
Replanting of old tea lands,
iv. Adoption of proper land and soil improvement measures.
The successful undertaking of these would depend on the formulation of a
common set of policies (with due consideration being given to regional variations) supported by adequate institutional arrangements.
Fernando,
N., Study of Tea Small holdings in Kalubowitiyana, (Matara District)
Draft Report, Department of Economic Research, Central Bank of Ceylon,
2/
1982.
Fernando, N., ibid.
164
DEVELOPMENT OF TEA AND RUBBER SMALL HOLDINGS
Implications on labour use of a progressive increase in yield levels are
shown in Table 5. It is seen that the doubling of the average yield which is an
achievable potential, increases total lobour use by over 60 per cent. The
potential for such an increase is seen particularly in mid—grown areas, where
the yield levels are very low. The labour use figures given in the
table,however, can be achieved only after raising the productivity of the land
to the commensurate yield levels. This would take several years. However, in
a large extent of the low poductive small holdings, the activities which need
to be undertaken (land improvement, replanting, filling vacancies etc.), would
offer considerable opportunities for additional employment even in the short
run. Given the short—run implications of a large scale replanting programme
entailing loss of employment (especially loss of plucking labour) and incomes,
an accelerated programme of filling vacancies and use of fertiliser along with
soil conservation appears preferable.
As filling of vacancies amount to replacing the plants that have died,
there appears to be a need for allowing the small holdings with a greater
density of vacancies (say 7,400 vacancies per ha)to be eligible for the replanting subsidy. This can help to reduce the loss of income owing to uprooting of yielding tea bushes. Along with this, the subsidy for filling vacancies, which is grossly inadequate, can be raised.'1
As the response of tea to fertiliser is both very high and quick, there is
an immediate possibility of raising output and employment by expanding
fertiliser use on small holdings. One practical way of assisting the small
holders to use fertiliser in a context of high cost and lack of an easy credit
system is by evolving a scheme along the lines of the Replanting Subsidy
Scheme in which a replanting cess is deducted from the sale price of tea. The
factory purchasing green leaf could provide fertiliser and the cost be recovered in stages from the payments due for green leaf.
The question of inter—cropping on tea lands has to be looked at from
several aspects. One relates to the possibility of raising income and employment by intensifying the tea crop, which is already a very labour intensive
crop and on which the knowhow is already available. The other is that there
are alternative lands, such as coconut, which may be better suited for
inter—crops. Also the suitability of tea lands for inter—cropping would depend on terrain and agro—climatic conditions.
H.D., The Constraints and Problems Affecting the Tea Small
holdings Sector in Sri Lanka, Thesis presented to the University of Reading,
Jayasinghe,
1982.
165
403
503
606
202
303
(b)
115
110
124
124
120
(a)
143
139
136
149
146
(b)
Factory
55
67
22
33
44
md/ha/yr
Drivers
10
12
4
6
8
md/ha/yr
680
789
350
463
572
(a)
(b)
Using
ha/yr
598
707
821
377
488
(b)
Total Labour
formula worked out for estates in the Tea Master Plan
1) Plucking labour ha/yr = yield (kg/ha/yr/) X 1/2 out turn tea/green leaf kg.green leaf/plucker/day
111 Field sundry labour ha/yr = 156-0.01 x yield (kg/ha/yr)
Requirement of factory labour is based on the average output per worker per day of 30 kg made tea/day
(c)
Source: Author's estimates.
average intake per day after plucking 15 kg green leaf per day per plucker.
500
600
7,500
9,000
1,660
2,000
Using
200
300
400
3,000
4,500
6,000
667
1,000
1,330
lal
(a)
kg/ha/yr
md/ha/yr
kg/ha/yr
Field sundry
Plucking
Increase in the Demand for Labour with Increase in the Yield on Small Holdings
days ha/yr
Green leaf
Made tea
Yield
TABLE 5
109
114
110
108
109
109
—
(b)
111
ha/yr
—
113
(a)
Increase
I-
(I)
z
P
Z
0
DEVELOPMENT OF TEA AND RUBBER SMALL Hou)lNc3s
A number of crops have been identified as feasible inter—crops on tea
lands. The labour requirements and possible incomes of such crops are given
in Table 6. However, it is important to note that whatever inter—crops that
are introduced should be supplementary to tea. Tree crops such as coffee and
clove can be introduced on a limited scale, where conditions permit, as a
replacement for the shade trees. Pepper, however, appears to offer a higher
potential, as it can be easily trained up the existing shade trees (gliricidia and
albizzia), and as it is capable of giving an early return (2 years) than coffee or
clove. In the mid—country areas where the yield of green leaf is the lowest,
accelerated vacancy filling of vegetatively — propagated tea plants along with
fertiliser use and the use of inter—crops as replacements for shade trees are
bound to improve the yield of tea and the overall employment and income
from the holdings. As the extent of tea small holdings in the mid—country is
very high, a strategy on the above lines for their development is considered an
urgent necessity.
167
23,840
2,652
46,110
19,200
1,537
120
22,270
16,548
7,320
7,630
14,950
8,918
575
543
500
110
(Robusta)
Clove
The profits rise dramatically to about Rs.40,000 after the twelfth year.
f) Though clove. start yielding in the fifth year, the break—even point Is reached only in the seventh year, when there is a net profit of only Rs.1,280.
a) Rs.26 is used as the wage rate of unskilled labour.
b) The yield under inter—cropping is assumed to be only 75% of that under Mono—cropping system.
c) The selling price of a kg of pepper was used as Rs. 30
d) The selling price of a kg. of coffee was used as Rs.32
e) The selling price of a kg. of cloves was used as }fs.160
Notes:
Source: Based on Technical leaflet No.10, Farm Enterprise Budgets for Minor Export Crops" Minor Export Crops Department, Peradeniya.
18,436
66,000
2,200
(Rs)
Profit
47,564
Sales
revenue
22,370
(kg)
7 yr.
Yield in
Rs.
Total cost
Rs.
Materials
25,194
Rs.
Cost for 7 Yr Period
Cost of
Cost of Labour (a)
969
Labour units
1000
No. of plants
Economics of Inter—cropping in Tea (per ha)
Pepper
Coffee
Crop
TABLE 6
DEVELOPMENT OF TEA AND RUBBER SMALL H0WINGs
The Rubber Small Holdings Sector
Background
The
extent under rubber in Sri Lanka is about 228,547k' hectares of
which 31 per cent is in small holdings of less than 4 hectares, and account for
some 150,000 holdings. Rubber Master Plan Study Team inventory study of
actual rubber area in 1979 estimated it to be approximately 210,465 ha.
As seen from Table 7, 91 per cent of the total extent of small holding
rubber are in five of the major rubber—growing districts. The proportion of
land under small holdings in these districts varies from 25—44 per cent of the
total rubber extent. The importance of the sector lies in the fact that, more
than with tea, a large number of families are engaged in small—scale rubber
cultivation and that such areas are almost exclusively located In districts with
high rural density where problems of unemployment and under—employment
are widespread.
Information on the structure of rubber small holdings is not available for
the whole country. However, data available for rubber producing districts, as
shown in Table 8 provide some indication of the distribution of holdings.
These can be considered to reflect broadly the natior.J situation. It is seen
that the heaviest concentration of small holdings is in
category below 1.6
ha in extent. The proportion of holdings below 0.8 ha is 36 per cent for
Ratnapura and 49 per cent for Kalutara.
Productivity and Employment on Small holdings
Yield data are not available separately for estates and small holdings.
The available national data show that the average yield of dry rubber had
reached a maximum of 845 kg/ha per year in 1978, but had declined to 697
kg/ha per year in 1981. The large estates usually record yield levels substantially higher than the national average. Thus for the year 1978, estates
under the Janata Estates Development Board (JEDB) recorded an average
yield of 950 kg/ha per year and those under the State Plantation Corporation
(SPC) a yield of 1,025 kg/ha per year. It is relevant to note that 32 per cent
of the country's rubber acreage is managed by these two corporations. Based
on the national average yield, the yield of both the small holdings and private
estates, (comprising 68 per cant of the total rubber extent of the country)
works out to about 565 kgs/ha per year, which is very low.
In general, labour requirements in rubber cultivation are half those of
tea. Unlike in tea, where the labour requirement in plucking vary with the
yield of green leaf, in rubber, there is no direct correlation betweeen yield level
and tapping labour. This is because, irrespective of the yield, the number of
trees that have to be tapped by a tapper remain the same. The variation,
"
This is the adjusted figure based on the Rubber Controller's Data.
169
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 7 Area under Rubber and the Proportion in Small Holdings—1979
Total
Extent
District
% of Small holdings
(ha)
Colombo
Kalutara
Galle
Matara/l-fambantota
Ratnapura
Kegalle
Kurunegala/Puttalam
Kandy/Nuwara Eliya
Matale
Badulla/Moneragala
Total
25,947
51,113
22,664
9,263
39,487
52,640
6,127
6,690
8,096
6,518
44.5
34.2
31.6
32.4
25.5
33.2
13.0
20.7
228,545
30.6
10.1
2.7
Source: Calculated from records of the Rubber Control Department.
Note: holdings below 4 ha in extent.
therefore, comes only with the density of trees per hectare. If at all, variation
in yield should affect only processing labour. But even here it is minimal as
most small holders sell their latex to bigger estates or government processing
centres. Lobour requirements in other cultural practices such as weeding,
manuring, disease control or soil conservation are not high. Weeding on
rubber lands is less frequently required as weed growth is much slower owing
to low penetration of sunlight. All these activities appear to require about one
person for every three hectares. Although the tapping labour requirement is
high, the tappers usuaily work only about four hours in the morning. There is
thus considerable under—employment among this group.
170
1.75
100.0
807
14
0.24
0.50
1.10
2.36
5.61
15.19
13.3
23.0
30.5
23.2
8.3
1.7
107
186
246
187
67
Holdings
Total No. of
Ratnapura District
Average Size
% of
Holdings
of Holdings (ha)
569
116
166
172
97
14
4
Holdings
Total No. of
1.11
100.0
30.9
30.2
17.0
2.5
0.7
.
Average Size
of Holdings (ha)
0.23
0.53
1.05
2.15
5.02
13.79
18.6
% of
Holdings
Kalutara District
Size Distribution of Rubber Holdings in Ratnapura and Kalutara Districts
Source: A.B. Dissanayake, W.H. Premachandra and A. de Vaas Gunawardena, Sample Survey of Rubber Small holdings In Ratnapura and Kalutara
Districts, Rubber Research Institute (RRI), 1980.
Total
4.0- 10.0
10.00-20.0
1.6-4.0
1.6
0-0.4
0.4-0.8
Size Class (ha)
TABLE 8
I
rn
rn
PLANTATION AGRICULTURE IN Sm LANKA
Cost of Production and Incomes
Data on cost of production and incomes are not available for the small
holding sector. Hence only some rough estimates can be made on the basis of
the figures available for the estate sector.
The cost of production of a kilogram of rubber (Ribbed Smoked Sheet
RSS) on small holdings and on small estates of different size categories is given
in Table 9. The figures are for the year 1978. Between 1978 and 1981, the
cost of production of rubber has gone up by approximately 40 per cent in the
state sector
which is shown in Table 10. Assuming that a similar
rise in cost of production would also have occurred in the private estates and
small holding sector, we have worked out the cost of production and producer
margins for the year 1981 in Table u.'1
The last column of Table 11 gives the profit margin of different holding
sizes both on a per kg as well as per hectare basis. The per hectare average
annual profit margin is only Rs.1,815, which gives an average monthly profit
of Rs.150 per hectare. There is a clear relationship between the profit margin
and size of holding, the margin declining in sympathy with the rise in holding
size. This is due to the fact that, on small holdings, there is a greater reliance
on family labour in management, extraction (tapping) and cultivation
(weeding etc). Thus, although the average profit margin is only Rs. 150 per
hectare, it increases to R.243 on holdings less than 2 ha, i.e. an increase of 62
per cent. However, this average profit margin of the small holder is still very
low and results from two factors. One is the low average per hectare yield,
which is only 565 kg/ha. The other is the lower quality of RSS of small
holding rubber which reduces the price obtained (Table 11). The price given
in the table, however, ignores the marketing problems the small holders have
to face. The intervention of middlemen further reduces their profit margin.
1/
Family labour cost is not included in these computations.
172
DEVELOPMENT OF TEA AND RUBBER SMALL HOLDINGS
Cost of Production of Rubber—Ribbed Smoked Sheets —
TABLE 9
1978
Type of Expense.
Cost of Production.
Small estates.
Smallholdings
(.2ha)
(2—4 ha)
(4—8 ha)
(8—20 ha)
cents/kg
cents/kg
cents/kg
cents/kg
(49)
(37)
(28)
(21)
General charges
Cultivation
Extraction.
Manufacture and
marketing
Maintenance of rollers etc.
13.50
35.61
148.92
88.71
42.94
207.90
160.08
65.19
219.19
178.37
85.49
228.13
72.46
3.10
75.13
4.20
74.79
7.42
75.78
8.44
Total
273.59
418.88
526.67
576.21
Source : R.R.I., Advisory Services Department and Economic Research Unit
(a survey carried out in 1979.)
The figures in brackets represent the number of holdings from
which data was collected.
TABLE 10
Year
Cost of Production of Rubber — Estate Sector
S.P.C.
COP.
1978
1979
1980
1981 (Jan.—Sept.)
1981 (estimated)
6.84
8.43
9.06
9.37
10.48
% Increase
100
23
32
37
53
C.O.P.
7.12
8.05
8.28
8.84
9.30
J.E.D.B.
% Increase
100
13
16
24
31
Source: Calculated from cost of production (COP) data from J.E.D.B. and S.P.C.
173
PLANTATION AGRICULTURE IN SRI LANKA
Factors Affecting Productivity
The productivity of rubber is determined by a number of interrelated
factors such as the age of trees, the type of clones, tapping system and
fertiliser use. Rubber is brought into tapping normally in the seventh year and
the yield gradually rises to a maximum in about the 13—16th year (6th — 9th
year of tapping) which is maintained for a period of about 12 years up to the
25th to 28th year. After that the yield declines. Thus in terms of yield, the age
structure in rubber is very important. The age structure of rubber in Ratnapura and Kalutara districts for which information is available is given in Table
12. A total of 34.0 per cent and 15.1 per cent of the acreage of private
holdings of the Ratnapura and Kalutara districts respectively were planted
before 1953. In addition 10.5 per cent and 22.2 per cent of the acreage of
private holdings have reached the 'declining yield age'. Of the 55.5 per cent
(Ratnapura) and 62.7 per cent (Kalutara) of the holdings replanted after 1958
and which are under. 24 years, it is possible that a fair percentage would also
have reached the 'declining yield age' if the small holders had adopted daily
tapping.
Replanting rubber with high yielding clones on a continuous basis is a
prerequisite for maintaining higher yield and employment levels. According
to the Rubber Master Plan, around 40 per cent of the small holding extent
below 4 ha are overdue for replanting. Surveys have shown that the tapping
systems adopted by the small holders are injurious to the long—term productivity of rubber. About 16 per cent of the small holders start tapping under
girth when the trees are brought to tapping
Surveys have also
shown that 46 per cent of the small holders practice daily tapping of half a
spiral (s/2 d/1 200%) as against the recommended tapping system of half
spiral on alternate days (s/2 d/2 100%). These practices reduce the productive life of rubber trees on small holdings to about 24 years from a
normal productive life of 30 years.31 These practices, however, assure the
small holder an early income from his holding and provide for a higher
level of family labour use and income than under recommended tapping
practices.
While information on fertiliser use on small holdings is not readily
available, the response of rubber to fertiliser application is also contested by
some as the latter is not so evident like in tea. However, the level of feriliser
application in rubber is generally low f or the country as a whole and is very
low in small holdings and it is generally recognised that increased application
Dissanayake, AB., et. al., 1980, op. cit.
/ Dissanayake, A.b., 'A Survey of Tapping in Small holdings Planted under the
Rubber Replanting Subsidy Scheme', Quarterly Journal, RRI, March/June
3/
1963.
Dissanayake, A.B., 'The Economic Life Span of the Rubber Tree in Small
holdings', Quarterly Journal, RRI, Sept./Dec., 1968.
174
(7'
I-
5.76
8 — 20
Source: Based on Table 9.
ha.
2.74
4.19
5.27
C.O.P.
1978
Rs.cts.
Below 2 ha.
2 — 4 ha.
4 — 8ha.
Category
9.00
10.00
10.00
9.50
Rs.cts.
3.84
5.87
7.38
8.06
6.29
1.10
1.68
2.11
2.30
Average
Sale Price
Rs.cts.
Rs.cts.
COP.
Present
Estimated Profit Margins of Rubber Holdings.
40% increase
TABLE 11
Per.ha.
Rs.cts.
2,915.00
1,768.00
1,480.00
1,096.00
1,815.00
Per kg.
Rs.cts.
5.16
3.13
2.62
1.94
3.21
Estimated Margin
of Profit
PLANTATION AGRICULTURE IN SRI LANKA
of fertiliser especially on young plantations can raise the yield substantially."
Yields as high as 1,130 kg/ha have been obtained on small holdings where
such improved practices such as fertiliser application are adopted.21
TABLE 12
Age of Rubber in Ratnapura and Kalutara
(Holdings below 20 ha)
Ratnapura
Kalutara
% of Area
Planted before 1953
Replanted 1953-58
Replanted after 1958
Total
34.0
10.5
55.5
15.1
100.0
100.0
22.2
62.7
Source: Calculated from Dissanayake, A.B., et.aI., 1980, op.cit.
Potential for Raising Employment and Incomes on Rubber Small holdings
There are several compelling reasons for undertaking an accelerated
programme for improving the performance of the rubber small holding sector.
The first is to increase substantially the current levels of labour use because
these are among the regions suffering from high rates of unemployment and
under — employment. Second, as a large number of people are dependent on
rubber small holdings and as the levels of incomes are extremely low, a rise in
the productivity levels can contribute to a substantial improvement of rural
incomes in these areas.
It was earlier shown that there is a large gap between the current and
potential yield levels; the former being around 565 kg/ha, while on well
managed holdings yields as high as 1,130 kg/ha have been obtained.3" Unlike
Rubber Research Institute's standard recommendation is 210 kg per hectare.
/ Barlow, C., et. al., 'Some Aspects of the Economics of Small holding Rubber in
Sri Lanka', International Rubber Conference, Kuala Lumpur, 1975.
Labour Requirements at Different Yield Levels (Mandays/ha) are given below.
Tapping
Processing
Fertilizer application
Maintenance
Total
176
565 kg/ha
1,100 kgs/ha
125
55
125
111
—
20
200
20
68
324
DEVELOPMENT OF TEA
RUBBER SMALL
in tea, a large increase in the yield of rubber cannot have a dramatic effect on
employment. This is because the increased yield is obtained by tapping the
same number of trees, although, some increases in labour input may result
from increased fertiliser application, weeding, maintenance work, etc. all of
which are essential components of a high — yield package. A higher latex yield
can also have a significant effect on processing labour requirement. A rise in
per hectare yield from 565 kg/ha/year to a level of 1,100 kg/ha a year
would result in an additional production of 4.5 kg/day (assuming 125 tappings a year). Processing of this additional amount of rubber would require
about 56 additional days per hectare per year while 20 additional man—days
would be required for fertiliser application. In addition, another 48 man—days
would be required.for extra maintenance work on the plantation on items
such as weeding, cleaning drains and soil conservation. Thus an increase in
yield from 565 kg/ha/year to 1,100 kg/ha/yr would require about 124
additional man—days/ha/yr, reaching a total of 324 man—days." At the
current level of labour use per hectare per year of 200 man — days at a yield
level of 565 kg, this would mean a 63 per cent increase iii the annual labour
requirements. Bringing about 30—40 per cent of the low yielding small
holding rubber acreage close to such a yield level can therefore result in a
considerable expansion in employment opportunities. Since the rate of increase in labour requirement would be lower than the rate of yield increase in
rubber, a rapid increase in yields can bring about a notable rise in labour
productivity and thereby a rise in small holder incomes.
A production increase of rubber alone is not sufficient to raise small
holder incomes. Both the quality of the rubber produced and the efficacy of
the marketing arrangements are important factors. Small holders generally
produce only RSS of a lower quality owing to poor processing facilities. The
difference in price between RSS grades is considerable.
"
Barlow, C., et. al., 1975, op. cit.
177
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 13
Quality of Small holder Rubber
Grade
Gr 1
6.8
25.8
15.9
29.7
Gr 1&2
Gr 2
Gr
Actual Grade (%)
% Purchased
2&3
Gr 3
19.7
43.6
26.6
7.0
Gr 3&4
Gr 4&5etc.
9.5
Total
5.3
10.1
100.0
100.0
Source: Dissanayake, A.B., A Study of the Rubber industry of Ceylon with
Special Reference to Small holdings, Thesis presented to the University of Ceylon, Peradeniya, 1969.
Labour Requirements for Inter—cropping
TABLE 14
1
ha of-
Rubber
Labour Requirement
Crops
(Man days)
.
