August, 2, 2017
Having travelled the plantations extensively with some of his kinsmen who were already in the tea industry as a school boy during the 1950s, Jayantissa Ratwatte was a frequent visitor to the island’s hill country tea plantations and so the transition from books to tea was quite an organic one. Continuing a tradition that started with the late Kenneth Ratwatte, a well-respected pioneer in the country’s nascent plantation sector, and today extends to his son, Kenneth Ratwatte who is also in the tea trade, Jayantissa commenced his preeminent career in 1961 as a trainee at Whittalls Estates & Agencies Ltd.; over the next four decades Jayantissa has stood at the forefront of the plantation industry and together with many other industry leaders, served a vital role steering and shaping it through turbulent periods of nationalization in 1974, and subsequent privatization in 1992.
“Even at the time that I was starting out in 1961, I well remember people claiming that the exit of British planters would spell doom for the industry and I would get a barrage of questions about whether I was sure that this was the industry that I wanted for myself, but I was always confident right from the beginning, and that was due to the fact that I could see the latent potential in a yet underutilized national resource.
Uncertainty around nationalization
“In my early days in the Industry, a good number of the British planters were already anxious with political trends in the country and many had moved to Kenya and other tea growing nations. There was a new generation of Sri Lankan planters who were joining the industry. I’m pleased to say that despite the naysayers, we were able to not only maintain, but also improve on agricultural, manufacturing and productivity standards.
“This was due in no small part to a much deeper understanding of local conditions which Sri Lankans had as compared with British Planters, and also as a result of their ability to more freely interact with plantation sector workers.”
He noted that where British planters were not very conversant in the vernacular, and were generally averse to interacting directly with estate employees, Sri Lankan planters were able to step and take a more open approach to dealing with employees and the wider estate community.
“The British left an industry that was organized in an extremely hierarchical manner, so it had to be a gradual process of easing out of that culture and into one in which we could start to win the confidence of our employees. That being said, it was no easy task to attempt to manage thousands of people, so naturally, we had to maintain certain standards and protocols.”
“This was a period of learning where the boundaries were at times tested and the workers may have felt that they we were less rigid than the British and they would try to take advantage of that. Overall we were able to manage these issues while also trying to drive meaningful improvements to quality of life in estate communities,” Ratwatte explained.
From the start of the 1970s, the debate around the nationalization of the holdings of privately owned companies had commenced in Sri Lanka, ramping up with the passing of the Land Reform Act in 1972 which prohibited individual ownership of land in excess of 50 acres.
In the years leading up to nationalization, Ratwatte rose through the ranks quickly reaching the position of Superintendent of Hellbodde Estate in the Pusselawa/Ramboda District, where he worked for almost a decade before being appointed to Board 2 of the Janatha Estates Development Board (JEDB). By 1987, Ratwatte was serving as Chairman of Board 1 of the JEDB, overseeing tea, rubber and coconut plantations across Hatton, Dickoya, and Avissawella.
“There were several initiatives at the outset of nationalization like the MTIP & TRAD Projects that provided substantial investments into capital development including replanting, factory development, diversification, housing, water, sanitation, and transport, and these resulted in considerable improvements all round.
“As time progressed, politics infiltrated the sector and crucial positions were filled by political appointees and this set an extremely negative precedent. The working culture shifted drastically from one of productivity to a notably lethargic performance. By the mid 1980s the industry turned out to be a drain on the Treasury which, had to spend Rs. 400 million per month simply to sustain it.”
In anticipation of privatization in 1992, Ratwatte was hired by John Keells Holdings Ltd in 1991, with the expectation that he would lead the formation of its plantation company.
“After the Management Company was set up and our first crop of senior executives appointed – all of whom were renowned planters in their own right – our first challenge was to set about changing the mindset of the employees and resultant stagnation that had permeated the entire industry,” Ratwatte explained.
In the first decade post privatization, most RPCs performed reasonably well as both markets and climatic conditions remained fair, despite regular wage increases and consequential ‘gratuity top up’, payment of lease rentals and other expenses.
Since then the industry has been beset with extremes in weather, volatile markets, high costs, low productivity an aging tea stock, unreasonable wage increases.
Vision for the future
“This is an industry that is tailor made for resourceful investors who have the right influence in world markets. It is unquestionable that it must be sustained and that it does have the potential to be a viable business. Today, I believe the industry and the Government are at a crossroads beyond which significant investments will need to be made to ensure the long-term survival and prosperity of Sri Lankan tea.”
In particular, Ratwatte criticized the lack of engagement from the Tea Research Institute, noting that moving forward, steps had to be taken to reinvigorate the organization so that it could start making vital contributions in replanting, including the development of high yielding clones such as those which had been established in countries like Kenya, and introduction of new technology in tea processing.
“Harvesting techniques must be updated. Gone are the days where we can continue to have a 100% handpicked tea. That is simply too expensive and we must look to examples of mechanized harvesting.”
Similarly, he stated that factory processes would also have to be updated while estate workers would also have to be further incentivized to remain and work in the plantations, ideally by providing options to supplement their income – including dairy and vegetable farming and even tourism.
“Finally I believe that our industry itself will require significant restructuring. At present we have far too many layers between production and retail. This process must be simplified and this is only possible through partnerships with major tea players like Liptons and Unilever, May Tea, Starbucks, Finlays UK, and similarly large multinational brands.”
“They have to be allowed to enter the Sri Lankan Tea Industry ideally in association with those local companies that have been successful with RPCs, and other leaders in the trade. They need to be incentivized and given latitude to restructure and make what changes they deem fit to make the industry more profitable and sustainable. At that point, our production will be linked to guaranteed markets. Suffice to say such investors will require guarantees from the State for security of their investments. That is the only way that I can see in which we can achieve the levels of investment necessary to turn this industry around,” he asserted.
Ratwatte also expressed support for a change in the model of production at the estate level, either through the formation of legally binding “co-operative partnerships” of workers who are provided a right of ownership specifically over the crop, where land is retained with the state and RPCs through their manufacturing facilities.
Alternatively, he stated that a feasible revenue sharing model that did not enable any further dilution of the ownership of plantation land could also hold the potential to drastically improve the outlook of Sri Lanka’s tea sector.
The vital need for informed decision making
“Particularly over the recent past it has greatly saddened me to see the kinds of uniformed, misleading, and oftentimes illogical criticisms that are being levelled at the industry, particularly at the grower’s level.”
“What is required is a unified vision for how we must proceed. The changes I’m talking about and the investments required can only be achieved through bold and drastic restructuring that is firmly focused on sustainability and long-term profitability,” Ratwatte concluded.