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By B. Sivaram
Three countries in South Asia -- Bangladesh, India and Sri Lanka -- account for 52 per cent of global black tea production, 42 per cent of exports and 36 per cent of consumption. The tea industry in the region also provides year-round employment to about 1.5 million workers -- mostly women -- and an equal number depend on tea-related ancillary activities for their livelihood. Yet South Asia's predominance in the tea world is on the decline, with many of the old fields in need of replanting, processing facilities requiring modernization and welfare structures calling for upgrading. At global level, the tea industry is finding it increasingly difficult to make ends meet, caught between rising costs on the one hand and stagnant or declining prices on the other. This problem is more acute in South Asia than in the relatively new tea-growing regions of East Africa. International and intra-regional efforts aimed at improving the tea market have met with little success, and a more practical option available to the industry is in the realm of cost reduction. There is no doubt that the two crucial cost elements -- labour wages and estate supplies -- are bound to rise, per se, but the thrust of this study is that these increases could, within limits, be neutralized in terms of unit costs of production through enhanced productivity. The focus here is not just on labour productivity but also on the other production factors that are involved in the growing, manufacturing and marketing of tea.
For the purpose of this study, increased productivity is defined in the classical sense, that is, as obtaining more output for the same input. In the tea industry, which is overwhelmingly in the private sector, the primary profit orientation is interwoven with the objective of productivity gains improvements. Thus, improving the productivity of capital by way of adding value to the product and through the cost-effectiveness of capital expenditures is also to be seen as part of the productivity approach. Significantly, the two major inputs in the tea industry -- land and labour -- are neither as abundant nor as cheap as they were when the tea plantations were established more than 100 years ago by the European settlers.
The factors affecting the productivity of the tea field and bush have been fully investigated and well documented. On the basis of the data that exist in this regard, much has been done to increase productivity. Nevertheless, the personal, socio-economic and health factors that could have an impact on performance of workers have largely remained a grey area in the realm of assumptions and suppositions, primarily because of the difficulty of quantifying and weighting them appropriately.
The factors affecting productivity in tea estates are basically, threefold:
-- uncontrollable, such as weather, temperature, altitude, jat (variety) of tea, type of planting, and age of bush;
-- controllable, varying with management practice;
-- related to worker productivity, encompassing not only wages and incentives but, also aspects such as motivation, individual talent, experience, absenteeism, health, training, age, pregnancies, nutritional status, living environment, family problems and family earnings.
The present study seeks to throw some light on the latter, especially the socio-economic characteristics of workers, with the objective of sifting out those features that are relevant in terms of productivity from those which may not make a difference or cannot be assessed with any degree of accuracy.
Worker requirements in the tea industry can be broadly classified into two categories -- those for current production and those for capital field development. Among the former, which comprise the bulk of the labour absorption, harvesting (plucking) accounts for as much as 70 per cent of the workdays and 40 per cent of the cost of production. Fertilizing, weeding, pruning and processing account for most of the rest of the field-level labour force, although the shift to chemical weeding has reduced the labour required for this activity. Also, the large-scale conversion to CTC (cut, tear and curl) manufacturing in the region requires a factory labour component barely half of that needed for orthodox production. On the capital side, the pace of new planting and replanting is extremely slow because of the low economic returns. The industry's efforts have, accordingly, been directed at the infilling of vacancies which, although not as labour-intensive as the other options, is found to be cost-effective.
Several yardsticks are available by which to judge the production efficiency of the tea industry and its effect on reducing costs. The most important is plucking productivity, which represents the quantity of green leaf harvested per workday, the objective being to increase that quantity without detriment to quality. To a lesser extent, processing productivity, input productivity and management productivity are relevant factors in optimizing plantation efficiency. In the final analysis, however, the main parameters are the appropriate workday requirements and the labour per unit of area. An attempt has been made to quantify these parameters in relation to the different levels of field productivity. It must be stressed that field productivity will vary from country to country and from district to district within the same country. Modern developments are also taking place within the region through the adoption of computer technology. While the use of computers is at present restricted to the programming of the plucking schedule, it is expected to be extended over time to cover all field inputs.
