The Hindu Business Line : Vandiperiyar tea estates: Globalisation plucking away livelihoods

The tranquil mood of the plantations was shattered by the liberalisation moves initiated during the 1990s. And despite the Government intervening to revive and reopen a few of the closed estates, the situation is far from happy in several of the re-opened estates.

— C. J. Punnathara

RBT estates at Vandiperiyar…The wages of plantation workers continue to be dictated by the price of green leaves

C. J. Punnathara

The overnight rains had made tender, new leaves sprout on the tea bushes at Manjumalai estates at Vandiperiyar in Kerala. And Sujatha, Susheela, Amrithavalli and Velamma were a happy lot. They could pluck far more tea leaves with far less effort and, thereby, increase their earnings handsomely.

The old economic adage of production at higher levels of the value chain generating wider margins and greater profitability is no longer in vogue in these estates. Yet they are happy as the Ram Bahadur Thakur Group I estates, which had remained closed for over seven years, had reopened in August 2007, generating employment and wages and helping the Vandiperiyar township bustle with activity again.

Globalisation pangs

By the end of last century, Vandiperiyar town had begun to feel the pangs of globalisation. Commodity prices were driven to the ground, as cost cutting fuelled a consumption-driven accelerated pace of economic development.

As prices plummeted, operational efficiency and productivity became the hallmarks for survival and several old generation plantations began to wilt before shrinking prices and skyrocketing input costs. Eighteen plantations in Kerala, 14 in West Bengal and two in Assam downed their shutters throwing thousands of workers out of their jobs and livelihood.

Only the well-integrated plantations, involved in production, processing, packaging and marketing, could really combat the recession and grow. While most of the partly integrated ones into production and processing merely survived, a few others were forced to close their operations before the onslaught of the all-pervasive global market forces.

Waking up late

It took over seven years and considerable nudging from the Tea Board and the Commerce Ministry to revive and reopen even a few of these closed estates. And it has not yet been a happy ending for several of the re-opened estates.

For example, power supply to the tea factories of the RBT Group I have been discontinued, halting thereby all value-added operations. The company is now learning the bitter lesson. Even as losses accumulate, its workers continue to pluck green leaves which are sold to other factories for processing and further value addition.

Low margins

There are no big margins in the green tea leaf business and, in fact, it is often a loss-making proposition. Four kilograms of green leaves costing Rs 28-32 can be processed into 1 kg of tea which would fetch around Rs 64 on an average — double the price of the green leaves. After segregation, packaging and marketing, the price of the very same tea would double to Rs 128 or more.

While the wages of the tea plantation worker continue to be dictated by the price of green leaves, the profits of the plantations are dependent on value addition. However, the regular workers also get additional benefits such as housing, water supply, electricity connection, etc. Not a bad deal by Indian labour standards.

But the tranquil mood of the plantations was shattered by the globalisation and liberalisation moves initiated during the 1990s. Institutions such as the World Trade Organisation ensured that the protective walls of trade and non-trade barriers were pulled down, exposing even the poor women plantation workers to fierce international competition.

As the protective barriers came down, prices were dictated by factors such as international supply and demand. Often, tea-producing countries in Africa such as Tanzania and Kenya, where the workers are paid even lower than their Indian counterparts, turned on the heat of competition on the Indian estates, resulting in further fall in prices. .

The plight of the workers as well as the estates became even more precarious during periods of natural calamities, such as drought, which resulted in lower production that were often not accompanied by price increases.

Globalisation ensured a seamless flow of goods and commodities across international frontiers and the paltry production of calamity-hit country often did not kindle even higher domestic prices. The workers at the lowest level of the value chain paid the heaviest price while those up the chain, such as processors, packagers and marketers, were relatively less hit by the crisis.

Market transition

As the markets have changed, so have the producers. Some of the well-integrated companies such as Tata Tea have moved out from the production and processing business to concentrate on the high margin areas of grading, packaging and marketing.

Yet others like the Kanan Devan Hill Plantations Company have shown how even the production and processing operations can be carried out successfully through efficient management — in this instance through participatory management, with the workers holding the biggest block of shares in the company.

There are thousands of plantation workers in India who have lost their basic source of livelihood. And those working in RBT estates at Nellickai, Manjumalai, Pambanar and Thengakal continue to be hit by the virulent international market forces, spilling over from globalisation.

Globalisation has vitiated the sharp international commodity price fluctuations which have been accompanied by production cycles of boom and bust. It is time the few embattled estates that have reopened before the next cycle of bust geared up. Else, the tea might taste bitter to the thousands of these workers who have learnt the hard way to create a new lifestyle.

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