1st Yr 2nd Yr 3rd Yr 4th Yr 5th Yr 6th Yr 7th Yr Total
Banana
Pineapple
Passion Fruit
Permanent
inter — crops
82
251
113
53
175
61
180
58
Coffee
Cocoa
116
61
70
78
68
Sources:
134
i
46
27
80
20
78
71
—
—
—
—
—
—
—
—
208
686
252
60
63
60
63
517
533
64
64
Adapted from Chandrasekera, L.B. Potential for inter—croping
Rubber lands in Sri Lanka, Botany Dept, RRI, 1979.
ii. "Farm Enterprises Budget for Minor Export Crops", Technical
Leaflet No. 10,
Minor
Export Crops Department, 1980.
178
—4
I-
300
9,000
250
440
550
No. of plants
Per ha.
Labour
208
686
252
517
553
Units (a)
5,408
17,836
6,552
13,442
13,858
3,800
10,250
3,475
3,850
4,288
Cost for 4 year period
Cost
Cost of
(Rs)
materials (Rs)
9,208
28,086
10,027
17,242
18,146
Total
Cost (Rs)
1,216 (e)
855 (e)
58,000
900 (bunches)
8,000 (fruits)
(kg)
Yield
Economics of Inter—cropping on Rubber.
22,500
40,000
29,000
38,912
32,490
(Rs) (b)
Sales revenue
13,292
11,914
19,973
21,670
14,344
(Rs) (c)
Profit.
.
yr.period only but these can
on for much longer periods.
e) The yield of Coffee and Cocoa has been reduced (90%) to allow for any drop in yield owing to shading by rubber.
d) Calculated for a 7
a) Rs. 26 is used as the wage for unskilled labour.
b) The selling prices used are i. Bananas—one bunch Rs.25
ii. Pineapple—one fruit = Rs.5
iii. Passion fruit—one kg
50 cts.
iv. Coffee—one kg = Rs.32
v. Cocoa—one kg = Rs.38
c) Revenue from sale of suckers has not been included in Banana and Pineapple. In Passion fruit harvesting can be continued for another year.
Source: Same as Table 14.
Banana
Pineaple.
passion fruit
Coffee (d)
Cocoa. (d)
Crop.
TABLE 15
r
PLANTATION AGRICULTURE IN SRI LANKA
It is seen that only about 20 per cent of the small holders RSS reach
Grade 1. Under the Group Processing Centres" (GPC) sponsored by the
Rubber Research Institute, 55 per cent of rubber produced by 103 GPCs in
the year 1981, were sold as RSS Grade 1. The GPC with the highest quality
rubber had sold 99 per cent of its produce as Grade 1 RSS.2' This shows the
vast potential the GPCs have in improving the quality of small holder rubber
and thereby enhancing their incomes.
The possibility of cultivating inter—crops is extremely limited under
mature rubber owing to lack of sunlight. The only permanent inter — crops
that can be grown with rubber are cocoa in the Matale and Moneragala
districts and coffee in a few other areas. But here, too, the initial planting of
the rubber trees has to be adjusted to avenue planting in order to accommodate inter — crops by allowing sufficient sunlight to fall in the inter — row
space area.
However, at replantir,g a number of crops can be grown up to four years
and some extra income obtained during the immature period of rubber. But
owing to heavy rainfall in the rubber—growing area ranging from 120—240"
per year and the steep terrain, there is risk of erosion if root crops are
cultivated. The crops that have been tested and found to be economically
viable during the immature phase of rubber are banana, passion fruit, and
pineapple.3" The requirements of labour for temporary inter—cropping of
immature rubber with the above crops are given in Table 14, and in Table 15
are given the costs of and returns from inter—crgps. The potential for increasing labour use and incomes of small holders during the gestation period
of rubber when they experience a sharp drop in labour use and a total lack of
income from rubber is considerable.
Conclusions and Recommendations
Although there are considerable differences between tea and rubber in
respect of cultivation, harvesting and processing, there are also several features common to both crops. First, both tea and rubber small holdings are
The centres are organised by the RRI on a 40 per cent non returnable grant
and a 60 per cent soft loan basis, for groups of small holders producing
150—300 kg of dry rubber per year. The small holders have to form themselves into an association, the executive committee of which is responsi-
ble for managing the centre. The rubber latex from the members of the
centre are bulked together and a trained rubber maker cum manager manufactures good quality rubber on behalf of
and it is sold in bulk.
The RRI arranges for the training of the rubber maker, gives 'books of
2/
accounts' to maintain records and even audits the accounts.
RRI, Progress Report of the Group Processing Centre Scheme of the Advisory
3/
Services Dept. of the RRI for the Year 1981.
Chandrasekera, L.B., 1979, op. cit.
180
DEVELOPMENT OF TEA AND RUBBER SMALL HOLDINGS
found in densely populated regions of the wet zone where land is scarce and
alternative employment avenues limited. Second, the average productivity of
the small holdings is extremely low and, hence, per ha labour absorption as
well. Third, the average size of small holdings in both crops is indeed very
small, being only 0.4 ha. for tea and 0.5 ha for rubber. Fourth, due to low
productivity levels, low quality of produce and marketing problems, most
small holders obtain extremely low incomes. Finally, a major problem faced
by all small holders relates to that of marketing and processing.
Besides improving the incomes of the small holders of tea and rubber the
development of this sector is vital from several other repects as well.
First, given the high proportion of the area under small holdings and the
likely future additions to this extent (due mainly to fragmentation) production
improvement on small holdings will be vital to increase exports and foreign
exchange earnings. Second, since tea and rubber small holdings are located in
regions with unemployment and under—employment and where productive
investment opportunities are extremely scarce, a fuller development of these
lands can substantially contribute to improving employment and incomes of
these regions.
On the basis of the analysis made in the previous sections, we can
identify, in broad terms, several areas of possible action required to realize the
full potential of this important sector. Among other things, a major immediate
requirement of central importance is to improve marketing and processing of
produce to enable the small holders to increase their incomes. A well coor-
dinated programme to increase fertiliser application, filling vacancies and
undertaking essential soil conservation and land improvement measures need
to be pursued rigorously. From a long term point of view, a carefully planned
programme of replanting of uneconomic plantations has to be undertaken.
While pursuing these, it is also important to pay due cognisence to the
possibilities of introducing inter — cropping on small holdings as a strategy
towards improving and stabilizing small holder incomes.
There is no doubt that certain major institutional innovations are required to speed up the development of the small holder sector. Past policies
and programmes have had an excessively bureaucratic and technocratic
approach. Most of them relied on the provision of credit, subsidies, extension
services etc. to a mass of unorganized small holders. A major thrust would be
required to organize the small holders in to larger production/marketing
groups and to link them, where feasible to the organized estate sector which
now has under its aegis the most well organized produetion/marketing/
processing and research network. There is a pressing need to improve the
data base of the small holding sector and to undertake a careful analysis of the
socio—economic and institutional dimensions to guide future planning.
181
Eight
DEVELOPMENT OF UNECONOMIC TEA AND
RUBBER LANDS
V.J. Jacob
Introduction
Crop diversification of land under tea and rubber was viewed some time
in the past with a great degree of enthusiasm. The promise shown in the
1950s by clonal varieties to achieve high yields led to the notion that large
extents of tea and rubber land could be utilised to produce other crops while
at the same time maintaining the production levels of both crops with a
reduced land base. This notion was best amplified in the Tea Commission
Report'1 which recommended a programme for replanting VP tea at an
increased rate in the hope that the high yields of such tea would lead to a
reduction of the tea area, and thus make land available for other purposes.
The Report suggested that "Assuming that 600 million pounds (272,000
metric tons) of made, tea, ... would be of a reasonably adequate annual output
for Ceylon to maintain its competitive position in the markets of the world,
and assuming also that VP clones may yield on the average 3000 lbs. of made
tea per acre (3360 kg/ha), the total production aimed at may be obtained
only from 200,000 acres (80,000 ha) under tea as at present".
The Commission proposed a programme for replanting 80,000 ha
(200,000 ac) with VP tea by 1985, which would produce 600 million pounds
of tea in 1989. With regard to the 160,000 ha (400,000 ac) excluded from
the VP replanting programme the Commission stated: "a good proportion
will be found, as times goes on, to be increasingly uneconomic to be retained
Government Press, Report of the Tea Commission, Sessional Paper No.
XVIII, Colombo, 1968.
183
PLANTATION AGRICULTURE IN SRI LANKA
under that crop". Proposals were made by the Commission to give financial
assistance to diversify these lands; and the need for a comprehensive survey
of alternative crops was stressed. Various crops with the potential for replacing tea were also briefly reviewed.
However, this macro notion on diversification of plantation agriculture
was soon abandoned in favour of a concept that recognised the limitations of
such an approach and also accepted the need for a more rigorous definition
of marginal and uneconomic land. The change of approach was largely due to
factors such as:
i.
physical problems of replanting on the scale envisaged;
ii.
managerial problems of maintaining high yield levels;
iii.
failure of tea and rubber to maintain the gross production targets
owing to the overall decline of the Plantation Sector;
iv. importance of tea and rubber in the national economy and the need
to improve production levels of these crops;
v. change in economic conditions.
The present thinking in Sri Lanka is that diversivication of plantation
agriculture so as to reduce the share of the major crops such as tea and rubber
has to be complementary to and not in conflict with the objective of increasing
the returns from the major export crops.
The first serious practical manifestation of the interest in developing
uneconomic tea and rubber land was seen in 1970 with the establishment of
the UNDP/FAO project on "Agricultural Diversification of Uneconomic Tea
and Rubber Land".'1 The project was set up to study the problems involved
in diversification and plan a strategy for the development of degraded tea and
rubber land. The project prepared a number of feasibility studies indicating
input/output ratios, ecological and other requirements, market potential,
financial and employment implications, etc. It also established model demonstration farms for mixed farming and animal husbandry. Detailed field
studies and a number of training booklets were also made available. Thus the
work of the project over the past decade has improved the knowledge relating
to the various aspects of crop diversification. Despite these and other efforts
" UNDP/FAO, Agricultural Diversification of Uneconomic Tea and Rubber
Land, Sri Lanka. Diversification of Tea Land in the Mid—country of Sri
Lanka: An Analysis of Possibilities and Limitations, (mimeo), Colombo, 1977.
184
UNECONOMIC TEA AND RUBBER LANDS
large areas of uneconomic tea and rubber lands continue to remain neglected
and under-utilised.1"
Extents, Location and Productivity
The terms "uneconomic" and "marginal" lands (particularly under tea
and rubber) remain loosely defined and are sometimes used interchangeably.
Lands classified as "uneconomic" are defined on the basis of net returns per
hectare (or on a crude yield/ha basis) while "marginal" lands are usually
considered to be those that are no longer suitable for the crop, owing to
excessive soil erosion and neglect of the land. The latter term does not mean
that the land is marginal in an agro-ecological sense.
The extent of uneconomic tea and rubber lands has been differently
calculated. The UNDP/FAO study of 1977, on the basis of 1975 prices of
mid—grown tea, found that estates with yields below 850 kg/ha to have
negative returns, while estates with average yields above this level come up to
about 1400 kg/ha and have only small margins.21 The study considered
seedling tea areas which yield below 900 kg/ha to be uneconomic tea lands.
It considered lands giving a yield above this to have ecological potential for
development into high yielding properties.
The UNDP/FAO study of 1977 considered at least 25 per cent of the
tea holdings to be either derelict or very low yielding and that 25,000
hectares of registered tea lands to be abandoned and available for crop
diversification. The Tea Master Plan (IMP)3' has pointed out that an estimated 40,000 ha. of tea and rubber were marginal, and has identified about
20,000 ha. of this extent to be under tea.
1/
the 1950's the attention of the Government of Sri Lanka was focussed on
the problem of replanting uneconomic tea lands with alternative crops. The
Agricultural Plan of 1958 and the Ten—Year Plan both gave emphasis to the
development of tea sma!l holdings (lands below 10 acres) which were comIn
paratively low in productivity owing to unabated soil erosion and high mortality
of plants. The Land Utilization Committee of 1967 estimated that about 18,200
ha of tea small holdings (holdings less than 4 ha) were available for
alternative crops and forestry. The concern with diversification in the early
1970's also led to the Five—Year Plan meant for the period 1972—76 to include
replanting of uneconomic tea and rubber land with other crops as one of the
objectives of the Agricultural Plan. The Five—Year Plan hoped to bring about
9,000 ha of uneconomic tea and rubber holdhings under cocoa annually. It
also envisaged growing on such land of some minor export crops such as
2/
pepper, cardamom, clove, nutmeg and cinnamon.
1975 was relatively a favourable year for tea compared with the previous years.
The situation in previous years where prices were lower must have resulted in
lower returns.
Canadian International Development Agency, Tea Master Plan, Vols. 1—VI,
1979— 81.
185
S
PLANTATION AGRICULTURE IN SRI LANKA
These lands are located mainly in the mid-country region; and midcountry tea is of the lowest quality and fetched the lowest price compared
with high—grown and low—grown tea. Most tea estates in the mid—country
were established about 100—150 years ago. Land in the mid—country is
generally mountainous with steeply dissected valleys. Because of the steep-
ness of the terrain and the heavy rainfall in the region, there is considerable risk of erosion unless adequate soil conservation measures are taken.
These have not been done in most estates in this region. 1/
The unsatisfactory state of net returns and labour absorption on lowyielding tea lands can be seen from the UNDP/FAO study (Table 1).
TABLE 1
Tea — Expected Net Returns and Employment
Yield
Kg/ha
600
700
800
900
1,000
1,100
1,200
1,300
1,400
Net Returnsa
Rs./ha
(380)b
(220)
(50)
110
290
460
620
800
960
Employment
Man—days/ha
334
360
386
414
440
466
494
520
546
a.At 1975 prices. b Figures between parentheses are negative.
Source: Compiled from Tables 2 and 3 of the UNDP/FAO Study, 1977.
"
The virgin forest which covered this region up to the mid— 19th century was
replaced with coffee and later with tea in the mid—country and rubber at lower
elevations. It appears that in the last century much land which would now be
considered unsuitable for planting was opened up with coffee and Tea, and
later abandoned. Many of the patna areas are such abandoned land. The habit
of burning these areas in the dry season has prevented the re—establishment
of natural forest cover. With little attention paid to erosion control the soil
has been badly affected.
186
UNECONOMIC
AND RUBBER LANDS
The extent of uneconomic and marginal rubber land depends largely on
the progress of replanting where trees have passed useful economic life.
When old rubber is not replanted the land is either transferred to other crops
or remains
It may be worth noting that 17 per cent of the rubber
land in the country is in the age group 26-3 1 years, 3 per cent in the age group
35-37 years and 4 per cent 37 years and over.2' This means that a total of
approximately 24 per cent was estimated to have either passed their economic age or would soon become so within a few years. Most of these lands
are under private ownership and their yields are low largely owing to old age
and neglect. That labour requirements in rubber are closely associated with
yields (though not to the extent as it does in tea) is shown by the fact that the
per ha labour reqdrements increase from 0.40 persons at 180 kgs to 0.54 at
360 kgs and 0.67 at 540
Between uneconomic tea and rubber lands, problems posed by the
former are far more serious than those of the latter. The extent of land under
uneconomic tea is larger than under uneconomic rubber and both the per ha
and the absolute number of jobs at risk are also much higher. Soil erosion
which is one of the most serious problems of uneconomic tea and rubber lands
is less acute in rubber, which is grown at low elevations and usually in
combination with cover crops in constrast to clean-weeded tea grown at
higher elevations. Most of the tea lands are very steep, and where erosion has
been excessive there is often a high proportion of stones and rocks. Besides,
at low elevations the choice of alternative food and spice crops available to
replace low yielding rubber lands is much wider whereas at mid elevations the
alternative crops that can replace run-down tea lands are fewer.
Alternative Development Possibilities
The case for systematic development of the uneconomic tea and rubber
lands is very strong. Clearly, if this considerable extent is allowed to remain
without rehabilitation and development, soil condition will continue to deteriorate, further reducing the present low yields with adverse repercussions on
labour absorption. Besides, further neglect of these lands would aggravate the
environmental and ecological degradation that has already taken place on
The Rubber Master Plan pointed out that some 16,000 hectares out of a total
estimated rubber land of 208,700 hectares was, at the time of their survey,
out of rubber. Approximately 1,616 hectares were lost to tea and 3,774
hectares to coconut or had been lost to other non—specified land uses; 4,700
hectares had been removed and were awaiting replanting. The shift to other
crops was largely due to the producer losing confidence in the rubber crop,
and the profitability of alternative crops. Such transfer or abandonment had
taken place largely on marginal land. See, Commonwealth Development Corporation, Report on the Rubber Industry Master Plan Study. London, 1979.
2
Report on the Rubber Industry Master Plan Study, ibid.
/
See Table 6 of Chapter 6.
187
PLANTATION AGRICULTURE IN SRI LANKA
tracts of the mid—country region. It should be noted that uneconomic tea
and rubber lands are situated in the Wet Zone, where the problems of rural
unemployment and land hunger are most acute.
vast
The basic development choices available are two-fold-either improvement of tea/rubber through the application of correct practices or replacement of tea/rubber with alternative forms of land use. The available alternative uses of land are crop diversification, animal husbandry and afforestation.
Improvement of Tea/Rubber
One of the development possibilities of uneconomic tea and rubber lands
is the concentration of high-yielding clonal varieties on suitable tea and rubber
lands. In the case of tea, once such lands are identified two alternatives are
available:
i.
replacing low-yielding tea with high-yielding VP clonal varieties, or
ii. filling vacancies with VP tea.
The first alternative involves Ithe uprooting of old seedling tea followed by
soil rehabilitation and planting with VP clones. The high cost of rehabilitation
and replanting, the gestation period of approximately 5-6 years for plucking
to commence, weak price levels, high production costs and taxes make
replanting even on land suitable for such work unattractive.
In areas where there is a reasonable stand of seedling tea, one—shot
replanting can be replaced by a process of selective replacement of low—
yielding bushes and the filling of vacancies using high—yielding clonal VP
material. This strategy helps to replant gradually, the entire are over a
period of time. It also avoids the lengthy unproductive period entailed in
uprooting the old tea but requires very high levels of management skills to
be successful. However, filling vacancies is the most attractive alternative
as there is no initial loss of income and employment caused by total uprooting of old seedling tea. An immediate increase in yield could in fact be
obtained by the application of fertilizer. Therefore, replanting is only
justified if the seedling tea to be uprooted is in a very bad state. For replanting or filling vacancies, however, the land should prove suitable for
VP tea.
Comprehensive estimates of the extent of land suitable for intensification
with the VP tea are not available. However, the UNDP/FAO study contends
that in many cases degradation of mid-country tea estates has proceeded so
far that a large extent of the land is unsuitable for VP tea even after rehabilitation of the soil. In the case of rubber, gradual development through a
process of filling vacancies is not possible. The intensification of rubber has to
be done through replanting with high-yielding clones. The loss in income
188
UNECONOMIC TEA AND RUBBER LANDS
during the replanting period can be covered with inter-cropping, government
subsidies and the sale of old rubber trees.
Alternative Crops for Diversification
A variety of alternative crops can be planted on marginal tea and rubber
lands at various elevations ranging from sea level to 5,500 feet msl. Since high
grown tea is to remain as a mono—culture by virtue of its flavour and
comparatively high profitability, alternative crops with high potential to
generate employment and income at elevations ranging from sea level to
3,500 feet msl. only are considered for discussion in this paper (see Table 2).
Cocoa, robusta coffee, cinnamon, pepper, nutmeg and clove can be planted
on the low — grown marginal tea lands, while cardamom and arabica coffee
can be grown at elevations above 2,000 feet. msl. respectively. However,
pepper, robusta coffee and clove can be planted up to 3,500 feet msl. Among
the alternative crops, the most important ones are coffee, pepper, clove,
cocoa and cardamom.
In the case of rubber, some investigations were made by the UNDP/
FAO Research Project on Minor Export Crops at Matale. In this experiment
old trees were thinned out at 100 and 50 trees per ha to provide shade for the
alternative crop cocoa. Under Matale conditions, 100 old rubber trees/ha
resulted in the best establishment for cocoa assessed by percentage survival
and growth of the trees." The cost of establishment of cocoa was considerably less in this case, as there was an even distribution of overhead shade in
the plot. Kirinde and Alles have highlighted the potential of spice crops in Sri
Lanka.21
Animal Husbandry
In some areas animal husbandry may replace low — yielding tea/rubber.
Well managed pasture is a stable form of land use for
slopes, particularly on relatively poor soil which cannot be used for crop diversification.
High rainfall and cooler climate in the mid and up—country create suitable
conditions for growing grass and for dairy farming. In these areas, even steep
slopes offer suitable land for pasture. Well managed pasture provides a good
cover against erosion and its root system increases the organic matter content
of the soil.
"
2
/
Wickramasinghe, P.J. and Jacob, V.J., 'Experiment on Diversification of
Uneconomic Rubber into Cocoa', Journal of the National Agriculture Society
of Ceylon, 1982.
