Key turnaround management points for Sri Lankan plantation industry
11 August 2015 06:30 pm
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No industry will move forward without its competent employees. It is a challenge to attract and retain talent in organisations that consider ‘growth’ as a top priority. This situation is critical with the Gen Y and now Z concerning employment in the plantations industry. This area of knowledge has to be investigated and a correct proposition has to be installed, especially in the plantations industry managed by the Regional Plantations Companies (RPCs), if they are to embark on turnaround management.
Let me repeat: “No employees – no industry.” It is due to this that a concept such as ‘employer branding’ has emerged out of many slogans. If the concept is correctly applied, there will be many employees with different skill sets looking for employment in plantations. RPCs should be able to achieve most challenges better than the smallholder sector as RPCs have ready access to more resources than the smallholder sector.
Most RPCs are traded in the stock market. As such, the public must have a right for correct information.
At present, there are many watching the performance of plantations in Sri Lanka, especially those managed by the RPCs, including retired public servants, professionals and investors. All these stakeholders are equally concerned about the future of plantations as this is our ‘national wealth’. Therefore, as responsible citizens of Sri Lanka, isn’t it our duty to safeguard the national interest for the sake of our future generations?
The above are not facts but personal opinions. If it is about sustainability then sustainable focus must be addressed.
Therefore, it’s worth looking into facts and data applicable to the business to ascertain how they survive and grow with an objective of understanding the causal factors for any setback, if any, so that, we can rectify our mistakes and thereby achieve the necessary target.
To overcome these shortcomings and achieve the desired target, there should be a separate unit to handle financial irregularities committed by certain management companies. I, therefore, would like to make an appeal to the state to appoint an independent high-powered team of professionals to look into the facts and figures given to the public. So, the public as well as the plantation community would know the figures and percentages published were in order.
In this endeavour, there are many areas which we should be concerned in order to correct our mistakes. For example:
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The business model - Have we changed the 150-year-old traditional plantation management model that is appropriate to the needs of the 21st century?
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The crop - Have we understood the dire need for diversification? Do we see winning RPCs, which have carried out the necessary changes in this direction?
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Have we addressed human resource management (HRM) issues which accounts for about 70 percent of the cost of production (COP)?
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Have we addressed the industry sustainability adequately?
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Have we understood the success of certain RPCs, which have adopted market-oriented production targets and are competing in the global market?
If the proposals of the last budget report with regards to the plantation sector were implemented, this situation would not have occurred. They were:
Large plantations
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It was proposed to undertake a comprehensive assessment of the under-performing plantation companies.
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It was proposed that the best performing plantation companies, which increased their productivity, application of bio fertilizer and engaged in worker welfare, brand promotion and investments to promote high-value tea exports, should be encouraged.
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It was proposed that each plantation company will be required to submit a report about its performance with development plans and targets before March 31, 2014 to enable the golden shareholder being the government to make appropriate decisions for the development of plantations under each company.
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It was proposed to implement a credit scheme with eight-year maturity and 6 percent interest to every company that has so far performed well, provided they commit to replant an agreed extent and are committed to ensure social development of its plantation workers and increase the volume of its value-added tea exports.
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It was proposed that banking institutions would earmark around Rs.500 million for this development loan scheme in 2014. Provision of the existing leases will be suitably amended incorporating new conditions necessary to ensure the development of this impotent sector.
Whatever said and done, since there are no solutions to legitimate demands regarding employee wages, although there are some RPCs ready to meet them. The causal factors of those who can and cannot have, have to be investigated through the high-powered committee proposed above. This will pave the way to develop a new set of policies that will lead to turnaround management of this important industry. Therefore, trade union action for higher wages at this moment should be delayed in view of poor market conditions for both tea and rubber.
The committee must undertake an independent research through the Plantation Human Development Trust (PHDT) on cost of living of the plantation workforce in all agro climatic regions before it is too late. (There is an interesting study undertaken by Rosy Senanayake recently on this across the country). Wage increases must consider inflation. Otherwise, we will be underpaying employees as the value of money drops.
The problem will be solved when both parties understand the actual issues of either side. But there should be a genuine approach. With politically-motivated workforce, they have more bargaining power. This should not be underestimated.
I can see impending danger in the event this doesn’t get solved soon. Cost of living cannot be reduced without real improvement in national level productivity and reduction of waste. These issues of wages will get aggravated with possible rises of cost of living soon.
I don’t think we should delay in submitting viable alternatives, especially, when the Labour Minister is willing to listen to the demands of the employees.
The biggest mistake done is the non-appointment of at least one person to each RPC by the state out of crop science graduates who have the scientific knowledge on crop science as well as management to look after billions’ worth of assets.
At the same time, we would like to bring to the notice of the committee to look into the following as well:
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Apart from one estate in Pussellawa, which recorded a yield of 3,000 kilogrammes yield per hectare (YPH) last year, there weren’t any other estate yielding over 3,000 kilogrammes. Is it the same with rubber plantations?
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How many estates are yielding over 2,000 kilogrammes? Is it correct that the majority of tea estates in RPCs yield below 1,500 kilogrammes YPH?
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In rubber plantations, how many estates are yielding over 2,000 kilogrammes YPH? Is it true that the majority of rubber estates under RPCs yield less than 1,000 kilogrammes YPH and some below 800 kilogrammes? Thus, the majority of rubber trees are only suitable to be used as firewood.
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Certain people in the top management of RPCs are responsible for drafting management contracts for PRU and to check why there is no compulsion in the ‘Indenture of Leases’ to replant a specified acreage each year.
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To check whether it is true that there is a group of retired public servants among the investing public who are contemplating legal action by petitioning the Supreme Court and filed a Public Interest Case against some companies for neglecting the ‘state-owned plantations given on lease’, which belong to the citizens of Sri Lanka.
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In this regard there are some ex-planters who are willing to give information, if the committee wishes and will provide more details in regard to many violations that has taken place during the last two decades.
(Lalin I. De Silva is the former Editor of Ceylon Planter’s Society Bulletin)