As the most costly and yet measurable operation in the tea industry, plucking has been the focus of a productivity-linked approach in respect of wages and incentives. However, several field-level prerequisites, such as improved soil conditions, modifications to the micro-climate, appropriate choice of planting material, optimization of pluckable shoots, adoption of a management approach to pruning, skilful manipulation of the plucking surface, and integration of plucker intake with field responsiveness, have to be met before embarking on that approach. The cooperation and acceptance of workers will also have to be sought and obtained, the key factors in this regard being simplicity, ease of implementation, fairness and speedy reward.
A case-study on the working of a productivity wage/incentive system in South India is presented below. Essentially, tea estates are classified into four categories depending on the yield per month. The minimum quantity to be plucked per day for the four different classes is laid down and, corresponding to each of them, two incentive slabs (categories) and rates were initially established. The scheme applies to both hand and shear plucking. The three-year agreement, which took effect in 1990, has been extended for a further three years, with the incorporation of a third incentive slab and an across-the-board improvement in the incentive rates. The scheme has been implemented with fairness and transparency, and the existence of a grievance procedure renders it credible in the eyes of the trade unions. Both management and workers have stood to gain from the scheme, although to a varying degree -- a lower share appears to have accrued to the latter. A suggested method for measuring the productivity gains is to calculate workdays -- and the corresponding labour costs -- as if labour productivity was at the earlier level and to deduct therefrom the actual workdays -- and the actual labour costs -- the difference being taken as the gain in productivity. Based on the experience of the manufacturing industries in the South Asian region where productivity packages are in operation, 60 per cent is proposed as a fair share of the gain to be passed on to the workers.
Reference is made in the paper to the emerging labour shortage and the desirability of using shear harvesters during the heavy cropping period. Apart from bringing about a gain in revenue to the managements and the nation, such a measure is expected to improve worker output and have a salutary effect on escalating costs. Admittedly, its widespread application could be detrimental to the quality of the end-product but this is part of the trade-off between quality and allowing the harvest to go unplucked.
A group incentive scheme has been proposed with a view to effecting productivity gains in operations other than plucking. The concept is that for a certain percentage of output above the standard, the corresponding percentage of extra wages are paid as an incentive. Although this scheme has been illustrated in an example pertaining to pruning, the approach could be extended to all task-related operations, including spraying, fertilizing, shade regulation, forking, leaf loading, and so on.
Besides wages and incentives, the paper deals with other aspects that have a bearing on worker productivity. The following are analysed: the linkage between health and worker productivity; the motivational factors influencing worker productivity; the optimization of welfare returns; the advantages of according independent economic status to women workers in the tea industry (contrary to current practice in rural households); and the gains accruing to managements from controlling the common illnesses (respiratory and water borne) among workers. A case-study highlights the importance of the socio-economic and health factors in identifying and improving the performance of women pluckers. It has been demonstrated that, within reasonable limits, age and experience have a direct bearing on plucker productivity. For instance, good pluckers have over 20 years of experience and their age is seen as a helpful attribute. For new entrants, the study suggests the desirability of training as an additional means of improving productivity. It is also seen that taller women make good pluckers because they can reach the whole bush and can generally carry more. This leads to the suggestion of a possible reallocation of field work to bring the best out of shorter less robust workers. Contrary to the popular myth that sterilization adversely affects labour productivity, it was noticed that a high proportion of good pluckers had undergone sterilization after the birth of two or three children. Nevertheless, the domestic demands on women workers with children below six years of age have been somewhat detrimental to their productivity. This trend is, however, seen to be transitional because once the children are in school, the mother's plucking productivity increases. This finding highlights the need for proper crèches and better estate school facilities. The study also indicates that poor pluckers habitually take more sick leave and unauthorized leave than good pluckers. It is not possible to draw any reliable correlation between plucking and such aspects as indebtedness and haemoglobin levels, although an in-depth study involving the latter is recommended.