Kirinde, S.T.W., Spices and Essential Oil Crops of Sri Lanka, FAO, Rome.
1978 and
AlIes, W.S., 'The Resurgence of Sri Lanka's Traditional Spice Crops'. A
paper presented at the 35th Annual Session of the Sri Lanka Association
for the Advancement of Science, Colombo, December, 1979.
189
PLANTATION AGRICULTURE IN SRI LANKA
Production levels found in trials on degraded tea land," indicate that
around 10 t../ha. of dry matter can be produced, depending on soil fertility,
grass species, fertilizer level and climatic conditions, while under better
growth conditions the productivity can reach 40 t./ha. of dry matter. Consequently the carrying capacity can vary between 1.5 to almost 6 cows per
hectare.
At present animal husbandry is widespread among small holders and to
some extent among estate labourers. But the productivity levels are very low.
(Milk yields are at an average of 5—6 kg/cow/day.)
The feasibility of dairy production based on improved pasture has been
well proved in demonstration farms established by the Agricultural Diversification Project.2" Satisfactory production parameters can be reached if good
standards of management are maintained. To achieve this, the dairy farmer
needs to be supported by an effective extension and marketing service; while
veterinary services should be readily available.
Forestry
Forestry is often the only suitable form of land use for the worst eroded
terrain where much of the uneconomic tea is found. Often the land has been
so severely eroded that a permanent cover of grass or trees is the only form
of land use suitable.
There are large areas where several tea estates have been abandoned
during the past decade. These lands, together with adjacent patna, may form
contiguous blocks of several thousand hectares and offer the opportunity for
the creation of large—scale industrial plantations. The technical knowledge
for the development of these areas is available. The Forest Department has
identified the most suitable species and has devised satisfactory nursery and
afforestation techniques.3"
Two alternative uses are possible through afforestation:
i. Growth of eucalyptus for firewood to be used in the tea driers.
ii. Growth of pinus for pulp, which replaces imported pulp.
2
Pillai, E.T.S. et al. Pasture Trials in the Mid—and Up—country. Agricultural
Diversification Project, Peradeniya, 1976.
/ Nijboer,
/
G. and Rajaguru, UB., Dairy Demonstration Farms. Agricultural
Diversification Project, Peradeniya, 1976.
Rariatunga,
M.S., 'Notes on the Planting of Forest Specimens', Sri Lanka
Forester (X), 1972.
Sri Bharathie, K.P., 'Improvement of Nursery Techniques for Tropical Pines in
Sri Lanka', Sri Lanka Forester (XI), 1973.
190
UNECONOMIC TEA
RUBBER LANDS
The scope for expansion of both eucalyptus and pinus is considerable as
the tea industry needs large quantities of firewood. The present requirements
of pulp are estimated to about 36,000 ha. of pinus.11
The UNDP/FAO Study of 1977 points out that large—scale plantations
would generate considerable rural employment — -each hectare of forest
plantation would employ an average of 50 man days per year on land at
present unused. This is apart from the employment which would be generated
by the pulp and paper and saw mill industries which would follow when the
trees are 15 years and older. A second and perhaps more important benefit
would be that afforestation would protect the watersheds of important rivers.
A programme of planned afforestation would require the co — ordinated
efforts of the JEDB, SPC and the Forest Department. The programme should
cover not only the production of firewood and pulp but also afforestation of
timber as well.
"
Redhead, J.F. and Anandarajah, N.C.E., 'The Cultivation of Eucalyptus on
Tea Estates', Training Handbook No. 4, Agricultural Diversification Project,
Peradeniya, 1976 and Redhead, J.F. and Anandarajah, N.C.E., 'The Growth
of Pinus Caribaea on Degraded Tea and Rubber Lands', Training Handbook
No. 5, Agricultural Diversification Project, Peradeniya, 1976.
191
PLANTATION AGRICULTURE IN SRI LANKA
Possibilities** of Minor-Export Crops in Relation to Tea
TABLE 2
and Rubber at Different Altitudes
Main Crop Tea
o
Minor Export Crops
(a) Arabica Coffee'3
(b) Cardamom'
(c) Cinchona"
(d) Macademia"3
(e) Pyrethrum"
(f) Perfumery Plants'
w
I
u
I
c
>
0
Main Crop : Tea
Minor Export Crops
(a) Cardamom"
(b) Arabica Coffee"3
(c) Robusta Coffee"3
•
Q)I
0.1
0.1
C'.1
0
w
0
It)
C."
I
(d)
I
Pepper
"3
0l
UI
Main Crop (s) : Tea and Rubber
I
I
0
Minor Export Crops
(a) Robusta Coffee"2'3'5
0
0
(b) .-.reper 1,2,3,5
(c) Clove
>
(d) Nutmeg1'2'3'5
'i-'
•
'-I
I
o
1,2,3,5,
°
(e)
Cocoa
1,2,3,5
Main Crop (s) Tea and Rubber
Minor Export Crops
0.
000
(a) cocoa
1,2,4,5
(b) Robusta Coffee"2'3'5'
(OLt)
1,2,3,5,
(c) Pepper
1,2,3,5,
(d) Linnamon
.JI
I
Restricted to lower elevations in the region
1, Diversification from Tea.
2, Diversification from Rubber,
3. Mixed—CroppIng with Tea
4. Mixed—cropping with Rubber
5. Multi — cropping.
-'
192
UNECONOMIC TEA AND RUBBER LANDS
Mixed —Cropping Potential
The potential for mixed—cropping on tea and rubber lands is being
increasingly realised. At elevations below 4,000 feet msl., where the tea is
fairly good, the land can be mixed—cropped with coffee, pepper and clove.
On tea lands coffee can be planted at 5 X 5 metres spacing below 4,000 feet
msl. at a density of 400 plants per ha. Pepper can be planted below 3,500 feet
msl. with the same spacing and density. Clove should be planted at a spacing
of 6 X 15 metres at a density of 111 plants per ha. A recent study of a tea and
clove mixed — cropping system has found that such mixed — cropping has
definite advantages. 1,'
Sri Lanka has taken a major lead in mixed — cropping cocoa in rubber
lands. A total of about 3,240 ha of this combination is in bearing. Although
it is not feasible to realise optimum production from cocoa under this system,
the overall net returns per unit area can be increased by this cropping system.
Moreover, cocoa will provide some degree of shade to the tapping panel of
rubber. This is very useful in areas which are marginal for rubber. If rubber is
planted at 30 X
8
feet spacing, a wider avenue is available for
mixed—cropping with cocoa. Density and yield of rubber at this spacing is not
signifficantly different from those planted at 12 X 20 feet spacing.
Profitability of mixed—cropping on tea and rubber lands is shown in
Table 7. In combination with tea, clove has the highest profitability
(Rs.57,464 per ha.) followed by pepper (Rs.22,223 per ha.) The cocoa and
rubber combination gives a combined net return of Rs.10,598 per ha.
A mixed — cropping strategy on hitherto mono — cropped tea and rubber
lands would offer the unique advantage of providing a cushion against low
prices for the major crop.
Employment and Income Implications
The production potential of uneconomic tea and rubber lands is limited
by elevation, slope and soil conditions. Most spices such as pepper, nutmeg
and clove flourish only at low elevations. At high elevations, the choice of
alternative crops on discarded tea lands is narrowed down to cardamom,
grass for fodder and tree species such as eucalyptus or pines. Further, the land
available for diversification, after retaining the best of the uneconomic tea
/rubber lands for high yielding varieties, is the worst, and the scope for
development of such lands is therefore limited. Development of degraded
land for productive use demands considerable financial investment, a waiting
period of low or negative returns and above all high management skills.
" Mathevan, R., Studies on Rooting Pattern and Crop Production in Tea
(Camellia Sinensis) and Clove (Uengenia Carysphyllus) mixed systems,
M. Phil. Dissertation submitted to the University of Peradeniya, Sri Lanka,
1982.
193
PLANTATION AGRICULTURE IN SRI LANKA
Rehabilitation and development of uneconomic tea and rubber lands
would require observation of the actual performance and identification of the
production potential of the low—yielding land; returns from tea/rubber and
alternatives; and marketing prospects of tea/rubber and alternatives. The
diversification tending away from tea and rubber could be justified only:
(a)
if the economic returns including employment generation are higher
from alternative use; or
(b)
if the optimum national production targets of tea and rubber have
been reached and the excess amount cannot be sold.
Further, the diversification of land tending away from tea/rubber must
consider the relative economics of such an exercise. It should be recognised
that relative to other crops grown on a large scale in Sri Lanka, tea generates
the highest level of income and employment per unit of land area. The Tea
Master Plan found that at current prices, no major internationally traded crop
generates as much gross revenue per hectare as tea, even in Sri Lanka, where
the average yields are below global averages.
TABLE 3
Labour Requirements of Various Crops or Forms of Land Use
Crops/Land Use
Man — days/Ha/Year
618
317
329
321
287
287
VP tea
Seedling tea
Dairy husbandry
New mixed forest garden
Existing mixed forest garden
Paddy
Remarks
Small holdings
Assuming two
crops per year.
Source: UNDP/FAO Study, 1977, p.41.
In Sri Lanka, the employment norm on tea land is over 3.0 labourers per
hectare and unlike many other crops, employment on tea estates is found to
be regular all the year round. The labour requirements of various crops or
forms of land use as computed by the UNDP/FAO Study are given in Table
3.
The labour requirements of run—down tea estates were noted by the
study to be in line with those of the newly—established mixed forest gardens.
A problem therefore, to be taken note of is the low level of labour requirements of most diversified uses compared with tea. Thus from the perspective
of employment, diversification tending away from tea and rubber should be
194
cn
Labour units
Labour cost
Material cost
Total cost
Return
Margin
3. COCOA
Labour cost
Material cost
Total cost
Return
Margin
2. COFFEE (Arabica)
Labour units
Return
Margin
1. COFFEE (Robusta)
Labour units
Labour cost
Material cost
Total cost
Crops
(3,386)
(4,943)
(3,777)
3,777
4,712
592
3,282
12,198
8,916
1,282
4,120
2,000
1282
136
3,282
20,634
17,352
1,282
2,000
136
183
2,691
1,909
4,600
50,976
46,276
3,428
32,800
29,372
3,428
29,248
25,820
183
2,691
1,909
4,600
45,856
41,256
1,281
2,147
146
6
1,281
2,147
146
5
2,838
Department of Minor Export Crops.
3,386
4,943
2,191
1,586
193
3,352
1,909
5,261
29,520
34,259
228
26,080
21,887
Figures between Parantheses are negative.
1,872
198
4
2,911
1,282
4,193
Years
Source:
2,014
2569
1,974
149
8,093
13,440
3,132
2,215
5,347
213
1,584
4,274
8,704
4,430
183
2,690
3
Note:
137
(3,877)
1,833
3,877
—
139
2,044
(3,314)
202
(6,396)
6,396
2,382
4,014
273
(4,823)
1,707
4,823
134
1,970
1,344
3,314
212
2
Farm Enterprise Budget for Two Beverage Crops
(Rs./ha)
3,116
1
TABLE 4
3,282
28,120
24,838
1,282
2,000
136
183
2,691
1,909
4,600
53,760
49,160
3,428
34,368
30,940
1,281
2,147
146
7—15
Value of
Rs.38/kg.
Rs.32/kg.
Rs.32/kg.
Produce.
U)
z
rn
8
C
Labour cost
Material cost
Total cost
Return
Margin
307
3. CARDAMOM
Labour units
1,019
—
—
Figures between parenthesis are negative.
Department of Minor Export Crops
436
6,409
2,547
8,956
14,400
5,444
(1,477)
—
60
882
596
1,477
258
3,793
3,826
7,619
16,500
8,881
4
Note:
258
3,793
2,564
6,357
9,600
3,243
(1,538)
Years
Source:
—
(4,546)
—
2,264
2,282
4,546
154
(1,785)
64
942
596
1,538
2,270
5,000
64
942
843
1,785
7,730
10,000
6,019
265
3,895
3,835
3
(As/ha)
13,760
11,781
7,040
5,192
436
6,409
2,547
8,956
32,000
23,044
1,979
1,848
436
6,409
2,547
8,956
22,400
13,444
85
1,250
729
80
1,176
672
.16,719
201
2,955
3,826
6,781
30,250
23,469
201
6
2,955
3,826
6,781
23,500
5
Farm Enterprise Budget for Three Spice Crops
214
3,146
2,873
2
(7,853)
4,513
3,340
7,853
—
(6,055)
134
1,970
4,085
6,055
(6,957)
—
284
4,175
2,782
6,957
1
Labour units
Labour cost
Material cost
Total cost
Return
Margin
2. CLOVE
Return
Margin
Labour units
Labour cost
Material cost
Total cost
1. PEPPER
Crops
TABLE 5
7
436
6,409
2,547
8,956
40,000
31,044
1,323
961
2,284
71,200
68,916
90
2,955
3,826
6,781
37,500
30,719
201
Onward
Rs.160/kg
Rs.160/kg.
Rs.25/kg.
Value of
Produce
(I,
C
C)
C)
0Z
d
>
I-
718
2,008
2,200
6,092
696
2.406
3,494
—
1,658
4,511
(936)
—
189
2,835
Material Cost
Total Cost
Return
Margin
(Rubber + Cocoa)
1,126
—
106
4,440
1,898
608
Source: Department of Minor Export Crops
• Negative Return.
6,440
1,077
3,657
3,718
—
120
1,800
1,077
2,877
5,742
172
2,580
133
13,940
1,155
605
1,760
24,800
77
10,519
1,065
472
1,537
6,156
71
15,711
957
2,157
11,968
1,200
80
5
1,382
3,327
1,650
14,673
1,080
547
1,627
10,400
72
8,254
96
1,440
472
1,912
4,265
12,110
957
2,500
8,712
1,545
103
4
1,152
2,967
1,995
4,659
—
765
446
1,211
51
6,358
89
1,335
583
1.918
2,376
8,808
958
2,548
5,456
1,590
121
.
3
Years
1,815
4,458
—
54
810
632
1,442
114
4,429
1,710
3,065
4,774
3,697
—
1,575
638
2,203
105
65
975
495
1,471
1,290
1,710
—
86
2
114
1
Labour cost
-
Labour units
B 1. COCOA
Labour units
Labour cost
Material cost
Total cost
Return
Margin
(Tea + Clove)
A. 3. CLOVE
Labour units
Labour cost
Material cost
Total cost
Return
Margin
(Tea + Coffee)
A 2. COFFEE
Labour units
Labour cost
Material cost
Total cost
Return
Margin
(Tea + Pepper)
A 1. PEPPER
Crops
Rubber Inter—planted with Cocoa
(Rs./ha)
.
80
120
8,508
10,598
1,077
2,877
9,900
1,800
1,077
2,877
7,810
120
57,464
1,876
53,440
721
77
1,155
14,299
1,065
472
1,537
9,936
71
22,223
957
2,157
18,480
1,200
1,800
43,122
1,155
663
1,818
39,040
77
12,409
1,065
472
1,537
8,046
71
18,967
957
2,157
15,224
1,200
80
Onward
6/7
TABLE 6 Farm Enterprise Budget (per ha) under Good Management for (a) Tea Interplanted with Pepper/Coffee/clove and (b)
Mature
550
3,550
7,125
3,000
200
—
470
7,050
2,800
9,850
15,750
—
470
7,050
2,800
9,850
15,750
2,800
9,850
15,750
7,050
470
Tea/Rubber
C)
C
z
0
z
0
PLANTATION AGRICULTURE IN SRI LANKA
carefully implemented and confined to land that has no potential for high
yielding tea and rubber.
In the case of pepper, 2,000 plants can be planted per ha. at a spacing
of 2 X 2.5 m.while at 7 x 7 m. spacing only 200 clove plants can be accommodated per ha. However, profitability of clove is the highest (Rs.68,916
per ha.) followed by arabica coffee (Rs.49,160 per ha.). Although cardamom
gives only Rs.31,,044 per ha. it is also a labour intensive crop like tea. At
optimum production, cardamom needs about 436 labour units per ha. In the
case of clove which ranks first for profitability, the labour requirements are
the lowest (90/ha.). Cardamom has an edge over all other Minor Export
Crops under discussion as far as the generation of gainful employment is
concerned. Cardamom has performed quite well in the Settlement Projects in
Sri Lanka. Farm enterprise budgets prepared by the author for six alternative
crops are presented in Tables 4, 5 and 6.
Based on the UNDP/FAO Project Studies, the study of 1977 has
attempted an evaluation of alternative uses to seedling tea, in terms of
employment, private profitability, return to labour and government, and
economic returns. The findings are shown in Table 7.
Labour requirements of a number of different crops have been worked
out by the UNDP/FAO Project in its input—output studies. This useful body
of data is set out in Table 8.
Types of Enterprise
A major question that arises in connection with the development of
uneconomic tea and rubber lands relates to the type of enterprise which is
best suited for the purpose.
Though details of the extents of land under different types of ownership
are not available it could be surmised from available data that the largest
share of uneconomic tea and rubber land is under private ownership either in
the form of small estates or small holdings. Where large extents of degraded
lands are involved and are considered best suited for tea, their rehabilitation
and development would demand high management skills required for increasing yield levels and improving the quality of t"a. Hence such rehabilitation needs to be organised on a large-estate basis. Large plantations with
portions of land considered "uneconomic" or "marginal" for the main crop
can be provided with the required incentives to bring such land under alternative uses such as minor export crops, dairy farming and afforestation. Such
a strategy would lead to the development of a more diversified plantation
enterprise.
198
UNECONOMIC TEA AND RUBBER LANDS
TABLE 7
Crop or
enterprise
Alternatives to Seedling Tea — Annual Values of the
Parameters
Returns to Returns to Returns to
Govern —
landowner
labour
ment
VP tea
Clove
Clove
Expected
price
Constant
Foreign
exchange
returns
Economic
returns
Rs/ha/yr
Rs/ha/yr
Rs/ha/yr Rs/ha/yr Rs/ha/yr
(218)a
4,560
5,062
7,528
5,386
6,620
1,320
(346)
5,023
6,263
14,237
price 1975
10% price
decline
Coffee Expected
price
Coffee + 25%
Coffee — 25%
Nutmeg Expected
price
Nutmeg + 25%
Nutmeg — 25%
Pepper Expected
price
Clove
2,053
2,407
1,137
(282)
2,354
2,035
3,035
862
3,395
650
(337)
3,369
2,952
4,562
1,342
10,875
1,551
(594)
7,680
5,812
3,790
1,054
1,813
(357)
(1,184)
4,362
5,553
10,080
13,848
6,313
5,350
3,028
Dairy farm
3,246
1,366
4,245
2,598
Eucalyptus
Pinus
379
317
326
237
1,836
547
3,496
505
Pepper
Pepper
+ 25%
— 25%
Mixed farm
Dairy small holdings
(+3609)b
(142)
(138)
-4-356
a Figures between parentheses are negative.
b The amounts on this line result from the sale of FEEC's on the foreign
exchange.
Source: UNDP/FAO Study, 1977, p. 43.
199
PLANTATION AGRICULTURE IN Sm LANKA
I
N—
N
—
N)
N 0 tfl.-'
C'I
—
—
000
—
-
N.
—
(I)
—
m
I
r
o
—
—
—
'0
5
U)
U)
(S.
I
0 '0
U) 00
in
N
0
—
0)00
I
'0
—
Oor.)
—e
ee
N) SON)
I
U.
200
0
RUBBER LANDS
UNECONOMIC
A considerable extent of uneconomic tea and rubber lands is held by
private owners, many of whom are also absentees. A major reason for their
deterioration is the low profitability resulting from low productivity, high cost
of production, fluctuating prices and heavy taxation. These properties suffer
most from the inability to generate surpluses for investment in rehabilitation
and development. With appropriate incentives, improvement of the main
crop when the land is most suitable would still be more attractive than
large—scale diversification to other crops. Where the land is unfit for teal
rubber, programmes for crop diversification through proper incentives need
to be pursued.
The small holdings show promise for the cultivation of several crops
such as fruits, spices and other food crops in the form of small holder
mixed—farms. A mixed—farm has been described as a holding of approximately I ha. on which a combination of crops such as clove, coffee, nutmeg
and pepper are grown as the principal cash crops together with coconut, fruit
crops and vegetables for home consumption. / In the first five to six years
crops such as banana, papaw, turmeric and ginger are interplanted as there is
ample space left between the spice crops. It is observed that this type of
mixed— farming is in line with existing land use patterns in the villages as it
closely resembles the Kandyan forest garden.
A move towards the establishment of Small Farm Settlements was in fact
attempted by the Government in the early 1970s through the National
Agricultural Diversification and Settlement Authority (NADSA). It implemented the Tree Crop (Tea) Diversification Project in the Nilambe—Atabage,
Gurugoda— Ritigaha and Kudaoya—Mahaoya River Catchments in the
mid — country. The project is supported through the assistance of the World
Bank and covers 11,000 ha within a catchment area of 170 square miles.
