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Who would have realised that a new chapter of such great consequence was going to open up for the tea industry when the clock struck twelve midnight on 31st December 1899. It ushered in a period of great importance, not only for the industry but also to the entire nation.
It has been said with a great deal of truth, that the British acquired this country not by deliberate intent, but by accident. They moved in fast with no exact knowledge of their final destination. They came in to fulfil their urge for adventure, to seek their fortunes and enlarge their possessions. In the process the British nevertheless were able to lay the foundation for a great empire of modern times in this island of Ceylon.
Ralph Fitch was the first European to land in Colombo on 5th March 1589. This laid the groundwork for many other European to stream into Ceylon 250 years later to establish the plantations in the primitive forests of the backwoods of Central Island. The British sailor, Robert Knox followed, but was kept a captive under King Raja Sinha 11 in Kandy from 1660 to 1679.
In the meantime the Portuguese who happened to be the first European settlers in the country appeared in Galle in 1505 and moved to Colombo in 1519. They were unsuccessful in moving to the central hills, and their influence was mainly confined to the Maritime Provinces.
The first Dutch ship arrived in Batticaloa on 31st May 1602 and after 54 years of war, intrigue and manipulations between the Portuguese the Dutch and the Kandyans, Colombo was ultimately taken over by them on 12th May 1656.
In 1796, Dutch holdings had to be abandoned when a British expedition from Madras threatened their supremacy in the island, and at last Ceylon became a Crown Colony in 1802. The most important economic event that followed during the British period was the opening of the island to European enterprise. The second important event was the acquisition of the Kandyan territory in 1815. With it, British took possession of the entire island.
Construction of the necessary infrastructure found essential for the promotion of an agriculture economy commenced thereafter. It was Sir Edward Barnes who laid the foundation for future development of the island by his prudence in constructing roads and bridges during the period 1824 to 1834. His first task was to construct the great highway into the hill-country.
Many commercial enterprises followed. In 1820, Mr. George Bird commenced coffee planting in Kandy, and in 1824 opened up his own plantation at Sinnapitiya near Gampola. This project, in a sense was the real beginning of what has since grown into the vast plantation industry of the present day.
Recorded in buried musty files are the land sales during the early days. It contains a story of individual enterprise, hardship, fortune and heartbreak that would fill many a volume. Within nine years, Crown lands totalling 294,526 acres were sold to Ceylonese and Europeans. These new settlers pushed their way initially into the valleys of Dumbura, Ambegamuwa, Kotmale and Pussellawa.
Some were genuine planters but most others were just futures traders, who were always found in a venture of this kind. All the undisturbed jungles surrounding Pidurutalagala, the highest point in the island was soon converted to fields of coffee. After having completed their task on the western highlands, they spilled over to the rolling grasslands of Uva.
Sir Emerson Tennant compared this period of land development in the country to the gold rushes in California and Australia. The main differences however were that “the enthusiasts in Ceylon instead of thronging to dig up, were fast burying their gold.”
This was a reference to the disaster that overtook Ceylon in 1845 due entirely to a financial crisis originating in England. Most panic-stricken landowners abandoned their properties; still others sold their holdings for a mere song. The government was called in to intervene. All development works were halted, and instructions from Colonial Office were “save and hoard revenue.”
Adversity has its uses, and with it, a new era dawned for the plantations. The immediate result of this temporary setback was a return to financial sanity and an arduous rebuilding of the industry, all but ruined by ill-luck and senseless speculation. Those who stuck to their possessions and those who followed them later set about their task in a more sober disposition. This was a trying time for the estate owners with their problem's manifold. The recruitment of labour from South India, their transport to the plantations, the complexities in the upkeep of a large work force, were just a few of the major issues
At this stage, the planters felt the need to form an organisation to safeguard their interests. Most of all, they needed an association to speak authoritatively on their behalf and to deal with those responsible for the administration of the island. It was Mr. George Wall who drafted a circular letter proposing the formation of an Association. As a result, about hundred coffee planters met on February 17th 1854 in Kandy, and under the Chairmanship of Captain Keith Jolly, the Planters Association was formed.
The advancement and progress of the association were so fast that within two years, 27 Planting Districts were carved out. There were 404 plantations, and 80,950 acres under coffee yielding 325,438 cwts of coffee per annum. During this period, roads were extended, old constructions put in order, and rivers bridged. Amidst this upsurge in activities, the Planters Association continued to grow rapidly watching over planting interests and voicing the viewpoint of the planter to the government.
Next most important event to take place that sealed the bond of reliance between the state and the private sector was the creation of the Ceylon Chamber of Commerce on March 25th 1839.
There has never been in the history of Ceylon where the private sector had not participated in economic development, nor has there ever been a time when private industry had not play its part in creating national income, in replenishing the public revenue and in providing other services.
The state and the private sector have always been partners in progress. The Ceylon Chamber of Commerce has always helped to promote the economic development of the country, nurtured its commerce, created appropriate machinery for all the processes connected with trade, and endeavoured to maintain high standards of business practices and morality.
During British rule in the island, it used to be said that the policy of the government in regard to economic, commercial and even fiscal questions were dictated by the Planter’s Association and the Chamber of Commerce, and the voice of Queen’s House and Downing Street was merely the echo of the voice of these two associations. Whatever justification there might have been for this belief, the fact remained that they were the only two organised bodies that existed in Ceylon at the time that the government was able to consult.
It was the coffee industry that revealed the rich possibilities for plantation agriculture in Ceylon. Several original members of the Chamber joined this new enterprise followed by many Government officials, including the Governor himself who risked their own money to see the industry off the ground.
The overall development of the country during that time was entirely due to the expansion of the coffee industry. New roads, towns, bridges, railway and the sheltered port of Colombo came into existence on the rising tide of the “bitter berry.” A banking system, engineering workshops, hotels and department stores, and a flood of imported goods followed, to make life a little pleasanter.
Export of plantation coffee reached its peak in 1870 at 885,728 cwts. With smallholder coffee, this figure increased to 1,054,030 cwts. The end of coffee as a plantation crop came in 1889 when exports fell to less than 100,000 cwts.
The great coffee industry built by private enterprise collapsed in the 1880’s stricken by a deadly disease that made its appearance in 1869. Within twenty years the entire industry was ruined. Banks failed, agency houses went into liquidation, and most planters rendered penniless. Other crops were tried out but salvation was found in the substitution of tea for coffee. This switchover is considered one off the brightest chapters in the story of private enterprise in the country.
By the turn of the century, tea had taken over and was on its way becoming the staple export of the country, exporting 149,265,000 pounds of tea to many parts of the world. New markets were developed in the New World. Methods of cultivation and manufacture were improved and soon tea planting became more scientific and more profitable.
The speed and efficiency with which the new plantations were developed are well illustrated in the success story of Mariawatte Estate Gampola. One hundred acres were planted in 1879. In 1884 and 1885 crops of 1,092 lbs and 1,180 lbs were harvested. For many years it continued to give crops of over 1,000 pounds per acre
The growth of the tea industry is reflected in the following figures.
Tea, although not indigenous to Ceylon, had attracted much attention in the Island. A few experiments had been carried out even before coffees become a major export crop. Commercial exploitation of tea in the British Colonies commenced with the discovery of this plant growing wild in the forests of Assam in 1830. It was Lord William Bentinck, the then Governor General who set up a tea committee in 1834 to investigate the possibilities of its commercial cultivation in the Presidency of Bengal. In 1836 the first Assam grown tea was sent to London.
Ceylon received the first consignment of tea seeds from Assam at the Peradeniya Gardens in December 1839.
Wolf made the earliest reference to tea in the island in 1782 when he wrote that “tea and some other sorts of elegant aromatic, are not to be found here. Some trials had been made to rear them, but without success. It is the same with sugar; as a rarity, indeed, it may be had here, but not in such quantities as in the fields of Batavia." Captain Robert Percival, who was present at the capture of the Island from the Dutch in 1796 giving an account of the natural productions, had the following to say.
“But it was not sugar alone that Ceylon seemed destined to afford to the general use of the western world; the tea plant has also been discovered native in the forests of the Island. It grows spontaneously in the neighbourhood of Trincomalee and other northern parts of Ceylon. General Champagne informed me that the solders of the garrison frequently used it. They cut the branches and twigs and hang them in the sun to dry; then they take off the leaves and put them into a kettle to boil to extract the juice, which has all the properties of that of the Chinese tea leaf.”
He proceeds further to say that the government of the day nor the public seems to have taken much notice of this fact until after the coffee enterprise became a partial failure. Even at that stage, Percival was convinced that the Ceylon tea would supersede the use of the Chinese article, as also of the Assam type. The quantities however were not sufficiently large enough to be appreciated.
According to Tennant Dutch had attempted to cultivate tea but without success. Cordiner, in 1805 say that the tea plant was growing wild near Trincomalee, and that the soldiers dried the leaves, boiled them, and preferred the decoction to coffee. Bertolacci contradicts a report current in his day (1813) that the tea plant grew wild in the forests of Ceylon, and yet Bennett, thirty years later, bravely published a coloured plate of a species of an indigenous tea plant. This he did however, on the authority of Assistant Staff Surgeon Crawford who in 1826 sent him the specimen from Batticaloa, of which however Bennett could never find another in the Mahagam Pattu.
Tenet, on better authority mentions that the leaves of the “Rannawara” were infused in the South of Ceylon as a substitute for tea, the plant being called the “Matara Tea Tree”. Dr. Trimen, who took over the directorship of the Royal Botanical Gardens at a time when coffee was failing as a commercial crop, described it as a small tree common from coast to Dimbulla, with leaves often strongly serrated, for which the name of “Roxburgh” was adopted.
The tea plant was first introduced in the British time under the direction of Governor Stewart Mackenzie in 1839. Dr. Trimen who succeeded Thwaites as the Director of the Royal Botanical Gardens, in his report published way back in 1886, cleared all doubts regarding the introduction of tea to Ceylon.
Facts with regards to the first introduction of Assam tea into this colony are as follows: -- “In December 1839, Dr. Wallich, the eminent Indian Botanist, at that time as head of the Calcutta Botanical Gardens, sent to Peradeniya, seeds of the then discovered “Indigenous Assam Tea," and these were followed in February 1840 by 205 plants. In May, the Superintendent of Peradeniya, Mr. Normansell, sent several plants to Nuwara Eliya, and a person supplied to look after them. This was after representations were made to the government that tea was likely to prove a “new and profitable speculation, and a valuable source of revenue to the government."