A similar study on the occupational and non-occupational health standards of women tea pluckers identifies strain on the neck and cervical spine from carrying the tea basket, abrasions to the hands, lack of protection for the toes and, more importantly, the ill-effects of anaemia as factors that adversely affect worker productivity. The study also suggests remedial measures for overcoming these problems.
The general belief has been that productivity is higher on estates than in smallholdings. Recent trends, however, suggest a higher output per workday and a higher land productivity per unit of area among smallholders. But the gain in profitability and productivity does not necessarily accrue to them since their activity stops at the raw material (green leaf) stage, whereas that of the estate sector culminates in the manufacture of an end-product (made tea). Development efforts should, therefore, be directed to ensure that the benefits from processing should also trickle down to the smallholder. Some approaches in this regard already exist but they may require strengthening in the context of an uncertain and vulnerable tea market. Moreover, an efficient agricultural extension system and proper processing facilities in close proximity will be important factors in giving a much-needed impetus to this emerging sector of the tea economy.
South Asia has a predominant stake in the global tea economy. Three countries -- Bangladesh, India and Sri Lanka -- account for 52 per cent of world black tea production and 42 per cent of the export trade (table 1). These countries, with a population of 1,200 million, account for 36 per cent of world tea consumption.
Table 1. South Asia: Black tea production and exports, 1991-94 (million kg)
| Production | Exports | |||
| 1991-93 | 1994 | 1991-93 | 1994 | |
| Average | Estimate | Average | Estimate | |
| Bangladesh | 47 | 53 | 28 | 24 |
| India | 727 | 744 | 182 | 149 |
| Sri Lanka | 217 | 242 | 196 | 230 |
| South Asia | 991 | 1 039 | 406 | 403 |
| World | 1 909 | 1 934 | 971 | 954 |
| South Asia's share (per cent) | 52 | 53 | 42 | 42 |
| Source: FAO. | ||||
Medium-term projections clearly point to India and Sri Lanka continuing to retain their leading position in production and exports, respectively, with Pakistan emerging as the world's largest importer, surpassing both the United Kingdom and the Russian Federation. The likely position by the year 2005 could be as indicated in table 2.
Table 2. Projected tea production, 2005 (million kg)
| South Asia | World | South Asia's share (per cent) | |
| Production | 1 355 | 2 811 | 48 |
| Exports | 539 | 1 435 | 38 |
| Consumption | 1 043 | 2 727 | 38 |
| Source: FAO. | |||
From the employment perspective, the ILO notes that some 50 countries engaged in the production of plantation crops have a workforce in this sector (exclusive of smallholdings) of about 20 million. Of them, tea workers alone in the three South Asian countries, estimated at about 1.5 million, account for 7.5 per cent. About the same number of persons are also employed in ancillary activities, including estate supplies, retail and wholesale trading, export and internal trade, warehousing, transport and so on. Other plantation products, such as rubber, coconut, coffee and a wide variety of spices, are also grown on a large scale in this region but employment on tea estates accounts for 59 per cent of plantation employment (table 3).
Table 3. Wage employment in plantations in South Asia ('000)
| Tea | All plantations | Tea's share
(per cent) | |
| Bangladesh | 114 | 114 | 100 |
| India | 987 | 1 610 | 61 |
| Sri Lanka | 426 | 860 | 49 |
| South Asia | 1 527 | 2 584 | 59 |
| Source: ILO. | |||
This predominance is to some extent offset by the disabilities which South Asia has to face by virtue of being a "traditional" tea-producing region. With the industry here having been established over 100 years ago, during the colonial era, many of the fields are well past their prime and in need of rejuvenation and replanting. A parallel situation exists in the processing factories which also require replacement for modernization. There is also a pressing need to upgrade infrastructural facilities involving welfare, workers' housing, education, medical care and so on. These features are in sharp contrast to those of the tea plantations in East Africa which have the advantage of having commenced operations barely 25 years ago under modern field practices and manufacturing technology, and are therefore in a position to compete more effectively in the world market than their older counterparts in South Asia.
