Tangible Profits from Plantations

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Plantations farm a single commercial crop like tea, rubber, coconut, sugarcane, cashew, cinnamon, timber or oil palm. This exercise is an attempt to understand, through production perspectives the interventions required, to harvest the untapped potential of the plantation industry to earn a tangible profit.

Land

The Land as a factor of production includes the natural resources used to create goods or service. The resources can be renewable resources like forests or non-renewable resources like oil, water, precious stones, minerals, and precious metals.

The plantation companies are entitled to use only above-ground resources like the crops cultivated but the below-ground assets remain unutilised which is a great loss to the crisis-hit national economy. The haphazard policy decisions taken on the above ground cultivations have already created a Rs.27 billion loss for the Regional Plantation Companies (RPC) sector alone. The 30 per cent crop loss due to the untimely stoppage of much-needed fertiliser for large scale and labour-intensive plantation agriculture has contributed to the loss of a sizable income of forex.

Policy

National policies affecting plantations like the agriculture, biodiversity, land, clean soil and national wage policy need to be revisited and improved. If a common consensus can be arrived at in parliament in identifying a reasonable GDP after due consideration of the budget deficits, then the national policies can be drafted to bridge the gaps by allocating resources meaningfully. Our GDP has dropped to 80 billion USD and borrowing has been a deadly option. Sadly, the country is not short of resources.

A national policy for Plantation industries seems to be the biggest need of the hour as the policy has been absent from the aforesaid national policies since its inception. The main aim of such a policy is the sustainable growth of the industry. The Plantation policy will also help to attract FDIs.  The leasehold rights of the RPC sector could be increased to 99 years as tea, and rubber crop cycles alone run into 30 years of each crop. Investor confidence must be looked at in business decisions.

The policy can address issues arising from the life cycle analysis of all crops cultivated at present. we are happy that the ministry has started on this, but the exercise must be completed soon. The degree of the need for the Plantation policy is well visible in the following chart. Although the numbers published below speak of a very low level of around 2.7 per cent contribution to the GDP, these numbers have been unable to capture the value addition component fully. The Ministry is trying its level best to get the relevant data collected for some time now.

Labour

Labour is responsible for transforming resources into goods or services available for purchase. The outmigration trend of the RPC sector from 300,000 employees in 1992 to a little over 110,000 as of today is alarming. Once the policy is developed it is going to be easy to distinguish workable annual revenue goals. This will lead to the identification of the skill inventory of the employees of the industry. This will help the National Institute of Plantations Management to deliver objectively driven skill transfer programs to all categories of employees such as the daily paid category of employees and monthly paid categories. Also, the industry will be able to generate high-value jobs in the information age. With the residential workforce with plenty of talents and logistics inbuilt such as infrastructure, the Industry is a potential candidate for an influx of forex. In the modern world, human capital is an asset that can propel economies but an enabling environment must be created.

Capital

The capital is the company’s physical paraphernalia and the money it uses to buy resources. The need for a cash injection to gain from the transformation of the agriculture age to the industrialisation age is very much urgent. The industry needs funding for objectively driven R & D programs to develop high market products with advanced technologies into attractive markets. Climate-smart agriculture is another area huge investments are urgent.

Entrepreneurship

Entrepreneurship is the secret sauce that combines all the other factors of production into a product or service for the consumer market. An example of entrepreneurship is the evolution of the social media behemoth Meta (META), formerly Facebook. Another example of entrepreneurship is Starbucks Corporation (SBUX). The retail coffee chain needs land (prime real estate in big cities for its coffee chain), capital (large machinery to produce and dispense coffee), and labour (employees at its retail outposts for service). Entrepreneur Howard Schultz, the company’s founder, provided the fourth factor of production by being the first person to realise that a market for such a chain existed and figuring out the connections among the other three factors of production.

Technology

Technology plays a vital role in influencing production. In this context, technology has a broad definition and can refer to software, hardware, or a combination of both, used to streamline organisational or manufacturing processes. Plantations are heavily dependent on spatial information although such are not used objectively. Satellite-based monitoring is one such catalyst for sure. The Ceylon Planters Society which comprises working planters on the ground has submitted a wire frame indicating the 10 billion USD earning potential per year. The goal was set by considering the factors of production including the accelerator, and technology.

Our collective aim through the compilation of facts above was to lobby for the much-needed national plantation policy and regulation without which the industry cannot make a required impact on the GDP that is crying for forex. We believe that our appeal will be heard this time and acted upon quickly as possible. The Ceylon Planters are always ready to shoulder the wheel. Let us put our best foot forward to regain Sri Lanka.

Lalin I de Silva is the Editor of Ceylon Planters’ Society Bulletin, a former Senior Planter/Agricultural Adviser and consultant/Secretary General of the Ceylon Planters’ Society. Freelance Journalist

By Lalin I. de Silva