This area illustrates the peculiar land use and socio—economic problems of
the mid—country, viz.: serious soil erosion, rapidly declining production and
resulting decrease in employment, mounting land hunger, unabated deforestation and in general, degradation of the environment. Most lands in this
area yielded between 448 kgs. to 673 kgs made tea per ha and tea was, in
most cases, over 90 years old. Within four to five years beginning 1978, the
project was expected to establish 2,550 low—altitude mixed farms contatning
coconut, coffee, clove, nutmeg, pepper, banana, papaya, avocado, breadfruit, jak and 1,300 higher altitude mixed—farms with a dairy component,
390 cardamom farms and 230 tea—dominated diversified farms. This
programme also included about 5,670 ha of conservation, commercial and
fuel forestry.2" In the High Altitude Mixed Farms (HAM Farms), coffee is the
dominant or core crop while in the Low Altitude Mixed Farm (LAM Farm)
pepper is the dominant crop.
2/
UNDP/FAO Study, op. cit.
K.P., Tree Crop Diversification in the Mid—Country of Sri
Lanka, (mimeo), October, 1979.
Wimaladharma,
201
PLANTATION AGRICULTURE IN SRI LANKA
In order to support the NADSA Programme, the UNPD/FAO Minor
Export Crops Research Project established a I ha. model farm at Delpitiya.
This mixed farm was established on the concept of the multi — species cropping system with multi—storey canopy alignment of the component crops.
The component crops would tap solar energy at different strata." In crop
production, efficiency depends on the rate and extent to which solar energy
is converted into economic produce. The multi—species mixed—cropping
model designed by the UNDP/FAO Research Project of the Department of
Minor Export Crops has the objective of maximising crop production per unit
area. The expected yield and returns per ha. of a mixed cropping model are
given in Table 9. This model is quite unique in having 13 different crops
occupying different storeys. This mixed farm which was planted in November
1978, is expected to give a gross return of about Rs.70,000 per ha. at
optimum production. Moreover, a cropping system like this is the most
congenial environment for human habitation with practically no soil erosion.
is more or less a 'Scientific Kandyan Forest Garden' with a very high
It
economic potential. A part of the home needs of the settler will be met from
the farm in addition' to generating income and gainful employment. The
success of such a model depends to a large extent, on the selection of crop
species and crop cultivation based on compatibility and canopy architecture.
A variety of improved minor export crops is now available in Sri Lanka for
this purpose.21
1/
2
Bavappa, K.V.A. and Jacob, V.J., 'A Model for Mixed Cropping', CERES 14
(3), 1981.
Bavappa, K.V.A. and Jacob, V.J., High Intensity Multi—Species Cropping — A
New Approach to Small—Scale Farming in the Tropics', World Crops (March.
April 1982).
/ Jaboc, V.J., 'Progress in the Breeding and Selection of Minor Export Crops in
Sri Lanka'. A paper presented at the Seminar on Progress in Plant Breeding
Research in Sri Lanka: sponsored by the Sri Lanka Association for the Advancement of Science, May 1977, Colombo.
202
C
12 Crops
Pepper (kg)
Coffee . R (kg)
Coffee . S (kg)
Clove (kg)
Nutmeg (No.)
Coconut (No.)
Mango (No.)
Jak (No)
Breadfruit (No)
Avocado (No)
Arecanut (No)
Banana (No)
Lime (No)
Crops
.
15
50
50
100
1
100
15
30
50
100
1
50
15
40
10
15
30
50
1
20
5
30
5
10
10
1
10
1
Nil
1
5
Nil
Nil
10
Nil
Nil
Nil
Nfl
500
50
50
1.5
100
25
50
25
Nil
0.1
1.0
0.75
1.0
0.75
0.5
0.5
0.8
0.6
0.4
0.2
0.5
0.4
0.3
0.3
0.2
0.2
Nil
Nil
0.2
Nil
0.1
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
7
6
5
4
3
2
Year
Robusta Coffee
S = San Rarnon Coffee
= Value at 1980 price (inflation factor not added)
R.
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1
Mixed Cropping Model at Delpitiya
(Planted — November 1978)
Yield (Kg/plant) or No. of fruit/plant
TABLE 9
18
12
12
3,594
—
4,400
24
2,400
24
24
44
3
3
150
45
150
150
3
3
36
1,296
165
957
1,296
220
1,914
6,000
1,810
kg/No.
Total
Yield
No.
Plants
per ha.
—
10
20
0.2
0.2
1
2
1.5
0.5
25.00
30.00
30.00
100.00
0.2
Value
Price
Rs. C
73,705
90
150
30
480
240
880
75
32,400
4,950
28,710
1,800
1,200
2,700
Rs.
Total
Unit
—
8z
rn
PLANTATION AGRICULTURE IN SRI LANKA
Marketing Prospects for Alternative Crops
As with tea and rubber, marketing limitations beyond a point of production must be recognised in the use of alternative crops, too. However,
marketing prospects of all these products seem satisfactory. Sri Lanka's share
of the world spice market is still negligible. In. the case of clove, the share of
Sri Lanka in the world trade varies between almost nil and 2.7 per cent, with
an average in the past few years of 120 tons or 0.8 per cent. The marketing
study of clove prepared by the Agricultural Diversification Project indicates a
possible expansion of exports to 1,000 tons. Such an expansion could come
from 1,000 ha. at full production, after approximately 18 years.'1
The share of Sri Lanka in the world coffee trade is also negligible and
some expansion is considered possible. In the case of nutmeg the share was
only 1.6 per cent in the period 1972—76 with a peak year during 1973 in
which 311
or 4 per cent of the world trade volume was exported. Owing
to a rise in world demand, a higher production would be required to maintain
the 4 per cent level. Sri Lanka lost her market for cardamom in Saudi Arabia
and Kuwait and today provides only 5 per cent of world exports.
As for pepper, which is the most important spice in world trade both in
volume and value, Sri Lanka contributed 530 tons or 0.6 per cent (in the
period 1972—74). A study undertaken by the project indicates that Sri Lanka
can safely expand its exports to 4,000—10,000 tons
The world
demand for pepper has been growing at around 4 per cent per year.
Conclusion
Both the high labour absorptive capacity and the economic returns from
tea and rubber compared with available alternative uses through crop
versification points to a strong case for concentration on tea and rubber
production on land most suitable for these two crops. Besides, a programme
of large — scale diversification of tea and rubber land is beset with a number of
practical constraints. On the other hand, continued concentration on tea and
rubber in plantation agriculture perpetuates dependence on a few major
export crops. A long—term programme of diversification calls for a careful
and gradual implementation with periodic reviews to shift tea and rubber
production gradually to those areas with optimum growing conditions and to
expand crop diversification to surplus uneconomic tea and rubber land.
On the uneconomic tea and rubber land that is available at present for
alternative uses, diversification possibilities lie largely between settlements
McConnell, D.J. and Upawansa, G.K., 'The Spice Industry of Sri Lanka:
Cloves, Farm Management Report No. 3, Agricultural Diversification Project,
Peradeniya, 1972.
2
/ McConnell, D.J. and Upawansa, G.K., ibid.
204
UNECONOMIC
AND RUBBER LANDS
based on mixed farms, or grass for animal husbandry and afforestation. A
programme of diversification through small — farm settlements where feasible
would require certain tenurial changes. A change from tea/rubber to other
uses would depress labour absorption on these lands in favour of higher
productivity and higher income in place of the current levels of low income
and low labour productivity. The implications of crop diversification on
displaced labour need to be investigated, especially the possibilities of transfer
of such labour to more productive tea and rubber estates.
The UNDP/FAO Study of 1977 underlined the need for formulating a
long — term perspective plan and a short — term action programme for crop
diversification on uneconomic lands. The perspective plan is to provide the
general framework for the short — term plan and the implementation of the
short—term plans is expected to provide data for improvements in the per-
spective plan. Such a plan should take the form of a total land use plan
covering all uneconomic land. A plan of this nature should cover not only
diversification into alternative crops but also afforestation and co — ordinated
erosion control measures. The availability of comprehensive technical studies
done so far by the UNDP/FAO Diversification Project and almost a decade of
experience in the diversification effort are advantages already possessed. The
state ownership of vast extents of land in the plantation areas facilitates the
implementation of a comprehensive programme. Indeed, state ownership
casts on the state sector the responsibility of playing a lead role in this regard.
The successful implementation of such a master plan meant to bring
about a systematic development of uneconomic tea and rubber land would
demand:
i.
a clear understanding of the limitations and constraints, especially
in respect of agro — ecological factors;
ii. considerable investment for land rehabilitation;
iii. the identification of suitable farm settlement programmes where
feasible;
iv. effective incentives for diversification by way of fiscal concessions,
credit facilities, marketing assistance etc.;
v. imparting necessary management skills through training programmes, and an efficient extension programme to provide consistent
support services; and
vi. improvement of the existing infrastructure.
205
Nine
POTENTIAL FOR AGRICULTURAL DIVERSIFICATION OF LANDS
UNDER COCONUT TO INCREASE PRODUCTIVE EMPLOYMENT
S. Tilakaratna
The Setting: Coconut as a Monoculture
The land area under coconut is currently estimated at about 0.4 million
ha.'1 This area accounts for about one—fifth of the total agricultural land; it is
only second to paddy and is almost equal to the total area under tea and
rubber. About 2/3 of the coconut lands are concentrated in the four administrative districts of Kurunegala, Puttalam, Colombo and Gampaha which
comprise the 'coconut triangle'. Kurunegala district accounts for about
one—third of the total cultivated area in the country. The coastal districts
south of Colombo namely Kalutara, Galle, Matara and Nambantota account
together for about 15 per cent of the total area. The two interior districts of
Kegalle and Ratnapura account for about 7.5 per cent. The remaining area
(about 12 per cent) is distributed among the other districts mainly as home
gardens. The greater part of coconut lands are in small holdings. The only
available data on size of holdings are for the year 1962 when the holdings
below 10 ha in size constituted 64 per cent of the total land area and those
below 4 ha in size constituted some 50 per cent.2t It can be assumed that in
1/
2/
According to the Census of Agriculture of 1973 the land area under coconut
was 451,481 ha. Leaving out homesteads which are mixed cultivations and
allowing for lands which have gone into alternative uses such as house construction and industrial uses over the past decade or so, the current figure is
estimated at about 0.4 million ha. New planting has not been significant enough
to compensate the losses of coconut land to other uses.
Holdings of 20 ha and above may be taken as the estate sector proper and
holdings in the range 10 to 20 ha as 'small estates'. See. Department of Census
and Statistics. Census of Agriculture: 1962, Colombo, 1966.
207
PLANTATION AGRICULTURE IN SRI LANKA
the subsequent two decades, as a result of the population pressure on land
with its consequent process of fragmentation, and the impact of the land
reform of the 1970's, the importance of small holdings has increased further.
However, in Kurunegala (the leading producing district) relatively large size
holdings of 10 ha and above constitute about 57 per cent of the total coconut
land area and holdings below 4 ha constitute only about 20 per cent of the
total.1"
An important characteristic of most coconut small holders is that coconut is often not the main source of livelihood. Many small holders are often
paddy cultivators as well. There are also many who are engaged in various
non—agricultural pursuits (e.g. salaried employment). For such small holders,
coconut is a part—time activity and a supplementary source of income.
The average annual yield of coconuts has remained at around 5,400
nuts per ha which is far below the potential of 9,900—12,400 nuts per ha that
can be achieved under proper management conditions. Low yields are a
reflection of low management levels. In the 1970s, the average land area
fertilized remained below 20%. The annual replanted/under— planted area
(based on the acreage equivalent of new seedlings issued) was below 2% of the
total area in the late 1970s and has been around 4% in most recent years
(1979—81). In the Kurunegala district for instance, except for some weed
control, other cultural practices (soil and moisture conservation, drainage,
pest and disease control) were not undertaken by over 80% of the farmers and
fertilizer was used only by
Continuous poor management of coconut lands has led to a declining
trend in total coconut output over the years. The average annual production
in the decade of the 1970s was lower than in the 1960s by nearly 10%, and
a further decline has taken place during more recent years as shown below:
Total Production
million nuts
2,644
2,240
2,142
Period
1960—64
1975—79
1980—81
A declining crop in the context of a rising trend in domestic consumption
(which rises more or less at the same rate as population growth) has caused
a sharp decline in the exportable surplus; it has fallen by more than 50 per
cent in the past two decades.
2/
Hussain, S.M., Perera, U.V.H., and Karunasena, K., Preliminary Report of the
Survey of Coconut Lands in the Kurunegala District, Development Planning
Unit, Ministry of Finance and Planning, 1978, pp. 19—20.
Hussain, et al., ibid., pp. 19—20.
208
DIvERsIFIcATIoN OF Cocor'ur LANDS
Labour intensity of coconut mono—culture is relatively low and in fact,
is the lowest among all agricultural crops in the country. Harvesting (once in
two months), fertilizer application (once or twice a year) and planting work
(replanting, under—planting and filling vacancies) do not require a regular
labour force. It is only for cultural and management practices (contour
draining, bunding, terracing, husk burying/mulching, harrowing, ploughing,
control of weeds, pests and diseases) that some sort of a regular work force
is needed in coconut lands. However, few coconut lands in the country
regularly adopt such practices. Hence, the actual labour use is far below even
the mono—culture potential. Under the existing levels of management, one ha
of coconut absorbs an average of no more than about 0.25 person, that is to
say, it requires an average of about 4 ha to provide full—time employment to
one person. According to the Socio—Economic Survey of 1969/70, the total
employment in coconut cultivation was nearly 85,000 persons, which was an
average of one person for 5.3 ha. The corresponding figures in tea and rubber
cultivation (the total land area of which equals the coconut area) were 607,
000 and 191,000 respectively according to the Socio—Economic Survey of
1973."
Such low level labour absorption in a crop which covers about one fifth
of the agricultural land area in the country comes directly into conflict with the
pressing need for employment generation in the economy. The employment
situation in the coconut industry appears anomalous in the context of the
severe under—employment an unemployment that characterise the rural
economy.
Finally, it may be noted that coconut as a mono—crop is highly land
extensive representing a state of under—utilized physical resources in a
context of land scarcity and population pressure on existing land resources.
Coconuts are planted using a spacing of about 24—26 feet on either side of
the palm giving a population of 165 palms per ha. Such spacing utilises only
about 25 per cent of the land area as a result of the fact that the roots of the
palm concentrate within a radius of about 6 feet. With about 405,000 ha
under coconut, the bulk of which is mono—culture, the total extent of
unutilized/under—utilized land resources thus appears substantial.
Rationale of Inter—Cropping
The rationale of inter—cropping emerges logically out of the setting of
coconut cultivation described above. A combination of factors, in particular
the existence of productivity levels substantially below the potential levels, the
low returns per unit of land and in relation to the capital value of the land, the
These figures include employers, employees, own account workers and unpaid
family workers. In the case of coconut, there is no reason to expect a substantial
change in this figure in the period since 1969—70. It should be noted there
are, in addition, about 42,000 persons engaged in coconut processing activities.
209
PLANTATION AGRICULTURE IN SRI LANKA
failure to introduce sharp productivity improvements, declining trends in
output and exportable surpluses, low labour absorption in the context of high
rural unemployment and under—employment, and the gross underutilization
of physical resources under mono—culture, present an overwhelming case for
inter—cropping. Inter—cropping is capable of enhancing farmer incomes
substantially. It emerges as an important instrument of raising the resource
utilization in coconut lands, thereby enhancing the contribution to the level of
output and employment in the economy. There is evidence to show that
scientific inter—cropping is capable of raising coconut productivity as well. If
so, inter—cropping may also turn out to be an important element in a package
to solve the problem of low coconut productivity, Inter—cropping signifies a
shift of emphasis from the narrow perspective of the productivity of coconut.
to the broader front of overall productivity of land under coconut.
Current State of Inter—cropping
Inter—cropping is not something new to the coconut farmer. Traditionally, in home gardens coconuts were never grown as a single crop. Some
form of inter—cropping under coconut has thus been a common practice
among peasant farmers since very early times. Moreover, during the early
development phase of some of the larger coconut plantations in the
country,inter—crops were used to meet a portion of the investment costs
serving as an important source of income until the coconuts began to yield an
income flow. However, the practice of inter—cropping has not been continued as a permanent feature.
Most of the inter — cropping currently being practised is confined to
home gardens and is geared to subsistence needs of peasant families rather
than a systematic attempt to optimise income from the land. In the larger
holdings and in particular on the estates, mono—culture continues as the
dominant feature.
The nature and extent of inter—cropping practices revealed from various sample surveys conducted in coconut producing areas of the country in
the 1970's are summarised below.
—
Small holdings in the Coconut Triangle (1972)
About 40 per cent of the farmers practised some kind of inter—cropping,
mainly for consumption and local sales. The commonest crop was banana
and it was found in almost all inter—cropped lands. Passion fruit and
pineapple were cultivated by 5—6 per cent of the farmers. Some 40 per
cent of the farmers had cattle, 9 per cent buffaloes, 15 per cent poultry
and 5 per cent pigs. Improved pasture cultivation was found to be
negligible."
Agrarian Research and Training Institute (ARTI), Small holdings of the Coconut
Triangle, Occasional Papers Series No. 2, December, 1973.
210
DIvERsIFIcATIoN OF COCONUT LANDS
—
Galle District (1973)
In the four villages surveyed in Ambalangoda and Balapitiya areas,
inter—cropping was found only in 18 per cent of the holdings. The principal inter—crops were manioc, cinnamon, sweet potatoes and mixed
crops. Animal husbandry of some kind was done on 6 per cent of the
holdings, but there was no cultivation of improved pasture.V
— Colombo District (1974/75)
69 per cent of the farmers reported some form of inter—cropping; but it
was not systematic. The most popular inter—crops were manioc, banana,
sweet potatoes, ginger, turmeric and betel. 29 per cent of the households
kept cattle. There were no improved pastures under coconut. The estates
surveyed lacked any inter—cropping or livestock rearing under private
ownership; even after the vesting of these estates in the state under the
Land Reform, in only a few cases had some attempts being made to adopt
inter —cropping.21
— Chilaw and Puttalam Districts (1975)
Some kind of inter—cropping was found in 49 per cent of the total number
of holdings. Manioc and bananas were the principal inter—crops. Cattle
raising was found in 30 per cent of the holdings but improved pasture
cultivation was negligible.3'
— Kurunegala District (1977)
The main secondary activity in coconut lands was reported to be cattle
rearing. About 70 per cent of the coconut holders had reported having
livestock with an average of one head of cattle per 1 ha. But improved
pasture cultivation under coconut was carried out by only 1.7 per cent of
the coconut holders on 2.4 per cent of the total land area. Systematic
inter—cropping of some sort had been carried out by only 7 per cent of the
operators and the area covered was only 1.3 per cent of the total. Only 0.5
per cent of operators had made use of the government subsidies available
for inter—cropping and only 1.3 per cent had used the subsidy for
pastures.
4/
— Kurunegala District (1980—81)
A concentrated effort is being made under the Integrated Rural DeveCoconut Cultivation Board, Socio Economic Study of Coconut Lands in
2
Ambalangoda and Balapitiya Areas, Colombo 1973.
ARTI, Land Reform and Development of Coconut Lands: A Case Study of
Villages and Estates in Class 11 Coconut Lands of Colombo District, Research Study Series No. 14,1977.
4/
Coconut Cultivation Board, Socio—Economic Study of Coconut Lands in the
Chilaw and Puttalam Area, Colombo, 1975.
Hussain, et al., op. cit.. pp. 19—20.
211
PLANTATION AGRICULTURE IN SRI LANKA
lopment project in the Kurunegala District, to introduce inter—cropping
into a target area of 4,050 ha (3,238 ha under perennials namely coffee,
cocoa, and pepper and 809 ha under pasture). In the first two years of this
project (1980—81), the actual area cultivated has amounted to 22.5 per
cent of the overall target.'1
The information from the above surveys is not very helpful in estimating
the actual area under systematic inter—cropping since the data relates to the
number of holdings or farmers rather than the land area. Only the Kurunegala
(1977) survey reveals the land area under systematic inter—cropping; it was
1.3 per cent for inter—crops and 2.4 per cent for improved pastures, making
a total of 3.7 per cent of the total coconut lands (excluding the estates). If we
assume that the picture at Kurunegala in 1977 was representative of the
country as a whole and raise the figure to 5 per cent to take into account
inter—cropping in estate lands, then the total area under systematic
inter—cropping can be estimated at about 20,235 ha. Adding about 4,050 ha
for inter—cropping during the period 1978—81 (inter—cropping subsidy
scheme covered nearly 3,560 ha by this time), the total area under systematic
inter—cropping may be roughly taken as 24,300 ha or 6 per cent of the total
coconut land area.