Whether in Asia or Africa, however, the tea industry's problems are intrinsically the same -- rising costs and stagnant or declining prices. The importance of these factors varies. As far as prices are concerned, global efforts, through FAO and UNCTAD, to maintain prices have met with little success. A recent initiative by Sri Lanka led to the establishment of the International Tea Producers' Forum, but efforts by the Forum to lift sagging world prices will take a long time to bear fruit. Within the region, the South Asian Association for Regional Cooperation (SAARC) has been negotiating a South Asian Preferential Trading Agreement (SAPTA) as well as a South Asian Free Trade Agreement (SAFTA). Progress has been slow in contrast to the success achieved by other trading blocs, such as the European Union, NAFTA and APEC. Meanwhile, world tea prices fell for the fourth successive year, the overall decline in US dollar terms for 1994 being about 7.7 per cent over 1993. There were, however, considerable regional disparities. While the average price at the Mombasa (Kenya) auction increased by 3.5 per cent, there was a substantial decline in the principal centres in South Asia -- 12.9 per cent in Calcutta (North India), 22.1 per cent in Cochin (South India), 8.5 per cent in Colombo (Sri Lanka) and 15.8 per cent in Chittagong (Bangladesh).
On the cost front, two elements are crucial in the tea industry -- labour wages and estate supplies. The former accounts for 50-55 per cent of the cost of production and the latter about 25 per cent. Indeed, wages have gone up over the years and will continue to rise in keeping with workers' aspirations, the increasing cost of living, trends in the rest of the economy and, equally, because of the strong trade union movement -- a well-known feature of the South Asian situation. Prices of field and manufacturing inputs follow a somewhat similar trend, influenced not only by the levels of inflation but also by the impact of devaluation of the local currency and, lately, the total or partial withdrawal of fertilizer subsidies, following pressure from the international lending institutions. Sri Lanka has possibly the world's highest cost of tea production at an estimated US$1.47 per kg in 1994, compared with US$1.09 per kg for India and US$1.15 per kg for Bangladesh. The cost is reportedly even lower, at US$0.96 per kg, for the estate sector in Kenya.
If the tea industry has to choose between improving prices and controlling costs, the former is the more difficult option, particularly in a global environment where transnational corporations are exerting greater influence on the buying operations. The latter option, therefore, seems to be the more practical alternative. Although wages and input costs per se are bound to rise, they could, within limits, be balanced in terms of unit costs of production through enhanced productivity -- not just that of labour but also the other factors of production that contribute to the growing, manufacturing and marketing of tea. It is against this backdrop that this study on productivity assumes crucial significance.
The tea industry operates in the private sector in India and Bangladesh, and a process of privatization -- or rather, reprivatization -- is under way in Sri Lanka. Profit is the measure of success, and calls for a three-pronged approach combining added value, cost control and productivity improvement. Since productivity gains involve obtaining more output for the same input -- growing two blades of grass where only one existed earlier, in the classical sense -- an element of productivity is inherent in respect of value added and cost control as well. In effect, adding value to the product is a means of improving the productivity of capital. In the tea business, adding value takes the following forms: generating a larger proportion of higher priced teas; blending and packeting at source; direct marketing by producers; and manufacture of tea bags, instant tea, flavoured tea, green tea, etc. Similarly, cost control measures generally involve capital expenditure as, for example, in material handling equipment, heat recording systems, energy saving devices and so on. In this sense, these are also components of the productivity approach.
Tea production is a land-intensive and a labour-intensive enterprise. In former times, land and labour were abundant and cheap. Both these factors of production are now scarce and costly. Soil degradation and ageing fields have also compounded the problem. Moreover, the bonded labour system, which ensured profitability to the early European settlers, has given way to a generation of young and educated dependants of the workforce who are seeking new opportunities in the cities. in preference to estate employment located in remote areas. These developments do not augur well for the established plantation system and make it all the more difficult to infuse modern productivity concepts into a society entrenched in custom and tradition.
