The Hindu Business Line : Higher input costs dog plantation sector

Chennai, Sept. 14 This week, prices for CTC (crush, tear, curl) tea dusts touched Rs 100 a kg. It is only a continuation of an uptrend that has been witnessed since the beginning of this year for the tea industry. It is after 10 years that the sector is witnessing such an uptrend.

Not just tea, but even prices of coffee, rubber, pepper and cardamom are ruling at new highs. Plantation ‘A’ coffee prices are ruling around Rs 140 a kg at the Indian Coffee Traders Association auctions, while arabica cherry rates are being quoted at Rs 121 a kg and robusta cherry at Rs 103 a kg.

Rubber prices recently touched a record Rs 147 a kg for the current year; the prices are averaging over Rs 130 a kg. Cardamom prices are also averaging at a record Rs 587.52 a kg, while pepper prices are ruling at Rs 140 a kg near record prices.

Hitting new highs

But do these prices mean good times for the plantation sector? “To an extent, yes but things are not all that rosy as the prices seem to reveal,” say planters.

Even as tea prices have hit a new high, the question on the lips of the planters at the recent United Planters’ Association of Southern India (Upasi) conference at Coonoor was whether the current trend could be sustained.

“This trend should be sustained. Or else, first tea plantations in Kerala will face problems and then, the estates in Tamil Nadu,” said Mr N. Sriram, Chief Executive Officer of Contemporary Tea Auctioneers Pvt Ltd.

According to Tea Board data, tea prices from January-July averaged at Rs 77.18 a kg, against Rs 66.23 a kg during the corresponding period a year ago. “Despite tea prices rising by over Rs 10 a kg this year, our problem is that costs of input and labour have gone up,” said Mr N. Dharmaraj of Harrisons Malayalam Ltd. “Input costs have increased by Rs 3 a kg and labour costs are up Rs 5.50,” he said.

“Fertiliser prices have gone up considerably. But the point is even at high prices, fertilizers are not available,” said Mr Ullhas Menon, Secretary-General of Upasi. “Other input costs such as diesel and power have also increased this year,” says Mr D.P. Maheswari, President of Upasi.

Labour issues

Labour has become a major issue for plantations. One, workers are not available for plantations such as tea, coffee and rubber. Two, wages for workers have been increased through intervention of State Governments. Kerala increased the minimum wages in tea and coffee plantations to Rs 115 a day, while Tamil Nadu raised it to Rs 101.52. This has upset the plantation sector, which has now openly called for deleting Minimum Wages Act for plantations.

“We don’t have problems in paying higher wages but we are also looking to workers increasing output,” said Mr Maheswari.

But more than higher pay, lack of experienced hands is hurting plantations. “Workers no more want to live in a plantation environment. Their children no more want to do such jobs,” said Mr G.V. Krishna Rau, the Coffee Board Chairman.“What we have now in the plantations are older people as workers. They have limitations and they are also under pressure from their children to move out,” said Mr Dharmaraj.

“Plantations need workers who need some skills. These are developed over years but now we have workers who come from the North, stay a few months and then are moved to some other place by their contractors,” he said.

Mechanisation could be a way, said Mr Maheswari. “It will bring in some change in their nature of the worker’s routine. They also will feel they are doing something different,” he said.

Price projections

While tea prices are seen coming under pressure next year, particularly if Kenyan production stages a comeback, coffee prices are likely to drop in the near term. Rubber prices are projected to stay steady as also cardamom and pepper now.

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