Auction prices have gone up 20 percent from 62,958 on May 02.

The highest price was 79,900 rupees for 1,000 nuts at the May 30 auction, down from 80,100 rupees a week ago, while the lowest was 65,000 up from 62,500.

A total of 316,756 coconuts were offered at the auction and 248,938 nuts were sold.

Wholesale prices were 95 to 110 rupees for large nuts and 85 to 90 rupees for small nuts in the week
to April 17.

Farmgate prices in Kurunegala were 72,000-75,000 per 1,000 nuts.

Coconut oil was 570,000–610,000 rupees per metric ton.

Coconut shells were 32,000–34,000 rupees per metric ton. (Colombo/June1/2024)

Mihular was Managing Partner of KPMG Sri Lanka and Maldives from 2012 to 2022 and chaired KPMG’s Middle East and South Asia Regional Cluster, where he also acted as Chief Operating Officer.

He holds directorships at various public listed companies, including Watawala Plantations and Sunshine Holdings.

He is a Commissioner at the Colombo Port City Economic Commission and a member of the Stakeholder Engagement Committee of the Central Bank of Sri Lanka.

Outgoing Chairman Wijesinha has served on the boards of both Watawala Plantations and Watawala Dairy Ltd. In September 2023, he was honoured with the ‘Order of the Rising Sun’ by the Government of Japan, in recognition of his contribution to strengthening economic relations and promoting mutual understanding between Japan and Sri Lanka.

Watawala Plantations, a diversified agribusiness company, is a joint venture between Sunshine Holdings and Pyramid Wilmar Plantations Pvt Ltd. (Colombo/May30/2024)

“267 employees have given consent to be retired under the VRS to be implemented for employees in relation to the amalgamation of Ceylon Fertilizer Company Limited and Colombo Commercial Fertilizer Company Limited,” Gunawardena told reporters Tuesday.

The Cabinet of Ministers approved the proposal to implement the VRS at a cost of 844 million rupees from the funds of the two fertilizer companies for execution of the proposed retirement scheme.

This is subject to the recommendations of a committee appointed to study retiring excess employees in state enterprises, Gunawardena said. (Colombo/May29/2024)

In order to pay the mandated wage which amounts to a 70 percent increase in costs, without an increase in output which is possible under alternative models already tried will force cost-cutting in fertilizer and other investments, the Planters’ Association of Ceylon said.

The government issued another gazette in May, with exactly the same wage as in April, under the so-called wages board ordinance.

Wages for tea and rubber workers are the highest among all wages boards including garments and other state jobs like

Planters’ Association strongly opposes Government’s arbitrary and ill-conceived wage hike for plantation sector workers

The plantation industry raised its strongest possible objections to the Government’s arbitrary, reckless, unilateral decision to drastically hike minimum wages for tea and rubber sector workers by an unprecedented 70%.

All producer stakeholders issued a unified warning against the devastating impact the latest increase will have on the plantation sector, leading crippling operational challenges, ultimately leading to severe economic instability for the nation.

“This decision was made without proper consultation or consideration of the needs of all industry stakeholders. In particular, it fails to provide any consideration and threatens to cripple every segment of the Sri Lankan tea and rubber industry. This current effort to force such a clearly unsustainable mandatory minimum wage on tea and rubber smallholders and the Regional Plantation Companies (RPCS) is impossible for the industry to absorb, even with radical cuts to basic operational necessities. The continuity of the entire plantation sector is now at risk, and most critically the livelihoods of the very workers and communities who are connected to the industry across Sri Lanka,” The Planters’ Association of Ceylon stated.

As a result of the decision, the cost of production for tea and rubber is set to rise dramatically, with estimates indicating a minimum 45% increase in the cost per kilogram of tea. This surge in operational costs will render Sri Lanka’s tea and rubber industries uncompetitive in the global market, further exacerbating the financial strain on these sectors.

Additionally, the wage hike will place an enormous burden on Regional Plantation Companies (RPCs), which will face an annual increase in excess of Rs. 35 billion inclusive of EPF/ETF and gratuity payments. This financial strain is unsustainable and threatens the livelihoods of thousands of workers in the plantation sector.

The PA also noted that the current approach of the Government in attempting to coercively set wages for the private sector, and interfere in management of the sector from key Government figures represent a stark violation of the terms of the IMF agreement, which is crucial for Sri Lanka’s economic recovery. This decision is very clearly driven by short-term populist politics aimed at securing electoral victories rather than fostering long-term economic health of the industry, and securing the interests of workers.