Again in April 1842, another instalment of Assam plants was received from Dr. Wellich, and in October some of these were sent to Mr. Mooyart at Nuwara Eliya with directions to cultivate them, but was not sure as to what became of them.
By accident he met in London E. F. Gapp, to whose care the plants had been sent. He was at that time tutor to the son of Sir. A. Oliphant, Chief Justice of Ceylon. He informed that in October 1842 he received the plants from Mr. Mooyart at Nuwara Eliya, about thirty in number, and cleared a piece of jungle for them on Sir Anthony’s land. They were doing well when he left the island a few years after. Mr. Gapp thinks the ground was somewhere in the neighbourhood of the present Queens Cottage. Some of the Nuwara Eliya plants were put out near Essex Cottage, now Naseby tea plantations, and it may be worth a search to discover whether these plants are still in existence.
Worms' brothers of the Rothschild family had in 1841, attempted to raise the Chinese tea plant on a correctly prepared clearing on Rothschild estate Pussellawa, and later on Labookelle on the slops of Ramboda Pass. Manufacture was undertaken with the assistance of a Chinese tea maker. The project was abandoned due to high costs involved, which often exceeded pounds sterling 5 per pound. Many other planters too tried growing tea as a subsidiary crop to coffee, but all failed due to the high cost involved in its manufacture. Very little headway was made during the initial stages to expand its cultivation. Though the first attempt at manipulating the leaf was a total failure, the tea plants flourished well.
When the above properties were taken over by the Ceylon Company Ltd. in 1865, they found a small extent of tea on Condegala on the Ramboda Pass, growing well, and soon they began to pay attention. An Assam tea planter of some experience was employed to manage the estate, assisted by Bengali coolies. The experiment did not prove a success. This in a way prevented other planters from taking to tea planting in a big way.
In the meantime, Mr. P.D.Millie claims to have planted tea in Punduloya in 1861. Mr. David Baird Lindsay too says that he had obtained Assam tea seeds in 1864, and had them planted in Rajawella, Dumbara. His tea manufactured from trees six feet tall, were unsparingly condemned in Mincing Lane, and very little was heard of the Dumbara teas thereafter.
In a much quieter way, and as early in the field, the then proprietors of Loolecondera estate Hewaheta, Messes G. D. B. Harrison and W. M. Leake and later the Anglo Ceylon and General Estates Company Ltd. who under the careful management of Taylor, were able to acquire the highest eminence among Ceylon teas.
Taylor on Harrison’s orders, collected tea seeds from the Peradeniya Gardens and planted them along the roadsides in 1866. Further, Mr. W. M. Leake, being the Secretary of the Planters Association, was able to influence the Governor to send Mr. Arthur Morice an experienced coffee planter on a mission to India to inspect and report on the Assam tea districts. The report that followed was well accepted by the planting community. This report persuaded Mr Leake to order for his firm M/s Keir Dundas & Company a consignment of Assam hybrid tea seeds in 1866. These seeds were handed to the care of Taylor, who in turn planted them in a clearing of twenty acres,
In almost four year's Taylor was able to sell his teas in the Kandy market. The samples forwarded to London however were also well reported on, and this convinced them to extend their cultivation further. Taylor, being a perfectionist, was involved in the manipulation of the leaf, so as to obtain the best possible results. He was lucky to have served under Mr. Jenkins, an Assam tea planter, who knew all the complexities of tea manufacture.
He was able to draw on his knowledge, and before long Taylor too became an expert tea maker and began to produce teas equal to Assams in preparation and quality. The Company continued to import Indian tea seeds on a regular basis, and Loolecondera teas began to be classed as being equivalent to the best in the world.
Loolecondera soon was acclaimed the showpiece in local tea planting. In 1888, the twenty year tea bushes were reported to be growing vigorously, and in 1891, Taylor himself reported that the “tea fields were as good as ever, giving the same crop. It had been fertilised once only with caster cake in the beginning of 1885."
Taylor died on 2nd May 1892, and his successor Mr. G.F. Deen reporting on the same fields twenty-seven years later, had the following to say. “They are still full of vigour, showing no signs of decay and up to date the oldest tea fields have been giving yields at the rate of 471 pounds of made tea per acre. It is still flushing and yielding well."
It was not until 1867 that tea came to be grown commercially, and it was James Taylor who proved on Loolecondera that tea could be grown profitably as an alternate crop to coffee that was on its way out. Had it not been for the pioneering efforts of the British planters who took to tea with confidence rather than with despair, coffee would have gone on its way and thousands and millions of people the world over would not be enjoying “Ceylon” tea today?
With the coffee industry fast failing, the British planters had a choice of other products such as cinchona, cardamoms, cocoa, Indian Rubber, Liberian coffee, and many others, but only a very few turned out to be as promising as tea.
It was the belief, and often remarked, that the western and the greater portion of the central divisions of the island were evidently intended by nature for tea growing. “Leafage” is the predominant characteristic of the vegetation, and the constant humidity and the almost uninterrupted monthly rainfall, often so averse to blossom and fruit formation, were the ideal conditions in which the tea plant ought to flourish, and bring forth flushes more abundantly.
With the future of tea now looking bright, the problem of obtaining planting material in sufficient quantities to meet the ever-increasing demand surfaced as a major restraint to its steady progress. A large quantity of plants of both the Assam hybrid and the Chinese variety was distributed from Peradeniya and Hakgala Botanical Gardens during the period 1873 and 1874. These were found insufficient, and the planters were forced to turn to India for the supply of Assam tea seeds. A considerable business in tea seeds resulted during the initial stages, but with the steady growth in the tea coverage, a great deal of local tea seeds was available from the older plantations.
It was reckoned that the rush into tea planting at the initial stages had been to some extent, hampered due to the scarcity and comparative dearness of tea seeds. Most of the planters, who were recovering from the coffee crash, found it difficult to invest in tea seeds that were selling at around Rs.50 to Rs.80 per mound. The cost of planting up an acre for seed alone was found to be more for tea than for coffee or cinchona.
The importation of tea seeds in sufficient quantities commenced from about 1882, but by 1898, in consequence of a temporary depression due to poor tea prices, and adverse exchange rates, imported Indian tea seeds became difficult of sale. This provided the enterprising tea planter, with a supplementary source of income by producing the much-needed seed and raising young plants locally.
Elphinstone, a pioneer coffee planter, who witnessed the conversion to tea, was quick to take advantage of this difficulty, and became the forerunner in the sale of tea seeds in the country. In 1882 he was able to raise an extra Rs.16,000 from the sale of tea seeds from Horagalla estate (Nagastenne Group) Dolosbage. By 1890, there was not a single planting district in the island, in which tea did not dominant, except perhaps in places such as Dumbara, Pangwilla, and in lower divisions of Matale, where cocoa was being tried out.
The part played by the private sector comes into prominence from thereon. The introductory care taken by the Worms Brothers in the promotion of coffee and then tea cultivation in the country cannot, at this stage be disregarded. “The Worms brothers belong to a remarkable family," says Ukers in his book All About Tea. The eldest, Solomon, was the first Baron de Worms, son of Benedict Worms of Frankfort-on-Main, and his spouse, who was the eldest sister of the Baron de Rothschild.
The brothers were born traders and adventurers. They were both members of the London Stock Exchange. The sprit of adventure made Maurice to set sail East in 1841, and Gabriel followed him the following year. They set themselves up in shipping and banking business, with Maurice looking after the planting end in the up-country. He inaugurated the planting enterprise in the country with some Chinese cuttings, which he brought home after a voyage in 1841.”
Subsequently, the Ceylon Company, which later was renamed the Eastern Produce and Estates Company Ltd. imported Indian labour, and under the direction of Mr. Jenkins, a retired tea planter from Assam, were able to make tea by hand in a temporary factory at Condegala and at Hope.
The 2000-acre Rothschild estate at Pussellawa was well known for its completeness and efficiency, and was considered a model for others to review. For over twenty-five years Rothschild tea was the standard for quality in Mincing Lane. With the start made at Pussellawa, they soon reached out and opened Keenakelle in Badulla, Meddecombra in Dimbulla, Thotulagalla in Haputale, Condegalla and Labookelle in Ramboda, and Norwood in Dickoya, with the total holdings of 7318 acres. They held these properties for twenty-four years and sold them to the Ceylon Company for Pounds sterling 157,000, considered a record transfer of European-owned assets.
Whilst on this subject, mention must be made of the other famous coffee estates that went over to tea. There was Delta estate, adjoining Rothschild on the one side, owned by Rev, James Glenie, and Captain Harry Bird’s Black Forest where Mr. F.R.Sabonadiere, the founder of Sabonadiere & Company Colombo resided.
The progress made into tea was rapid, but there was a period of mistrust that existed between 1867 and 1874. The rush into tea really started in 1875. The extant under tea increased from 350 acres in 1874 to 1,080 in 1875, and by 1883 the tea coverage had expanded to 32,000 acres.
By mid 1875, tea was growing in thirteen districts out of the thirty-seven planting districts then recognised. There were no tea plantations north of Kandy, and none on the Uva side. Hewaheta no doubt is indicated as the oldest stronghold of the tea plantations, but what is most significant is the rate of development that took place in the district of Nuwara Eliya and Yakdassa. In 1875, when James Taylor had planted 100 acre's tea in Loolecondera in Hewaheta lower, Jenkins on Hope in Hewaheta upper had expanded the tea coverage to 136 acres.
In most cases, estates opened up in the Nuwara Eliya district had been mainly for growing tea, and it is only for this reason that it had acquired the proud title of a “Tea District." The leading planter in this district was L.A.Rossiter who in 1875 owned 203 acres. Rossiter remained the owner and superintendent of Fairyland (35 acres) Hazelwood (18 acres) and Oliphant (150 acres), with Alston Scott & Company as agents.
He also owned Florence in Yakdassa comprising 100 acres of prime tea. He had been operating extensively in the purchase of suitable tea lands, and amongst them was Ratnillakelle, which he named the “Great Western” estate. Other plantations were Pedro (35 acres) owned by F.Bayley and Tullibody (50 acres) owned by G.Armitage, both under the supervision of E.A Watson.
