‘Productivity-linked wage can reduce cost in plantations’

Even before the pandemic, the sector was going through financial stress. However, the outbreak of Covid has disrupted the whole business ecosystem of plantations. The cost of production of all crops has seen an average increase of approximately 28 per cent last year alone. Prices of inputs such as fertilisers, fuel, agro-chemicals, etc, skyrocketed. For instance, the price of muriate of potash rose by nearly 120 per cent.

Besides, inflationary pressures have resulted in significant increase in the wage component. As plantations are labour-intensive, it significantly influences the cost of production.

Commodities prices have declined in the past year, especially cardamom, rubber and tea. Now growers are selling below production cost, causing huge financial distress to the sector.

You must also note that organised plantations in the State do not receive any financial or policy support despite taking a huge burden of social cost.

The average price of rubber latex was ₹133 per kg in November 2021 and is now down to ₹80. RSS 4 grade was selling at ₹182 in November last year and today the farmer realises approximately ₹150. The price support of ₹170 extended by the State Government is unavailable to organised plantations, where the cost of production is higher. If this situation continues, a large section of growers will leave the trees untapped.

Cardamom growers are in a serious financial crisis with average price nosediving to ₹953 from ₹2,909 in 2019-20. The output is falling by 30 per cent due to vagaries of nature this season. With production cost reaching unmanageable levels, along with a crash in prices, growers are leaving the fields unattended.

Since 2020, tea prices are on a downward trend. During 2020, the average price of Kerala-origin tea was around ₹140 due to Covid-induced supply-side constraints. However, the average price has since dropped by ₹12. The only silver lining is that orthodox tea prices are firm, but they are expected to soften once the Sri Lankan situation normalises.

Plantations are among the most labour-intensive sectors in Kerala. Large-scale automation is difficult due to the topographic limitations. Across all plantation crops, nearly 65 per cent of production cost is the wage component. Any increase in wages will have a direct impact on cost. Moreover, productivity is the lowest among plantation states, whereas the wages are the highest in the country.

We believe that the aspirations of the workforce will have to be met by keeping the paying capacity of the sector in mind. Otherwise, the sector will not survive in the long term. The practical solution is the introduction of a productivity-linked wage system, where the earning potential of the workforce will increase without significantly affecting the cost of production.

No. The returns from unit area of land is very low for plantation crops due to the mono-crop culture, except perhaps in the case of cardamom. There are legal restrictions for plantations [looking] to diversify.

We suggest that plantations should be encouraged to take up multi-cropping, animal husbandry, horticulture and its processing, silviculture, and responsible tourism, among other activities. This will enhance returns from unit area of land and make plantations profitable. The government has already announced such measures last year, but they are yet to be implemented. This will generate large-scale skilled and unskilled employment and the state revenue will increase through enhanced GST.

We believe the directorate under the Industries Department can play a pivotal role in the revival of the sector. Even though it is in its nascent stage, we see a lot of energy and enthusiasm. We have had a series of discussions and I am confident that the aspirations of the grower community will be properly addressed.