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Sri Lanka plantations lose Rs80 per kilo of tea

ECONOMYNEXT – Sri Lanka’s regional plantations companies (RPCs) have offered a revenue sharing model with labour unions demanding high wages, saying they cannot afford anything more when they are losing 80 rupees a kilo at tea auctions.

At present, the production cost of a kilo of tea for RPCs is often in excess of 450 rupees primarily due to the high labour cost, the Planters’ Association said in a statement.

Labour cost constitutes 67 – 70 percent of the total cost of production (CoP) with the average revenue earned from the sale of a kilo of tea at the Colombo Tea Auction being only 368.30 in the first week of October 2015.

This represents a loss of more than 80 rupees per kilo, the statement said.

The PA said prices received at both rubber and tea auctions are now lower than in 2013 when the last wage hike (of 20 percent) was given to estate workers, indicating that even the present wage is unaffordable to the plantation companies.

The Regional Plantation Companies said they have put forward their recommendation for a revenue sharing model for the remuneration of estate workers.

“This bold initiative is the only sustainable solution and way forward, which would see a drastic change not only in increased incomes through improved productivity, but a radical change in the lifestyles and mindsets of the plantation workers,” the statement said.

“This is an important step that the industry is taking to set the future direction for sustainability in the plantation industry,” says Planters’ Association Chairman, Roshan Rajadurai.

“We are conscious that almost 1 million people are dependent on the Regional Plantation Companies although only 183,000 are registered workers and this system will be a win-win situation for both workers and us.”

The RPCs incurred a loss of four billion rupees on tea and rubber last year.





The new proposal enables high labour costs to be mitigated by improving worker productivity through performance-related pay – similar to the smallholder model – while enabling workers also to earn well beyond their present income.
 (Colombo/October 21 2015)

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