The IMF’s $3 billion Extended Fund Facility (EFF) for Sri Lanka is contingent on several stringent conditions aimed at ensuring fiscal consolidation including reduced intervention in state-owned enterprises (SOE). Historically, state control over enterprises has led to inefficiencies and financial burdens, as evidenced by the failures of numerous state-run businesses in Sri Lanka.

Historically, the state has consistently failed to manage State-Owned Enterprises (SOEs) effectively, leading to steep losses and in many instances, near total collapse. By the time of privatization in 1992, state owned plantations made continuous losses that had to be heavily subsidized by the Government up to Rs. 5 billion per year which was borne by the Treasury.

A further Rs. 8 billion was owed by the JEDB and SLSPC to the Bank of Ceylon and Peoples’ Bank as a result of a US$ 300 million lending facility which was extended to the state plantations by the World Bank. While these funds were intended for the improvement of the plantations industry, there were no significant improvements and the plantations did not have the ability to repay the debts, and the Government was eventually compelled to absorb this debt.

Following privatization, worker wages appreciated sharply, and with a significantly larger workforce of 327,123 within the RPC sector the industry was able to operate more effectively, investing substantially towards the development of the industry, including all of the key certifications and standards that have allowed Pure Ceylon Tea, and rubber to maintain a reputation for unmatched quality relative to global competitors.

These efforts have led to improvements in efficiency and productivity, which are now at risk due to the proposed wage hike. It is also important to note that all these companies are publicly traded companies listed on the Colombo Stock Exchange. Any attempt at a second and immediate expropriation by the Government will therefore contravene Securities and Exchange Commission and SEC rules, the Companies Act and other related statutory provisions.

Such an arbitrary and impractical decision also risks severe damage to local and foreign investor confidence alike. The PA warned that this would have negative consequences beyond the plantation industry, especially at a time when Sri Lanka desperately requires foreign direct investment to help boost strategically important sectors in manufacturing and services, as well as the agriculture sector.

The PA has long advocated for a shift to a productivity-linked wage model or a revenue share model, which aligns worker compensation with productivity and revenue earned at auction. This approach not only incentivizes productivity but also ensures a fair and sustainable wage system for workers. Already workers under revenue share under the previous wage structure recorded earnings in excess of the minimum wage that was recently gazette.

The current daily attendance-based minimum wage model is outdated and does not reflect the realities of the modern plantation industry. Any disruption to production or quality standards could send shockwaves through export markets, diminishing export revenues and competitiveness.

“We urge policymakers to prioritize long-term economic stability over short-sighted decisions and to consider the industry’s proposals for a productivity-linked wage model,” the PA said.

Small tea estate owners are already paying more than the prescribed minimum wage and there is a problem related to increasing these wages in the regional estate companies which have been transferred to the private sector from the government, a statement from the ministry quoted Nanayakkara as saying.

Small estate owners however are paying pluckers based on the volume of kilo plucked around 50 rupees a kilogram.

The privatized firms say they are offering more on a the basis as smallholders and workers who have not been prevented by the unions are earning between 40,000 to 75,000 rupees a month on the same basis.

President Ranil Wickremesinghe has told the cabinet of ministers that a bill must be drafted to take over the estate companies that do not implement the minimum wage and “give them to those who can implement them properly”, the statement said.

Separate discussions have been held with estate owners and labour unions, and because the parties could not reach an agreement, the ministry had convened the Wage Boards, said Nanayakkara.

“In the first instance, the estate owners did not attend, and they officially informed us that they would not participate in the second session. Therefore, as a last resort, we proposed a wage of 1,700 rupees, inclusive of a basic wage of 1,350 and a 350 rupee allowances, based on the legal provisions we have. We gazetted this on April 30 and May 1, giving the relevant parties 15 days to file objections,” he said.

“Since no substantial objections were received, the Department of Labour, the government, and I, as the Minister of Labour, finalised the notification last Thursday,” he added.

The Planters’ Association representing said they met President Ranil Wickremesinghe and govt officials and explained that they cannot pay as much as 1700, which works out to 74 percent increase with EPF.

President Ranil Wickremesinghe had requested owners on numerous occasions to raise the wage, said Nanayakkara.

“When this country fell during the time of COVID-19, the estate workers made a great sacrifice because they could not have a meal of rice, a roti, or drink plain tea,” he said. 

