SUSTAINABILITEA THROUGH GOOD AGRICULTURAL

PRACTICES

SMALLHOLDER – FACTORY PARTNERSHIP

SRI LANKAN EXPERIENCEBy

Dr Sarath Samaraweera

Smallholdings in Sri Lanka

• Smallholding in relation to Tea means an area of land which is less than 50 Acres ( Approximately 20 ha) in extent on which tea plants are grown

Extent of Smallholder land = 132,329 ha

= 60% of Total land under Tea

Number of Smallholders = 397,223

Trends in Tea Production

• Production gains have been in the Low Elevations

• There was a substantial growth during 1980 to 1995

Tea Production

-

50

100

150

200

250

300

350

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Year

Mn kg

/yr

Low Growns

Sri Lanka

Trends in Tea Prices

Tea Prices

-

50

100

150

200

250

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Year

Rs/kg

Low Growns

Sri Lanka

• Low Elevation Teas fetched prices higher than the country average since 1974

Trends in Tea Production - Growing Sector-wise

Tea Production Mn kg GL/yr, Growing Sector-wise

20 34 30300

480 520

500

747

1,200

-

200400

600800

1,000

1,2001,400

1,6001,800

2,000

1970 1998 2005

Year

Private [Smallholdings +Estates]

PlantationCompanies

State Sector

• Production by Smallholder growers has shown steady increase.

• These are the results of accelerated growing in late 70s or 80s.

Trends in Tea Production – Processing Sector-wise

Tea Production kg Mn/yr, Processing Sector-wise

20 19 15

140 137 120

70124 170

-

50

100

150

200

250

300

350

1970 1998 2005

Private Factories

PlantationCompanyFactories

State Sector Factories

• Private Factories process 65% of the national tea production.

• 90% of that is supplied by Smallholder Growers

Factors that contributed to the growth of the Smallholder – Bought Leaf Factory Sector

• Availability of fertile lands for new planting• Attractive prices which improved

profitability of both growing and processing sectors

• State subsidies for Field and Factory development

• Construction of larger, better equipped processing factories

Factors that relate to sustainability of Smallholder – Bought Leaf Factory Sector

(1) Age of Tea• Over 10% of Smallholder Tea lands are > 25 yrs old. • Over 42% of lands are in the 10 –25 year age group.

These lands will need intensive management to sustain viability.

• 40,695 ha [39%] of VP tea lands are < 10yrs age. Well cultivated, these lands will supply two thirds of smallholder production.

• Soil conservation and maintenance of complete cover of tea by intensive and regular infilling will ensure higher yields and improved profitability from these lands

Factors that relate to sustainability of Smallholder – Bought Leaf Factory Sector(2) Size of Smallholdings

• At an average Yield of 2,000 kg/ha/yr & Rs 16 / kg net profit – Net profit from a 0.5 ha unit is Rs 6,200 per month.

• Such a small grower is unlikely to have a surplus to plough back to the field.

• This category contributes about 90 Million kg/yr.

• Intense consolidation of the field and proper agricultural practices are vital for further improvement of yield, profitability and sustenance of small smallholder.

Holding Size

% Number of holdings

% extent

<0.5 ha 88.4% 51.4%

0.5 – 1.0 ha

8.5% 17.2%

Total 100% 100%

Factors that relate to sustainability of Smallholder – Bought Leaf Factory Sector(3) Agriculture as a business

• Education facilities in rural areas have improved considerably over the decades.

• Only 2.5% of the growers are < 25 years of age and over 30% are > 55 years of age.

• Tea growing and processing techniques will have to change to make it more attractive to younger generation

Introduction of basic science of Tea to school curriculum Mechanization Convince the younger generation that with correct

agricultural practices, tea growing is profitable, more profitable than any other crop and probably lot more rewarding than most white collar jobs.

Factors that relate to sustainability of Smallholder – Bought Leaf Factory Sector

(4) Competition between factories• In most Tea Districts, available processing capacity is

much higher than the availability of leaf.[In some, as much as 60%]

• Competition leads to, Innovation and strategies to improve process, in particular

product quality and lowering of cost. Less improved factories will lag behind and face under

utilization of assets• Growers and factories must be encouraged to enter into

“Voluntary “ partnerships. This will create trust, facilitate closer interaction, facilitate knowledge transfer, facilitate optimum utilization of assets, leads to stability and effective management of cost

Sustainability through focused development of processing factories

• Fact - Sri Lanka can sustain only at “high Quality” level where prices would be adequate to support a high cost environment.

• Factory development must focus on external competition, demand for hygienically produced tea and the need for improved efficiency in utilization of man power and energy.

• Expectation – Market place must recognize not only the “Quality of Product” but also the “Quality of Process’. Otherwise investments for hygienic production will be slow and frustrating.

Sustainability through focused development of land base

• High prices realized for tea will encourage development of land to optimum level.

• Introduction of high yielding cultivars less susceptible to drought and pest and diseases

• Establishment of shade at optimum level thereby smallholder becoming the supplier of raw material as well as an energy source.

• Cultivation of hitherto underutilized land to energy plantations

Summary

• If Sri Lanka were to maintain 200 Million kg production from the Smallholder – Bought Leaf factory combination,

Infilling must be intensified Replanting must be accelerated. Quality of replanting must be ensured. Younger generation must be attracted. Agricultural practices, particularly soil conservation and

shade management must be improved. Grower and Factories must be encouraged to partnerships.

References

• Census of Tea Smallholdings in Sri Lanka 2005. Department of Census and Statistics

• Statistical Bulletins [1998 and 2006] – Sri Lanka Tea Board

Thank You