Government Efforts to Promote Inter—cropping: Performance and Targets
With the setting up of the Coconut Development Authority (CDA) in
1971, a policy package was adopted for the overall development of the
coconut industry, and inter—cropping under coconut formed an important
element in this package.2" By this time, the Coconut Research Institute had
already done considerable work on the cultivation of improved pasture under
coconut and hence sufficient technical knowledge was available to promote
pasture cultivation as a nation wide programme. A Pasture Subsidy Scheme
was introduced at the end of 1972 which represented the first direct gov-
ernment intervention to promote systematic inter—cropping. Under this
scheme, all coconut holdings of 0.4 ha or more situated in the main coconut
growing districts with an evenly distributed annual rainfall of over 60 inches,
became eligible to receive the subsidy. The current rate is Rs. 2,000 per
paid in two equal instalments — first after the establishment of pasture/fodder
and second, after proper maintenance for one year. The total land area which
has made use of the subsidy during 1973—81 amounted to 4,070 ha (first
instalment) and 2,700 ha (second instalment).
It appears that only about 70 per cent of those who took the first
instalment of the subsidy had continued long enough to obtain the second
"
2/
Ministry of Coconut Industries, Sri Lanka: Coconut Statistics, August, 1982.
Coconut Development Authority, Annual Report, 1973, p. 53.
Prior to 1981, the subsidy was Rs. 740 per ha.
212
DIVERSIFICATION OF COCONUT LANDS
instalment. About 30 per cent had either abandoned pasture cultivation after
the first year of operation or else their cultivation had not met the standard
required to be eligible for the second payment. It should also be noted that
the current subsidy rate meets less than 30 per cent of the total cost of
cultivating a ha of pasture.11
In the case of most other inter-crops, agronomic research had not
progressed to a level (by the early 1970's) to enable the launching of an
effective subsidy programme. Lacking scientific data on the suitability of
crops to different agro-climatic conditions and the management practices the
initial efforts of the Coconut Cultivation Board (during 1972-74) to promote
inter-cropping were based on whatever cropping practices were already
available in the villages. Government assistance was confined to the provision
of planting material and some extension services. With the food crisis of
1973-74 (when the food rations were cut and a food scarcity prevailed in the
country), the Coconut Cultivation Board induced the coconut holders to grow
short-term subsidiary crops (eg. soyabean, pulses, manioc, sweet-potatoes
and yams), and planting material was provided for this purpose. In the context
of the food crisis, there was a relatively high response from the farmers and
in the Maha season of 1973 as much as 26,325 ha of coconut lands were
inter-cropped. Of this area,42 per cent was devoted to manioc, 16 per cent to
sweet potatoes and yams,23 per cent to pineapple and bananas and the
balance to miscellaneous crops.2" These successes were, however, not sustained in the subsequent years; the inter—cropped area recorded a sharp
decline as the food supply situation improved.
In 1978 a more systematic effort for the promotion of inter-crops was
attempted with the introduction of the Subsidy scheme for three perennial
crops namely coffee, pepper and cocoa. Coconut holdings of 0.2 ha and above
with a minimum of 74 palms (22-45 age category) to a ha, situated in twelve
districts with an annual rainfall of at least 70 inches, became eligible for this
subsidy. The subsidy is paid in three annual instalments with the first instalment amounting to about 50 per cent of the total. The current (since January
1982) subsidy rates are Rs. 5250 for coffee, Rs. 5,560 for cocoa and Rs.
6,500 for pepper per ha.
The total cost of cultivation currently amounts to about Rs. 7,400 per ha.
2/
Tractor hire alone amounts to about Rs. 1,550 per ha.
Coconut Development Authority, Annual Reports, 1974 and 1975.
213
PLANTATION AGRICULTURE IN SRI LANKA
TABLE
1
Performance of Inter—cropping Subsidy Schemes for
Coffee, Cocoa and Pepper (ha): 1978—1981
1st
Pep per
Cocoa
Coffee
3rd
2nd
3rd
—
—
2nd
3rd
1st
2nd
—
—
24
—
—
115
3
—
—
14
3
—
—
163
80
22
6
—
—
382
39
10
1978
46
—
—
1979
1980
1981
168
17
—
349
251
20
47
8
24
23
70
24
813
84
8
141
1st
—
1978
to
1981
.
Source: Ministry of Coconut Industries (1982). pp. 50—51.
Of the three inter-crops, coffee has emerged as the more popular one
followed by pepper and cocoa. The response to the subsidy scheme has been
rather slow. As seen in Table 1, only 1,336 ha received the first subsidy
instalment over the four years 1978-81, that is an average of 334 ha per year.
Moreover, the land area receiving the second and third instalments of the
subsidy has recorded a sharp decline to 123 ha and a mere 17 ha respectively. The 'drop-out' rate after the first subsidy instalment has been very high,
and much higher than in the case of pasture. The findings of a recent survey
conducted in the Kurunegala district threw some light on the high 'drop-out'
rate.1" The main problems were:
—
damage
caused to crops by drought
—
poor performance of the inter—crop and consequent failure to qualify
for the second or third instalments
—
inconveniences and long delays involved in the disbursement of
subsidies so that some farmers were not even aware of their eligibility for
second and third instalments.
The total land area covered under the exisiing subsidy schemes for
inter—cropping (pasture and three perennials) up to end of 1981 amounted to
5,405 ha (the lands which received the first subsidy instalment). During
1978—81 when both subsidy schemes (pasture and perennials) were in
operation, the average progress in inter—cropping was only 890 ha per
annum. When inter—cropping activity outside the subsidy schemes is also
taken into account, the annual progress may be at the most 1,000—1,200 ha.
"
ARTI, Kurunegala District Rural Development Project: lntercropping Coconut
Lands with Minor Export Crops. 1982.
214
DIVERSIFICATION OF COCONUT LANDS
At this rate of progress, it would take almost a century to introduce
inter — cropping to even one quarter of the coconut lands in the country.
An important development in recent years has been the inclusion of
inter — cropping
as a major element in the Integrated Rural Development (IRD)
projects currently being operated in four coconut producing districts
(Kurunegala, Puttalam, Matara and Hambantota). In fact, the greater portion
of the coconut lands inter—cropped under the subsidy schemes in recent
years has been land coming under the Kurunegala District IRD project. As
seen in Table 2, the actual performance as well as the targets for future years
are very modest. Nevertheless, the inclusion of inter—cropping as a specific
area of action at the district level is a significant development. In three other
districts (Colombo, Gampaha and Kegalle) where a special coconut development project is in operation, targets have been set for inter — cropping for
the period 1982—86 (Table 3). These targets rise from about 260 ha. in
1982 to 840 ha. in 1986. If the official targets set for the seven major coconut
growing districts (given in Tables 2 and 3) are realized, the annual rate of
increase should be over 2,000 ha by 1983.
TABLE 2
IRD Projects: Inter—cropping Performance & Targets (ha)
Targets
Performance
1979
1980
1981
1982 1983 1984 1985
193
417
268
223
187
364
405
15
81
17
24
61
—
6
20
11
40
26
1. Kurunegala
-
Perennial
Pasture
898
1,093
324
—
—
2. Puttalam
-
Perennial
125 170
3. Matara
-
Perennial
Pasture
4. Hambantota
-
Perennial
Pasture
182
26
IRD Project periods: Kurunegala (1979-83); Puttalam (1981-85);
Matara (1980-82); Hambantota (1981.83).
Source: Ministry of Coconut Industries (1982), p. 53.
215
109
PLANTATION AGRICULTURE IN SRI LANKA
TABLE 3
ADB/IFAD — Coconut Development Project: 1982—86
Inter—cropping Targets (Hectares)
1982
1983
1984
1985
1986
160
100
260
240
120
360
400
500
120
620
600
240
840
Colombo and Gampaha
Kegalle
Total
120
520
Source: Ministry of Coconut Industries (1982), pp. 5657.
Potential Scope for Inter—Cropping: Agronomic Factors
Coconuts are grown in a wide variety of ecological zones, and in practically all parts of the country except at the higher altitudes. All these lands
(around 0.4 million ha) are suitable for some type of inter—cropping activity
in a wide range from perennial, semi — perennial and seasonal crops to animal
husbandry. The nature and type of inter — cropping activity and its intensity
will, however, vary depending on the agro—climatic characteristics, in particular the rainfall, soil type and the terrain. Moreover, the complex biological
system that results from any inter—cropping, involving competition for light,
water and space, is a further important factor that must explicitly enter the
feasibility calculations.
Agro — climatic
Considerations
Based on the climatic and soil/terrain conditions, the coconut area in the
country has been divided into three main zones and seven regions and suitable
inter—crops have been identified as follows.1"
(a) Wet Zone This area covers approximately 40 per cent of the total
coconut lands in the country and receives an average rainfall of 60 inches a
year. The suitable inter—crops include pepper, passion fruit, pineapple, cinnamon and pasture (on shallow soils and flat — sloping terrain) ginger, turmeric,
yams and tubers (on shallow soils and flat terrain) and cocoa, coffee, pepper,
nutmeg, cloves and bananas (on deep soils and flat terrain).
(b) Intermediate Zone This area covers approximately 25—30 per cent
of the coconut lands in the country. Rainfall averages above 40—45 inches.
Suitable crops include pineapple, papaw, pasture, manioc and cereals
(shallow/flat lands and deep/sloping terrain), and papaw, banana, pastures,
manioc, vegetables and cereals (deep flat terrain).
(c) Dry Zone This area accounts for 30 per cent of the coconut lands in
the country, and has an average annual rainfall of 30—35 inches.
Ministry of Finance and Planning, A Study of Inter—cropping in Coconut Lands,
December, 1981 (cited in the text as Inter—cropping Study).
216
DIVERSIFICATION OF COCONUT
Inter—cropping is generally feasible only in the Maha season. Crops such as
chilies, onions, vegetables, cereals, and pulses can be grown.
Very broadly, then, agro—climatic considerations suggest that both
perennial and semi — perennial crops would be feasible in the regions of the
Wet Zone, semi—perennial and seasonal crops in the regions of the Intermediate Zone, and only short — term seasonal crops (confined to the Maha
season) in the Dry Zone (unless supplementary irrigation facilities are
available).
Competitive Relationships/Mututal Compatibility
The other factor to be considered is the complex ecological situation
resulting from the interaction between the coconut and the inter—crops. Each
crop (coconut and the inter—crop) while demanding certain conditions for its
growth would at the same time affect the growth of the other. F-Ience, it is
necessary to take into account the effect of the inter — crop on the yield and
the life span of the coconut palm, and the effect of the coconut crop on the
growth and yield of inter—crops. A mutually compatible cropping system
should ensure the following:
(a) absence of moisture competition between the coconut and the
inter—crop,
(b) absence of nutrient competition between the two,
(c) sufficient sunlight for the inter — crop through the over — hanging
canopy of the leaves of the coconut palm,
(d) adequate physical space between the coconut palms for the growth
of inter—crops.
The problem of moisture competition suggests that inter—crops, in
particular perennials and semi — perennials, be confined to regions with high
or medium rainfall and having few or only short dry spells. In other areas, at
best, short—term crops confined to the rainy season would be feasible, unless
supplementary irrigation facilities are available. It may also be noted here that
drought conditions were identified as a major constraint by a sample of
inter—croppers and non—inter—croppers. This issue will be taken for further
discussion in a later part of this paper.
An important factor, that limits the growth of inter — crops under coconut is sunlight. Light transmission through the coconut canopy depends on
many factors such as the height and the age of the plant, the density and the
system of planting (e.g. square, rectangular and
On the other
"
Level of soil fertility and soil type and the orientation of the plantation in
relation to the incidence of light are further factors. The amount of light reaching the ground cover will also vary with 'the time of the day, season of the
year and cloud cover. See, Ferdinandez, D.E.F. 'Integration of Animal Production and Other Crops into Coconut Cropping Systems in Sri Lanka' Ceylon
Coconut Quarterly Vol. XXIX, Nos. 3/4, July—December, 1978, p. 12.
217
PLANTATION AGRICULTURE IN SRI LANKA
hand, inter—crops exhibit varying degrees
shade tolerance. Coconut
plantations which are above 30 years of age are considered old enough to
allow sufficient light penetration for the growth of most inter — crops. Statistics on the age composition of coconut palms for the country as a whole are
not available for recent years. In the Kurunegala District (1977) some 64 per
cent of the coconut palms belonged to the age category of 30 years and
above.'t If we assume that the situation in the Kurunegala district holds valid
for the country as a whole, then about two — thirds of the total coconut lands
may be considered suitable for inter—cropping based on adequate sunlight
availability.
Two further points need to be noted. Firstly, during the period of the
establishment of the coconut palm, that is upto 6—8 years, light penetration
is sufficient for inter — cropping with seasonal and semi — perennial crops. The
lands which fall into this category are the replanted (not under — planted) and
new planted lands. The extent of replanted land with palms below 8 years old
is not available for the country as a whole. Under the new planting subsidy
scheme introduced in 1976, nearly 10,100 ha had been newly planted up to
the end of 1981. In the Kurunegala district (1977), the extent of palms below
7 years constituted about 10 per cent of the total and this figure once again
may be taken as broadly representative of the national picture.21
Secondly, where palms become senile at 60 years or so, either replanting
or under—planting has to be carried out. On lands where under—planting is
adopted (rather than replanting), inter — cropping would not be possible. In the
Kurunegala district (1977), the palm population with 60 years and above
constituted nearly 10 per cent of the total. Once again, lacking statistics for
representative of the national picture. In view of the need to replant/under
—plant plantations of 60 years and above, such lands (that is about 10
per cent of the total) may be left out of the potential area available for
inter — cropping.
The above estimates of the potential feasible area assumes that the
spacing between palms (density) is adequate for inter—cropping. The rec-
ommended density for coconut is 158 trees per ha (that is a spacing of
8 X 8 m) and inter—cropping is feasible at this density when the age of palms
is below 8 years and between 30 to 60 years. However, there are many areas
where the density is higher than this which narrows down further the feasible
area for inter—cropping. In the Kurunegala district, for example, the average
density of lands falling under wet and semi — wet zones varies from 163 to 193
palms/ha. This average is highest in holdings of less than 0.4 ha reflecting
excessive planting for subsistence
Similarly, in the southern
Hussain et al., op. cit., p. 12.
2tlbid.,
3tlbid.,
p.
p.
12.
12.
218
DIVERSIFICATION OF COCONUT LANDS
coastal belt, the average density was found to be between 170 to 188
palms/ha." In the case of home gardens, even if there is no high density,
excessive shade from the over — crowded growth of various other plants is a
barrier to systematic inter—cropping. Lack of data makes it difficult to suggest how much of the coconut lands become unsuitable for inter — cropping on
account of high density or over—crowded growth of other plants. For the
purpose of this study, we assume a rough figure of 10—15 per cent.
Finally, successful inter — cropping requires that the competition for
nutrients between coconut and the inter—crop be avoided. Most coconut soils
are deficient in Nitrogen, P and K and application of at least these three
nutrients is essential for the successful integration of inter — crops in coconut
plantations; both coconut and the inter—crop need to be fertilized using the
recommended doses. Research studies show that there are no adverse effects
on coconut yield from inter—crops, provided both crops are adequately
fertilized and grown in the more favourable rainfall regions. These studies also
show that there is a long term beneficial effect on coconut production if
certain crop varieties are used. These beneficial effects are due "to the better
cycling of nutrients, improvement in the soil structure and better water
percolation characters exhibited by soil cropped continuously to
inter—crops"2" It may be noted that the share of coconut lands fertilized in
any year has never exceeded 30 per cent of the total area.
It has been suggested that a multi—tier system of cultivation
(multi — storeyed cropping pattern) arranged according to the sunlight requirements of the different inter — crops (leading to an efficient utilisation of solar
energy) and which utilises physical space efficiently may be the most suitable
pattern for maximising the environmental resources. An example is the
combination of cocoa/cinnamon plus black pepper and pineapples/tubers
which have complementary/exclusive root systems.3t
Feasible Land Area for Inter—cropping
As we have seen, the potential for inter—cropping is highest in lands
with favourable moisture conditions. Such lands should receive the highest
priority in a national inter—cropping promotion. On the other hand, moisture
stress would be a serious limiting factor in the development of inter— cropping
in the Dry Zone coconut lands unless irrigation facilities change the picture.
Moreover, in contrast to the Wet Zone where the man/land ratio is high,
there is no compelling reason to intensify land use in the Dry Zone where
there are still areas awaiting development. Hence, from a national point of
view, resources for inter—cropping would be best utilised in the Wet Zone
L'
Coconut Cultivation Board, 1973, op. cit., p. 2.
/ Ferdinandez, op. cit., p. 86.
Nelliat, E.V. et al., 'Multi Storied: A New Dimension in Multiple Cropping for
Coconut Plantations' in World Crops, VoL 26, November—December, 1974.
219
PLANTATION AGRICULTURE IN SRI LANKA
region. The focus area for a national programme of inter—cropping could be
scaled down to about 147,000 ha (or 36 per cent of the coconut lands in the
country) located in the Wet and Intermediate zones. Of this extent, about
24,300 ha have already come under inter—cropping leaving a balance of
about 123,000 ha for future development.
1. Total area under coconut (Approx.)
2. Less
Dry Zone lands (approx. 30%)
on account of moisture
stress and low priority from a
national point of view: 121,408
= 283,286
ha
3. Less
lands with high palm densities
crowded with other plants, or
unsuitable for other physical
reasons such as soil/terrain.
Assumed 20%: 56,657
4. Less
404,694 hectares
= 226,629
Land with palms in the age
category 8—30 years (where
sunlight is a limiting factor)
and above (where under—planting
could be a limiting factor).
Assumed 35%: 79,320 ha
=
147,309
Economic Feasibility of Inter—cropping
In recent years, although some important advances have been made in
defining technical feasibility of inter—cropping and technically superior
inter—cropping systems, there have not been corresponding advances in the
economic analysis of inter—cropping. Literature is only just beginning to
emerge. No attempt has been made in this paper to make new calculations;
our analysis is based instead on economic feasibility calculations already
available in the literature. Economics of ten selected inter—crops which have
been proved technically feasible are examined. These are:
(a) Perennial crops Cocoa, coffee, pepper and lime which have a relatively long economic life (10—20 years) and which involve a gestation period of 3—4 years before a positive economic return could be
realised.
'I Intercropping Study, op. cit.. and Etherington, D.M. and Karunanayake, K., 'An
Economic Analysis of Some Options for Inter—cropping under Coconuts in Sri
Lanka', Sri Lanka Journal of Agrarian Studies (Vol. I, No. 2), 1981.
220
DIvERsIFIcATIoN OF CocoNuT LANDS
(b) Semi—perennial crops Pineapple, banana and papaw with a relatively lower economic life (3—5 years) and involving a shorter waiting
period of about one year.
(c) Seasonal crops Ginger, turmeric and manioc which are harvested
after only one season.
Economic Returns from Single Inter—crops
Economic returns from each individual inter—crop and from coconut
inter—crop combination are presented in Tables 4 and 5. Several important
conclusions emerge out of these calculations.
Apart from manioc and papaw, all other inter—crops yield average
returns per hectare higher than that obtained from coconut mono—crop.
Coconut yields only about Rs. 4,000 per hectare as a mono—crop (at
1981 prices) and the share of coconut in the total income from land is
only 20 to 30 per cent.
Economics of Ten Selected Inter—crops
TABLE 4
Intercrop
Economic
Life (Years)
Waiting
time for
positive
cash
returns
Develop-
Return per
ment Cost
Hectare21
Internal
Rate of
Return31
(Rs)1"
(years.)
Cocoa
Coffee
Pepper
Lime
Pineapple
Banana
Papaw
Ginger
Turmeric
Manioc
20
15
15
10
4
5
3
Seasonal
Seasonal
Seasonal
4
3
4
3
1
1
1
Season
Season
Season
8,100
10,000
12,400
3,500
23,500
6,400
7,000
11,200
4,900
3,700
4,800
7,000
5,400
15,500
12,500
9,800
700
9,200
4,200
1,300
1/ Development
32.5
39.5
27.5
50.0
50.0
50.0
50.0
50.0
50.0
35.0
cost refers to the costs over the period for which cash flows
are negative. All costs and prices used are those prevailing in October—
2/
November, 1980.
Returns per ha are undiscounted annual averages.
In the case of seasonal crops, the figures are a simple rate of return.
Source: Ministry of Finance & Planning, 1981, op. cit., table 2.
221
PLANTATION AGRICULTURE IN SRI LANKA
Coconut as a mono—crop provides a return of only about 10 per
cent on the capital value of the land. With inter—crops, the returns rise
sharply to over 22 per cent (except for papaw and manioc). For coffee,
lime, pineapple, bananas and ginger the returns are 30 per cent or
above, a level higher than the current interest rates.
Calculations of Internal Rates of Return (IRR), which take into
account the varying time structure and returns, show that six
inter—crops have an IRR of over 50 per cent, and three have an IRR of
over 30 per cent. Pepper has the lowest IRR (nearly 28 per cent) but it
may also be considered reasonably profitable when compared to the
prevailing interest rates of over 20 per cent.
TABLE 5
Returns from Coconut and Inter—crops
Returns per
ha coconut
and Inter—crop
(Undiscounted)
As a return on
the capital value
of land (%)
Return from
coconut only as %
of total return
on land
Rs.
