Echoes of A Plantation Economy

By Maxwell Fernando
     
 
Nothing succeeds like success, and this timeworn epigram has been marvellously illustrated again and again in the history of planting in Sri Lanka. Some of our planters, with no special superiority of judgement prudence or ability have been carried on the full tide of prosperity to competence and fortune, while his neighbours, through no fault of his own has failed to enjoy this rare good luck. The stories of plantation enterprise in the country are full of dejection’s and lamentations on the one hand, and fun and frolic on the other.

Planters, who opened up land together and planted them up with the same care and judgement, have invariably ended up with mixed fortunes. The first being agnostic of the future, sold his property prematurely at moderate profit was afterwards called a fool. The second who held on to his plantation without selling until the periodical inflation and the boom period set in, he then acquired fame and fortune. For the third, which held on to his land, found himself ruined in reputation and pocket when the depression set in.

This was the sense of confusion that prevailed in Sri Lanka in the early days of the planting industry, when speculating and not cultivation reigned supreme.

The best of coffee plantations during a particular season and situated in the best planting areas were condemned the following season as never likely to do anything for the owner. In a like manner, run-down properties were marked up to the skies.

The dark days of depression, wet seasons, leaf disease, and caterpillar had been responsible for sorrowful changes. Estates sold not many years previously for prices than deemed well within their value, and on which cultivation had been kept up and extended, with leaf disease fought and grub repelled, were estimated at one-fourth the previous selling price.

     
  Speculation thrived
     
 
The unwillingness on the part of the British to try out new crops could be explained by drawing a parallel between than Ceylon as a temperate country and Ceylon as a British Colony. The early pioneers, who ventured out to Ceylon, did not arrive in the country as settlers, but came in as speculators, and their stay in the country was only short-lived.

It is said that only about 10% of the whole body of planters who made fortunes in coffee ever decided to stay in the country. The British capitalist who invested in the country realised their investment and the profits within a short period of time. The accumulated profits made during periods of prosperity enabled them to build up reserves from local wealth that they remitted abroad. The country was completely lacking in reserve funds, and in the class of Europeans, enriched by former times of prosperity, to brace the industry when the period of adversity and depression arrived.

During the best coffee days, the country was referred to as the incubator to which British capitalists sent their eggs to be hatched, and on receiving an abundant brood, left nothing but the shells for the locals. Had the profits from the abundant coffee crops in their favourable days been retained, the country would have found the necessary wealth to triumph over the difficulties, when lean periods came.

Plantations would have been more diversified, more industries would have sprung up, a large number of wealthy citizens of European origin would have been living in prosperity, There would have been better distribution of wealth among the citizens, and a better balanced society would have emerged, where the foreigners and the locals would have lived in harmony.

The year 1876 turned out to be a decisive year for the country’s economy in general, and to the plantation enterprise in particular. King Coffee buried, and tea identified as the new crop to take its place. Yet another outrageous violation of the principal of having all the eggs in one basket.
     
  Tea takes over
     
 
“The history of Sri Lankan tea industry has one element which marks it off every other producing country, and still has influence today,” so says Denys Forrest in his book the “World Tea Trade.”

Unlike other producer countries, tea cultivation was not originally planned out as such. They were in fact planted on the graves of dead coffee trees, which in the early 1830’s provided all the investment opportunities for British capital. Magnificent crown lands were inadvertently cleared, mostly by the public servants, and the clergy on an enormous scale for the cultivation of coffee. Unlike tea, it was very much an easy affair, as coffee was an annual crop, and there were long periods of layoff operations.

Coffee stores were constructed in cramp sights close to streams, in order to take advantage of waterpower. After the coffee crash, and with the advent of tea, the entire scenario changed. Labour had to be obtained on a more regular basis, the coffee stores that were initially used for tea manufacture, had to be modified to make them more spacious and airy. They had no option but to build upwards, and this has remained a special characteristic of a Sri Lankan tea factory.