During the initial stages, it was the China jat that was widely used in the country with good results, and the reports received from the London brokers had been vary favourable. It was Dr Thwaites, the then director of the Botanical Gardens who directed the public to the advantages of this hardy plant. At the early stages, there were doubts as to the suitability of Assam jat at elevations above the limit of coffee.
This impression however was dispelled when Assam varieties were found flourishing well at the Hakgala gardens in the 1860’s. In 1872, Dr Thwaites saw no reason why the sides of the higher mountains should not be covered with tea, and by 1875 the cultivation of tea in the island was an established commercial success.
Taylor sold his first lot of Assam hybrid tea in Kandy in 1872, and in the following year 23 pounds were valued at Rs.58 and sent to London. Expansion of tea cultivation thereafter was accelerated, and the two Botanical gardens were hard pressed to supply the industry with the required planting material.
Large quantities of Assam seeds were imported from Calcutta, but such imports had to be suspended subsequently, due to the possibility of contamination. This led to the establishment of local tea gardens for the propagation of seed.
The Ceylon planter had much to learn, and he did it with undiminished anxiety and consecration. This led him to install, in place of coffee, a speedily spreading and rewarding industry that helped to win back his earlier losses.
The correct sense of anticipation applied by the first batch of Ceylonese who ventured out to cultivate tea during the latter part of the 19th century is amply demonstrated in the courageous manner they faced the problem of over production and poor prices that surfaced during the early stages of the 20th century. They were faced with virtual destruction at their very first attempt at cultivating tea.
The dumping of poor quality teas in world markets by the pioneer tea cultivators, reached critical proportions in 1900, when the locals were just beginning to market their own teas. The prices slumped to uneconomical levels. These pioneers who initiated tea production in the country were able to successfully over ride this crisis, with hopes of s brighter future.
The second decisive similar period surfaced during the period 1920 to 1921. Their determination once again saw them through, but the rush into tea by the Ceylonese entrepreneurs slowed down during this difficult period. This depression however was short lived, and the remarkable recovery of the plantation industry created a great sense of self-satisfaction among the business community in the island. What had looked as a major economic disaster had turned within a few years into a notable success.
The low country Sinhalese in a way captured all the opportunities that the fast developing economy of the country had to offer. It was very likely that one could locate them at the helm of any flourishing commercial venture even today.
The island had been fortunate in many aspects. The climatic conditions ensured that tea could be plucked all the year round, unlike in Assam, where the crop is seasonal.
The entire structure of the tea enterprise, and most of the subsidiary commercial agencies were owned and controlled almost exclusively by non nationals, whose main concern was to remit home as much of the profits as possible. The local involvement in the economy of the country was limited to transport and food production.
They nevertheless saw great visions unfolding in tea once again. They were gearing themselves to play a more active part in the plantation economy of the country, which earlier had been controlled by the British interests.
This rapid recovery that coincided with the switch over from coffee to tea, obscured the obvious fact that Ceylon was once again becoming dependant on a plantation economy, a reality that became apparent during the world depression thirty years later.
While the Britishers were in the process of consolidating themselves further in the country, there was an undercurrent moving towards a progressive form of Ceylonisation.
The leftist political parties, and the trade unions were responsible for the revival of nationalistic sentiments, which began with the independence movement in the early 1920’s. They not only wanted political freedom, but also wanted to enjoy a greater stake in the country’s economy.
This movement was gathering momentum, and this nationalistic fervour began to manifest itself during the worldwide trade recession, which lasted from 1929 to 1934. This demand was voiced with even greater urgency after the political reforms of 1931 that ushered in universal franchise and an elected parliament with a Board of Ceylonese Ministers.
The initial outcome of this was the rationalisation of the management of the larger plantations held by the British. This no doubt agreed with the government’s policy of Ceylonisation, but when this plan was stretched to its logical end, many European planters were found out of employment.
According to a report issued in 1952 by the Commissioner of labour, out of a total of 1912 executives on the plantations, only 684 were Europeans.
The agricultural sector, with tea as the main export crop; fell under the direction of the Minister of Agriculture D.S. Senanayake who later became the Prime Minister of an Independent Ceylon. He led the country in a series of agricultural reforms, but his main concern was to ensure that Ceylonese individuals controlled the tea industry. He feared the formation of trade unions on the plantations, and moved the Legislative Council in 1947 to disenfranchise the Tamil plantation workers.
Although the policy of Ceylonisation was clearly laid down, its execution was to a great extent hampered by the straitjacket of colonial control. London buyers controlled the retail business so that the producers could not overpower the multinational buying agencies. The Russian market that proved a great potential for Ceylon teas, was lost after the revolution of 1917. In fact, the tea industry became a virtual prisoner of the London tea market.
In a bid to encompass this problem, and to improve the position of the tea industry the government was quick to react, and a series of structural changes followed.
The Tea Research Institute was created in 1925 to improve the technical side of tea cultivation. The Tea Propaganda Board was established in 1932 to promote the sale of tea in foreign markets. The International Tea Agreement of 1933 helped to level off global over production. Ceylon became a party to the Imperial Preference Agreement signed in 1933 to safeguard tea and rubber prices in London. Through the medium of the Companies Ordinance of 1937, the government actively promoted the formation of rupee companies. The Bank of Ceylon was established in 1942 to assist the Ceylonisation policy of the government.
At the time of independence in 1948, sterling companies based in London and managed by British controlled agency houses in Colombo owned two-third of the tea sector. Banking, insurance, shipping services too was controlled by them, while marketing arm was totally in the hands of the Metropolitan concerns.
The government in their determination to Ceylonise the tea industry went further to introduce export duties on tea. It now became apparent that the government’s intentions were that the tea industry would be the milch cow, which would finance the overall development of the country. Exchange control regulations were promulgated in 1939 and the repatriation of capital halted in 1957. These measures caused increasing hardships to sterling capital invested in the country. It was at this point that the flight of British capital commenced. East Africa offered a stable economic and political alternative for British investment.
The flight of capital once begun could not be halted. Sterling estates were being sold steadily through the 1950’s on a piecemeal basis to Ceylonese companies and individuals, thus threatening the output and productivity of the entire industry. This situation reached such alarming proportions that the government was compelled to pass the Anti-Fragmentation Act of 1958 to prevent wide-scale splitting up of large properties.
This process got further aggravated when in 1956 Mr S. W. R. D. Bandaranaike for the first time mooted the concept of nationalisation, though it took a further two decades to become a reality. Meanwhile the uncertainties brought about by political independence augmented by reservations regarding the future of the tea industry, led still more Britishers to sell their shares in the plantation companies.
Largely the opportunities to own tea estates and purchase shares in sterling companies operating the tea plantations came the way of the Ceylonese only during this period and after the World War 11. This was the second opportunity the local landed gentry enjoyed to participate in land transactions with the British. The Ceylonese however was quick to seize new investment opportunities when they did come their way.
This process of transfer of ownership in the plantations was aided to a greater extent by the Korean boom of the 1950’s, which urged commodity prices to rise in consequence. This excess wealth in the hands of the estate owners and the trading community was invested in securing plantation shares or in purchasing the properties outright from the British.
These events opened up new vistas for the Ceylonese to enter into a field that had hereto been exclusively dominated by the Europeans. This was only one aspect of the problem. The local participation was only at the production level, but was forced to leave the actual task of marketing Ceylon teas with the Europeans for a further period of about four decades.
In 1930 sterling companies owned about 80% of the tea, and 50% of the rubber plantations. By 1952, this figure had shrunk to 50% tea, and 38% rubber, and by 1958, it slumped further to 37% and 13% respectively.
According to Snodgrass, many of the capital transfers had taken during the period 1950 and 1960, and a sum of Rupees 182 million had been credited to sterling accounts in England by local investors mainly to finance foreign estates and agency houses.
During the period 1935 and 1958, the sterling companies had sold 35,845 acres of tea of which locals, 3,044 by other sterling companies, 5,028 by small holders, and 769 by the government had purchased 27,400 acres.
In order to assist the local estate owners to finance these purchases, the government established the State Mortgage Bank in 1931, the Agricultural Credit Co-operation in 1943, and the Bank of Ceylon in 1942. The government was forced to extend further facilities to the plantation sector when the boom of the 1950’s ended.
It is said that the tea industry in the country was launched on the graveyards of the old coffee plantations. It may not be altogether true, when taking into consideration the newly planted tea areas in the South. It is recorded that practically all plantation crops had been tried and tested in the Southern parts of the island.
The Arabs first introduced the coffee plants to Sri Lanka. This plant originally grew wild in the gardens of the enterprising Southerners, and around temples in which its beautiful scented flowers were used for decorative purposes. During the Portuguese occupation of the island from 1505 to 1665, no attempts were made to cultivate coffee. After the expulsion of the Portuguese by the Dutch, attempts were made to cultivate other commercial crops such as cinnamon, and it was only in 1740, an attempt was made to cultivate coffee.
Tea on the other hand was comparatively a new fashionable idea to the locals in the South, and what is most significant is that local entrepreneurs undertook large-scale cultivation of tea in these areas. Through their involvement in agriculture for centuries, they had acquired the inherent skills, and cultivation of tea did not pose much of a difficulty.
Most of the tea plantations in the South were opened only at the beginning of twentieth century, and the sprawling acres of tea seen in this part of the country stands as a tribute to the local pioneers who ventured out in clearing vast tracks of virgin jungle, which was found less attractive to the Britishers. The Knowledge gained in other agricultural ventures was applied to tea with great success, and with it the low grown segment began to develop.
The process of Ceylonisation of the plantations during the early stages could have been accelerated had it not been for the difficulties encountered by the Ceylonese in obtaining capital for investment.
The essential prerequisites for the establishment of a plantation economy were cheap land, and capital at competitive rates of interest. Unfortunately, all these dependent factors were denied to the Ceylonese, when they decided to enter the planting fraternity in the late 19th century.
Land values had appreciated, labour by then had been unionised, and above all, the required capital was not available through the normal channels. Had it not been for these impediments, the local entrepreneurs would have entered the agricultural field much earlier.
Trade at that time was the biggest money-spinner, but it was totally controlled by the Indian traders with wide connections in India, Africa and the Far East. Production and trading in tea and rubber were in foreign hands. They further manipulated the local tax structure to favour the sale of British goods in the country. Locally produced goods could not compete with imported varieties. All the projects, which guaranteed high returns, required capital. It was readily available to the British, but denied to the locals.