Cocoa
Coffee
Pepper
Lime
Pineapple
Banana
Papaw
Ginger
Turmeric
Manioc
8,800
11,000
9,400
19,400
16,500
13,800
4,700
13,200
8,200
5,300
24
30
26
53
45
37
13
39
22
14
46
37
43
21
24
29
86
30
49
76
Notes: Return per coconut ha was taken as Rs. 4,000 and the capital value of
land was taken as Rs. 37,100 per ha. Return on inter—crops based on
Table 4.
Development costs (all costs incurred until cash flows become
positive) per ha show considerable variation among the inter—crops.
They are highest for pineapple (Rs. 23,500). Pepper, ginger, coffee, and
cocoa also involve high development costs (in the range Rs.
7,400—12,400). Banana and papaw occupy an intermediate position
with Rs. 6,400—6,900. Turmeric, manioc and lime have the lowest
development costs being under Rs. 4,900. High development costs
make it difficult for a coconut holder without access to sufficient funds to
undertake inter — cropping activity.
222
DIVERSIFICATION OF COCONUT LANDS
Economic Returns from Inter—cropping Systems
A comprehensive economic ayalysis of inter—cropping must consider
not only the costs and returns for single inter—crops but also for
inter—cropping systems. Optimal returns may come from an inter—crop mix
rather than from a single inter—crop. An inter—cropping system would include not only a combination of inter—crops but also different time periods at
which the crops are to be planted and how much of each crop is to be grown.
Some preliminary studies on the economics of alternative cropping systems
have been undertaken by Etherington and Karunanayake (1981). Based on
1979 price and cost data, they have attempted an economic analysis of
alternative cropping models using five inter—crops namely pepper, pineapple, banana, cocoa, and coffee. (See Table 6) The results should be considered
as 'working hypotheses' which need to be verified in the light of more recent
and improved data. However two interesting results emerge out of the
exercise.
TABLE 6
Performance of Single Inter—crops Vs. Inter—cropping
systems (per ha)
Inter—cropping Models
Individual Inter—crops
Crop
Pineapple
Annuity
Annuity at
M odel
at 12%
Rs. 4,550
12% (Rs.)
A:
Pepper ±
7,700
Pineapple
8,800
Banana
B1:
Pepper +
10,700
Banana
1,700
Coffee
B2:
Pepper +
Banana
grown in
10,000
stages
B and A models
in rotation
8,900
Cocoa
1,500
C:
Pepper
3,050
D:
Pepper +
E:
Peppe; +
Cocoa
Coffee
5,800
6,000
Notes: Annuity represents the constant annual equivalent of the sum of net
present values.
All pepper is being grown using coconut palms as support. Two vines are grown
per acre. In A and B1 pineapples and bananas are grown in rows using 60% of the
area in two four—year periods with a two—year fallow period between cropping
cycles. Internal Rates of Return on all cropping models are equal to or greater
than 32%
Source: Ethirington and Karunanayake, 1981, op. cit, table 5.
223
PLANTATION AGRICULTURE IN SRI LANKA
The most important conclusion is the considerable increase in income
that is possible from the adoption of an inter — crop mix relative to a single
inter—crop. Whichever model is chosen, the increase in returns is clearly
significant. Model B (pepper and banana mix) is superior to all other models.
Models C and A represent the 'second best' options. Models D and E (with
cocoa/coffee with pepper) do not fare well relative to models with banana/
pineapples.
Pepper appears as an integral part of all inter—cropping models. Pepper
cultivation using coconut palms as support, costs little in terms of material
inputs. The physical space it uses is negligible and hence could be combined
with any inter—crop without a competition. Pepper makes a significant
contribution to the economic returns of the various inter—cropping models. In
fact, without pepper the returns in the models D and E would have fallen by
over one — half.
The above conclusions, though tentative, clearly suggest the superiority
of an inter—cropping mix compared to a single inter—crop. There is an
important need for more economic analysis to identify optimal
inter— cropping systems.
Economics of Pasture and Cattle Under Coconut
The technical feasibility of pasture and cattle rearing under coconut has
been established." Pasture under coconut would become an economic proposition only with new pasture species having a high yield potential. The
natural pasture species do not show high response to fertilizer, and at their
best such pastures have a carrying capacity of one animal to 1.50—2.00 ha.
On the other hand, high yielding species with adequate fertilizer application
have a carrying capacity of about 3.2 animals/ha. The success of cattle
farming under coconut would also depend on the efficiency of the animal to
convert the pasture into animal products. Nearly one—third of the national
herd is known to be in the coconut growing areas, but most of these cattle are
local breeds with relatively low yield. Economic calculations show that better
breeds combined with improved pasture could make cattle farming under
coconut an attractive proposition. For example, a feasibility study of a cattle
farming unit of six animals on a coconut land of 1.8 ha cultivated with
improved pastures (supplemented with pasture from paddy fields) shows a
benefit—cost ratio of 2.3 and an internal rate of return of over 50 per cent.2'
Here again, there is a need to integrate cattle farming into inter—cropping
systems and to consider optimal combinations of cattle and inter—crops.
However, no studies have so far been made along these lines.
'I Ferdinandez, op. cit.
2/
Based on a project study on cattle farming used in a training workshop for rural
bankers held in Kurunegala in October 1982, (Unpublished).
224
DIVERSIFICATION OF Cocor'ur LANDS
Marketing Prospects
Economic feasibility of inter — cropping has so far been calculated on the
assumption that there are no major marketing constraints. Marketing prospects are however, not uniform for all crops.
—
In
general, market prospects appear favourable for minor export crops
such as coffee, pepper and cocoa. In the case of these products, Sri Lanka
is a small supplier in the world market and there should be no major
constraint in marketing a substantial increase in supplies.
—
the case of fruits (pineapple, banana and papaw) the market prospects
would depend partly on the growth of the internal market and partly on
In
the ability to find export outlets. The income elasticity of demand for fruits
is relatively high and the domestic consumption can be expected to expand faster than the rate of growth of the population. There is also an
additional demand emanating from the growing tourist industry.
—
Lime,
ginger and turmeric are almost entirely sold for domestic con-
sumption and the markets are likely to grow more or less at the same rate
as population growth.
—
Manioc
as a food crop is consumed at low income levels and its con-
sumption can be expected to decline with rising incomes. However, as a
crop for other uses such as animal feed and industrial starch it has better
market prospects.
—
Dairy products are highly income elastic, and should not encounter serious
marketing constraints.
Labour Absorption Potential
Estimates of labour requirements (as single crops) are given in Table 7.
It can be seen that six of the inter—crops (pepper, papaw, ginger, pineapple,
turmeric and manioc) have a labour absorption capacity of over 124
mandays/ha year;, that is to say, 1.2—2.0 hectares of land could provide
employment for one person (250 mandays). Two crops (coffee and
cocoa) require 78—89 mandays/ha/year; that is, one person could find full
time employment on 2.8—3.0 ha. Bananas and lime have the lowest absorption capacities and these crops are not very different form coconut in
employment generation (one person for 4.0—5.3 ha).
full — time
Labour intensity varies substantially among inter—crops. In the case of
perennials and semi — perennials, cultural and management practices
(weeding, mulching, pruning, fertilising and plant protection) absorb a higher
labour input (in most cases over 50 per cent of the total labour inputs) and
harvesting absorbs only about 20—40 per cent. In the case of seasonal crops
(ginger, turmeric and manioc) the greater portion of the labour use is for land
225
PLANTATION AGRICULTURE IN SRI LANKA
preparation and planting (well over 50 per cent of the total) with harvesting
absorbing about 15—20 per cent.'1
Estimates of labour requirements of alternative inter—cropping models
(given in Table 7) are presented in Table 8. All models considered have labour
absorption capacities of over 198 mandays/ha/year. The pepper + coffee
combination (model E) has the highest labour absorption potential with 319
mandays/ha/year. These results clearly indicate the superiority of
inter—cropping systems (as against a single inter—crop) from the point of
view of employment generation.
TABLE 7
Intercrop
Labour Requirements of Inter—crops
ha/year
No. of ha per
worker at 250
mandays
198
177
175
151
138
131
1.3
1.4
1.4
1.7
1.8
1.9
86
78
2.8
3.2
61
4.1
47
5.4
Average Labour
Input — mandays/
High Labour Inputs
1. Pepper
2. Papaw
3. Ginger
4. Pineapple
5. Turmeric
6. Manioc
Medium
7. Coffee
8. Cocoa
Low
9. Banana
10. Lime
Source: Ministry of Finance & Planning, Inter—cropping Study, op. cit.
Inter—cropping Study, op. cit.. Table 5.
226
DIVERSIFICATION OF COCONUT
TABLE 8
Labour Requirements in Alternative Inter—cropping
Systems
Model
Average Labour
Requirement
mandays/ha/year
A
B1
B2
C
D
E
Pepper + Pineapple
Pepper + Banana
Pepper + Banana grown
in stages
Models B and A in rotation
Pepper + Cocoa
Pepper + Coffee
No. of ha per
worker
at 250 days
220
200
1.1
200
210
240
320
1.2
1.3
1.2
1.1
0.8
Source: Ethirington and Karunanayake (1981), Table 5.
On the basis of the above findings the total labour absorption potential
of inter—cropping under alternative assumptions is given in table 9. It is
assumed that the feasible area available for inter—cropping is 123,000 ha
(i.e. the total feasible area less the area already inter—cropped).
These are direct employment opportunities. In addition, indirect employment would be generated in nursery development, distribution, transport, and other services for which no estimates are available. In the case of
small holdings, a substantial portion of the employment generation is likely to
take the form of a reduction in under—employment levels or enhanced utilisation of surplus family labour. A rough estimate is that an average household
with two adult workers (that is 500 mandays/year) may have about one—
fifth (that is 100 mandays) of surplus labour time, that could be spent on
inter—cropping." Utilisation of such surplus family labour (for which there is
little or no opportunity cost) constitutes an additional gain from
inter — cropping.
1/
This estimate is made in Inter—cropping Study: 1981, op. cit.
227
PLANTATION AGRICULTURE IN SRI LANKA
Labour Absorption Potential of Inter—cropping
TABLE 9
Inter— cropping System
systems (cropping mix)
with high labour absorption potential:
Inter — cropping
1.2 ha/person
100,000
Single inter — crops with high labour
absorption:
1.6—2.0 ha/person
60,000—75,000
Single inter — crops with medium labour
absorption:
2.8—3.2 ha/person
38,000—43,000
Single inter — crops with low labour
absorption:
4.0 ha/person
30,000
Constraints on Inter—cropping
Problems faced by inter—croppers as well as non—inter—croppers have
been revealed in a sample survey conducted in July—August
These
findings are summarised in Table 10. The most common problems reported
TABLE 10
Constraints on Inter—cropping
Percentage of
Percentage of
Inter — croppers non — inter — croppers
Constraint
Drought
Lack of Funds
Lack of Technical know — how
Labour Problems
Unavailability of planting
material
Price instability
Marketing Problems
Thefts
reporting as
a problem
reporting as a
57
48
43
42
47
60
63
37
23
22
45
20
35
problem
40
10
16
The survey covered a sample of 152 inter—croppers and 507 non—intercroppers
in five districts (Colombo, Kurunegala, Puttalam, Kegalle and Matara). See,
Ministry of Finance & Planning, Report of the Survey of Inter—cropping,
op. cit.
228
DIVERSIFICATION OF CocoNuT LANDS
by both inter—croppers and non—inter—croppers (by over 40 per cent of
both groups) are drought, lack of funds, lack of technical know—how and
problems of labour availability. In addition, 45 per cent of inter—croppers
have reported price instability as an important constraint. It was also revealed
that a farmer faces at least two or three of the problems listed in Table 10.
The importance of these problems varies considerably with the farm size.
Drought has been reported as a problem by most inter—croppers; it is most
severe for holding sizes above 2 ha (62—79 per cent in this size category). On
the other hand, lack of funds and technical know — how are particularly
serious problems for small holders rather than for bigger holders and estate
owners. Similarly, problems regarding physical inputs, marketing and price
instability affect small holders more than larger holders.
Problem of Drought
Moisture stress is an important factor affecting inter — cropping activity
and the success of a large scale programme will depend on the effectiveness
with which this problem is attacked.
Coconut palm requires a minimum annual rainfall of 50 inches, evenly
distributed over the year. It is the excess above this minimum rainfall level
that could be used for inter—crops if a competition for moisture is to be
avoided. However, even in the wet zone portion of the coconut triangle, an
excess is available only for about six to eight months of the year. In other
words, moisture stress prevails even for coconut (as a mono—crop) during a
part of the year, particularly during January to March and July to August.
Crop damage can be anything from one—third to one—half. This has discouraged inter—cropping and prevented achievement of planting targets.
This brings us to the issue of technical and economic feasibility of
irrigation on coconut lands. Prospects of developing ground water resources
by dug well/tube well programmes or the feasibility of river diversion
schemes (e.g. Kelani River) are issues that need further research and study.1'
Assuming that irrigation is technically feasible, it would be necessary to carry
out cost— benefit analyses taking into account in particular the increase of
yield from existing coconut and from hybrid coconut plantings and the scope
for inter—cropping among other factors. Irrigation would raise the capital
intensity of both coconut and inter—crop cultivation.
It is necessary at the same time that a strategy of inter—cropping be
evolved taking into account (a) lands in the wet zone where moisture condiIt has been shown that diversion of Kelani River is capable of irrigating around
40,500 ha of coconut in addition to a substantial acreage of other crops. See,
Seneviratne, J.T., New Thinking on the Kelani Ganga Schemes: Irrigation
Proposals (mimeo.), 1977.
229
PLANTATION AGRICULTURE IN SRI LANKA
tions are more favourable, (b) crops which demand less in moisture, and (c)
times of the year when moisture stress is not a problem. In addition, further
research efforts are clearly needed for the development of inter — crops less
demanding of moisture and to improve moisture conservation techniques.
Problem of Funds
Relatively high initial investment costs characterise most inter—crops. In
addition, many involve a long gestation period. Such investment outlays are
beyond the capacity of most small holders who also lack the ability to wait
long periods for inter—crops to bear fruit. Field surveys have revealed that
'lack of funds' is a constraint for 60 per cent of all non—inter—croppers and
for 75—85 per cent of those with holdings below 2.00 ha.Moreover, nearly
one — half of the existing inter — croppers have reported this factor as a constraint.
In the case of four inter—crops (cocoa, coffee, pepper and pasture) a
subsidy scheme is now in operation. However, these subsidies are inadequate. Calculations reveal that they cover about one—half of the development
costs of coffee, pepper, and pasture, and two—thirds of the development cost
of cocoa.
The absence of a proper credit scheme emerges as a conspicuous gap in
the current inter—crop development policy.
Extension and Research
Some 63 per cent of the non—inter—croppers and 43 per cent of the
inter — croppers
have reported lack of technical know — how as a constraint on
inter—cropping. This problem is particularly experienced by small holders.
For example, 65—80 per cent of the non—inter—croppers in the size group
2.00 ha and below have reported this problem. Despite the creation of a
unified system of extension under the Agriculture Department to cover all
crops other than tea and rubber, the Coconut Cultivation Board continues to
function as the only agency for extension support for coconut and
However CCB extension officers are too pre — occupied with the
subsidy programme, and as a result, virtually no extension services operate
for inter—cropping. It is only in the Kurunegala district that some special
arrangements have been made for extension under the IRD project.
inter — crops.
There is also a need for well coordinated and intensified research support for inter—cropping. The Department of Minor Export Crops (DMEC) has
a research programme for cocoa, coffee, and pepper but it is mostly confined
to mono—crops.
The coconut Research Institute deals specifically with coconut
inter—cropping. Most, if not all crop varieties, now being used or tried under
230
DIvERSIFIcATIoN OF COCONUT LANDS
coconut have been developed for mono—culture cropping systems, which
may not give optimum results. Hence breeding of varieties for inter—cropping
appears as a distinct research requirement. Problems of moisture stress,
technically efficient cropping patterns, and optimal density of coconut palms
in the context of inter—cropping (an important problem when new planting
and replanting is being done) are further important areas of agronomic research. It is also necessary that economic analysis be improved to identify
alternative inter—cropping systems that yield improved.,results.
Marketing Constraints and Price Instability
Price instability and lack of proper market outlets have figured as important problems particularly for small holders. Farm gate prices are often a
small fraction of the wholesale market price in view of the substantial margins
by middlemen and traders at various levels. This situation reflects
lack of organisation (and hence weak bargaining power) of small producers.
Moreover, the small producers often have depandancy links with traders
through credit supplies. It may be noted that marketing did not figure as an
important problem for bigger operators who normally sell their produce in
bulk in wholesale markets. There is a need for governmental intervention to
introduce guaranteed price schemes to reduce price uncertainty. At the same
time, there is a need for group organisations among small producers to
improve their bargaining power and to undertake more organised marketing
efforts.
Concluding Note
The superiority of a system of coconut—cum—inter—crops over the
traditional coconut mono—culture has been adequately demonstrated. Additional income and employment generation, more rational utilisation of
resources, increased food production, and increased exports through the
expansion of minor export crops stand out as significant gains from
inter—cropping. With inter—cropping, there would be a shift from the narrow
focus of coconut productivity to the broader front of overall productivity of
land resources.
The feasible area for inter—cropping can be estimated at about 147,000
ha of which only about 24,000 ha appear to be inter—cropped at present.
The rate of introduction of inter—cropping in recent years has been around
1.000— 1,200 ha/year. According to the present targets, a rate of over
2,000 ha per year is envisaged by 1983. However, for inter—cropping to
make an impact on the national economy, the annual rate needs to be stepped
up to a level of around 8,100 ha per year, so that inter—crops would cover
the feasible land area before the end of this country.
231
PLANTATION AGRICULTURE IN SRI LANKA
The employment potential of inter-cropping depends upon the particular inter-crop or the cropping combination and ranges from one unit of
employment for every two to four hectares. Assuming an average level of
two units of employment on the same extent, the total direct employment
potential would be in the range 60,000-75,000 units.
In addition to the technical feasibility and economic viability, several
other criteria will have to be used by the policy makers to decide on the
appropriate inter-cropping systems. Among these are:
- the extent to which the crop combinations meet the basic needs of
the farmers and/or the country.
- employment potential of the crops or crop combinations
- the importance of cash crops in earning foreign exchange
- the ease with which a particular inter-crop model can be learnt by
the farmers.
Our analysis has also identified a number of constraints that stand in the
way of undertaking a large scale programme of inter-cropping on coconut
fands. These problems range from those associated with environmental
conditions (drought) to institutional and organisational problems.
There is thus a need for adopting an integrated approach to the development of inter-cropping. Such an approach should concentrate in developing the total productivity of coconut lands leading to a more rational
utilisation of the land resources in the coconut regions. This would also mean
concentrating on areas with high inter - cropping potential.
It must be noted further that at least some of the constraints affect
different types of coconut operators in different ways (e.g. small farmers,
medium operators, estate areas). Hence, any programme for the expansion
of inter-cropping needs to give due consideration to this aspect as well.
In particular, a strategy for dealing with the vast numbers of small
farmers needs to be conceived in terms of organised groups.
232
APPENDIX
Proceedings of a National Seminar
Appendix
PROCEEDINGS OF A NATIONAL SEMINAR ON
EMPLOYMENT EXPANSION IN
THE PLANTATION CROP SECTOR OF SRI
LANKA
December 1982
Colombo
Introduction
A three—day national seminar on "Productive Employment Promotion
in the Plantation Crop Sector of Sri Lanka" jointly organised by the ILO/
ARTEP and the Sri Lanka Foundation Institute was held at the Sri Lanka
Foundation Institute, Colombo during 14—16 December 1982. The seminar
was sponsored by the Ministry of Labour, the Ministry of State Plantations,
the Ministry of Janatha Estates Development and the Ministry of Coconut
Industries of the Government of Sri Lanka. It was attended by about thirty
participants representing a wide spectrum of interests such as social scientists, crop specialists, planners and policy makers, employers' and workers'
representatives and plantation managers. Three foreign participants, one
each from Malaysia, the Philippines and Indonesia also participated in the
meeting as observers." The seminar was inaugurated by the Minister of
Coconut Industries and Deputy Minister of Janatha Estates Development,
who also delivered the keynote address.
The seminar was organised as part of ARTEP's on—going work on
employment promotion in Asian agriculture and was intended to discuss the
role of plantation agriculture in employment generation in Sri Lanka. Several
papers on selected themes were specifically prepared for the meeting
(included in this volume) as well as a preliminary summary of the main findings
of an on—going ARTEP study on labour absorption in the plantation crop
sector of Sri Lanka (not included in this volume). The seminar was intended
The list of participants is given at the end of this Appendix.
235
PLANTATION AGRICULTURE IN SRI LANKA
to exchange views and experiences relating to the potential role of the
plantation crop sector in employment promotion and to identify key issues
and problems affecting the realisation of this potential. It was also expected
that the seminar would identify gaps in knowledge and areas for future
research.
The discussions during the seminar covered a very wide spectrum of
issues and it is not possible to reproduce these fully in a summary report. In
what follows we have tried to give the high lights of the discussions on a
selected number of themes.