“The President repeatedly urged the estate owners to provide a reasonable wage to the workers. However, since we did not receive a satisfactory response, we took this decision. All estate owners will now have to pay this minimum basic wage.”

Tea farm managers say that successive governments have dealt heavy blows to the sector, in the form of the glyphosate ban which lost the country the Japanese market, the fertilizer ban which hit the sector badly and finally the currency crisis, which led cost rises.

Despite all what has done by successive governments to hit the plantations, managers says they have paid salaries and EPF. Meanwhile the residual government managed estates are in arrears of provident fund contributions deducted from the workers own salaries.

The private firms which bought the estates in the mid 1990s had paid 8,000 billion rupees to get the leasehold and last year each estate paid around 80 to 100 million in leases, which was adjusted upwards by the GDP deflator, after the currency crisis. (Colombo/May27/2024)

Sri Lanka is 2011 expropriated several private companies including two privatized sugar plantations, and a publicly listed hotel, claiming their assets were ‘underutilized’.

Sri Lanka has been unable to attract foreign investment in the scale of countries like Vietnam despite being socialist one party state, who have created better perceptions about investor protection and labour laws, analysts say.

Sri Lanka’s President Ranil Wickremesinghe in the presence of several plantations sector legislators announced on May Day that a 1,700 rupee a day wage had been ruled by a gazette.

Plantations and worker unions ended collective bargaining after President Gotabaya Rajapaksa ordered a 1,000 rupee a day wage under gazette rule.

Privatized plantations have protested that they cannot pay such wages and a pay system that is broadly based on smallholder system partly based on productivity is being adopted by some workers.

Cabinet spokesman Bandula Gunawardana said a committee had been set up to examine whether or not the companies can pay the wage taking into consideration cost of production and the competitiveness of Sri Lanka tea in the international market.

“The government has given 22 companies under long term lease,” Minister Gunawardana said.

“The president also asked to examine if they are being managed so inefficiently that salaries cannot be paid, to cancel these long-term leases and given them to individuals who can manage them better.”

“Cabinet approval was given to set up a special committee to examine matter relating to cancelling the lease and giving to other parties, if they cannot pay the salaries and develop this land assets.”

Minister Gunawardana was asked how reasonable was the demand by the state to pay mandate wages when plantations which were still under full state ownership in the Sri Lanka State Plantations Corporation and Janatha Estate Development Board, could not even pay the EPF of workers and tax payers have to fork out cash to pay that.

Elkaduwa Plantations, another company under state control also owes workers EPF and ETF according to reports in the public domain.

State Minister for Finance Ranjith Siyambalapitiya said recently that 5 billion taxes collected from the people would be given to state plantations to pay EPF and ETF arrears.

The plantations were privatized in the 1990s because they could not pay wages and tax payer funds of hundreds of millions of rupees, were being made monthly and no replanting was also being done due to inability to pay wages.

Minister Gunawardana was also asked whether threatening expropriation at this juncture, when the country was desperately trying to attract foreign investment was a wise decision.

“it is not a threat,” Minister Gunawardana said. “It is to examine the matter (karunu adyanayak) widely that the President put forward a cabinet paper under the leadership of the Presidential Secretary.

“The idea is to examine whether they are not being managed well enough to pay salaries and if not give them to another investor. Then the investors will get another chance.”

The plantations were privatized under several conditions including restrictions on diversification without the approval of a ‘golden shareholder’ which was the state.

However, it is not clear whether payment of politically decided salaries mandated by gazette, was a condition of the lease.

All Sri Lankan workers have suffered a steep fall in real wages after macro-economists printed money suppress rates to boost ‘growth’ (targeting potential output) leading to a collapse of the rupee.

There has been no official rise in wages by plantation companies since the currency collapse other than the productivity based formula. (Colombo/May24/2024)

Coconut prices have risen 12.9 percent over the past three weeks.

The highest price was 80,100 rupees for 1,000 nuts, up from 74,100 rupees a week ago, while the
lowest was 62,500 up from 55,000

A total of 392,995 coconuts were offered at the auction and 306,490 nuts were sold.

Wholesale prices were 95 to 110 rupees for large nuts and 85 to 90 rupees for small nuts in the week
to April 17.

Farmgate prices in Kurunegala were 72,000-75,000 per 1,000 nuts.

Coconut oil was 570,000–610,000 rupees per metric ton.