Sir Emerson Tenet, a keen observer of nature in the island, reporting in 1885 had observed that there was not a single Ceylonese capitalist in the sense in which the word would have been used in England. He would have had little reason to change his mind, had he was alive in 1915. The wealth of the country was in the hands of the British.
The small Ceylonese trader too found it difficult to compete with the traditional Muslim trader, the Chettiar, and other minor groups who had established trading outlets all over the country.
When the Ceylonese were denied access to lending institutions that were controlled entirely by the British, they were forced to turn to the Chettiars, referred to as the merchant bankers from South India, for their requirements of capital.
Prior to the establishment of an organised financial market in the country, commencing with the Bank of Ceylon, it had been the Nattukottai Chettiars who provided the Ceylonese the finances to indulge in trade and commerce. Only a few living today will realise this fact. From about 1875 to 1925, the Chettiars had been actively involved in the financial dealings in the country. During this half-century, they had helped in no small way to promote the economical well being of the country.
They were emigrant traders from Chettinad in South India, who were ultimately called upon to set up the economic and the credit structure in the country, at a time when the locals were looking forward to holding a stake in nation building. The dominant role played by them as private bankers, money lenders, financiers, and traders during the early stages of the country’s economic upsurge cannot be taken light of. In recognition of the financial assistance rendered. Their name became synonymous with private banking.
They were regarded as the most fascinating of all the non-indigenous business communities that had traded in the country. They were a closely knitted community with very little intercourse with the outside world. Hindus by religion, they devoted a considerable amount of their time to religious activities.
They were known to honour their social and business obligations without any deviation. They followed a code of business ethics, which was not common to other foreigners trading in the country. The Ceylonese had implicit faith in the Chettiars. They borrowed freely from them, and also invested their savings with them. They were always assured of a good return on their investments.
Money was often given to them for safekeeping, and the strong box in their houses was considered as secure any deposit vault in a British bank. They enjoyed a high reputation in the pawn broking business, and the Ceylonese preferred to deal wit6h them rather than with their local counterparts.
The Nattukottai Chettiars were the forerunners in modern day finance companies. More than 505 of the deposits of the early finance companies came from this community. They took risks in speculative ventures that the British banks avoided. The current position however is different. It was the disappearance of these Chettiars from the local money market that paved the way for the rapid expansion of the native finance companies.
The harsh words such as: Jews and Shylocks” that were used to describe these people seems unjustified. At a time when the British banks mistrusted the indigenous population, it was this community that took all the risks to lend to the locals. Their interest rates may have been on the high side, but they were only lending money they had borrowed from the banks. Further, they had to safeguard themselves against bad debts, which at that time was a common feature.
During the early stages, they assisted the smooth conduct of trade with India by discounting the excess Sterling Bills for rupee bills. This paved the way for them in their new role, to become the middleman between the banks and the local population who required capital. The British held the Chettiars in high esteem too.
Coffee was abandoned in the early 1870’s. It was mainly for tea, and later for rubber that the Ceylonese agriculturist and the businessperson needed finance and credit. During this time of need, it was to the Nattukottai Chettiar that the local entrepreneurs could turn to for financial assistance, as they were regarded as the official money lenders to the nation.
Coffee was abandoned in the early 1870’s. It was for tea, and later rubber, that the Ceylonese agriculturists and businesspersons required finance and capital. During this time of need, it was to the Nattukottai Chettiars that the local entrepreneurs could turn for financial assistance.
The highly complicated nature of local mortgages did not prevent the Chettiar from investing in them. The large scale opening up of jungle land by the locals, for the cultivation of coconut, and later tea and rubber, would not have become a possibility, had it not been for the financial assistance available from the Chettiar community.
They were not rigid in their dealings, and they were always ready to accommodate the businessmen and the speculator, the exporter, and the landowner trying to raise a dowry for the unmarried daughter. They were very liberal in the securities they secured from the borrower, but the fundamental accusation against the Chettiar revolved round “interest rates.” The degree of risk was reflected in the interest rates charged, and they were worked depending on the circumstances of the case.
It is most unfortunate, that the people of the country were not sufficiently trusted by the British lending institutions. The Ceylonese from the very outset, were compelled to turn to the Chettiars for financial assistance, due to the indifference on the part of the British to lend to locals. This meant that the Ceylonese borrowers from the very commencement of a plantation economy were loaded with high interest rates, unlike the British whom had it cheap all the way.
The Chettiars continued in this role until about 1925, and with the world wide depression of the early 1930’s, the government was compelled to undertake the task of providing the necessary finances to the fast developing economy. State sponsored institutions such as the State Mortgage Bank were set up in 1931. The bank of Ceylon followed in 1941, and the Agricultural and Industrial Credit Corporation were structured in 1941, for the sole purpose of offering financial assistance to the local segment of the business community, who had no access to foreign lending institutions. With most credit functions being undertaken by the state, the volume of money lending businesses of the Chettiars was further reduced.
Vane Ena Lena Shena Letchiman Chettiyar was a famous money lender who conducted a brisk business in Galle, at a time when there was a burst of economic activities in the Southern districts. The original set of Ceylonese who changed their scope of activities from trade to agriculture, was a brave lot. They opened out vast tracks of virgin jungle for the cultivation of a crop established by the British. The names of these prominent planters from the South would have appeared in the books of record maintained for the conduct of his business several times.
Following in the footsteps of the original Chettiars was C. P. Haley and Company. They conducted a thriving business in general merchandising in Galle. In a bid to attract additional business, they too commenced lending money at cheaper rates of interest to those offered by the Chettiars. In this manner they were able to obtain a fair share of the business conducted in the southern province.
The plantations in the South were opened up during the early part of the twentieth century. It was no doubt an uphill task all the way, but they took it on the stride, and although the start was difficult, the Korean Boom of the 1950’s provided them with the much-needed capital, and assured them of a steady growth for the future.
Another important event that affected the progress of this sector came about with the Land Reform Law No 1 of 1972. Until the above reforms were enforced, there was no law in the country that fixed a sealing on land ownership. By 1972, there were about 5,600 owners of agricultural property who had nearly 1.3 million acres with an average land holding of 200 acres, as against the national average of 0.36 acres per person. The maximum extent of land that may be owned by any person was defined as follows.
If such land was exclusively paddy land, 25 acres, OR
If such land does not consist exclusively of paddy land, then 50 acres.
Under this new law, land owned by public companies and religious institutions was exempt. It was at this stage that the expansion of the smallholder sector really developed.
According to a survey conducted in 1874, the total population of Ceylon was 852,000 of which 47% lived in the Maritime Provinces stretching from Chilaw to Tangalle, reflecting a very high concentrating of people along the seacoast. All of them were not Sinhalese. Many were Europeans, but there were also Chettiars Burghers and Malays. In addition, there were regional distributions between the low country Sinhalese and those of the Kandyan provinces.
British as the Colonial masters accepted the differences present among the Sinhalese, but established a judicial and administrative system, which held all people equal before the law.
Under the British, no one was discriminated against, and everyone benefited from the expanding economy. Casts became increasingly a matter for political concern, although a differentiation was generally made on an occupational basis.
In the case of the Sinhalese, the community’s major internal division has been geographical between the Kandyan families and the aristocratic families in the low country. Their respective economic resources broadly reinforced this division. The Kandyan families, holders of Nindagam (Kings land) found themselves reduced to poverty after the unification of the country by the British in 1815. Many of the low country aristocracy however maintained or enhanced their economic power through the cultivation of commercially viable lands in coconut, rubber tea and other products.
The people of the low country had been greatly influenced during the long years of colonial rule. They had been constantly exposed to the economic propositions and activities of the West, whereas the Kandyans prided themselves on embodying the virtues of Sinhalese traditionalism.
The people living in the Maritime Provinces on the other hand were considered more responsive to changes, and after having acquired all the trading skills of the foreign invaders, they came to be regarded as giants in commerce trade and industry, though out of proportion to their numerical size.
The older families from Moratuwa and Panadura such as the De Mels, the Peirises, and the De Soysas were heavily involved in the estate owning sector, chiefly in coconut and rubber, and later tea. The older generation followed a pattern of accumulation rather than entrepreneurship, while the younger generation took up too commercial and trading activities.
A great deal has been said about the British planter who started a great plantation industry in the early 1830’s. Very little is known of their local counterparts who alongside the British helped to establish a plantation enterprise in the island at about the same time.
The period 1900 to 1920 has been referred to as the “Native Era” for tea planting. There were feverish activities directed towards converting vast tracks of land in the Gampola, Pussellawa, Badulla, Galle and Matara districts into tea lands.
These areas were full of promise, and provided the new comers ideal conditions to make a start. The other wealthy families who had already commenced with coffee were fast converting them into tea, along with their European counterparts.
Ever at this late stage the expected government assistance did not come the way of the local entrepreneurs. Instead, they were placing further obstacles in the way of the industry among the Sinhalese. Notwithstanding all impediments, the locals were gradually expanding their tea coverage in their gardens. During the early stages, unknown to the government authorities, many responsible villages were purchasing tea seeds and plants on a regular basis at the rate of Rs.10/- per thousand, for inclusion in their home gardens.
When this tendency became more noticeable the state took notice, and the Government Agent Southern Province in his administrative report for 1890 had recorded that “the natives are going in extensively for tea planting,” and reporting in 1893 he had said that “Sinhalese tea gardens are especially numerous in Wallaboda and Talpe Pattus.” The growth of the smallholder sector in the country could be traced to this period. Although its development had been slow during the initial stages, it ultimately proved to be one of the most effective growth areas in the country’s tea industry.
Along with the development of the small holder sector, there was also the wealthy families from the Southern Province, very often sons of acclaimed agriculturists, who, after having acquired the necessary skills in planting from their fathers took to the cultivation of tea in a more serious manner. They are well known for having invested widely in tea and for conducting their businesses with considerable success in the twentieth century.
The second push into tea, and this time to purchase developed properties from sterling companies came their way after Independence. The uncertainties created as a result of the Second World War and granting of political independence to Ceylon in 1948 offered the Ceylonese further opportunities to expand their holdings in tea.
This was a chance they were all waiting for, as they were now able to venture into an area, which up to this time had been the exclusive fortification of the British. They were now in a position to savour the odour of upcountry teas and have a stake in its decision-making. They accepted this opportunity with open arms. In this instance, they were able to penetrate the hill country by purchasing outright well-developed properties from the British.