Performance and Trends
The most striking feature of the plantation crop sector of Sri Lanka is the
overall decline in output it has undergone during more than a decade. There
was a great deal of discussion on the nature, the causes and the consequences
of this decline.
The post—Independence period, on the whole, was marked by near
stagnanation or a decline of area under plantation crops. The output of tea,
rubber and coconut show divergent rates of growth during the two decades
from 1950 onwards. But on the whole, the decade of the 1970s registered a
decline in all three crops compared with the previous decade. The yearly
estimated output of the three crops were also marked by drastic fluctuations
from year to year.
The overall yield levels have also seen a declining trend. The per hectare
output of all three crops is one of the lowest among major producers. The
average yield of tea in Sri Lanka which remained at 747 kg. per ha. in 1960
reached a peak level of 870 kg. in 1969 and gradually declined to 770 kg. per
ha. in 1977. In the case of rubber, the yield rates showed improvement during
the 1960s but since the early 1970s has been near stagnation with only a
downward trend in yield rates. In the coconut sector, from about the
mid—1960s the decline in yield has been almost continuous.
The available data on long—term trends in employment show that over
the last three decades there has been a downward trend in the number of
permanent workers employed in the plantations and the decline has been
particularly sharp during the 1970s. On the basis of available crude data it is
seen that in 1950 there were approximately 588,000 permanent workers on
Sri Lanka plantations; by 1970 the number stood at 570,900 and by 1976
the figure came down to 363,350. In 1978, however, the figure increased to
442,400 which is attributed to enhanced capital development work undertaken on most estates.
There have been wide variations from year to year and from crop to crop
in the number of workdays of employment provided to the registered em236
PROCEEDINGS OF THE SEMINAR
ployees on the estates. On tea and rubber plantations the average number of
days per worker sharply declined after the late 1960s and recorded a rise
after the mid1970s. The long—term decline in the area under plantations
and the downward trend in the volume of employment provided have together kept the ratio of the number of plantation workers per hectare constant for a greater part of the period under review.
It was argued that the number of manhours employed per month is a
better measure of employment on the plantations. Such data available for the
period after 1964 suggest that there have been wide seasonal variations in the
intensity of employment on both tea and rubber plantations. The large fluctuations in the number of manhours worked also indicate that in Sri Lanka
the increased yield rates of plantation crops which occurred in certain years
had the effect of raising labour input and reducing under—employment by
making it possible to offer more work to those already employed on plantations.
During discussion on the labour supply situation in the plantation sector,
attention was drawn to the changing composition of the estate labour population and its implications for employment. Among the changes noted,
particularly with reference to tea plantations were, first, the reduction in the
proportion of Tamil workers of "Indian origin" to 63 per cent of the estate
population in 1981 from a figure of 82 per cent in 1971, second, the decline
in the proportion of permanent workers (other two categories are temporary
and casual workers) enjoying assured employment and social security
fits. This decline has come about through the increased recruitment of village
labour as casual workers to meet the drop in resident labour due to the
increased pace of repatriation of Tamil workers to India.
The decline in the share of resident labour in the estimated work force
has contributed to a relative shortage of labour in the estates situated in
regions at higher elevation where village labour is not readily available and
immobility of estate labour has not permitted inter—estate transfers. It is
found that mid and low—country estates are generally faced with a labour
surplus situation due to the relatively easier availability of village labour in
these regions. In discussing the question of labour shortage the need to
distinguish between perceived and actual labour shortages was pointed out. It
was said that if the available labour is used more efficiently the so—called
labour shortages may, in fact, not occur.
Some participants also refered to the growing problem of unemployment on the estates among young persons who are relatively more educated
than their parents. With the expansion of education facilities in estates, the
problem is likely to assume serious proportions unless appropriate remedial
measures are taken.
237
PLANTATION AGRICULTURE IN SRI LANKA
On the question of wages and earnings of plantation workers, there was
a general consensus among several authors of the papers that a distinct
improvement in plantation wages took place during the post—land reform
phase, but many participants doubted the possibility of a real improvement.
Until 1975, the wage increases in the Estate Sector were largely the outcome
of periodic increases in allowances to workers. The basic wage rate, nontheless remained low and static. Compared with the low wage rates of the
pre—reform years, the post—reform increases in money wages look fairly
impressive. However, the first few years of the land reform did not bring
about any improvement in real wages of estate workers. The steep increase
in the prices of wage goods which took place between 1973 and 1975 in fact
resulted in a drastic decline in real incomes. The increase in money wages
since 1976 has also been largely offset by the rise in prices. The money wage
rates of male tea workers almost doubled between June 1976 and August
1981. Similar increases were also noted in the case of workers on rubber and
coconut estates.
These wage increases were set in motion by the state— owned plantations, which profess a policy of improving the living standards of the plantation labour force. Such increases need also to be viewed against the fact that
the per worker availability of work on estates taken over in 1975 decreased
significantly during the transitional period. Consequently, by June 1976, both
tea and rubber estate workers on public sector estates received a lower
monthly income than those on the private sector estates.
From 1978 onwards the number of days when work was available
increased on the government—owned estates on account of the capital development works initiated. The average yields on the public sector estates
also made some improvement. As a result of these developments, by June
1979, the monthly income of workers on the public sector estates was found
to be considerably higher than that of their counterparts on the private sector
estates. An important change which came about during this period was the
introduction of a bonus scheme for workers on the state — owned plantations.
In 1979, it was estimated that on the average, 30 to 40 per cent of workers
on state plantations enjoyed bonus payments ranging from Rs.150 to Rs.300
per worker per year.
These changes apart, it was pointed out that land reform did not bring
about any fundamental change in the methods of remunerating workers, nor
did it help to provide any stable monthly income to the workers. A high
degree of seasonality and fluctuations in the income levels of workers continued to persist on the plantations. So did the male—female differentials in
wage payments.
Some discussion also took place on the question of the link between
wages and employment. Several participants argued that fixing of institutional wages invariably creates several problems for the management in such
238
PROCEEDINGS OF THE SEMINAR
matters as (i) maintaining a reasonable profit margin, (ii) providing greater
employment opportunities to the resident labour and (iii) improving the basic
services for the estate population such as housing and water supply.
There were some who suggested that estates should think of supplementary ways of improving the overall income and living conditions of labour
than merely relying on wages. Mention was made of initiatives in providing
greater opportunities for the unemployed and the under—employed to engage
themselves in other gainful activities such as livestock and poultry farming
and intensive vegetable cultivation which would also help to improve the
nutritional standards of the estate workers.
-
Several reasons were attributed to the poor performance of the plantation crop sector. Among these, the unsatisfactory growth trend in prices and
the high degree of price fluctuations were considered as major causes of the
relatively poor performance. Besides factors directly affecting the demand for
plantation crops, it was also shown that the institutional rigidities associated
with plantation agriculture have prevented the making of suitable adjustments
in output in the short run to overcome adverse price trends. Another major
reason attributed to the decline was the threat of nationalisation announced in
the mid— 1950s which dampened re—'nvestment. It is worth noting that there
was no disagreement on this among the participants. Further, an inflexible tax
structure combined with rising cost of production amidst declining productivity levels resulted in low producer margins, making it extremely difficult for
estates to undertake development work on a continuing basis. Some parti-
cipants argued that the disruption caused by the land reform was more
responsible for the current situation. But many participants contested this
view, as we shall see in a later section. Although no single factor could be
isolated as being mainly responsible for the decline, it was generally recognised that the plantation system as a whole, for a variety of reasons, had
entered a phase characterized by declining production and productivity much
before the introduction of the land reform.
Land Reform and the Plantation Sector
The issue of land reform repeatedly came up for debate at almost all the
sessions, in addition to the two particular sessions during which it was the
main focus of discussion. The land reform programme of 1972 and 1975
affected almost 23 per cent of the total area under permanent agriculture in
the country and resulted in the acquisition of almost 60 per cent of tea, 30 per
cent of rubber and 10 per cent of the coconut acreage. These together
accounted for the largest proportion of all acquisitions. The land reform thus
affected almost exclusively the plantation crop sector. It resulted in the
nationalisation of all foreign—owned plantations and their assets and was the
first attempt in the country to impose a ceiling on private ownership of land.
The land reform was, therefore, considered a major turning point in the
239
PLANTATION AGRICULTURE
SRI LANKA
history of plantation agriculture in Sri Lanka, although some participants
preferred to consider it as the culmination of a gradual process of change in
plantation agriculture that started in the country several decades back.
There were three divergent assessments of the entire programme. First,
was by those who looked at the land reform from the perspective of the past
i.e. the pre—reform plantation system. This view, expressed by some plant-
ation managers, was that the land reform disrupted a balanced system in
which there was equilibrium between the various interest groups such as
management, worker organisations and the state. With the dismantling of this
institutional structure following the land reform, it was the estate management system that was weakened most.
A number of participants strongly contested this view and suggested that
the earlier system had in fact been showing signs of disintegration much prior
to the reform and that in any case it had to be restructured drastically.
The second group included those who assessed the land reform largely
from the criteria of its objectives and implementation. It was argued that the
reform had an obvious ideological orientation towards a "socialist" pattern of
society and ostensibly aimed at greater economic and social equality within
the agricultural sector. The main criticism of the land reform was that it was
undertaken without adequate understanding of the agrarian problems for
which solutions were being sought. Hence, the reform could not take the
course it was expected to follow and the stated objectives of increased
employment and productivity could not be achieved.
It was argued that although the ownership pattern of the estates
changed there did not result any significant internal changes in the system of
plantation management. The major difference was the replacement of a
multiplicity of owners by the state itself. But much the same administrative
hierarchy and labour management system continued as before.
The redistribution of the acquired lands among landless peasants was
less important during the post — reform phase although this was given much
publicity in the early years of the reform. Only around 47,000 ha. (14% of the
vested lands) had been redistributed among peasant families (in units ranging
from 0.05 of a ha to 0.4 ha) by the end of 1981. The entire redistribution
programme was haphazardly done and the supporting services in terms of
credit, extension and marketing facilities were not provided to the recipients.
Many of the lands that were redistributed were marginal and unproductive.
Hence after redistribution they suffered further neglet. Similarly, the earlier
professed objective of organising plantation enterprises under co—operative
forms of management could not be implemented in a forthright manner.
Electoral co—ops and Land Reform Co—operatives (Janawasas) that were
hurriedly set up after 1975 covering almost 20,000 hectares were subse240
PROCEEDINGS OF THE SEMINAR
quently disbanded (with the change of Government in 1977) and their lands
reallocated to state corporations to be run as state farms.
The immediate post—reform period was, no doubt, characterised by
considerable dislocation of management and disruption of development work,
particularly in activities such as fertiliser application, replanting and other
essential maintenance work. Such dislocations were particularly severe during
the first phase (especially the dislocation of resident workers from many
estates) and on lands acquired in that phase. Many of these defects were
corrected in the second phase. But taken as a whole, plantation crops showed
a general stagnation and deterioration in the post—reform period.
Several participants, however, cautioned against holding the land reform alone responsible for the declining performance of plantation crops.
Firstly, the post — reform decline was only a continuation of a trend that had
already started earlier (drop in fertiliser application and in the rate of replanting, neglect of soil conservation and factory maintenance). Secondly,
there were other factors such as the decline in the international prices for
plantation produce and the inflexibility of the tax structure and it's failure to
cope with the changes.
Those who viewed the land reform from this angle were also those who
took a long—term view of the development of the plantation sector, and
argued that the entire system was in the process of disintegration and required drastic reorganisation in order to bring it in line with developments in
the rest of the country. Mention was specifically made of the long neglected
living conditions of the estate population. It was argued that state ownership
of the bulk of the largest and the best estates now offers a unique opportunity
to develop and re — integrate the sector with the rest of the economy and
society, a possibility that was virtually unthinkable under foreign company
and private ownership. This view was strongly supported by the trade union
representatives. A number of initiatives that had been taken after the land
reform, such as crop diversification on mono — crop plantations, introduction
of ancillary activities such as dairying, and improved housing and welfare
facilities for workers were mentioned as some of the emerging positive
developments.
Potential for Employment and Income Generation
Several sessions were devoted to a discussion of the potential for employment and income generation in the plantation crop sector.
Three main areas were identified both in the papers and in discussions as
offering a high technical potential for increasing both:
i.
increasing the productivity of the main crops—tea, rubber and coconut,
241
PLANTATION AGRICULTURE IN SRI LANKA
ii.
introduction of other crops in association with the main crop, or
where the land is not suitable for the main crop, its replacement by
other crops, and
iii.
introduction of other income—generating activities.
Given the current low yields of all three major crops (averaging roughly
half the achievable potential) an increase in productivity can directly contribute to higher employment and income levels for both wage workers and
small holders. The greatest potential for achieving a high level of labour
absorption along with a rise in productivity is found in tea. This is seen from
the fact that the number of workers required per ha. increases to 3.45 units
at a yield level of 2,500 kg/ha. from a mere 1.56 labour units at 500 kg/ha.
Such dramatic increases in labour absorption are, however, not associated
with rubber and coconut, but other activities that are required to raise the
yields and maintain them at a high level demand considerable increases in
labour application.
The chief methods of increasing output in the main crops were identified
as (i) replanting of senile plantations with improved varieties; (ii) systematic
filling of vacancies (dead trees/bushes and senile ones that need removal) with
improved varieties where complete replanting is not required or desirable;
and (iii) increased fertiliser application and adoption of other essential cultural
practices such as weeding, soil conservation etc. Since there is a large backlog
of land awaiting replanting, filling of vacancies and overall rehabilitation, a
carefully phased programme to intensify these can offer a large potential for
labour absorption. There was general agreement that in the case of tea, where
feasible, emphasis should be given to filling of vacancies with VP tea in order
to minimise loss of employment and incomes for several years that would
result from replanting.
There was also much discussion on the potential for replacing uneconomic tea and rubber plantations with other crops and the possibility of mixed
cultivation of several crops along with the main plantation crop as well as
introduction of other crops in selected parts of larger estates. Some possibilities of introducing short — term crops on newly — planted lands during the first
several years were also identified, particularly on rubber and coconut land.
The greatest potential for inter—cropping with the main crop is found in
coconut — a mixed — cropped coconut plantation being able to absorb as
much as 200 mandays of labour per ha per year, which is several times higher
than the current levels (25—35 mandays per ha/year) under coconut
mono—cropping. Tea also offers large scope for mixed—cropping with several crops such as pepper on shade trees.
There was also much interest in the feasibility of introducing other
income—generating activities, especially on large plantations with resident
labour and where under—employment is particularly high. The role of lives-
242
PROCEEDINGS OF THE SEMINAR
tock was considered extremely relevant as well as programmes for the cul-
tivation of vegetables and other food crops by estate workers. Several examples of such initiatives were cited by the participants. The dairy development programme on tea estates was considered a very successful effort. Some
participants emphasised that such ancillary activities were a prerequisite for
reducing under — employment on estates and for improving incomes as well as
the nutritional status of estate families. The potential for large— scale introduction of animal husbandry on coconut land was considered very high. Some
participants also pointed out the need to explore the possibility of introducing
other non — agricultural income — generating activities on estates (e.g. weaving, handicraft—making etc.) for the benefit of the families of estate labour.
An important suggestion that emerged during the discussion related to
the role that state plantations should play with regard to crop diversification
and the introduction of ancillary activities on estates. It was suggested that the
state plantations, which had extensive infrastructure and research/extension
facilities available to them, should play a leading role in promoting these
activities and acting as a catalyst in extending them to neighbouring private
estates and small holdings.
Small holdings
In order to make an assessment of the prospects of the plantation crop
sector in Sri Lanka, it is essential to take into account the relative importance
of small holders in the economy. Small holdings (which are usually defined as
operational holdings not exceeding 4 ha in size) display different levels of
productivity and absorption of labour in crop production, compared with
estates. Currently about 22 per cent of the area under tea, 33 per cent of the
extent under rubber and 50 per cent of the coconut area comprise small
holdings. Recent trends show a rapid increase in their number, which is likely
to continue owing to increasing demographic pressure on land.
Given the current low level of yields and of management and, therefore,
low labour absorption, efforts at the development of the small holdings sector
were recognised as both important and urgent, not only to raise the income
levels of the small operators but also to provide employment and
wage—earning opportunities to landless villagers in these areas, which are
among the most densely--populated regions of the country. Some participants, however, doubted the ability of small holdings, in particular tea and
rubber, to increase production and employment, arguing that these crops do
best under large—scale operation. -Several participants disputed this contention and suggested that the current low production levels of small holdings are
not so much due to any inherent problems associated with the small size of
holdings but to other factors operating against this sector. If these are corrected, it was argued, there is no reason why the small holdings should not
perform better. The tea small holdings of Galle and Matara, where some of
243
PLANTATION AGRICULTURE IN SRI LANKA
the highest tea yields of the country are obtained, were cited as examples of
this potential. Where the small holder is deficient, it was argued, it is not due
to managerial inefficiency but often to other factors largely external to him.
A number of constraints that small holders generally face were identified. They included such problems as those related to input supplies, especially
fertiliser, inadequate extension facilities, marketing and low farm gate prices.
The problem of marketing/processing was identified as the main factor
affecting small holders. In the case of tea, owing to perishability of green leaf
the problem is far more acute than in rubber. The role of middlemen was
discussed at length and the need to minimize exploitation by them was
stressed. One way to achieve this, as suggested by some, was to introduce
more stringent legislation to control middlemen activities. Others, however,
doubted the effectiveness or even the desirability of tighter controls over
marketing through legislation, which they argued could only worsen the plight
of the small holder. It was thought that the regulations contained in the Tea
Control Act are adequate to regulate middlemen activities. What is required
instead is to increase and improve the facilities for processing of small holder
tea and rubber, particularly by increasing the number of factories and their
capacity, and the launching of schemes for direct collection of produce by
factories or direct sale to them by the small holder. It was also suggested that
greater efforts need to be directed towards organising small holders into
groups or associations for marketing produce and for obtaining inputs and
extension services. It was pointed out that small holders are aware of the
benefits of fertiliser use. They, however, lack the necessary funds to purchase
fertiliser. There are also problems of non—availability at the required time and
at convenient locations. The feasibility of factories/estates supplying such
inputs, planting materials, technical advice etc. was discussed at length. It was
suggested that this possibility be explored intensively before introducing any
implementable policy guidelines.
Regarding the question of low prices obtained by small holders, it was
pointed out that price is related to the quality of the produce. In tea for
instance, coarse plucking to increase total output invariably resulted in a
lower price for green leaf. In rubber, the problem is in processing deficiencies;
the bulk of the small holder output falling in to lower grades.
Attention was also drawn to the practice of applying blanket solutions to
small holder problems, ignoring the fact that there are consierable differences
in holding size, ownership and tenure and even in regional and intraregional
characteristics. One participant cautioned against the generalisation that
small holdings are synonymous with owner—operated holdings. He quoted
the findings of a recent study of rubber small holdings in three of the major
rubber—growing districts, which indicated that 50 per cent of the small
holdings (those below 4 ha in extent) in fact belonged to absentee owners, who
were mostly in salaried employment and in professions. It was therefore urged
244
PROCEEDINGS OF THE SEMINAR
that a good typology of small holdings to reflect the various differences be
worked out to assist policy formulation for this sector.
Crop Diversification
The issue of crop diversifiaction generated much interesting discussion.
While the need for introducing a diversified cropping system on mono—crop
plantations was generally recognised and the potential available for it in
general not disputed, many participants expressed disagreement about the
extents available for such diversifiaction, and on the feasibility of undertaking
large—scale programmes of crop diversification, particularly to replace lands
considered marginal for tea and rubber.
The participants devoted considerable time to clarify the concept of crop
diversification, since it was defined variously in the papers as well as by some
seminar participants. One interpretation referred to the replacement of the
main plantation crop with other suitable crops, i.e. diversification away from
the main crop. This was the concept used under the NADSA programme.
Another interpretation referred to the introduction of other crops in addition
to or along with the main crop. Here, too, it was pointed out that a distinction
must be drawn between the cultivation of certain crops in selected parts of a
large estate as single crops (referred to as mixed — cropping) and the introduction of certain crops as inter—crops mixed with the main crop (this was
termed inter — cropping).
Another issue that came up for intensive discussion related to the
potential for crop diversification of uneconomic and marginal tea and rubber
lands. It was recognised that there is an urgent need to determine precisely
the extents of such land, for the variously-arrived figures now range from
20,000-160,500 ha for both crops. Some participants also repeatedly
stressed the need to exercise caution in assessing the potential of alternative
crops to support the argument for crop diversification. Marginal and uneconomic lands are usually defined with reference to the present tea and rubber
yields of those lands, which for reasons of neglect and over—exploitation of the
soil are in a state of low productivity. What is often done is that the present
yields of neglected tea/rubber lands are compared with the potential yields of
other crops at an ideal level and the conclusion is drawn that deversification
into such crops would be more profitable than tea or rubber on such lands. It
was, therefore, pointed out that in defining marginal/uneconomic lands one
has to consider not only the present yield of tea or rubber but also the
potential of these lands in tea/rubber itself with improved varieties and land
rehabilitation. Many participants felt that, particularly in the case of the
so-called "marginal" or "uneconomic" tea lands, tea would still be the best
crop where the land is capable of being rehabilitated for cultivation.
