Issue link: https://read.dmtmag.com/i/556538
STiR tea & coffee industry international 55 All-Auction All-Tea Average Prices 1989 – 2013 Sri Lanka Production 1960-2013 Sri Lanka Production, Price and costs 1960 -2013 0 0.5 1 1.5 2 2.5 3 3.5 4 0 50 100 150 200 250 300 350 1960 1970 1980 1990 2000 2013 Production m kgs Price USc per kilo Cost of Prod Usc per kg Production m kgs Price (US cents/kg) Production Cost (US cents/kg) Source: Norman Kelly, International Tea Council 2014 Production Costs in US cents Tonnage in millions of kilos Source: Richard Darlington, AVT 2014 193 207 170 147 151 132 140 148 190 188 166 158 141 133 136 151 150 157 178 218 242 262 261 265 260 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 300 250 200 150 100 50 0 All-AucƟon All-Tea Average Prices 1989 – 2013 in US$ cts./kg. Quality has a price Despite the high price at auction, some estates still operate at a loss. Sri Lankan tea is grown on steep slopes and hand plucked which means yields are low and mechanization is not an option. The plant stock is aged. The cost of tea production rose from $1.35 per kilo in 2005 to $3.10 in 2013. Production increased 11% during the decade, but the cost of production rose 159%. The tea industry, directly and indirectly, employs a million workers with women comprising 75% to 85% of field labor. La- bor accounts for 60% of the cost of production which was esti- mated at $2.72 to $2.89 per kilo (SLRs 360 to SLRs 380) prior to the latest wage increase. Wages rose 25% in 2011 to $4.70 per day and in April 2013 were increased 18.4% over a two-year agree- ment that expires this year. Workers are seeking an increase to $7.50 (SLRs 1000). The basic wage is now $4.80 (SLRs 650) with incentives that exceed $5 per day, making it one of the highest in the world. From pg. 53 Sri Lanka is a very traditional country with a hierarchical busi- ness structure. It was difficult introducing a more horizontal, less formal structure, where workers and management come together as equals. Fairtrade compliance mandated this cul- tural shift. The training that was a part of the certification process helped both management and workers adapt. Management learned that there less autocratic ways to manage staff that net positive results in productivity. Workers became more comfort- able with expressing their opinions and sharing ideas. Workers and managers were encouraged to operate as a team. This process not only helped establish equality between manage- ment and workers but also helped alleviate gender inequal- ity. On the average estate, women make up about 50% of the workers. Due to increased exposure to the fairtrade standards and principles, Gnanasekeran has seen more men and women come together to discuss their concerns. Fairtrade certification ensures the estate receives a mini- mum price for their tea. Workers share the premium may al- locate this money wherever they see the most need. "The premium just started slowly coming in, a very small amount at a time, and was given to the premium committee (a group of individuals nominated by the workers)," said Gnanas- ekeran. "The interesting part is that the workers plan it, imple- ment it, and eventually are able to follow through to ensure that the funds were applied to the areas most needed." Accessible education was a first priority. The nearest school was beyond walking distance for most children, particularly the younger ones, and bad roads made walking even more difficult. The plantation company could not afford to provide transpor- tation, and so several plantation children did not attend. See- ing the value in education, the workers at Stassen Bio Garden jointly decided to use the Fairtrade premium to purchase a bus. "All the children are now able to go to school," said Gnanas- ekeran. "From the age of six the children are taken from their home to the school and brought back to their home." At another estate workers established a shop. "They were able to bring in the goods, and the people benefitted by get- ting very reasonable rates on the products. All profits that came from the shop sales went back to the workers," said Gnanas- ekeran. On a small holder certified farm they used the premium to purchase young seedlings, increasing overall productivity and bringing in more income for the farmers. Challenges still remain. The cost of production in Sri Lanka remains quite high, and for some plantations it becomes very challenging to remain sustainable when sales of Fairtrade prod- ucts decline. Higher market prices are essential for Fairtrade to be successful. Overall, Gnanasekeran views the results of Fairtrade certi- fication as very positive. People's attitudes have changed, and they seem happier. "They have no fear now, and the workers are able to meet and speak with management directly," said Gnanasekeran. "They feel that they are not just laborers, they are also part of this organization." Worker productivity has in- creased overall but beyond that the atmosphere has become more like a family, everyone is working closely together to- wards a common goal.