A Reality Check for Sri Lanka’s (and the world’s) Tea Plantation Sector

President calls out plantation poverty

The chief guest at the Colombo International Tea Convention (CITC) 2024 in Sri Lanka earlier this month was the country’s President, Mr Ranil Wickremesinghe. His opening words, “I don’t think we need plantations,” may have come as a shock to the 750 Sri Lankan and international delegates gathered there, predominantly representing the plantation sector. Instead, he said, “we need a thriving agro-business, lot of [land]-holders and a large management company that will look at the highest earning possible.”

“I don’t think we need plantations…” – President Wickremesinghe

He suggested that plantation workers experience higher “multi-dimensional poverty indicators” than people in Sri Lanka’s Northern Province which had been devastated by years of civil war. This, he ascribed in part to ‘line-room culture’ – the practice of housing plantation workers and their families in small, barracks-style dwellings set up by the industry’s colonial founders 180 years ago. The President proposed to extract these from plantations and establish separate workers’ villages as part of his intention to “to start reforming from inside.” President’s Media Division

With State elections coming up in a few weeks and a possible change of government, the President’s statement may not come to anything. But on the positive side, Sri Lanka’s plantation sector has already made a start on addressing the inadequate housing  problem through the Plantation Human development Trust (PHDT)’s independent housing initiative (described in THIRST’s recently published Alternative Approaches in the Tea Sector). There is still a long way to go to provide all of Sri Lanka’s tea plantation workers with decent housing, but the problem of multi-dimensional poverty indicators is an even harder nut to crack.

Conflicting realities

As a later speaker reminded us; “You can avoid reality but you cannot avoid the consequences of avoiding reality.” Reality can mean different things to different people – or from different perspectives. From the perspective of many representatives of tea plantation management, the reality is that: “workers are earning well” (C. Shreedharan, UPASI); that with the ‘revenue share model’ “those who work hard  get way more than they should” and the rest don’t because they “don’t want to work” (Pradeep Uluwaduge, Browns); that media reports about underpaid workers are based on random, non-representative examples (Mufaddal Jafferjee, Jafferjee Brothers); and that the living wage benchmark, calculated using the rigorous and globally accepted Anker methodology, is “incorrect and overinflated” (Roshan Rajadurai, Hayleys Plantations).

But as Dr Ebrahim Afshar, Chairman of Ahmad Tea pointed out: “the reality is that none of us in the tea business can claim sustainable business when you have migration out of the tea estates.”

“…the reality is that none of us in the tea business can claim sustainable business when you have migration out of the tea estates.” – Dr Afshar

Tea really is too cheap

Dilhan Fernando, Chairman of Dilmah Tea, reminded delegates; “We want to do what is right, but the right and valuable path costs more than the one that price demands of us. (Fernando’s speech was published in full in the Financial Times of Sri Lanka). This call for better prices echoed as a heartfelt plea in the speech by Dr Afshar. He argued that while price-suppressing competition between supermarkets and between brands may be good for consumers it is not good for workers who are struggling to make enough money to have a decent living.  “The reality,” he said, “is tea is far too cheap… there is not enough money in the chain to go around.”

“We want to do what is right, but the right and valuable path costs more than the one that price demands of us.” – Dilhan Fernando

Consumers should pay for living wages

Dr Afshar proposed asking tea consumers, rather than the companies that sell it to them, to meet the cost of paying tea workers a living wage, which he defines (in line with the Global Living Wage Coalition) as “a wage for a standard work’s week by workers in a particular place sufficient to support a decent standard of living for their family,” (the Coalition adds a safety margin). He pointed out that the gap between prevailing and living wages is between 25% and 50%  in various tea origins (with the smallest gap in Sri Lanka).

Professor Vijesandaran has recently produced for the Institute of Social Development an in-depth study on the cost of living on Sri Lankan tea plantations (THIRST has seen a hard copy of the 2024 update). It concludes that for workers to attain a decent standard of living in line with internationally accepted living wage definitions, after accounting for the value of free housing etc provided by the company, they would need to be earning LKR 2,321.04. The recently revoked Government ruling that wages should be increased from the current LKR 1,000 to LKR 1,700 was met with powerful resistance from the plantation sector (though some companies did pay it), arguing that this would push the cost of production above the prices at which they are able to sell the tea and destroy the industry – Sri Lanka’s biggest forex earner.

Dr Afshar had calculated that to close the living wage gap and enable the payment of living wages to tea workers would take just a 10% increase in the consumer price. Offering tea with a 10% markup and carrying a symbol indicating that Living Wages are being paid (based on trust) should be promoted in “friendly supermarkets” in Europe and the USA to “encourage consumers’ kindness to shine through in purchasing this product.” Doing so, he suggested, and knowing that they are contributing to decent wages for the people who produced it, “will make them feel good”.

We are all responsible for living wages

But it may not be that simple. While low wages (like other human rights breaches) are endemic across the sector, they have multiple and complex drivers (as outlined in THIRST’s report on the Root Causes of Human Rights Breaches in the tea sector) and would therefore need to be tackled on multiple fronts. As Fernando went on to say, “Fair wages, access to education, productive soils, great tasting tea, and a sustainable, resilient and reliable industry are the responsibility of consumers, retailers, brands traders and producers equally.”