Coconut shells were 32,000–34,000 rupees per metric ton. (Colombo/May22/2024)

“We have discussed imposing a permanent tax on B-onions and potatoes. This will help stabilise the price. We can remove or reduce the tax in cases of shortage.”

Sri Lanka started to grow potatoes and big onion in Sri Lanka in the 1980s during the time of President J R Jayewardena./

Sri Lanka did the deepest reforms for an open economy in 1977-78, but macro-economists started to print money and the country went into an IMF program within two years as the economy recovered, and more later and the currency started to slide and inflation shot up.

Both potatoes and onions were grown as import substitutes and have received protection for decades.

The call for food taxes come despite large number of people being pushed into poverty after a currency crisis in 2022.

A 10,000 person survey by LirneAsia, a regional policy research organization, found that 33 percent of the respondents had skipped a meal and 47 percent reduced their meal sizes, after the currency crisis hit the country in 2023.

Sri Lanka’s poor surged by 4 million to 31 percent of the population in 2023, the survey found.

Read more: Sri Lanka’s population in poverty surges to 31-pct of population: LirneAsia Survey

About 27 percent of adults restricted their meals to feed children. The survey was conducted from October 10, 2022 to May 12, 2023.

When India banned the export of B-onions the price went to over 700 rupees a kilogram, and farmers cultivated more onions. Now the price has come down to around 100 rupees, Amaraweera said.

“The prices are up because our production costs are high,” he claimed. “We can’t compete with imports. We have to import the seed potatoes too. We are trying to produce seed potatoes here. If we can do that we can become competitive.”

Though some Sri Lanka farmers produce food to feed the people and also export their products, others have for decades produced foods under state protective taxes and got used to high prices above global levels.
(Colombo/May22/2024)

“The Ministry of Agriculture and Plantation Industries has taken steps to allocate 1,600 million rupees to establish 160 villages in 25 districts with 6 youth agri entrepreneurship villages in each district,” Minister Mahinda Amaraweera was quoted in a statement.

“Arrangements have been made to provide an amount of one million rupees to each village under the first phase.”

The Minister said the aim of the program is to attract youth to agriculture and to introduce them to new agricultural technology, so they could target local markets and exports.

Under the initiative vegetables, fruits, plantation crops, and fish are to be harvested, and livestock products are to be produced in the villages. (Colombo/May18/2024)

Speaking at an event, Wickremesinghe said a modernised agriculture is the means with Sri Lanka can become an export economy and lift rural communities out of poverty.

“Agriculture is what stabilises the economy. We can’t keep living on loans. That’s why we have decided to turn this country into an export economy. The cabinet on Monday approved the draft legislations needed for an export economy.

“Now we’re trying to modernise agriculture and go for an export industry. That needs to be done. Agriculture is the way to eliminate poverty in our villages. For this, we need a modern agriculture,” he said.

The president predicted that by 2048, Sri Lanka’s population will have declined by about one million, though a population boom of nearly one billion could be expected in neighbouring regions, from Africa to Indonesia.

“They will have to be fed, and food will have to be supplied to a strong middle class in those regions. That’s going to be our market. We must get ready for that,” said Wickremesinghe.

“We sell tea to Europe now, and that’s good, but population is declining in Europe too. So we must move to new places, and cultivate. It’s not the traditional plantation that we’re expecting. We want to develop a new agribusiness,” he said.

In February this year, President Wickremesinghe said Sri Lanka needs to adopt modern agriculture techniques and involve the private sector to develop the sector.

“Our first step is to restructure the existing system and involve the private sector,” Wickremesinghe said at the United Nations Food and Agriculture Organization’s 37th Asia and Pacific Conference in Colombo on February 20.

“When assessing our economy, agriculture emerges as a sector capable of delivering swift results,” Wickremesinghe said. “We are endeavouring to transform agrarian service centres nationwide into modernization hubs for agriculture. To achieve this goal, we are actively seeking contributions from both the public and private sectors.” (Colombo/May15/2024)

The highest price was 73,600 rupees for 1,000 nuts, up from 73,000 rupees a week ago, while the lowest was 56,000 up from 52,000.

A total of 1,326,220 coconuts were offered at the auction and 685,218 nuts were sold.

Wholesale prices were 95 to 110 rupees for large nuts and 85 to 90 rupees for small nuts in the week to April 17.

Farmgate prices in Kurunegala were 72,000-75,000 per 1,000 nuts.

Coconut oil was 570,000–610,000 rupees per metric ton.

