Thursday, July 18, 2013

Problems faced by the rubber smallholders in Sri Lanka: My experience

I wanted to write here a long time ago, but kept on postponing as there was so much to write. But my embarrassment to accept some of the hard facts also prevented me in writing. When I saw this Estate of mine, I fell in love with the land. I wanted it to be remained as a rubber plantation and had plans to improve it further. But the existing rubber plantation failed to give me a reasonable return for my investment. After romantically and emotionally embracing this land with all my heart, I hate to admit that the investment is a failure and caused massive hardships in my life. 
The rubber plantation in the land did not give a reasonable production to be economically viable for tapping. The production cost of crape rubber was very high, leaving only one third of the income as a profit. This did not cover even the interest of the loan that I took from the bank to buy the land. I believed the rubber variety that has been planted in the Estate was a low yielding variety. The years of negligence at the early stage of plantations did not boost the healthy growth of the trees, and the trees became barren with very low yield. The Estate is on a rocky mountain with a thin layer of soil on the surface. This has further reduced the chances of root system of the trees to grow deeper to grow healthily. The constant rains in the area further reduced the monthly income. The average tapping days were reduced to 15 days in a month for last two years due to rain. 

Although the government of Sri Lanka gives rubber plants to replant and fertilizer, it needs at least another 15,000 to 25,000 $ to uproot the old rubber trees in my 12 acre land, and to prepare the land for replanting. It needs to wait nearly seven years until rubber plantation grows to a harvesting stage. With the constant rains in the area and high labour cost, I don't see replanting is a viable option for this land. It is very difficult for an owner to maintain any plantation living far away from the land. The owner should be there in the land all the time micro managing every aspect without relying on workers. 

With all the difficulties of managing the land, I tried my level best to sell the land over a period of one year. Lots of people visited the land, but the access road was the hindrance to sell it. The road is narrow and in a very poor condition. It is hardly motorable. The Estate has a huge rock over an extent of more than 8 acres. A friend of mine who tried very hard to sell the land finally suggested to form a company to mine the rock and use the remaining land for horticulture for landscaping. He was the only person whom I could trust to start such a venture.

For last two months, we had several meetings to agree with the terms and conditions. We prepared the necessary documents including MOU and lease agreement and made arrangements to register our company; Deranie Global Enterprises (pvt) Ltd. We sent papers for the company registration this week. We had discussions with the local authority people to get the road improved at our cost. Luckily we have a steady supply source from the nearby Crusher Plant which is 4 km away from our land to supply 50 cubes on daily basis.  We are trying to get some landscaping contracts too for us to provide plants.

My business partner and I are determined  to make it happen. I know the first three months are the hardest time of our business. There will be lots of ups and downs on our way, including social problems from the villagers. But we are getting there and we will make it happen!

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