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!

Misconceptions about Rubber Harvesting

Harvesting rubber is a tricky business. You can never do realistic estimates going by average daily yeild by acre (0.40 hectare). That is one mistake we did when we bought the land. There are so many factors affecting on the daily yeild; the age of the plantation, size of the tree trunks, fertility of land, way of tapping and period of tapping. We had no idea that rubber trees need to be tapped continuously to train the trees to produce more latex.

During the period of the land transaction, our plantation was not tapped over nearly three months. When we started tapping in early last May, it was a nightmare. The trees refused to produced latex. It took nearly 10 days of tapping to bring the plantation to a level of decent yield. At the end of May and the first week of June 2011, we had monsoon rains. When we restarted tapping after 14 days, we had to start the production from square one; the yield followed the similar pattern. But this time come back period is shorter than the previous time; it was 6 days of continuous tapping.

When we tap the plantation more and more, I hope that we will be getting a decent harvest close to an average daily yield of 8 kg per acre. Conservatively we are expecting a daily yield of 5 kgs per acre. Given the size of some trees and length of the period with no fertilizing, we have to expect a modest yield from our plantation.

Our trees had been tapped so badly over last five years. The trees were damaged and neglected. The trees were not fertilized nearly 7 years. What can we expect from  such a plantation at our early stage of tapping? Isn't it give and take business? We need to take care of our plantation, before we expect something in return.

Smallholders in Plantation Management

Where more than 70 percent of total world rubber production comes from Southeast Asia which includes countries such as Thailand, Indonesia, Malaysia and Sri Lanka; more than twenty million smallholders grow rubber. The farmers in Sri Lanka who hold lands extending from 0.5 to 20 ha (1 to 50 acres) belong to the smallholders. The rubber small holders in Sri Lanka have been contributing significantly to the national production. Their contribution in 2008 had been 71.7 percent of the national production, while the contribution of Regional Plantation Companies (RPC) was 26 percent.

While the large scale plantations had undergone significant structural changes in mid 1990s, due to underperformance as state-owned entities; the smallholding sector thrived in Sri Lanka particularly in tea plantations contributing substantially to the economy by achieving close to international standards. However, it was found that the progress of rubber smallholder development was less than the achievements of large scale rubber plantation development. The productivity of rubber smallholdings of Sri Lanka is in the region of 1,290 kg/ha where as in Malaysia it is around, 1,330 to 1,440 and in Indonesia it is in the range of 1,250 to 1,500 kg/ha.

The majority of rubber smallholders are still so poor in the regions, in spite of the fact that the world rubber prices are significantly high. The situation of smallholders is same in Sri Lanka. Farmers still use low agricultural technologies such as low yielding clones, indigenous practices and lack of management strategies in their production systems. They are inefficient in decision-making processes, have very little initiative in innovations, and a low level of education.

The rubber smallholders in Sri Lanka face the following problems;

·         Lack of proper institutional and policy frameworks,

·         Lack of directions and education about the availability of resources and information,

·         Nature of peasant type of production,

·         Lack of information and knowledge about high yielding clones and improved management practices and production systems,

·         Lack of soil fertility improvements

·         Lack of market orientation

·         Reliance on traditional technology, family labour and management.

The smallholders need to pay more attention to improve soil fertility, farming system and management and soil fertility for specific crops. They are required to maintain quality of product that affects the farm income. They need to apply manure and grow cover crops to improve soil fertility. In order to increase the yield, the smallholders need to use high-yielding clones. As smallholders normally use any clone that is readily available to them at the time of planting, it needs to make available high yielding clones that are appropriate for specific areas, and improve their knowledge of clone selection.

 

Plantations in Sri Lanka

Agro-climatic Zones of Sri Lanka

Tea, rubber and coconut are the main cash crops in Sri Lanka.  Rubber is grown in low country wet and intermediate zones, while tea is grown in mid country and up country wet zones predominantly at higher elevations. Coconut is grown in low country wet and intermediate zones. Both plantation companies and small holders are involved in producing cash crops in the country. The total land extent utilized for the plantation sector is about 750,000 hectares. The direct and indirect employment generated through the sector is about 1.5 million. It also plays a significant role in the national economy in terms of its contribution to the Gross Domestic Product (GDP). In 2007, the GDP contribution by plantation sector is 2.7%.

Most of the plantations in Sri Lanka particularly tea and rubber were originally started by the British during the colonial period in 17th century. Tea plantations were created by the British colonial state in 1860s. Land was acquired for almost nothing, when the local people showed indifference to work in the plantations; cheap slave-type labour was brought from South India. They were run efficiently and profitably by the British owned plantation companies and were significant contributors to the economy and to the government by way of taxes.

After independence in 1948, under the socialist Government manifesto introduced in 1970, the foreign owned plantations were nationalised under the Land Reform Low No.39 of 1975. During nearly two decades of state ownership and management, the performance of the plantations was disappointing.The productivity of the plantations dropped drastically due to the lack of skills in management, enprenurialship and motivation while small holdings and privately owned estates in other competitive countries recorded better performance. The crisis of the plantation sector deepened due toThe cumulative loss of the Janatha Estate Development Board (JEDB) and Sri Lanka State Plantation Corporation (SLSPC) from 1980 to 1991 was Rs.2,283 million by running the estates at a loss. The two corporations owed the Bank of Ceylon and the People's Bank a sum of over Rs. 3,500 million. There was no way the JEDB and the SLSPC could repay these loans and the Treasury had to find the money to settle these huge debts to the banks. The bulk of the money comes from various indirect taxes in the prices of essential goods such as rice, flour, and sugar.  The stated wanted to eliminate their dependence on Treasury subsidies to make more money available for social welfare measures and infrastructure development work and to reduce the burdens that were being heaped on the poor people as high cost of living.

In early 1990's, the government took a policy decision to handover the management of the plantations to the private sector. In June 1992, with pressure of the World Bank and Asian Development Bank, and in recognition of the poor performance of plantations under state (national) ownership, the government initiated a partial privatisation of the sector. Management contracts were issued to commercial interests, while national ownership of land was retained. In 1995, following a change in government, full privatisation of state plantations was commenced. This was the largest agricultural privatization in the world.