Coconut shells were 32,000–34,000 rupees per metric ton. (Colombo/May14/2024 – Corrected opening paragraph for 1,000 nuts.)

Thondaman, who has been critical on RPCs over their resistance in paying the latest daily wage of 1,700 rupees per tea plucker, said he wants action against the companies for destroying government assets.

“We are reviewing the agreement as we speak. There is a committee that is going through it,” he told reporters at a media briefing on Monday (13) in Colombo.

“My personal opinion is we can’t just look at it as just tea. Tea is an asset of the government of Sri Lanka. So when it is a Sri Lankan government asset, say if we have given 10,000 hectares of tea estates to a company, with 8,500 hectares of tea and 1,500 of abandoned, then today we need to conduct an audit to see of the 8,500 ha of tea lands exist.”

“If the tea (lands) have reduced, then action should be taken against the companies, because they have destroyed the assets of the government of Sri Lanka, tax payers assets.”

“So we are looking at all options, opportunities and exploring all possibilities on action.”

The lease review comes as the RPCs has vehemently rejected President Ranil Wickremesinghe’s May 1 announcement of raising the daily wage by 70 percent to 1,700 rupees.

Industry experts say tea producers face a daunting task in paying increased daily wage mainly due to appreciation of the rupee since early last year.

Sri Lankan estate workers live in poor conditions with higher level of poverty, analysts say.

Workers have been living sometimes in crowded shacks, without sanitation, running water, medical facilities or schools for their children.

Thondaman said he has requested for strong action against RPCs for not maintaining the tea properly.

“Now a lease review is going on and post that we will definitely go for that,” he said.

Many plantation workers have already shifted from estates due to poor wages.

Activists say tea pluckers have to work under very difficult conditions because most RPCs do not replant tea as per agreement.

“They should replant 2.5 percent of the land. They have been replanting 0.08 percent,” Thondaman said.

“Though it is a breach of agreement, there has been 400 agreements signed. Now the legality comes into question,” he said.

“Anyway, right now that’s why the president has gazetted the RPCs under the Finance Ministry.” (Colombo/May 13/2024)

According to an analysis of pulse production and consumption patterns in Sri Lanka published by the IPS and authored by Dr Kiruthika Natarajan, Dr Manoj Thibbotuwawa, and Dr Suresh Babu, the area under pulses cultivation increased by 7.87 percent from 1974–1990 but decreased by 1.56 percent during 1991–2022. Overall pulse production increased by 8.31 percent between 1974–1990 but exhibited a meagre growth rate (0.09 percent) from 1991–2022. Pulses currently occupy less than 1 percent of agricultural land. The daily Recommended Dietary Allowance (RDA) of pulses for an average sedentary man is 40 g (15 kg/year/person. But current domestic production of pulses contributes 1.7 kg/year/person, which is a mere 11 percent of the requirement, the IPS said.

During the 1960s, the institute said, Sri Lanka imported up to 50,000–60,000 mt of dry beans, chickpeas, and dry lentils. But between 1974 and 1990 these imports were negligible until they started to rise in the 1990s. This increase can be attributed partly to the introduction of alternative pulses, such as lentils, and the low prices of these alternative sources in international markets. However, the total pulses imports contribute 6.8 kg/year/person, which is about 46 percent of the requirement.

According to the IPS, the local supply of pulses through domestic production and imports amounts to 8.5 kg/year/person (58 percent of the requirement).

“Filling this gap merely by increasing the production of pulses locally is challenging due to the existing productivity and efficiency gap. All Sri Lankan pulses have a huge efficiency gap (EG) relative to the leading producing regions globally. Bridging this gap is challenging since pulse productivity declined for the past six years after remaining stagnant since the 2010s. Moreover, this has led to low returns on investments for most of the pulses.”

Price stagnation is a common phenomenon in pulse trade, the institute found.

“Since 2019, both the producer and retail prices have trended upward due to the external pressures from the COVID-19 pandemic and Sri Lanka’s deteriorating macroeconomic situation. However, poor marketing facilities and unstable prices coupled with a widening retailer-producer price gap have placed pulse producers in a precarious position. On the other hand, the farmgate price of pulses is lower than the import price after the imposition of the tariff, indicating a very protectionist system. Such protectionist policies to safeguard local farmers may not be conducive to the long-term growth of the sector and to ensuring food and nutrition security in the country.”