A revival of nationalistic sentiments at some time or other is the natural desire of people who have been subjected to long periods of foreign domination suffers from, and in this case Ceylon was no exception. Although this sensitive issue was freely discussed from about the early 1920’s, it only remained a far cry until the colonial office gave a greater measure of self-government to people of the island. The originator of these changes was Lord Donoughmore. The new constitution drawn by him was designed to provide the training ground for the day Ceylon was to run for her own affairs. This constitution came into operation from 1931.
This form of political thinking and the changes that were taking place in this field gave perceptiveness to the events that were in store for the country. The average citizen was no doubt going to be a stakeholder in this new economic order.
Amidst all these favourable changes taking place, which indicated a boost to the economy of the country, a dangerous sign of a trade depression appeared from about 1929. This tendency developed until the entire economy of the colony was suffering from the effects of a worldwide slum that continued until 1934. Prices of primary products declined sharply in international markets.
This was a period of real affliction to both the local and British planter. Salaries could not be paid, and a few from the tea sector were thrown out of employment, forcing them to seek engagements elsewhere. Serious thoughts were given to economising on production costs, and the immediate of the plantation companies was to rationalise their properties placing superintends in charge of large units with a fewer assistants.
This trend coupled with the Ceylonisation policy of the government changed the entire structure of the plantations. A survey conducted in 1952, it appeared that out of a total of 1,912 executives on the plantations, only 684 were Europeans. This depression in a way helped the Ceylonisation policy of the government to become effective within a short period of time.
When the depression was at its worst in 1932, rubber that was mostly a local venture was selling for only 8 cents per pound. Tea prices were no better and could fetch about 33 cents for a pound. The prudence of the government in introducing income tax during this time was questionable, but its introduction at the depth of the slump would have relieved many of the landowners of their tax obligations.
Unlike most other produce, tea took a longer time to get back on track, as there was apprehension regarding overproduction of this commodity at that time. Further, it was during this period that teas produced in Dutch East Indies (Indonesia) entered the market. This tended to worsen the situation.
During the period 1920 to 1930, the tea industry experienced boom conditions, but the upsurge was confined to only production. There was a heavy surplus of common teas in the London market during the latter part of 1920 as a result of bumper crops in India. Ceylon and Java. As a consequence, tea prices slumped.
This grave situation resulted in a general agreement being worked out between the British and the Ditch tea planting associations to restrict voluntarily the 1930 crop. This strategy met with only partial success due to the inability of the Dutch to control exports of native grown teas.
Continuous overproduction resulted in a further dip in prices. It was finally agreed to restrict tea exports for a period of five between the major producers of tea, namely India, Ceylon and the Dutch East Indies. This export regulation scheme became effective from 1933.
A reduction in surplus stocks to normal proportions could not be achieved within the stipulated five-year period, and the scheme was subsequently extended until 1954. For Ceylon a 15 % reduction was negotiated based on the total exports of 1929. This was referred to as the “Ceylon quota of exports,” which was maintained at 213,794,225 lbs for the year. These quotas were worked out each year for the different countries, depending on the global situation.
The success of this project was mainly due to the assistance rendered by the planters themselves. Had it not been for this early intervention, the tea industry would have headed for a total collapse, and most to suffer would have been the local entrepreneurs who were fast taking over from the Britishers.
Land settlement issues in the country had remained a complex problem from time immemorial, and have constituted the flesh and blood of the country’s society. Over the years, it had developed into a social structure originating in family ties, religion, and cast, race, and land owner-ship patterns. The plantation industry had grown-up on Western lines, and they had employed similar concepts of agricultural practice. Subsistence agriculture was converted to capitalist agriculture and the labour force was regarded a rural proletariat.
The introduction of an export oriented plantation system by the British created a host of structural problems, commencing with unemployment, land scarcities, food shortages, and a staggering growth rate in other sectors, where the locals had no stake.
A money economy soon replaced the traditional agrarian economic order. The situation was further aggravated by the promulgation of a series of laws empowering the state to take over any uncultivated land. The most objectionable of them all was the Crown Land Encroachment Ordinance No 12 of 1840, and the Waste Lands ordinance of 1897. These two laws were chiefly responsible for disturbing the rural balance that had existed in the country from ancient times. From that point onwards, the state acquired a dominant influence over land matters.
The state control of land in the 19th century, led to large-scale alienation of land in favour of British mercantile interests. Statistics of land sales reveal that after 1833, over a million acres had been sold to British planters, mainly for the cultivation of coffee. This changed the entire unsophisticated rural structure, causing severe hardships to the agrarian community.
By the early 1930’s, landlessness in the South Western Wet Zone had become a major issue, which dominated the thinking of the administrators. The rural population was fast increasing, and an inescapable solution had to be found, before it became a political issue.
At the 1956 General Elections, Coalition Government between the Sri Lanka freedom Party and certain Marxist elements ushered in a Socialistic era led by Mr S. W. R. D. Bandaranaike. The party’s Manifesto contained proposals for widespread nationalisation of foreign-owned plantations, banks, commercial and industrial establishments.
This was a blow that the private sector could not withstand. Their hopes were naturally shattered, but the government proceeded with their programme of nationalisation, but at a slower pace.
Complete nationalisation would have come about at a much earlier date, had it not been for the unenviable situation of having its hands tied by the dependency on the metropolitan markets, and the goodwill of the British. Further, nationalisation without compensation may have justified in terms of economic sovereignty, but it was not a step the government was prepared to take. The various political parties forming the government had conflicting views on this subject, with the result; the question of nationalisation was shelved, at least for a short time.
When the United front Government came into power in 1970, attempts were made to change the economic and political climate in favour of nationalisation and they experienced a certain degree of success. The introduction of the Anti-Fragmentation Act and the Exchange Control Laws provided them with the necessary political clout to take the plantation sector further under their control.
The first act of nationalisation applied to the operators of public passenger road transport, and became effective from 1st January 1958. Cargo handling operation were nationalised on the 1st August 1958. The Bank of Ceylon, which was started in 1939 with considerable private capital, was nationalised on 27th July 1961. The take over of the insurance followed. The exclusive privilege of writing new life insurance was vested with the Insurance Corporation of Ceylon. In 1964 the Corporation was further entrusted with the sole right to handle General Insurance. The functions of the private Oil Companies gradually passed on to the newly established Ceylon Petroleum Corporation.
The nationalisation of plantations on the other hand was carried out in two stages.
Until the above law was enacted, there was no law in the country, which fixed a ceiling on land ownership. By 1972, there were about 5,600 owners who had nearly 1.3 million acres with an average holding of 200 acres as against the national average of 0.36 acres cultivated per person.
The maximum extant of agricultural land that may be owned by any person was defined as follows.
If such land was exclusively paddy land 25 acres or
If such land does not consist exclusively of paddy land- then 50 acres. However, here too the total extent of paddy land shall not exceed 25 acres.
Under this new law, land owned by public companies and religious institutions were exempted. A statutory lease in favour of the former owner too was granted for a period to be decided by the LRC.
At the time of the Land Reform Law, out of a total geographical area of 16,228,220 acres, about 13,120,510 acres were arable land, of which 2,322,989 were under plantations. Under this law, 563,411 acres got vested with the LRC. The total extent of land vested with this authority amounted to 136,353 acres, which was about 23% of the total tea acreage sub-divided as follows.
The total acreage vested with the LRC under this law was as follows.
The total declarations were 5,160 from 22 districts. Colombo had the highest number of declarations amounting to 2,856 from 1,479 individuals, followed by Kandy with 548 declarations from 537 individuals. The lands so vested were entrusted to the care of a number of state run agricultural institutions.
The insurgency was officially credited as the major reason for the adoption of the Land Reform Act of 1972. This was used to involve the people at grass-root levels, in their land distribution scheme. This law was hailed as the most popular piece of legislation ever to be passed in the country.
With the implementation of this new law, ownership and land control in the country were subjected to radical changes, and a large proportion of the available land came under state control.
Land Reform (Amendment) Law No 39 of 1975
The experience gained from the first attempt at controlling the ownership of land in the country helped the government to conduct this operation in a more fitting manner. Unlike with the first Land Reform act, the question of compensation for the lands acquired under the second stage had been settled in advance between the British Prime Minister Harold Wilson and Mrs Bandaranaike
Implementation of the second stage of the Land Reform Laws ended up a smooth operation. The former owners in certain instances were made temporary statutory trusties, and the fact that they had by then a set of trained personnel at hand simplified the entire process.
This law came into force on 17th October 1975, and extended the ceiling on land ownership to properties owned by public companies. At this second stage, 396 estates owned by 232 public companies were nationalised. Of the 232 public companies, 87 were Sterling companies, and 145 were Rupee companies. The 87 Sterling companies, owned 191 estates and the 145 Rupee companies owned 205 estates. Of the 396 estates, 22 Agency Houses managed 376 and 20 estates were managed by owner companies.
Extent of nationalised land under the second stage of Land Reform
Under this law too, there were certain categories of holdings that were exempted and the same system of statutory trusteeship as in the previous case continued with the Agency Houses managing the estates during the transitional period.
About 40% of the cultivated tea the Second Land Reform Law affected lands. The larger estates that were acquired were to be run as similar units and they were transferred to the SLSPC and the JEDB. The latter was incorporated on 6th February 1976 in terms of the State Agricultural Act No 11 of 1972. The effective operation of this organisation however began on 1st April 1976 when the trusteeship of the former Agency Houses ended.
By end December 1976, 881 estates of the public sector comprising 366,184 acres constituting 61% of the total tea area went under state control. In the case of the private sector, 125,834 holdings amounting to 594,481 acres forming 38% of the total tea lands were nationalised and brought under state control.
In 1977, the tea industry went through a series of structural changes, which continued until the end of July 1978. During this period, the revisions were mainly directed at consolidating their position and effecting changes for the proper management of the properties, which ultimately ended up by making the SLSPC and the JEDB two of the largest management agencies in the world.
British are noted to have pioneered the propagation of tea as a plantation crop. Commercial planting was undertaken for the first time in India, and with its success, Ceylon looked as good as any other place for its cultivation. Prospects in the country were found ideal. It offered all the opportunities to procure a new product base for tea, when trade with China was fast coming to an end.