     
  Ceylon Teas encounter the first obstacle on Quality Front
     
 
As in the case of all new ventures, Ceylon tea too had its share of problems to encounter, before it could find favour in international markets. Ceylon, in a way, was fortunate as the progress of the industry was closely monitored, both at home, and at Mincing Lane in London.

British interests, that nurtured the tea industry in the country, could not afford to take evasive action after having lost a fortune in coffee. The British were not inclined to throw good money after the bad.

The initial shortcoming, as reported in London about “Ceylon Tea,” was its inability to remain fresh. The original tea manufactured in the country had a tendency to “go off” after some time, and this was attributed to lack of skilful attention being given to detail, and under-utilisation of machinery.

Opinions were sought from experienced tea tasters in London, and they were unanimous in their verdict that the only objectionable character Ceylon teas had was its peculiar herbal flavour, which was not identified at the time of manufacture. While all spoke highly of its purity and strength, they all seemed to be of the opinion that it was not nearly so well cured and prepared as Chinese tea.

Mr Exalt, the tea analyst at the British Customs, was of the view that in the curing of Ceylon tea, the process of fermentation had not been sufficiently and properly carried out. The tealeaves, he felt, should have been exhausted further, and the essential oils, which were responsible for the unpleasant taste in the tea, had not been sufficiently destroyed and removed. The tea examiner at St Catherine dock warehouses held very much the same view but attributed the objectionable flavour partly to an assumed difference between the variety of tea grown in Ceylon, and to a difference in climate and soil.

There were many opinions expressed on this matter and, after many deliberations, an important factor emerged. Ceylon teas in London, despite these shortcomings, were found to realise much higher prices than Chinese tea. They were hardly known under their country of origin and appear to have been used almost entirely for blending with Chinese tea to boost its strength.

It was only at this stage that an attempt was made to market Ceylon teas under their own name. The negative effects of the “herby” flavour in Ceylon teas were amply compensated by its positive qualities of strength and purity. These observations, however, were not taken lightly by the tea planter, and they began to work out matter for themselves by making careful experiments in fermenting, noting the time occupied in the process, and the temperature at which it was carried out. Slight variances to fermenting time made all the difference, and Ceylon teas once again became the favourite to the British consumer, as against the Chinese varieties.

Recalling the process through which the curing of coffee was perfected, “in the course of score of years, by the combined application of planters and engineers, to a pitch as near perfection as is possible,” it was felt that, in a much shorter time, the same experience will be realised in the case of the sister staple and as far as preparation was concerned, Ceylon tea would end up at the top of market. The planter and the engineer all worked in close partnership thereafter to perfect the art of tea manufacture, and the immediate results were most encouraging.

In the minds of the British public, the name of Ceylon has been chiefly associated with the production of coffee and spices. Ceylon coffee and spices were of superior quality and remained as the most important articles of trade. It was finally Ceylon tea that rapidly became the staple product, and the one for which the island soon became most celebrated.

Tea soon became the backbone of the country’s economy. The greatest blow to the industry came about during 1905 when the British Government increased the duty to two pence per pound. The British planters for the first time in the history of the plantation industry were up in arms. Edgar Turner the then Chairman of the Planters Association called it a “crushing blow." In this instance, perhaps for the first time, their elegance to the home government was stuttered. “It seems inconceivable to me that the United Kingdom, with its boasted free trade, should impose a duty of over 100% on the value of tea, which is an absolute necessity for both the rich and the poor. Which has for over 50 years practically, I may say, all come from foreign countries, and which now practically comes from all British colonies.” Turned said.”

This spontaneous reaction of the planters was followed up in London, and one of country’s former Governors Sir Joseph West representing the interests of both the local and the Indian planters said that it would amount to “moral cowardice” on his part, if he did not take up the cause of the Ceylon and the Indian tea industry, who depended on this commodity for their prosperity. Duty rates were revised subsequently.

