Glimpse of PM’s plantation reforms
08 September 2016Premier Ranil Wickremesinghe speaking at the Ceylon Planters' Society (CPS) AGM on Monday said that the Government of Sri Lanka (GoSL) will come up with a plan to revive the country's ailing plantation economy before the year end. (See also Ceylon Today Tuesday's (6) edition). He further said that as long as oil prices remain low, the plantation economy will never recover, in the sense that sector led by tea and rubber will also find their prices, also virtually at 'floor' levels.
He attributed the decline in oil prices to the rise in the shale oil industry led by the USA, with China, the world's second largest economy, also now joining in the 'shale' bandwagon. According to Wickremesinghe, there is a nexus between oil prices and other commodity prices such as tea and rubber. According to the Premier, if oil prices are low, then other commodity prices too will be low and vice versa. And, the 'kidney punch' that he delivered to the plantation community was that low oil prices are not going to disappear in a hurry. Therefore, it may not be wrong to presume that this community in particular will be waiting with bated breath until such time Wickremesinghe unveils his plans to revive the plantation economy before the year end, which is hardly four months away.
Nonetheless, the sector is still dependent on GoSL to solve micro issues such as the age of retirement. CPS Chairman Lt. Col. Ajanta Moonemalle speaking on the occasion asked the Premier to intervene with their private sector management to get the age of retirement increased from 55 to 60 years. Moonemalle recalled that during the days of nationalization, Wickremesinghe's uncle President J.R. Jayewardene, who was also the Plantations Minister, heard an appeal from the JEDB and SLSPC planters to lift the age of retirement from 55 to 60 years. Jayewardene responded positively to this appeal. Wickremesinghe made no comment on this request. But it may be assured, that Wickremesinghe being market sector oriented, will not force the private sector's hands to act on such issues.
Meanwhile, if one reads between the lines of Wickremesinghe's speech, there may be seven factors that are already in his mind vis-à-vis plantation reforms. Wickremesinghe, however, was quick to say that he also wanted CPS' inputs before formulating those reforms. Nonetheless, what may be in the Premier's mind vis-à-vis plantation reforms are:
1. Primarily national development preceding plantation development. This came out when he told planters that 10,000 acres of plantation land will be 'lost' in the Western, Wayamba and Southern Provinces as well as from the Kegalle District because of such development work. This may be similar to the tens of thousands of acres, mainly virginal, which were lost, when his uncle Jayewardene launched the Accelerated Mahaweli Development project in 1977, telescoping this original programme from 30 years to seven years. However, Wickremesinghe was quick to say that alternative land would be found elsewhere in the country to replenish this lost plantation land. Whether this statement was political or not, remains to be seen.
2. The high cost of production (COP) besetting the plantation sector which is pulling it down. Wickremesinghe however stopped short of saying that this high COP was due to high wages, a lament made by the plantation sector. The Premier however cited the example of 1½ million of the island's workforce sweating overseas for a monthly salary of between US$ 300 and $400 because they cannot find that type of money here. It remains to be seen whether that statement of the Premier too was political or not.
3. The importance of technology inputs to drive the plantation sector. In this instance he cited the example of the Netherlands and North America.
4. Diversification of markets, for tea in particular, the island's largest plantation export, without concentrating only on the Middle East and East Europe, but venturing out to other areas of Europe and the USA in the marketing of tea.
5. Diversification of the product range, for tea in particular, based on a study by Tetley of London, which said that by 2025 the market for tea would be for its medicinal value.
6. Public-Private Partnerships to take State-run research institutes such as the TRI and CRI forward, with a focus on market wants and needs.
7. And that this sector will have to adjust itself to live with low prices at least for some time. However, what Wickremesinghe didn't give a glimpse of was with regard to the fate of the golden share, which for all intents and purposes gives GoSL control over the island's 21 regional plantation companies and also that of the loss making State-run JEDB and SLSPC.
2. The high cost of production (COP) besetting the plantation sector which is pulling it down. Wickremesinghe however stopped short of saying that this high COP was due to high wages, a lament made by the plantation sector. The Premier however cited the example of 1½ million of the island's workforce sweating overseas for a monthly salary of between US$ 300 and $400 because they cannot find that type of money here. It remains to be seen whether that statement of the Premier too was political or not.
3. The importance of technology inputs to drive the plantation sector. In this instance he cited the example of the Netherlands and North America.
4. Diversification of markets, for tea in particular, the island's largest plantation export, without concentrating only on the Middle East and East Europe, but venturing out to other areas of Europe and the USA in the marketing of tea.
5. Diversification of the product range, for tea in particular, based on a study by Tetley of London, which said that by 2025 the market for tea would be for its medicinal value.
6. Public-Private Partnerships to take State-run research institutes such as the TRI and CRI forward, with a focus on market wants and needs.
7. And that this sector will have to adjust itself to live with low prices at least for some time. However, what Wickremesinghe didn't give a glimpse of was with regard to the fate of the golden share, which for all intents and purposes gives GoSL control over the island's 21 regional plantation companies and also that of the loss making State-run JEDB and SLSPC.
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