Chinese tea exports (averages, thousand of tons)
Growth in tea cultivation during the early stages was fairly rapid mainly due to the vast expansion undertaken in bringing large tracks of abandoned coffee under tea. The first commercial patch planted by James Taylor in 1867 as a pilot project, remained as the nucleus for further expansion, and extensions were rapid thereafter. Before long, Sri Lanka was on its way, establishing tea as a major agricultural crop, and in just one and half decades almost 68,000 hectares had been brought under tea cultivation.
Although tea planting was rapid, commercial production of tea took a much longer time to reach favourable levels. During the pioneering days it took almost six to nine years to nurture a tea bush to maturity. It was only in the early 1930’s that Sri Lanka’s tea production reached the 100 million kg levels.
Expansion in Tea Production
Year | Production | Percentage Growth |
---|---|---|
1930 | 100 m kg | --- |
1940 | 120 m kg | +20% |
1950 | 138 m kg | +15% |
1960 | 197 m kg | +47% |
1970 | 212 m kg | +70% |
1980 | 191 m kg | --10% |
1990 | 233 m kg | +22% |
1998 | 280 m kg | +20% |
The impressive performance of the tea industry up to 1970 could be gauged from the above tea production figures. The largest growth rate in the country is recorded for the period 1960 to 1970, when production increased from 197 million to 212 million kg. This expansion was completely overshadowed by the drastically reduced growth rate recorded for the following decade. The period 1970 to 1980 was a testing period for the country’s tea industry, and it took almost two decades thereafter for the industry that had shown so much promise earlier, to once again get back on track.
The problems the tea industry had to face during this time were many. In addition to the sudden reversal in production trends, tea prices too reached uneconomical levels, which threatened the very existence of the industry in the country.
Tea being an agricultural product, is subjected to vagaries of nature, and as such, yearly variances are of little significance. In this instance, an attempt is made to ascertain the general trends in tea production patterns in the country.
The indisputable attempts made during the initial stages, to establish tea, as the primary agricultural crop, after the failure of coffee, no doubt paid dividends. Tea production peaked way back in 1965 at 228 million kilos. Subsequent events, that led to a sudden reversal in production trends however occurred at a time when the tea industry was fully geared to face any eventuality. Weather had not been too adverse during this period following the boom period of 1965. In 1983, Sri Lanka’s tea crop declined to 179 million kg matching up to mid 1950 levels of production. It was only from about 1984, that the tide changed once again, and the tea industry started to enjoy a new lease of life, with low grown varieties offering vast potential for growth.
A rather noticeable feature that emerged after having established a record crop in 1965 was the declining trend in tea production. This was no doubt a unique feature that acted in complete contrast to world trends existing at that time. Other major tea producing countries in the world were expanding production during this period. The global tea crop in the period 1965 to 1977 rose by 51%, while the output of tea in Sri Lanka declined by 9%. In 1978 tea production was running about 6% below 1977 levels, and this trend was only arrested in the early 1980’s.
Sri Lanka enjoyed a very healthy crop increase during the early stages of the industry, and continued so up to the peak production year of 1965. Annual production more than doubled in the period 1939 to 1965, with the output moving from 107 million kg to 228 million kg, recording an annual growth rate of 3%. The declining trend became a cause for worry from about 1967, and during the ten years that followed, production decreased on an annual rate of over 1%, and declined by 12% during the period 1976 to 1977.
The initial growth in production that peaked in 1965 was entirely due to increase in yields per acre, and not due to any substantial increase in the area under tea. The phenomenal increase in yields from 382 kg per hectare in 1939 to 746 hectare in 1965 was attributed to increased use of fertilizer and improved agricultural practices.
The prime cause for the sudden drop in production thereafter is ascribed to the unexpected fall in fertilizer application since 1964. According to records maintained in the fertilized corporation, the use of manure peaked in 1964, a year before the country recorded a burst of growth in the sphere of tea production. Thereafter, fertiliser applications declined at a rapid rate decreasing by almost 40% in the decade 1964 to 1973, against a production drop of 7%. The use of fertiliser improved marginally in the following years, but production continued to decline to reach 196 kg in 1976.
A decision taken by the Tea Research Institute in 1959 to recommend the widespread replanting of old seedling tea with high yielding colonel tea also contributed to a great extent for the steady fall in crop due to large extents going out of production. This recommendation was based on a series of experiments carried out on a pilot project at Talawakelle. It was found that yields virtually doubled on colonel varieties. Large scale re-planting gave way to in filling, without taking into consideration the high risk associated with such an undertaking.
To make this arrangement more appealing to the producers, the government went on to offer a subsidy of Rs 6180 per hectare in 1959. It was presupposed that with this subsidy, re-planting would take place at about 2% per year. At this rate of improvement, it was calculated that within fifty years the entire tea area would be under high yielding varieties. In-filling at that stage was considered a wasteful expenditure.
Unfortunately, the re-planting rate never reached expected levels, and the in filling of vacancies was not resorted to as earlier. The inevitable did occur. The bush density decreased, and with it the productive base eroded, leading to a consequent decrease in yields. The failure to maintain bush density led to a series of other problems that had devastating effects on tea production. The failure to maintain a proper tea cover not only eroded yields, but also adversely affected fertilizer efficiency, increased plucking costs, and accelerated soil erosion.
The indirect consequences of a steady fall in production levels were also grave. Investments in the tea-processing sector during the early period of steady expansion were maintained in keeping with the improvement in crop. With a decrease in leaf production, the producers failed to update and increase factory capacity.
During the period 1957 to 1966 tea production increased by 50 million kg, but the factory capacity by only 31 million kg. The work piled up in factories has continued up to recent times. To promote investment in this field, the government once again offered assistance to the plantation sector to be utilized for this purpose during 1966 and 1967. Despite all these financial attractions, only about 63% of the targeted funds were utilised. The situation deteriorated further, and all the neglects and oversights accumulated over the years were passed on to the cooperatives and other statutory bodies created under land reform during the period 1972 and 1975.
The general decline in productive expenditure, which led to the sharp decline in tea production in the country, could be attributed to two very apparent causes. This was a period when the world was experiencing an over supply situation that caused prices to fall relentlessly. From 1955 to 1974 the decline in real terms was about 73%, and the most shattering erosion occurred in the period 1960 to 1974, when tea prices declined by about 60% in relation to other primary commodities.
No immediate let up in the situation could have been foreseen at that stage, and the future for tea projected only a melancholy picture. In addition to the surplus created among the traditional tea producers, there was the news that fresh lands were being opened up in Iran, Turkey, Argentine, and in new regions in East Africa. The use of high yielding clones by these new comers, who had gained sufficient experience watching the performance of others, were going to aggravate the situation further. On the disposal side, the projected improvement in consumption, did not offer much hope for bridging the gap between supply and demand. It was felt that further expansion in the production base would lower tea prices beyond economic levels.
All these problems reached critical proportions in the early 1960’s. From that point onwards tea plantations were forced to reduce recurrent expenditure. Consequently, output declined further. It reached a stage that the only pre-occupation of the planter was to find ways and means of reducing costs.
The other major cause for reducing investments in the plantation sector was the threat of nationalization. This intention of the government was for the first time made public in 1958, although it took a further seventeen years for its implementation. This took the form of a government policy, and in this atmosphere of uncertainty, investments in the plantation sector plunged further.
With vast cut backs having now commenced, the government was for the third time forced to mediate to salvage the plantations, which were fast heading towards a serious catastrophe. The state had no option but to offer a series of aid packages that included among others, a fertilizer subsidy, a tea chest subsidy, and an export duty rebate worked on the basis of realization prices based on a sliding scale. Despite all these attractive offers, producer margins continued to decline, and by 1975, the speculation had come to an end for the private sector. The plantations were nationalized.
Threats of nationalization, sluggish markets, depressed tea prices, both in rupee and real terms, the virtual disappearance of profit margins, and cash flow problems, explain the reasons for the sharp decline in production and investment in Sri Lanka’s tea industry. All the above cause and affect factors occurred in Sri Lanka during the period under review, and the country remained unique in this regard. The position was different in other countries. It was a time when both private and public funds were freely available to improve the industry, and our competitors made use of this opportunity to steal a march over Sri Lanka. This, no doubt was a trying time and it took a long time to get the industry back on course.
The older generation of tea planters would recall the directions and the standard curriculum they had to follow as junior superintendents. These standard instructions were worked out through years of observation by the senior management, and accurately recorded for the guidance of their juniors.
From the very inception of the tea planting in the country, monsoons came on time; with the result all routine agricultural strategies were pre-determined. One of the standard orders that used to be often repeated to the field staff was to guarantee that the bulk of the tea crop was harvested during the first six months of the year. It was not an order to strip the tea bushes, nor meant to artificially promote growth. The flush came regularly with the monsoon, and it was there for harvesting.
Regularity of monsoons in the early days made agriculture a child's play. It was most undemanding, and manageable, unlike today, when delays and total failures of the monsoons have become the order of the day. These uncertainties have been the chief hostile elements in the implementation of a proper agricultural policy for the country. These regular faltering in weather conditions have often stalled many ambitious schemes that had been carefully blueprinted on several occasions earlier. Agriculture today has entered the realm of uncertainty, and its advancement is a matter that is left entirely to the weather gods.
Under normal circumstances Sri Lanka would obtain about 40% to 60% of the rain from the North East and the South East monsoons. Inter-monsoon conditions would provide the balance rainfall needed for the country. The south central hills have a considerable influence on the climate of the country, because of the small land area involved.
Sri Lanka is said to enjoy two general categories of rainy seasons. In addition to the regular monsoons that blow over the island, the country also enjoys on a periodic manner, inter-monsoon conditions. Although the duration of the inter-monsoon situation is less than those of the monsoons, its contribution towards the countries total rainfall is remarkable. When monsoon rain sets in, the sky remains overcast for much of the day, and severe cloudbursts could occur day or night. Inter-monsoon rain is generally confined to the second half of the day following hot sunny mornings.
On the basis of the time of occurrence and the cloud movement, the two monsoons could be further subdivided conforming to four seasons. The first inter-monsoon sets in March and lasts until mid May. The South west monsoon proper follows and remains in force from mid May to September. The second inter-monsoon lasts from October to November, followed by the North East monsoon in December, which extends up to February the following year.