By the turn of the century, the area under tea had increased to 387,000 acres with a high concentration of about 62 % of the total cultivated in the Central province. Sabaragamuwa and the Uva districts followed thereafter, and their tea coverage expanded to 57,000 and 54,000 respectively.

The plantation enterprise in Sri Lanka, whether it is coffee, cinchona, or tea, they were all battened down in the Central Province, and remained the nucleus of the plantation undertakings. They all originated in Hewaheta, Nilambe and Pussellawa and moved into the trackless forests that clothed the vast mountain region that dominated the South Central part of the island, transforming the country all the way. They moved into the valleys of Dumbura, Ambegamuwa and Kotmale. They streamed into the mountain passes leading to the plains, surrounding Pidurutalagala, the highest point in the island, and then spilled over into the rolling grasslands of Uva.

Promotion of tea in the Southern Province was pioneered essentially by the enterprising Ceylonese, and by the turn of the century, their holdings had moved up to 15,000 acres. By 1887 tea had become the principle export commodity of the country. According to the Chamber records, the average price paid for tea sold at the public auctions in the first half of 1901 was 31.28 cents per pound.

A circular published by the Colombo Brokers Association on 19th January 1905, indicated that the total exports of tea from Ceylon for 1904 were 158,183,330 pounds when compared with 151,011,454 pounds in 1903. New markets were developing in the British dominions the United States and elsewhere.

According to a report published by the Planters Association, a breakdown of tea exports for 1903 was as followers.

United kingdom
96,000,000 pounds
Australia
18,907,795 pounds
Russia
12,660,856 pounds
America
6,328,450 pounds
Europe
1,531,953 pounds
Africa
860,161 pounds
Far East
4,498,644 pounds

With new outlets now assured, cultivation and manufacture of the product were improved and soon tea planting became more scientific, more efficient and more profitable. Progress was fast, and in 1929 the extant under tea had exceeded 457,000 acres, and exports increased to 251,588,012 pounds, deriving an income of Pounds Sterling 15,389,556.

This period of prosperity was however short-lived, and within a brief period of just two years, the tea industry was faced with one of the greatest exigencies in its history. There was overproduction of tea in the early 1930’s and the inevitable slump followed. Production and exports had to be restricted, and the International Tea Restriction Scheme was introduced early in 1933 limiting exports and controlling extension of tea areas in Ceylon, India and Java. This restrictive scheme was originally intended for a period of five years but was extended for better results until 31st March 1955.

After the outbreak of the 1939-45 war, the major part of the tea crop was sold under contract to the British Government at a price based on individual estates’ average price from 1936 to 1938 adjusted to a net FOB price plus 1, 1/4 d to cover additional war costs. The last auction held during the First World War was on the 14th September 1942, and was not resumed until 20th January 1947.

The Colombo Brokers during this period were called upon to play an important role. They became employers of the United Kingdom Ministry of Food, and their services were utilised for the inspection and valuation of all teas sold in Colombo. They were remunerated at a rate of 72 ½ cents per package based on the volume of business carried prior to the commencement of this scheme.

It is recorded that N. D. Drury’s father who was made a partner of Forbes and Walker on 1st January 1931 had on behalf of the Colombo Brokers Association visited London to negotiate favourable brokerage payments for the services rendered. Forbes and Walker acted as secretaries for the Brokers Tasting Panels and maintained all records connected with this operation.
     
  Search for new markets launched
     
 
Besides all the claims made by the producers to bring their produce into notice in world markets, it was only the supreme quality of Ceylon teas that helped to maintain such a position. Was it overproduction that was casting its dark shadow as depressed prices in London? This question was taken up more seriously and increasing efforts was directed to the opening up of new markets where Chinese teas had reigned supreme.

