Local plantation sector to see growth in 2Q despite labour issues: RIUNIT report

Research firm Research Intelligence Unit says the plantation companies remain optimistic about the revoking of the ban imposed on the usage of chemical fertiliser and see it as the ex-factor for a production boost in 2023, as compared with 2022.
The companies consider labour as a crucial element of their business and the ‘revenue-share model’, which is a newly adapted model from the 150-year-old daily wage model, is expected to correct most of the issues related to the productivity of plantation companies.   Releasing its first plantation sector report, RIUNIT added that in addition to the replanting strategies, most of the large listed companies prioritise increasing labour productivity and recruiting the proper skilled workers to the industry. 
“There is a niche market for Ceylon specialty tea, especially in the Middle East region that remains a positive,” the report said on the country’s tea sector.
The rubber plantations however are currently operating in a highly volatile market.
“Given the volatility, many estate owners tend to replace rubber with other less labour-intensive crops, which spurs diversification,” the report noted.
Nevertheless, it said most of the large listed companies tend to maintain a good portion of tea and rubber, despite their diversification strategies into other labour-intensive crops.
Research done in the oil palm sector showed that most of the companies are highly optimistic about its revival in the local market, given its large return on investments.  
Many smallholders are now at the verge of entering the oil palm industry, once the Sri Lankan government passes the green light.

“A report is set to be handed over within next two months by the Palm Oil Association of Sri Lanka to the Sri Lankan government, outlining the economic viability and profitability that perennial crops could potentially deliver,” the report noted