Abstract
"Ceylon Tea", one of the historic beverages, has played a prominent role in the economy in Sri Lanka. Despite this key economic role, the current performance of the tea industry shows a significant stagnant growth. This downward trend is directly linked to the high cost of production, low yield and labor unrest prevailing in the tea plantations. This situation has further worsened by over-supply from the new entries into the international tea trade, especially countries from East Africa. The purpose of this study is to clarify the characteristics of plantation land reform (1972-75) and privatization of the plantation management companies (1992) in Sri Lanka. In order to fulfill the above objectives data was collected by a field survey on Maturata plantation which represents the typical tea plantation in Sri Lanka. A plantation is generally defined as ex-large extended land with mono-crops mainly based on large number of rural workers, semi-processed product which caused to a dual economic structure in the plantation countries. The development of plantation agriculture in Sri Lanka was divided into four periods; 1) Under British Colonial system 2) Post-Independence period 3) Post-Land Reform and 4) Post privatization. Under the British, the management of tea plantation was done on the foreign based system but it was changed after the Land Reform Laws in the early 70s. These laws led to nationalizing tea lands which exceeded the margin of 10 ha. The Land Reform Amendment Law in 1975 vested 16,927 ha. of foreign owned tea plantations. These law were directly divised to generate employment for rural people and to increase the productivity of plantations. None of the results were as successful as expected in the tea plantations as chronic problems developed such as low productivity and high costs of production. Due to the unprofitableness of the state management, the tea plantation came into private hands once again in 1992. It made provisions that 443 tea estates become 22 regional plantations companies while ownership remained under the state control. Out of the 22 RPCs, 7 companies are still operated under the supervision of the foreign technical collaborators, while 15 RPCs are managed by Sri Lankan companies. By analyzing the Maturata Plantation, the participation of foreign share holders in plantation management was observed. Benefiting from private management, the RPCs show a significant growth in production, processing and marketing which has enabled the tea industry to face a more competitive environment. However, small tea holders which entered the tea industry after the land reform in 1972 remain in a higher position than large plantations. The future development of the tea industry mainly lays on the proper methods on increasing yield, processing branded teas and the developing small holders sectors.