In the United States, Ceylon teas not only had to grapple with the prejudices of tea drinkers borne of customs and acquired taste, but with a stagnant and with a decadent demand for tea, as built up against with the increasing taste for alcoholic drink. Consumption of tea in the United States had in fact decreased from 1.54 pounds per head in 1881 to a still more miserable 1.34 level in 1890.

Consumption of tea in the U.S. only involved a sum of Dollars 30,000,000 in 1890, which was less than a Dollar per head, as against Dollars 122,500,000, for coffee, which was over Dollars two per head. It was astounding to note, that while the consumption of tea and coffee remained constant at a value of only Dollars 152,500,000, the value of alcoholic drinks had increased from Dollars 200,000,000, in 1886 to an startling total of Dollars 900,000,000, in 1890, which worked out to fourteen Dollars for every man, woman and child, in the States.

Promotion of tea in the States was no easy task. They could not at any stage divert from the fundamental principles of free, open and legitimate competition in all spheres of commercial activity. Those were the accepted norms of private enterprise, with the result the progress was slow. While looking for new markets, Ceylon planters were forced to make an in-depth study of the various forms of marketing systems that existed in other countries at that time and adept new strategies as they went along.

By the turn of the century, the subject of over supply of tea had blown over and the planters were fine-tuning their manufacturing techniques to ensure that the ultimate product was of a better quality. Over production was, to a great extent, reduced by fine plucking.
     
  How Ceylon teas entered Russia
     
 
Russia was one of the largest consumers of tea in the world next to Britain, but they were all Chinese. This rapid expansion in tea consumption in this region had been carefully observed by British interests in Sri Lanka. From about the latter part of the 19th century, their main alternate to Britain was Russia. Although the tea industry was in its infancy at that stage, a few enterprising planters visited this region to study their tea drinking habits that were to some extent alien to them.

Russia had always been a tea-drinking nation, and their inclination towards Chinese tea had been the strongest enemy of the British. Russia for many years had scoffed at innovation and firmly believed in the tea that came from China overland, as they maintained that tea transported by sea, lost much of its flavour and quality. So the tea merchants continued to obtain their requirements of tea by overland routes, which in itself was fascinating.

It was to break this fondness the Russians had for Chinese tea, that the local tea interests made their presence felt so early in their territory with the sole idea of converting them to drinking Ceylon tea. It is recorded that Mr G. H. D. Elphinstone, a Scotsman who had a keen interest in Ceylon tea plantations, undertook an extensive tour of Russia way back in 1886, at a time when the tea industry was just been established in the country, It was mainly to ascertain the potential available in Russia for the sale of this new product.

In a graphic letter written to his friends in Ceylon, his experiences in the ancient capitals of the White Czar’s vast domination had been well recorded What he said about the sufferings from intense cold would have caused its readers to appreciate the desire of the Muscovites to have continuously engaged themselves in the brewing of tea in their samovars to keep out the bitter cold. Not withstanding Being a Scotsman, Mr Elphinstone found the cold too much for him. He found that the tea served for the inhabitants of St Petersburg in their teashops had a special flavour that, to him, seemed artificially introduced. He however found the tea to be of high quality.

Despite all these obstacles, Mr Elphinstone was confident that the crusade spearheaded by him would be subsequently carried out by others. The battle against vested interests, customs, habits and taste, he felt would be severe, but he was confident, that this very same tea that conquered the markets in Britain and the United states, would triumph in Russia as well. Although it took a long time for his hopes to materialise, today the CIS is leading the list of our main buyers with a very comfortable lead over our second biggest buyer.

The overnight introduction of a free market economy during the early 1990’s was well accepted by the 280 million people, perhaps for its originality. The unconstrained reaction of the Russian people to this new economic order gave the impression among other things that a new market for teas has appeared, with the possibility of absorbing about 250 million kilos per year. Sri Lanka was able to improve her exports from 13 million kilos in 1994 to 56 million kilos in the year 2000. It was this buying power displayed at the local market place that was mainly responsible for sending tea priced to dizzy heights.