Issue link: https://read.dmtmag.com/i/491368
66 STiR tea & coffee industry international Empowered employees Tea is a labor-intensive industry with a serious labor problem. The late T.V. Al- exander, Tata's executive responsible for divesting KDHP "sensed that something out of the ordinary was required for the plantation operations in Munnar to, first, survive and then thrive," according to Tata's account of the KDHP buy-out. Alexander pushed for a participatory management model "the elixir that culmi- nated in establishing KDHP," according to Tata which recounted the divestiture in a 2013 article in theTata Review. "This was his brainchild and he made it work," says Thomas, who took over as the company's managing director on Al- exander's death. KDHP's management strategy merits a close look at a time when the colonial era plantation structure is crumbling. Here's why: Low Productivity - Plucking 42 kilos of tea and pruning tea bushes is strenuous and tedious. Absenteeism is high as able-bodied workers living as a couple often split their day between the garden and part-time work elsewhere. Since the estate provides food, child care, elementary education, housing, and medical aid the cost of absenteeism is high. In addition, an aging population of tea workers simply gets less done in a day. Worker productivity at KDHP has improved by 47% in the past 10 years. Labor cost - It is low by western standards but $3.67 for a day's work when mul- tiplied by 11,500 workers at an estate as large as KDHP amounts to a daily payroll of $42,200 which is more than $1 million a month. Tea requires large amounts of effort spreading fertilizer, applying insecticide and herbicides, pruning, terracing and irrigation work as well as intense factory operations during processing. The biggest expense in these endeavors is labor. While global demand is rising, the auction price remains low and the export market is extremely competitive. India was once the world's largest exporter of tea but gardens in Kenya and Vietnam undercut CTC (cut, tear, curl) pricing. The most important market for KDHP is domestic but Indians are accustomed to paying a low price for tea. The most lucrative market is overseas. Workers earn up to INRs9,000 ($149) a month with incentives. At $150 per month they earn $1,800 or 21% more than average along with benefits offered by the company (housing, medical, provident fund, gratuity, bonus etc.) that adds an additional 50% to the wages paid making the wages paid tea workers in Kerala the highest in India. Labor Shortage - The primary reason for India's labor shortage is generational, not economic. The young are adept at maintaining the gardens but unwilling to make tea their life's work, often at the urging of parents who want a better life for their children. In some regions the labor pool has declined as much as 58%. It is hoped that small holders (those tending gardens under 10 ha) will adopt an entrepreneurial mindset and take their own tea to market but that will inevitably lead the best and most skilled away from plantation life. KDHP demonstrates that small holders can band together to produce huge quantities of quality tea. KDHP workers are exceptionally loyal, with very low absenteeism. India is acutely aware of these and more pressing labor problems. Government ministers, at the urging of NGOs and trade unions, launched an in- vestigation this summer following revelations that hundreds of tea workers are starving on abandoned gardens in Assam and West Bengal. Cabinet members discovered a piti- ful situation at 23 gardens where operating companies failed. The ill are mainly older Green tea leaves are harvested throughout the year and processed in 16 factories. K. Mathew Abraham is head of market- ing and sales at KDHP.