Given the current level of pulse production in Sri Lanka, reviving the pulse sector will require both short- and long-term strategies to address the various challenges including poor agricultural practices, inappropriate government policies, market dynamics, and climate change, the IPS said.

“The short-term goal should be to improve production and productivity gradually while filling gaps in supply to achieve dietary requirements through imports. The import basket should include pulses like red lentils that do not compete directly with local pulses to meet the population’s protein requirements, especially the poor. Imports can also help fill the supply gap and stabilise prices.

“Long-term strategies in increasing the role of pulses in generating rural income and providing food security must focus on coordinated efforts involving policy support, research and extension, and market and demand considerations. All these efforts should especially focus on areas with huge untapped potential like diversifying the sector with underutilised pulse crops like Kollu, Pigeon peas and Chickpeas in dry upland cropping systems and increasing pulses’ area with improved input use efficiency under the “pulse in rice fallow” method. Successfully marketing pulse crops in Sri Lanka depends on crop quality, market demand, pricing, and effective distribution channels which can be achieved by improved collaboration among value chain stakeholders, promoting value addition, market intelligence through digital technologies, improved storage and transport facilities and consumer education and awareness on pulses’ benefits and how to incorporate them into meals.” (Colombo/May08/2024)

The Climate change office of Sri Lanka under President Ranil Wickremesinghe’s office, the Climate Vulnerable Forum (CVF) and Nativa Capital of Portugal signed the 100 million dollar deal Tuesday to work together on a farming and forest protection project in Sri Lanka’s Northcentral district of Anuradhapura.

Each of 15,000 farming family will receive 6,000 dollars throughout the project period on a concessional loan to grow watermelon, red chilies and tomato in the first stage solar pumps and other energy projects for sustainable agriculture.

The investment company Nativa will also facilitate market procurement related to these crops with an aim to export and establishments of factories in Sri Lanka in the future.

“Each family stands to benefit from an investment totaling approximately 6,000 dollars, which covers not only modern technical equipment but also addresses longstanding market access challenges faced by farmers,” Ruwan Wijewardene, the President’s Senior Advisor on Climate Change told reporters in Colombo.

“In addition to technological upgrades, efforts have been made to address market access issues faced by farmers, with the investment company committing to purchasing produce from the project.”

The project will expand to cover other crops and and areas including Polonnaruwa district and the Eastern province in the future.

“Upon the successful implementation of this pilot project, the government plans to extend modern agricultural technologies to other districts, foreseeing a transformation in the export economy and an enhancement in the quality of life for farmers,” he said.

“This endeavour not only promises economic prosperity but also seeks to empower farming communities with innovative technology and sustainable practices. It is poised to create employment opportunities, attract foreign investment, and fortify Sri Lanka’s agricultural sector.”

The project will be executed by Our Movement Lanka, a community-based organization and Nativa Capital with Sri Lanka government oversight.

A pilot project with 15 families growing chilli has already started.

A pilot project with a subset of fifteen families and 15 acres is in the process with chili cultivation.

Officials, however, failed to provide the projection of possible foreign exchange inflows despite repeated requests. (Colombo/May 08/2024)

Sri Lanka suddenly gazetted a hike in plantation worker daily wage to 1,700 rupees ahead of May Day rallies following the path of ousted President Gotabaya Rajapaksa who suddenly hiked wages to 1,000 rupees a day in March 2021.

Before unions exited collective agreements and the coercive power of the state came through gazette plantation workers also used to bargain with the privatized companies through collective agreements.

The Regional Plantations Companies (RPCs) will have to give the wage hike or face being taken back.

Or Else

“There is no going back for the private sector,” Minister Ratwatte told reporters in Colombo Thursday.

“It’s gazetted. Either they do it or we take RPCs back.

“I think the President has given a good message to the country.”

Management of state plantations were privatized under President Ranasinghe Premadasa as they caused hundreds of millions of rupees each month to the state through salary supplements.

Long term ownership was given to private citizens in the 1990s through leases under President Chandrika Kumaratunga.

Once Privatized, Once Expropriated

The plantations were once expropriated from foreign and local investors after independence from British rule, in a move that has been identified as an early step in the country’s post-independence decline.

The President J R Jayewardena put a constitutional guarantee against expropriation as foreign direct investment was sought again following the success seen in countries like Singapore in drawing foreign investment to its Jurong Industrial park.

Singapore however had monetary stability through a currency board, while Sri Lanka’s economic buraucrated depreciated the currency especially after the IMF’s Second Amendment to its Articles, triggering strikes and social unrest.