The South West monsoon is regarded the longest rainy season and lasts for almost four months. It provides sufficient rain to the South West lowlands and the western highlands. It drops much of the rain in the southward regions of the South central highlands and only the dry winds blow over the North eastern sector, thereby creating a drought. The second inter-monsoon could very well reach cyclone conditions as it is caused by depressions in the Bay of Bengal, and often result in heavy thunderstorms. These rains are well distributed throughout the country.
As a rule the South west monsoon provides rain to the south western and adjoining sectors, and the North east monsoon to the rest of the country. The inter-monsoon rain on the other hand is well distributed throughout the country.
Up to recent times, about 60% of the year’s tea harvest was collected during the first six months, and with it a chain of administrative problems would emerge. April, May and June were regarded as the best cropping months, generally referred as the “rush” period. In addition a “mini rush” would emerge during the latter part of the year. This was a period that most bulk buyers would look forward to operate forcefully in Colombo.
This was a period the tea prices would invariably decline, sometimes to unrealistic levels. Offerings at the weekly auctions would become unmanageable and sales would close long before schedule dates. Backlogs would result, creating cash flow problems to the producer.
Tea production appears to be better balanced today with a surge in low grown production. There is a more appropriate distribution of crop today, and this situation seems acceptable to both the buyer and the seller. These changes to cropping patterns in the country, which is of a recent origin, are mainly due to the perceivable position low grown teas have acquired in the recent past. The location of the low grown sector is such that it enjoys a good spread of rain throughout the year. Today, low grown production has superseded all other categories, and this sector commands a strong position in Sri Lanka’s tea output by contributing more than 50% of the total.
All indications are that there will be a further improvement in their contribution towards the national crop. It is the performance of low grown teas that will determine the future cropping patterns of the country. A change in the cropping patterns has already emerged, and with these changes, Sri Lanka’s future crop projections will have to be recast. Tea production in the higher elevations still follows the old pattern of providing the bulk of the crop during the first half of the year, but with the low grown sector now showing such potential for growth, there is every possibility that new trends in tea production will emerge in the future.
Nationalisation of the plantations in Sri Lanka did not come as a surprise. It was a topic that was freely discussed, and made public at least two decades before it was ultimately enforced, although its applicability in the existing framework, was questionable. With the threat of nationalization, productive expenditure on plantations took a nosedive, which ultimately led to a steep decline in tea production.
The effectiveness of the private sector, which by then had become established, was beginning to show results. Their creative skills were completely overshadowed by the disappointing performance of the company sector. The general neglect of the company owned plantations continued, and no proper records concerning land utilization were maintained. In this situation, no proper assessment could have been made about the performance of the public and the private sector.
After the land reform laws of 1972 and 1975 were implemented, vast structural changes took place leading to the alienation of large extents of land for projects unconnected with the tea industry. Due to lack of reliable information, the general performance of the tea industry was understated, and the exact extant of land under tea was always a disputed subject.
Up to 1986, the Tea Commissioners Division of the Sri Lanka Tea Board maintained the extent of tea coverage. They were based on the submissions made by the tea producers, who had got themselves registered with the department. This was no doubt a very tedious operation, and the accuracy of the final assessment depended on the correctness of the individual returns.
According to the Tea Board statistics, the extant under tea in 1960 was 185,000 hectares. A 20% increase was recorded for the following year, and the tea coverage was increased to 240,000 hectares.
Vast changes took place in the agricultural sector during this period. Original tea tracks round Kandy, which came under the classification of medium grown teas, became the nucleus for a series of development programs that resulted in large extents of land coming off tea. It was once again in the Central Province that large areas were identified for diversification under the National Agricultural Diversification and Settlement Authority. The Mahaweli Scheme too took a heavy toll of the tea lands in the area. Without an accurate update of the situation, the tea coverage in this area was superfluously overstated, and the yields understated. These changes mostly affected the medium grown sector.
To arrive at a more realistic figure, an aerial mapping system was pursued in 1886, with foreign collaboration, and a more functional land use map covering the entire country was completed in 1988. According to this survey, the total area under tea had shrunk to 201,630 hectares, from 240,000 hectares earlier, reflecting a shortfall of 16%. As anticipated, the highest shortfall was in respect of medium grown varieties.
This investigation, in a way was helpful to identify in a broader assessment, the total extant under tea, but it could not ascertain the identity of the extents held under private and the public sectors. A further classification was found necessary, as a distinct division was building up between these two sectors, with the small holders making a strong impact.
Another tea land survey was carried out in 1994 to ascertain more accurately the tea coverage held by the private and the state sector. The Tea Commissioners division of the Sri Lanka Tea Board undertook this project. At its conclusion, a further decrease in the extent of the tea coverage was discovered. According to the latest findings, the total tea coverage had declined further to 187,309 hectares.
With this new set of figures, Sri Lanka’s performance in tea has been launched to a higher elevation, According to this set of figures, high grown varieties cover an extent of 51,442 hectares, having lost 30% of the coverage as recorded in 1965. It was during this year that the highest crop of 91 kilograms was harvested from these areas, with a tea cover of 87,345 hectares. Production from these areas has declined to 75 million kilos for 2001. Mid grown areas have sustained the biggest loss, and has only attributed 56,155 hectares to this sector, having enjoyed a tea cover of 99,359 in 1968. The largest crop from mid grown areas of 80 million kilograms was harvested in 1968. For 2001, production had declined to 53 million kilos.
Expansion of the low grown sector projects a different picture, and is acclaimed today as the only sector that has recorded an uninterrupted growth rate, both in respect of the tea cover and production levels. The tea cover under low grown category in 1960 was only 48,113 hectares. The latest figures indicate that this area has expanded to 79,711 hectares. Correspondingly, production has increased from 48 million kilograms in 1960 to 166 million kilos in 2001. Today the low grown sector contributes more than 50% of Sri Lanka’s total production.
The performance of the tea industry in general has now to be recast on the updated figures. The current position shows up the industry in better light than ever before. The national yield has increased to 1,379 kilograms of made tea per hectare from 1,045 kilograms per hectare in 1993. Similarly, yields from high grown, mid grown and low grown areas have automatically enhanced to 1411 kilograms, 857 kilograms, and 1803 kilograms, respectively from 979 kilograms, 552 kilograms, and 1803 kilograms using 1992 registration.
The history of our tea industry has an element that is unique and which makes it off every other producer country, and still has influence today. Our tea estates were not originally planted as such. They were the coffee estates crudely converted to meet an agricultural and financial crisis. This belief is still upheld even today that tea had been planted on the graveyards of the old coffee estates.
Although the coffee rust seems to have made its appearance in early 1865, the hostile effects of this frightful disease were not felt until about the 1870’s, from which point the crops started to drop. Options available to the planters were few. Some interplanted the dying fields of coffee with tea. Others made a clean sweep and uprooted all, 1200 plants to an acre. The stumps were either burnt in the field or used as firewood. A few coffee plants were exported to England to be used as legs for tea tables. It was no doubt a difficult task for the coffee planters, but they did it, and out of the ashes raised an entirely a new industry “Tea.”
It is for this reason that Sir. Arthur Conan Doyle, in one of his works, pays the following tribute to the Ceylon Planter who successfully overcame the disaster that followed in the wake of the deadly fungus.
“Not often is it that men have the heart, when their one great industry is withered, to rear up in a few years another as rich to take its place, and the tea fields of Ceylon are as true a monument to courage as is the Lion of Waterloo. My story concerns the royal days of coffee planting in Ceylon before a pestiferous fungus drove a whole community through years of despair to one of the greatest commercial victories which pluck and ingenuity ever won.”
The first commercial planting of tea took place on Loolecondera pioneered by James Taylor. It is no doubt an undisputed fact that it was the “Bitter Berry” that set the stage for the country’s economic expansion, but it was the emergence of Ceylon as a tea producer that opened the brightest chapter in the story of private enterprise. By the turn of the century coffee was dead and tea stood as the leader of a new Empire. Three acres of tea in 1867 was transformed into 350,000 acres thirty years later.
Tea comes of age
Year | Area(Hr) | Exports(kg) | Value(Rs.) |
---|---|---|---|
1873 | 113 | 23 | --- |
1893 | 89,100 | 20,817,963 | 22,899,759 |
1920 | 163,620 | 83,986,468 | 80,781,537 |
1950 | 229,635 | 135,499,356 | 751,650,630 |
1990 | 221,535 | 215,213,647 | 19,797,011,862 |
1995 | 187,309 | 234,307,587 | 23,991,187,106 |
2000 | 188,971 | 287,971,003 | 53,035,725 261 |
2001 | 188,971 | 294,042,808 | 61,650,522,046 |
With the steady improvement in the output of tea, the need for a proper marketing system emerged. The first shipment of 23 pounds of tea from Loolecondera estate to London was recorded in 1873. Tea was then considered only as a small item of merchandise. There was a tremendous build up during the following decade and about 90% of all the teas produced were consigned to London. There were other markets too that were showing interest in Ceylon tea. By 1883, it became clear that a new marketing system had to be set up for the disposal of this new product, and auctioning of tea commenced.
By this time, Ceylon had become economically tied to Britain as a major supplier of tea, with production and marketing controlled by British interests. Under these circumstances it was natural that they were going to implant in the country a system similar to their own forms of business dealings. The first step towards regularising the tea industry and trade was the introduction of the middleman.
They needed a man in the centre to collect at one end and share out at the other. Through experience they had found it cheaper and more efficient to employ middle man rather than for either group to try to do the whole job themselves.
This led to the formation of various categories of brokers, merchants, and wholesalers buying and selling tea in Colombo, taking their respective cuts down the line before it was finally dispatched to the grocer overseas. This heavy reliance of the tea industry and trade on these various intermediary organizations founded by British interests initially is amply demonstrated in the manner in which tea trading is conducted even today.
With the rank order of our major buyers changing constantly marketing of tea become a complex and a challenging issue, but our position as the main supplier to world markets is improving. The tea industry in the country was started by the British, to supplement the loss of tea business with China. Up to about the early 1970’s more than 80% of our total production was absorbed by the western world, with the UK in complete control. Ceylon found sufficient protection in the UK market to unload the bulk of our production.
Australia and New Zealand also depended on our teas for most of their requirements. But unfortunately they have diverted their operations to other producer countries now. America and Canada however have been supporting Ceylon teas from the very inception. Although their intakes have shown a decline in the recent past, they still remain a force to reckon with.