The above point was discussed at length with reference to the
mid—country tea—growing region, which contains the largest extent of
245
PLANTATION AGRICULTURE IN SRI LANKA
"marginal" tea lands. These have been identified as offering wide scope for
diversification with other crops. Some participants contended that diversification of such lands is possible or may even be desirable only if the soils are
fertile enough to carry such crops and are capable of sustaining high crop
intensities and that the introduction of such crops will not result in the
displacement of labour or a reduction in the national income by uprooting tea.
Some participants strongly felt that in most mid — country areas, even with
eroded soil conditions, tea is still the best crop given the suitability of the soil
and realistic prices. They argued that tea is the hardiest of plantation crops
and where it fails owing to diminishing soil fertility, the chances of introducing
other crops would indeed be very limited. Several participants drew attention
to the disastrous consequences of the NADSA experiment, which attempted
to implement a large—scale programme of crop diversification on
mid — country
marginal tea lands.
Disagreement was also expressed on the large — scale replicability of a
multicrop model developed by the Agricultural Diversification Project on the ground that the experiment was carried out on land with highly
fertile soils and using all the available scientific and technical know—how.
one — ha
Under ordinary field conditions, the results would turn out to be less impressive.
The paper on development of "uneconomic" tea and rubber lands
clearly showed the technical feasibility of crop, diversification on tea and
rubber lands in different agro—climatic zones. Several other papers also
underlined the need for shifting away from mono—cropping to diversified
farming. The desirability of exploiting the very high potential offered by the
large extent of coconut land was emphasised and the need to abandon the
concept of coconut as a mono—crop not only in its cultivation but also in all
connected with coconut development, including subsidies, credit
facilities etc. was recognised. Particularly, in the case of coconut, it was
pointed out that since small holders have been practising inter — cropping for
centuries (though in an unorganised way) the know — how is already available
and that given right incentives and with proper organisation, expansion of
inter — cropping on coconut land should not be a major problem. The cultivation of 26,000 ha of coconut land with food crops during 1973 was cited
as a good example.
Consensus was reached on the pressing need to shift away from the
concept of mono—cropping to a system of diversified agriculture on land
under all major crops and on both estates and small holdings. It was
pointed out that the estates in particular must be considered more as farms on
which there should be a plurality of agricultural and allied activities both
as a means of increasing employment and income generating opportunities
and as a hedge against price fluctuations resulting from over — dependence
on a single crop.
246
PROCEEDINGS OF ThE SEMINAR
Three important suggestions emerged during the discussion as being
critical to the expansion of crop diversification. One related to the need
for the preparation of a long—term masterplan for crop diversification on a
scientific and integrated basis. The second was the need to change the
outlook of the traditional growers of tea, rubber and coconut. Estate management and small holders need re — orientation to gear themselves to become
multi — crop managers. (Some- plantation managers, however, reminded the
participants that the typical estate manager should not be considered as
exclusively mono — crop — oriented and that most of them are willing to learn
and experiment.) The third was related to the need to adopt an area—specific
approach in crop diversification, in order to strengthen support services
and to benefit from comparative advantages of different regions.
Institutional Aspects
Although there was hardly any dispute on the potential role of the
plantation sector as a source of additional employment and income generation and the technical potential the sector appears to offer for achieving
this, a number of constraints of an institutional nature were highlighted
during the seminar. The removal of such institutional bottlenecks was
considered essential for realising the technical potential of the sector, and
the view was expressed that cautiously — engineered institutional changes can
by themselves create the conditions required for realising the full technical
potential.
A number of institutional rigidities in the system were identified. Among
them the following were considered as serious. First is the tenuria! issue of
absentee landlordism associated with a sizeable proportion of private holdings, particularly coconut estates. This was considered a major problem that
retards increased production and employment growth and as such requires
early solution. Secondly, the continuing isolated existence of plantations on
the one hand and small holdings on the other (in other words, estates and
villages) was considered detrimental to the integrated development of the
rural economy in the plantation regions. Thirdly, despite many recent
changes, the plantation management, by and large continues to be less responsive to the need for diversified agriculture, greater worker participation in
management and assisting the development of the village economy. Fourthly,
the long —established confrontational outlook of the trade unions has still to
undergo change towards an approach which is development oriented. They
have remained as rigid as the management itself.
One of the most valuable insights presented at the seminar was that the
plantations must be viewed as a system which is an integral part of the
agricultural economy and the larger society of the country. It was pointed
out that the traditional plantation system is fast decaying owing to
forces of change that are both internal and external. Special mention was
247
-
PLANTATION AGRICULTURE IN SRI LANKA
made
of the increasing mobility of plantation labour owing to improved
educational facilities and to the growth of the other sectors of the economy.
It was also pointed out that the increasing number of small holdings necessitated consideration of the type of organisation that would best serve the
plantation crop sector as a whole.
Another important issue that came up for discussion was that of
estate — village integration. Some participants appeared to interpret this solely
in terms of job opportunities for village labour on estates, while others
considered it to mean integrating the two communities which had hitherto
remained isolated from one another, in a much broader sense. A representative of a plantation labour union, however, cautioned that integration must
be on the basis of equality and that it should not be interpreted to mean
assimilation. The discussion, however, did not proceed to sort out the differences between the two concepts nor to delineate precisely what integration
should entail.
Policy Priorities
Participants deplored the severe dearth of regular and reliable information on the plantation crop sector both at the macro and micro—levels.
Such a dearth was a surprise because of the earlier belief that this sector had
a sound data base. The need for collecting essential data on a continuing basis
was stressed by the participants.
It was also recognised that compared with the remarkable advances
made in agronomic research, social science research on the plantation sector
has remained weak. The seminar participants agreed on the need for closer
coordination between research and academic institutions to undertake
forward — looking type research on this important sector. It was suggested
that a small interdisciplinary study group be set up to design a suitable
framework for social science research in this field, in particular on aspects of
employment, equity and distribution of gains, and to formulate and carry out
a programme of such research.
A number of valuable suggestions of considerable policy relevance were
made during the discussions. Those that have a short—to—medium term
relevance may be briefly listed as follows.
i. The need for the creation of an umbrella organisation with overall
responsibility for the plantation crop sector and with coordinating
and integrating functions so as to obviate any conflict of sectoral
interests. This was considered important owing to divided responsibility, plurality of decision — making and over — bureaucrati-
cisation of state corporations (to the point or greatly curtailing the
decision — making
power of the individual manager at the estate
level). Not only are there several institutions responsible for plant-
248
PROCEEDINGS OF THE SEMINAR
ation crops but also different ministries have some measure of
responsibility.
ii. A start should be made to encourage and provide incentives to
estate managers to shift from a mono—culture orientation to one
geared to diversified agriculture. The need for training and retraining was emphasised.
iii. There was also a strong plea to consider under—utilisation of land
a social evil and to devise ways and means of providing opportunities for the use of such land (particularly in the case of coconut) by
the landless and the unemployed, under suitable arrangements until
more forthright measures are adopted to overcome the effects of
absentee ownership.
iv. Attempts should be gradually made to integrate the plantations and
small holdings on the one hand and estates and villages on the
other, in a way that would eventually end the long—entrenched
isolation of the two.
From the long—term point of view, the most important suggestion that
emerged from the discussion was the need to examine thoroughly the future
organisation of plantation agriculture in the country. Although, the small
holdings sector is expanding, it was not considered possible nor desirable to
replace the entire estate system with a small holding system. Also, despite
various difficulties, (in many cases those which are inherent in any transition
from one system to another) it was not considered politically feasible nor
socially desirable to privatise state plantations. It was, therefore, suggested
that a concerted attempt be made to evolve an alternative system of
agriculture suitable to the current and future needs of the
country. Some participants considered it to be of utmost importance to
explore alternative possibilities in the light of the need for estate—village
integration and the overall rejuvenation of the rural economy in plantation
"large — scale"
regions.
249
LIST OF PARTICIPANTS
Participants from
Sri Lanka
Mrs. C. Amarasekera
Deputy Director
Ministry of Finance and Planning
Colombo
Dr. P. Athukorala
Lecturer
Department of Commerce
University of Sri Jayawardenapura
Nugegoda
Prof. A.B. Dissanayake
Professor and Head
Department of Agricultural Economics
and Extension
Faculty of Agriculture
Ruhunu University College
Kamburupitiya
Dr. N.A. Fernando
Senior Economist
Central Bank of Ceylon
Colombo
Mr. J.K. Gnanaratnam
Manager
Crop Diversification
Ministry of Janatha Estates Development
Kandy
Mr. Victor Gunawardene
Editor
Marga Institute
Colombo
Mr. G. Hewagama
Assistant Secretary
Ministry of Coconut Industries
Colombo
Dr. V.J. Jacob
FAO Senior Adviser
Research Station
Minor Export Crops Department
Matale
Mr. R.B.M. Korale
Director
Employment & Manpower Planning Division
Ministry of Plan Implemantation
Colombo
250
Mr. S. Kulasegaram
Deputy Director
Tea Research Institute
St. Coombs
Talawakele
Mr. D.P.Z. Leanage
Superintendent
Brookside Group
Halgranoya
Mr. P.S. Liyanagama
I-lead/Division of Estate Management
Coconut Research Institute
Lunuwila
Mr. Manik de Mel
Finance Manager
Sri Lanka State Plantations Corporation
Colombo
Mr. P.1. Navaratne
Regional Manager
Tea Small holdings Development Authority
Colombo
Prof. GJ-l. Peiris
Department of Geography
University of Peradeniya
Peradeniya
Mr. K.P.G.M. Perera
Director
Regional Development Division
Ministry of Plan Implementation
Colombo
Mr. U.Vj-l. Perera
Director/Economic Research
Coconut Development Authority
Colombo
Mr. W.M. premachandra
Agricultural Economist
National Institute of Plantation
Management
Colombo
Mr. S.W. Ranasinghe
Senior Lecturer
Sri Lanka Foundation Institute
Colombo
Dr. N. Sandaratne
Deputy Director/Statistics
Central Bank of Ceylon
Colombo
Mrs. B. Selvaratnam
Consultant
Plantation Workers' Programme
Ceylon Workers' Congress
Colombo
251
Mr. S.J. de Silva
Superintendent
Perth State Plantation
Horana
Mr. M. Sinnathamby
Lecturer
Department of Economics
University of Peradeniya
Peradeniya
Prof. S. Tilakaratne
Department of Economics
University of Sri Jayawardenapura
Nugegoda
Dr. D. Wesumperuma
Director
Sri Lanka Foundation Institute.
Colombo
Participants from
outside Sri Lanka
Dr. (Mrs.) C. Aragon
Assistant Professor and College Secretary
College of Development Economics and
Management
University of the Philippines at Los Banos
College, Laguna
Philippines
Dr. W. Gooneratne
Senior Development Specialist
ILO/ARTEP
Bangkok
Mr. Gurdeep Singh
Federal Land Development Authority
Pahang
Malaysia
Dr. A.V. Jose
Economist
ILO/ARTEP
Bangkok
Prof. Mubyarto
Faculty of Economics
Gad jab Mada University
Yogyakarta
Indonesia
252
INDEX
AUTHOR INDEX
Herath, H.M.G.
Adamson, A.H. 137
Ahmed, M.M.A. 47
28, 75, 76, 78
Hussain, S.M. 208, 218, 301
Alles, W.S. 189
Anandarajah, N.C.E. 191
Jacob, V.J. 189, 202
Jayasena, W.G. 75, 76, 78
Jayasingha, H.D. 165
Jayawardena, K. 10, 74, 114
Jogaratnam. 1. 45, 76
Barlow, C. 65, 176, 177
Barraclough, S. 137
Bastian, S. 71, 74
Bavappa, K.V.A. 202
Beckford, G.L. 137
Boeke, J.H. 33
Brooke, E.M. 64, 65
Broostein, E. 137
Brown, C.P. 79
Kaldor, N. 3
Karunanayake, K. 220, 223, 227
Karunasena, K. 202
Karunatilake, H.N.S. 40
Kirinde, 5.1W. 189
Kuhonta, p. 44
Kurien, R. 20
Caine, Sir. S. 74
Chandrasekera, LB. 178, 180
Chanmugam, C. 79
Cooper N. 59
Lakshman, W.D. 62, 75, 76, 79, 80
Lawrence, Z. 59
Liyanage, M. de 5. 139
Dissanayake, A.B. 171, 174, 178
Domike, A. 137
Mac Bean, Al. 64, 65
Mac Connell, D.J. 44, 204
Majumdar, S. 62, 63
Mathevan, R. 193
Ferdinandez, D.E.F. 217, 219, 224 Mingst, K.A. 63
Fernando, N.A. 16, 20, 22, 26, 71, Moil, HAS. 47
Eliman, A.O. 47
Etherington, D.M. 22, 220, 223, 227
74, 114, 116, 118, Myrdal, G. 7
119, 142, 164
Gooneratne, M.H. 120
Gooneratne, W. 7, 10,
Nelliat, E.V. 219
Nijboer, G. 190
22, 35, 90
Grilli, E. 63, 64, 80
Groenveld, D. 16
Gunawardena, A de Vass. 171
Gunawardane, P.J. 10
Helleiner, G.K. 66
Perera, U.V.H. 58, 202
Peiris. G.H. 20, 33, 35, 40, 57,
58, 73
PilIai, E.T. S. 190
Piyadasa, H. 160, 162
Premachandra, NW. 171
253
Stein L. 58
Rajaguru, V.B. 190
Ranasinghe, S. 88
Ranatunga, M.S. 190
Readhead, J.F. 191
Robinson, D. 74
Robinson, Joan 6
Susiriwardana, M. 61
Tilakaratne, S. 58
Richards, P.J. 7, 22, 90, 113, 114
Upawansa, G.K. 44, 202
Samad, M. 119
Sandaratne, N. 35
Sarkar, G.K. 66, 80
Senanayake, Y.D.A. 28
Seneviratne, J.J. 229
Silva, Colvin R. de 24
Silva, KM. de 58
Silva, M.D. de 160
Silva, S.B. de 22, 29, 93, 104
Silva, Sumith 16
Snodgrass, D.R. 33, 73, 74, 77
Sri Bharathie, M. 190
Van Geldern, J. 33
Wanigaratne, R.D. 119
Weerakoon, B. 25
Wesumperuma, D. 88
Wickramasekara, P. 66, 80, 96,
98
Wickramasinghe, P.J. 189
Wijekoon, L.D. 47
Wimaladharma, K.P. 201
Wright, S.J. 104
SUBJECT INDEX
Absentee Landlordism. 21, 22,
27, 138, 151, 201, 244, 247,
248
Absenteeism among estate workers.
95
Capital Investment in Plantations.
13, 113, 116, 118, 131, 236,
238
Child Labour.
See under Labour
Agency Houses. 13, 38, 40, 41
Coconut Development Authority.
Agrarian Reform.
See Land Reform Programme
Coconut Research Institute. 212
Agrarian Research and Training
Institute. 24, 27, 35, 123, 210,
Communal Disturbances. 92
Co—operative Farms. 40, 41—43,
27
55, 92, 118, 123, 124, 131,
214
240
Agricultural Diversification Project.
246
Crop Diversification. 16— 18,
146, 183, 189, 245—47
Agricultural Productivity Committee.
35
Agricultural Productivity Law. 35
Dry Zone. 28, 217, 219, 220
Dual Economy. 33, 34
ARTEP. 10, 16, 17, 21, 74, 235
Asian Development Bank. 146,
216
Authoritarianism in Plantations.
Education in estates. 10, 114, 237
Employees' Provident Fund. 74,
108
See Plantation Management
254
International Fund for Agricultural
Development. 216
International Labour Organization.
Employment.
Decline in. 3, 5—6, 8, 13, 113.
236—7, 240, 243, 247
Sectoral distribution of. 9
Environmental Degradation. 24
ESCAP. 66
4, 18, 112, 113, 139
Institute of Plantation Manage-
Estate Control of Fragmentation
ment. 27
Irrigation on coconut lands. 229
and Sub—division Act. 40
Estate—Village Integration 19, 24,
Janata Estates Development
25, 248, 249
Board. 15, 25, 41, 54, 75, 88,
92, 101, 103, 119, 122, 124,
125, 142, 191
FAO. 27, 62, 140
Five Year Plan. 4, 185
Food Production in Estates. 26,
Janawasas.
See Co—operative Farms.
140
Foreign Exchange Earnings. 3, 4,
6, 28
Kandyan Forest Garden. 201
Group Organizations for Small
Labour.
Kenya. 14, 23, 62, 64
Holders. 181, 232
Group Processing Centres. 180
Casual. 16, 54, 67, 71, 89,
101, 103, 106. 120, 121,
Health Conditions in Estates. 10,
108, 114
123, 237
Child. 94, 105, 106
Female. 67, 89, 106
Of Indian Origin. 54, 67, 68,
Housing Conditions in Estates.
88
Mobility. 90, 102, 103
10, 114, 125—26
Improvements after Land Re-
Resident. 18, 20, 55, 88, 237,
form. 241
241
Village. 16, 71, 88, 93, 105,
Incomes
124, 125, 127, 237
Of Estate Workers. 115
Of Small Holders. 161—62,
Labour Absorption.
Decline in. 13
Labour Force Participation. 94—5
172— 73
India. 62, 64, 66, 93, 132, 139
Indo—Ceylon Agreement. 10, 92,
Labour Shortages in Estates.
102—6, 139
Land Acquisition Act. 39
Landless. 43
114
Indonesia. 23, 62, 64
Inter — cropping.
Land Reform Commission. 35
On Coconut lands. 151,
43
207 —32
On tea lands. 167—8
On rubber lands. 149—50
Economics of. 194—98,220—24
Land Reform Law. 4, 35, 111,
Integrated Programme of Com-
Effects on Production. 52—54
117, 146
Land Reform Programme.
122, 239—41
modities. 79
255
Effect on Estate Workers.
67—72
Small Holders. 73
Capital Development. 74
on Estate workers. 92,
117—122, 126—131
on Employment. 117—126
on Incomes. 126— 131
Extents Acquired under the. 7,
35—37, 239
Redistribution of Land under
the .. 7, 35—7, 46, 120,
123, 125, 240
Livestock Development. 18—19,
189—90, 224, 242
Private Estates. 8, 21, 27, 116,
Malaysia. 14, 23, 64, 65, 149,
Origin. 10, 89, 92, 93, 103,
151, 201
Production Decline of Plantation
Crops. 12—14, 47—54, 236
Rehabilitation Programmes—Plantation Crops. 44—45, 98
Repatriation of Workers of Indian
113, 131, 139, 236
152
Middle—east. 62
Sinhalese Labour.
See Village Labour.
Middlemen. 22, 76, 161, 172,
247
Small Holdings. 7, 8, 16, 26,
Minor Export Crops. 44, 189,
192
Mortality Rates in Estates. 108—9,
114
39—40, 62, 64, 73, 155—180,
186, 187, 201, 208, 243—5
Soil Erosion. 186, 187, 201
State Plantations Corporation. 15,
National Agricultural Diversification and Settlement Authority.
25, 39, 41, 54, 92, 101, 103,
119, 122, 124, 125, 142, 191
Systhetics. 62, 64
47, 92, 120, 201, 202, 245,
246
Tamil Labourers of Indian Origin.
National Institute of Business
88, 90
Management. 88, 98
Tea-Commission. 183
Tea Control Act. 274
Nationalization of Plantations — fear
of. 7, 13, 28, 74, 98, 113,
Taxation of Plantation Produce.
13, 21, 23, 98, 144, 201, 239,
239
Nutrition in Estates. 10
241
Ten Year Plan. 4, 185
Thailand. 23, 64, 80
Trade Unions. 119, 247
Paddy Cultivation. 103
Pakistan. 62
Plantation Management.
Bureaucratization of.. 20, 248
System of.. 7, 19—20, 41—42,
Transnational Corporations. 66,
80
136. 138, 240
UNCTAD. 64
Ceylonisation of.. 34
Under—employment. 4, 9, 18,
54, 107, 113, 116, 117, 131,
139—41, 169, 170, 181, 209,
Planters' Association of Ceylon.
116
Poverty in Estates. 108
Price Instability. 58—66, 231
237, 242—3
256
Under—utilization of land under
Determination of.. 70—71
differentials in..
95, 97, 106, 114, 131, 238
Male — female
plantations. 136—37
Unemployment. 4, 5, 9, 107—8,
116, 117
Among estate youth. 237
Money. 10, 11, 93, 128—9
Minimum. 71—2, 73, 93, 127
Real. 10, 11, 93, 238
Wet Zone.4, 28, 181, 217, 229
World Bank. 146, 201
USSR. 62
US Stockpiles. 65
Wages.
Boards. 70—71, 126
257
Printed in Thailand by Thai Watana Panich Press Co., Ltd.