Despite the constitutional guarantee, Sri Lanka once again expropriated companies in 2011, and missed a chance to win the confidence of foreign investors after a 30-year civil war ended, critics say.

Monetary Instability

The current wage hike from politicians representing plantation workers comes after the latest collapse of the rupee after macro-economists printed money to target ‘potential output’, again after the IMF gave technical assistance to the central bank on how to calculate it.

From 2020 macro-economist printed money and depreciated the rupee from 180 to 370 to the US dollar.

The central bank has since allowed the rupee to appreciate to 296 levels to the US dollar.

According to the gazette notice, plantation workers will have to be paid 1350 rupees a day, there will be a ‘daily special allowance’ of 350 rupees and an over kilogram rate of 80 rupees a day.

Objections to the order can be made to the Commissioner General of Labour until 12.00 noon on 15 May 2024.

The 70 percent apparent wage hike comes after a 60 percent inflation of the currency (from 184 to 296 to the dollar) against the US dollar.

Tea prices in rupee terms have started to come down as the rupee strengthened and the US also tightened policy, pulling back commodity prices. (Colombo/May02/2024)

Wickremesinghe announced the wage hike when he addressed the May Day rally of the Ceylon Workers’ Congress (CWC) held in the central Sri Lankan town of Kotagala, an area predominantly plantation workers live.

“It was the up country people who suffered the most during the hard times. But they were the people who also worked hard to produce tea and ensured foreign exchange,” Wickremesinghe told the May Day rally.

“I don’t think nobody wants back to 2022. We have suffered a lot. Now we have stabilize somewhat. The rupee has strengthened,” he said referring to the 2022 economic crisis that led to a political crisis and ousting of former president Gotabaya Rajapaksa and his government.

“Yesterday, Manusha Nanayakkara (Labour Minister) has raised the daily wage to 1,700 rupees.”

The upcountry people and their relatives have a strong vote base of around 1 million spread throughout the country. The main political party in the upcountry CWC had already pledged its support to Wickremesinghe if he contests in the presidential election.

Wickremesinghe has yet to declare his candidacy for the presidency, but his United National Party (UNP) sources have said he is likely to contest under an independent coalition.

The presidential election will be held between September 18 and October 18.

Currently, plantation workers receive Rs. 1000 basic wage plus EPF/ETF and after plucking the set target of 20 kg, they are paid an additional Rs. 40 a kilo.

It is not immediately clear how the local plantation firms could afford the wage hike given the island nation is one of the countries with the highest cost of production compared to India and Kenya due to lower labour productivity.

Sri Lanka’s plantation companies in March proposed a 33 percent increase in take-home wages based on a productivity model or a 22 percent increase in wages on the attendance-based model. The total of that model would have been around 1,500 rupees, plantation sources said.

Based on President Wickremesinghe’s request Regional Plantation Companies (RPCs) and the Employers Federation of Ceylon (EFC) have submitted the proposal to Labour Minister Manusha Nanayakkara on a proposed wage hike for the sector.

The minimum wage was increased to 1,000 rupees in October 2021, but plantation workers have complained that it was insufficient due to the high cost of living after Sri Lanka’s unprecedented economic crisis. (Colombo/May 1/2024)

“This loan facility aims at supporting the Company’s Agriculture Portfolio, especially the agricultural leasing product enabling farmers to access agricultural machinery such as tractors and harvesters at affordable rates and become owners via leasing scheme,” the company said in a stock exchange filing.

The company was responding to a story published in the Daily Mirror.

“As considered by EDFI, this investment rolls out the principle of the Global Gateway in Sri Lanka, which is Europe’s Strategy to better connect the world and to create the proper conditions for attractive investment opportunities.”

SDF shares were trading up at 14.00 on Monday. (Colombo/Apr29/2024)

The highest price was 72,200 rupees for 1,000 nuts down from 72,100 rupees a week ago, while the lowest remained at 60,000.

A total of 811,217 coconuts were offered at the auction and only 360,531 nuts were sold as prices fell for the third week in a row.

Coconut prices are down 16 percent from the last auction in December 2023.

Wholesale prices were 95 to 100 rupees for large nuts and 85 to 90 rupees per small nut in the week to April 4, 2024.

Farmgate prices in Kurunegala was 72,000- 75,000 per 1000 nuts.

Coconut oil was 570,000 – 610,000 rupees per metric ton.