Shipments to the Middle East were insignificant and it was only from about the early 1930’s that the Arab world cultivated the tea drinking habit, and purchases remained small during the initial stages. Iraq and Egypt have been our long-standing and regular supporters of Ceylon teas, and our connections with them date back to mid 1920’s.
The natural adaptation of current trading patterns in the Middle East was launched around the 1970’s with the boom in oil prices and with the changes that came about in the political structures in these countries. For example, in Iran, with the disposing of the Shah, what was once a sophisticated open market turned completely into a controlled economy? Similar if not identical changes took place in Libya, Syria, Egypt and Iraq.
The abundance of wealth in the oil rich countries saw the development of state subsidised food supplies being distributed to the local population, and this was a factor that spawned direct state intervention. Simultaneously, the accelerated development of the infrastructure within many of these countries necessitated the recruitment of an expatriate work force. This also increased the market for tea in those countries.
The impact of all these changes was felt in Colombo. Government buyers such as the Egypt Trade Centre, the Iraqi Board, the Iranian and Libyan state buyers and the Syrian Tenders continued to operate on a regular basis in Colombo. In addition, the government buyer for the USSR purchased the finest of Ceylon teas during the seasons.
Consequently, the producer was assured of a minimum demand and a fairly predictable market pattern, with a new level of prices being established in Colombo. There was a sudden shift of interest to these newly acquired markets, with the result; some of our conventional markets were neglected. Shipments to London auction were curtailed. Price conscious Pakistan began to look for CTC and cheaper quantities. The Oceanic countries switched their purchases to their neighbours.
With the collapse of the OPEC Cartel, and with the steady decline in oil prices, these countries realised that a state controlled economy could not be sustained for long, and were forced to revolve back to private trade. Today, we see a steady dismantling of the state funded giants. The impact of these changes is clearly seen in Colombo, and is basically twofold.
The vast homogenous markets are fragmenting into segmented complex markets of opportunity, demanding a variety of products, and lending themselves to branding and niche marketing, offering a stream of other opportunities for marketers of tea.
The change in the market pattern on the floor of the auction in Colombo and the demand generated by one single buyer is fragmented into a series of small orders staggered over a much wider time frame.
It is vital therefore that markets establish their brands early. The centralised marketing efforts of the government’s tea marketing authority must also recognise these factors and participate vigorously to ensure that the vital markets for Ceylon teas are not lost or diluted in the long run.
It is appropriate at this stage to quote Philip Kotler, the marketing guru who said recently “Entire markets are disappearing as a result of managed trade policies, advances in technology, and innovative competitors. Mass markets are fragmented into micro-markets. Power is shifting from the producer to the retailer. Multiple distribution channels are replacing single channels.” He also added that “Branding is a company’s prime means of getting into and staying in the consumer mind, and in the intensely competitive market place, the company’s first order of business is retain customer loyalty.”
Marketing strategies have chanced vastly in the recent past, and will continue to do so in the future. We should always be watchful to identify new trends emerging in the marketing field and take corrective measures to ensure that Ceylon teas are not left out in the cold. The marketing of our teas to these critical markets will have to be handled judiciously, and with the right amount of assistance and focus from government authorities and marketers; Ceylon could retain her share of the “consumers mind.”
The tea land survey conducted by the Sri Lanka Tea Board on the tea small holder provides valuable information regarding the steady expansion of private sector in the recent past. On these findings it becomes obvious that the future of the industry will to a great extent depend on the performance of the small tea cultivator that forms the core of the private sector.
Sri Lanka’s total tea coverage according to the latest findings is 188,967 hectares, of which 56% is under public management and the balance 44% under the management of the small holder. After many years of uncertainty, the latest figures have brought into sharp focus the effects of the structural changes that have taken place in the production of the tea industry. Since the findings of the aerial mapping system that was concluded in 1886, about 9% of the total extent in tea had withered away. The public sector records a loss of 25%, whereas the smallholder sector has recorded a growth rate of 23%.
In the smallholder sector, 82,916 hectares are cultivated by 206,652 tea growers, as against 106,047 hectares in the public sector with 404 management units. The status of cultivation of both sectors seems well balanced.
A study of the distribution of smallholdings, in relation to the extent of land cultivated by each small holder is equally motivating. The largest concentration of smallholdings is found in the Galle (56,547), and Matara (44,051) districts in the Southern Province. About 43% of the small holders are concentrated in these two districts. About 20% (49,161) of the small cultivators are found in the Ratnapura district in the Sabaragamuwa Province. In the public sector, the Central Province with 205 holdings controls 57% of the total extent of tea in that category, with a high intensification of 42% in the Nuwara Eliya district. The Uva Province with 76 holdings controls 23% of the extant under public management.
At the lower end according to size, there are 172,522 holdings that are less than one acre, and 23,636 holdings between one acre and two acres. The largest concentration of smallholdings operates within this group. At the uppermost end only 169 holdings of over fifty acres have been registered. In most cases, particularly among those belonging to the first group, tea is grown as a subsistence crop, and occupies only a portion of the individual holding. This system, in a way, helps to bring about an ecological balance and helps to protect the environment.
In this group 196,158 small cultivators are responsible for the maintenance of 94%of the total extent of tea under tea in that category.
The expansion of the smallholder sector has followed a definite pattern, and had only penetrated the higher elevations of high and medium classification of today, with caution. This was considered the domain of the British pioneer planters, and left for their use. The growth of the smallholder sector has been mostly cantered round low elevation areas. Today there are 159,644 units involving the cultivation of 56,644 hectares, and the bulk of it is concentrated in the Southern Province, with the districts of Galle and Matara acting as the foundation for its expansion. The concentration of the public sector in these regions is limited.
The future of the smallholder sector could be further ascertained by the manner in which they have managed their properties. According to the survey conducted in 1994, about 68% of all the small holdings were considered to have been in a very satisfactory condition, with over 75% resorting to regular fertilizer applications based on recommended methods. This is most vital in tea cultivation, as it not only increases the production of green leaf, but also improves its quality, ultimately resulting in the production of a better quality tea. From a long term point of view the small holder is well geared to face the future with confidence as about 70% of the shall holder tea base is planted with high yielding varieties.
The morning of 30th July 1883 like any other day was calm and peaceful In Colombo Fort, despite the fact that it was a Monday, the first day of a working week. There was tranquillity all around the place, and the tall “kalu imbul” trees that lined Queen Street, now Janadhipathi Mawatha, had cast intricate shadows on the dark kabuk roadway. They are called rain trees from the circumstances that at night, when the leaves fold into a kind of a sack, the moisture condenses inside it, and at sunrise when the leaves open it discharges in a shower.
There were also the Suriya trees providing shade to the many streets that bisected at Queens Street. It flowers profusely with delicate primrose-coloured blossoms, large and flamboyant, changing to purple when they fade, and in form resembling the single hibiscus. The only source of disturbance was the sound of the distant sea pounding on the rocks. Notwithstanding this slight disturbance there was calmness in the air.
The subdued mildness of the day however was deceiving, notably on that Monday evening in the realm of the country’s first produce broker. Within the lavish interior of the broker's office with the frontage to Queen’s street, the atmosphere was tense and widespread with rumours. Wild tales regarding a tea auction were the most recent conversation in the town. It was to be conducted in the two-story buildings that stood on the sight that Mercantile House now occupies. There were more observers than actual buyers, and many were there to criticise the system rather than appreciate it. The faultfinding types were many, and they had condemned the auctions even before it started, but the more temperate sorts were prepared to review the situation more closely. Most producers were ready to give this new concept in tea marketing a chance. It was under this coercion that William Somerville decided to hold his first suction.
Behind the closed doors of the Broking House, a tall white-clad figure stood at his desk, a wooden hammer in hand. He surveyed the gathering with a ferocious look in his eye. He no doubt was aware of the importance of the ceremony he was about to perform. He was about to pursue a new system of marketing for tea, and its success was at hand. He was mindful of the criticisms already made, but he was firm in his decision to go through with it. To some it was yet another page reclaimed from the British system. This no doubt would have influenced his thinking, but he was anyway the first to try it out in the country.
He welcomed the gathering, in a very captivating manner, and waited diligently for the handful of buyers in the room to call out the prices they were willing to pay for the five lots of choicest Ceylon tea he was offering them. No such sales had ever been conducted in that manner, and that perhaps explains the reasons for the inordinate delay in starting the sale.
Somerville was being disturbed by the minute, and his flushed cheeks became bright red, when a person from the audience initiated an altercation with the seller, on the valuations placed on the teas offered for sale. “We think your valuations are far too high," said another.
Though completely agitated, William Somerville stood his grounds and did not let himself be intimidated. Although the hammer came down only once, he had won the day. The first lot of 999 pounds that was described in the catalogue as “Kabaragalla unsorted” packed in 50 lb. chest was sold for 45 cents per pound. The rest were unsold.
In the marketing of Sri Lanka produce, it was the first time that the “Gavel” had come down to conclude a contract of sale, and with it the authority of the gavel has been established. Today, Colombo is considered the largest auction centre in the world. It handles around four to six million kilos per week, comprising over 6500 lots. The first “knock” of the hammer heard on this occasion is perceived to reverberate over 6000 times each week in the various auction rooms at the Chamber of Commerce. The gavel that has been the emblem of authority through the centuries has remained so as the Harold’s wand for the transfer of ownership. A verbal contract becomes an irrevocable bond at the fall of the hammer.
Somerville would have been a disappointed person with his first auction, but it was just a nondescript sale of five lots comprising in all, about 140 chests. Little did he realise then, that during the succeeding years, this rather vain attempt at auctioning tea was going to be the foundation on which the country’s entire production of tea was going to be marketed. Today, Colombo is the largest auction centre in the world, thanks to William Somerville. Over the years, this form of sale has been adopted for the marketing of other produce.
It is most unfortunate that no proper records have been maintained after this event, but the Ceylon Observer of 30th July had the following to say. “The first sale of tea in Ceylon came off at the officers of Messrs Somerville and Company. The results show that there were buyers, but there is considerable difference between sellers’ and buyers’ ideas of prices, which will rectify themselves. We congratulate Messrs Somerville on being the pioneer to start a local sale and trust there will be a long and prosperous succession.”
The auspicious date was 30th July 1883, and the scene the offices of Somerville & Company, Queen Street Colombo Fort.
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