Trouble on the plantations

BS OPINION

Planters have failed to keep up with trends in the global market, and failed to push up domestic demand. On the production front, they have paid scant attention to reducing production costs and upgrading product quality.

As a result, they have been destabilised in their established export markets by countries like Sri Lanka and Vietnam, which till not long ago were small players with inferior teas. The irony is that Sri Lanka planters have started viewing India as a potential market for their now improved and, in some cases, speciality products, at lower prices.

As a consequence, barring the rubber sector "" which has managed to turn the corner thanks to higher output and improved prices "" and coffee, which has received some financial reprieve due to special term loans, all other plantation industries are in the doldrums.

Tea and spices are the worst hit. Many small tea producers have simply abandoned their estates and more are on the verge of doing so, leaving thousands of workers without a means of livelihood.

In the case of an export-dependent commodity like coffee, Indian exporters are yet to get out of the relaxed mode encouraged by the global price boom of the mid-1990s, in the wake of heavy output losses in Brazil. Many exporters have continued to hold on to stocks, waiting for another bonanza "" which has not happened.

On the other hand, most spices, notably pepper, have suffered significant production losses due to deficient rainfall in the past couple of years. This, coupled with price stagnation, has crippled this sector.

The tea industry has its own cup-full of woes. Factors like indifferent quality, high production costs and outmoded plantation labour laws have resulted in competitors outpacing India, leading to the reduction of export orders from Russia, other erstwhile Soviet republics and Iraq, to take some obvious examples.

To add to these troubles, the Tea Board is now contemplating an amendment of the regressive tea (marketing) control order to enforce 100 per cent sale through official auctions. This will make the tea industry's plight even worse.

Still, the initiative has to come from the plantation sector, with quick measures to enhance production efficiency and bring down costs.

Such a strategy alone will be able to regain competitiveness. The state, on its part, needs to liberalise land and labour laws to facilitate the introduction of productivity-linked wages and adjustments in plantation acreage.

The alignment of production strategies with demand patterns at home and abroad, and imaginative marketing campaigns, are critical pre-requisites if the plantations are to thrive again.