Coconut shells were 32,000 – 34,000 rupees per metric ton. (Colombo/Apr29/2024)

Lanka Coffee Association, made up of companies involved in the industry, with Australia-funded Market Development Facility is holding the Sri Lanka Coffee Festival in Galle in June.

Coffee Consumption

Coffee sales in café, are picking up partly helped by the tourist industry.

“A lot of tourists especially in Colombo and down South appreciate a good cup of Sri Lankan coffee and that makes up a lot of the café’s demand,” Country Director for the Market Development Facility, Maryam Piracha, says.

Sri Lanka has approximately 2000 coffee bars.

As part of efforts to lift the industry, competitions will be held around the country to recognize the best baristas, or the people who serve customers in coffee bars.

“We will judge them on flavor and technique and less emphasis will be given to presentation,” Lanka
Coffee Association Chairman, Kushan Samararathne said.

The Barista competitions will be held at Jetwing Hotels in Dambulla, Galle and Colombo. The main Coffee Festival will be held in Galle on 7 June.

The Jetwing group is supporting Sri Lanka coffee as part of efforts to promote locally sourced products. In the group hotels local fruits and vegetables are used.

“We use locally sourced coffee in our hotels,” says Dmitry Cooray, Managing Director of Jetwing Hotels.

Coffee is believed to have been introduced to Sri Lanka around 1540 by Arabic travellers but was first planted on a commercial scale during Dutch rule.

Sri Lanka was a top producer of coffee by around 1860, exporting around 50,000 to 70,000 tonnes of beans cultivated in over 270,000 acres of land, when coffee leaf rust (Hemileira vastatrix).

Sri Lanka is now estimated to produce around 3,000 metric tonnes of coffee beans grown in around 20,000 acres of land, according to the Department of Export Agriculture.

Price Shock

While demand is picking up, supply of good quality Sri Lanka coffee is not keeping pace.

Industry officials say bad weather hit production recently leading to a spike in green bean prices.

“When we look at Sri Lankan coffee, the biggest barrier we face today is the lack of volume.”

Samararathne, who is also general manager of the Colombo Coffee Company said.

“That is because even prior to that we have a gap between the demand and supply but now that gap has been widened – the volume has dropped almost from 50 percent compared to previous one (harvesting season)

“And with that developing the quality becomes the problem. Because the moment there is a gap between the demand and the supply, everyone is trying to see how quickly they can sell their product.

“And there is a huge demand and anyone is willing to buy anything.”

Analysts say higher prices may incentivize farmers to grow more coffee, which should expand supply in the future.

At the Jetwing Uva Ben Head Villa, located in the middle of an old tea estate, coffee is being intercropped.

Cooray says they plan to use modern agricultural practices and facilities to improve the quality of Sri Lanka coffee. (Colombo/Apr28/2024)

The Uma Oya (River) project will irrigate 4,500 acres of new agricultural land, generate 290 Gigawatt hours of electricity and also provide drinking water, a government statement said.

Sri Lanka had awarded an engineering, procurement, construction (EPC) to Iran’s FARAB engineering group to design and construct the 514 million dollar multipurpose project in 2010.

The project was funded until 2013 with a million US dollar credit from the Export Development Bank of Iran but international sanctions prevented the country from continuing financing, a government statement said.

The project continued with funding from Sri Lanka. Sri Lanka had since repaid 19.3 million dollars of the credit and 35.2 million remains outstanding.

The Uma Oya project has a 120MW of hydro power generators, which can generate 290 Giga Watt hours of energy.

Each year 145 million cubic metres of water will be taken from Uma Oya to the Kirindi Oya river valley after generating electricity in an underground power station.

It will irrigate 1,500 hectares of existing agricultural and 4,500 hectares of new land in the Moneragala district, where crops can be cultivated in both the Maha and Yala seasons.

About 39 million cubic meters of water will be used for drinking and industrial purposes.

Two reservoirs built at Dyraaba and Puhulpola in Uma Oya basin is connected by a 3.98 kilometre conveyance tunnel and water is taken through a 15.2 kilomtre headrace tunnel to an underground power station. A tailrace tunnel takes water from the power station to the Kirindi Oya basin.

The project was originally expected to be completed in 2015, but due to financing delays and later water leaking into the headrace tunnel and the Covid pandemic had delayed it. The project completion date was extended to March 31, 2024 and defect liability date to March 31, 2025.

(Colombo/April23/2024 – CORRECTED Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm.)