In addition, as pointed out by ETP’s Chairman, Tom Franks, governments need to provide an enabling environment in which the industry can thrive.  He also reminded the buyers in the room that while they are asking producers to pay living wages and living incomes and to fund sustainability projects, they are simultaneously using traditional contracting systems that prioritise the lowest prices while continuing to demand quality, thus seriously hampering producers’ ability to comply. He argued that responsible contracting entails a joint commitment to positive human rights and environmental outcomes.

Professor Vijesandiran’s report concludes that “The plantation trade unions, RPC management and the Government should propose favourable action and join measures to ensure the industry’s economic viability to fulfil the economic aspirations of the worker community,” rightly stressing that without an economically viable industry living wages can never be a reality. In some countries, the industry is struggling to pay wages at all.

We need “joint measures to ensure the industry’s economic viability to fulfil the economic aspirations of the worker community,” – Prof. Vijesandiran

Philanthropic efforts within plantation model

Many efforts to stem the outward flow of plantation workers were shared at the Convention, including Hayley’s Plantations’ “womb to tomb” worker welfare initiatives; the “revenue share model” (also covered in THIRST’s Alternative Approaches report) in which workers (and their families) can supplement their wages by plucking in their own time from individually allocated blocks; PHDT’s housing and alternative income generation projects, its welfare officers, child development centres, clean water systems… and more.

One example of an estate going above and beyond their regulatory obligations to help improve workers’ wellbeing was Horana Plantations which I visited after the Convention. Their interventions include providing workers with alternative income sources such as a reusable sanitary napkin making initiative (sponsored by Ahmad Tea), as well as home garden projects, dental and eyesight screening and more. It remains to be seen whether these philanthropic efforts will be enough to convince workers to remain within the colonial plantation model.

The smallholder tea farmer reality

The alternative model is smallholder farming. Despite the preponderance of plantation sector representatives at the Convention, it contributes only around 30% of Sri Lanka’s tea production. The vast majority of Sri Lankan tea is produced by 400,000 smallholder farmers (represented at the Convention by Chairman of the Federation of Tea Smallholder Development Societies, Jagat Pathirana). Sadly, his speech and panel responses in Sinhala were not translated for the benefit of the international audience.

However, a group of smallholder farmers that I visited after the Convention told me that price was a key issue for them as well – with income in real terms having been squeezed by Sri Lanka’s economic crisis; the price of food staples such as rice now leave them with little or no margin. They also needed better infrastructure and marketing for their product. Yet, these farmers were hosting us in their well-proportioned, four bedroom home, surrounded by rambutan, coconut and banana trees as well as tea, a motorbike and tuk-tuk parked on the wide veranda. It was a far cry from the overcrowded line-rooms built by the British, their ragged roofs and peeling walls now showing their age. I’ve witnessed the same distinction between plantation worker and smallholder housing in India, Kenya and Tanzania.

The moral imperative for paying living wages

Like the President, it was the plantation workers about whom many speakers shared their concern. Tom Franks concurred that we must ensure that the “lowliest tea picker has a living income and a life worth living,” hinting with his use of that term ‘lowliest’ that the status of tea pickers should also be raised. Dr Afshar further challenged the industry with the words; “we cannot consider ourselves to have decent human morality if we cannot care about the plight of people a thousand miles away who cannot even get enough money for a decent living.”

“…we cannot consider ourselves to have decent human morality if we cannot care about the plight of people a thousand miles away who cannot even get enough money for a decent living.” – Dr Afshar

But his strongest argument was simply that “…not supporting living wage is so embarrassing!” That very human, emotional response cut through the complexity and magnitude of the problem like a knife. Within the opulent surroundings of the five star hotel hosting the overwhelmingly male delegates of the Convention, the notion of the predominantly women workers on whose backs the entire industry rides struggling to make ends meet should indeed have made us all blush.

The reality of future generations

Depending on whether the plantation sector and all those who profit from it, regulate it, and have a stake in it choose to heed or to avoid reality, these words of Dilhan Fernando will stand either as its call to action or as its epitaph; “The decisions we make today can determine whether future generations have the same food security, ecosystems services and welfare that you are privileged to have in 2024.”

“The decisions we make today can determine whether future generations have the same food security, ecosystems services and welfare that you are privileged to have in 2024.”

Those future generations, the children and grandchildren of today’s plantation workers, present the most pressing reality. They are globally connected, aware of their rights, have higher educational and career aspirations than their parents could ever have dreamed of, and will not be content with the subservient status they tolerated. This generation has enormous potential to reinvent the tea industry and to fast-forward its hampered evolution from 19^th century roots to an industry that is fit for the 21^st century.

Theirs is the reality to which we need to be paying the closest attention. Theirs are the voices we need to be heeding. Theirs is the potential we need to be unleashing and into which we need to be investing in order to secure the future for the tea sector, in Sri Lanka and beyond. Or we must face the unavoidable consequences for the tea industry, the millions that make a living from it and for the national economies that depend on it.

Sabita Banerji, CEO

THIRST’s participation in CITC 2024 was sponsored by Ahmad Tea.