The Hindu Business Line : `Govt must act to resolve crisis in plantation sector'

THOUGH the recent agreement with trade unions that all wage increase in future will be productivity linked will help the plantation sector fight international competition on cost, the crisis plaguing this sector for five years will be resolved only if the Central and State Governments take positive action on its long-standing demands, according to Mr A.E. Joseph, Chairman, Association of Planters of Kerala.

Addressing the 65th annual general meeting here on Saturday, Mr Joseph said though there have been crises in the past, it has never been so long and painful. The Government "is dragging its feet on these issues, and other States are taking advantage of the position. By the time our State Government takes decision, it will be too late."

The growers, Mr Joseph said, have been hoping for a better year in terms of better prices for tea, which was not to be.

The coffee sector continues to be under the grip of a severe financial crisis that has even forced some growers to commit suicide. To compound the agony of the coffee growers, the coffee growing area of Wyanad experienced one of the worst droughts.

The Union Government has, on the representation by Automotive Tyre Manufacturers Association (ATMA), withdrawn the port restrictions for the import of rubber and has halved the export subsidy.

The association, Mr Joseph said, would urge the Central Government and seek the support of the State Government in re-instating the export subsidy without any reduction in the rates.

Cardamom, the only plantation crop that was spared from the price crash, has also joined the other crops. The price, which started falling during 2002-03, has further decreased to Rs 361 per kg - a decline of around 36 per cent during the 2003-04 season. The early trends indicate a record low price at Rs 358 per kg and the price is likely to come down further.

Though the association has been taking up several issues with the Government at various forums, it is disappointing to note that the Government is yet to take a decision which will benefit the industry in the long run, said Mr Joseph.

When the price of any plantation produce goes up, the Government increases taxes on that crop and raises wages for the workers. They forget to reduce the taxes and wages when prices of that crop come down.

"It is time that we start thinking of a price related wage for the workers. The only decision that has some financial benefits for the crisis stricken industry was the waiver of plantation tax for 2003-04 and 2004-05 for tea and coffee."

Agricultural income tax is another issue.

The Kerala Government levies the highest agricultural income tax in the world. Communist China abolished agricultural income tax in 2004 after hundreds of years. Mr Joseph said the Tamil Nadu Government took a bold decision and in the right direction by repealing the Agricultural Income Tax Act, while "our Government is still discussing whether to reduce the rates from 60 to 50 per cent. The matter has been taken-up in all possible forums, but no decision seems to be forthcoming."

The Land Reforms Act enacted in 1963 has achieved its objectives. The plantation industry has been urging the State Government to enlarge the scope of the definition of `plantations" under the Land Reforms Act to include cashew, vanilla, medicinal plants and bamboo. These crops, apart from generating substantial income to the grower, can also support the existing plantation crops during crises like the one now.

The labour situation in the State, which was by and large peaceful, has changed recently. There have been some recent assaults on the management personnel in some of the member estates, said Mr Joseph.

The wide gap between the auction and retail price in tea continues to elude a satisfactory explanation and the industry is losing its credibility to the common man, when issues of scientific price discovery are not addressed to.

"It is intriguing why the Tea Board has not gone forward with the auction reforms, which would have led to the improvement of transparency and reduction in process cost. The Tea Board seems to be taking umbrage under the electronisation of auctions, which in the present format, unfortunately is not contributing to greater transparency. I am constrained to say that if the Tea Board does not address issues relating to scientific price discovery, they will be doing a great disservice to the industry, particularly to the workmen who have had to bear the brunt of the crisis," Mr Joseph said.

Mr Philip Mathew, Managing Editor, Malayala Manorama was the chief guest.