Hayleys Group-owned plantation firms are breaking century-old shackles of the daily wage-based hired system and the perceived low dignity that came along with working in tea estates. Faced with a shortage of workers due to changing aspirations & hopes and the low self-esteem associated with working in a tea plantation the Hayleys leadership teams figured they had to radically change the way the industry is managed to overcome the challenges.

The green shoots of the first results of a decade-long pursuit of a vision and investment that sought to put plantation workers at the centre are now apparent. Industry veteran Dr Roshan Rajadurai the chief architect of this transformation at Hayleys Plantations says besides putting people at the centre sustainability and innovation too now thrive in the plantations.

Hayleys-owned Talawakelle Tea Estates PLC won the retail and trading category award at the ACCA Sustainability Reporting Awards 2022. Dr Roshan Rajadurai the Managing Director of Hayleys Plantations and Senaka Alawattegama, Director and Chief Executive of Talawakelle Tea Estates PLC discussed the significance of the achievement.

How is the unfolding economic crisis, and trends in global consumption impacting the industry and your business?

Dr Rajadurai: We were back on our feet quickly after the pandemic because most of our work is done in the estates so it was manageable. What took us by surprise was the agrochemicals and fertilisers ban. For commercial-scale agriculture, these necessary inputs are required. Millions of people are farmers or work in agriculture and so the ban was a giant step back for the industry. But as a company, we foresaw this and we made some provisions to minimise the impact. That dark period has passed.

Recently what’s impacting us is the unavailability of weedicides and fungicides. The current supply in the market is insufficient for the rate of application for good weed management. Of course, the wider implications are that the output will fall and the pull factor for people to work in the tea fields; high crops and high earnings are affected.

Sri Lanka exports 95% of its tea. We are supplying a global commodity to the global market. So the demands and challenges are so much more complex compared to for instance India, where over 80% of the tea crop is consumed in the country. So in that context, we are affected by the events that disturb global commerce and they impact us the way the war in Ukraine and the tensions in Iran and Turkey would impact us, but so far we’ve been spared.

Auction tea prices are higher and exporters have also benefited from a weaker currency. However, all input costs have increased by as much as three to fourfold. So the margins are similar to what they were earlier.

While many companies in other industries have downsized during COVID and the economic crisis, the tea industry maintained its workforce. During COVID when there was a reverse migration of people into the estates we absorbed them, looked after them and employed whoever wanted a job.

Migration from Sri Lanka has accelerated since the economic crisis. Has this impacted the plantation sector as well?

Dr Rajadurai: It’s very ironic really, because in the 1860s when tea was first grown in Ceylon the wages were three times higher than that of South India. That’s how the tea plantations got the workers they required. At that time migrating to Sri Lanka was desirable. Now we are exporting plane loads of our people overseas for the same reasons. The plantation sector in particular is challenged by the migration of workers.

Agriculture work anywhere in the world has to be outdoors, but the negative perception people have of the plantation sector as not providing dignified work is unfortunate. This isn’t the case, compared to agriculture in Sri Lanka. Over 1.5 million households are involved in growing rice in Sri Lanka, where the conditions are no different but there is no stigma attached to that.

We are working to change that perception by moving away from the 150 old legacies of this daily wage model. Instead, we are now successful with something called the revenue share model. Besides the plantation companies, there are almost 500,000 smallholder plantations which produce 75% of Sri Lanka’s tea. Smallholder tea plantations are entrepreneurial and self-managed and within three decades, they have trebled land under cultivation, a manifestation of the model’s success.

The Regional Plantation Companies (RPCs) are also moving workers to that model while maintaining the current worker benefits. We see great success with workers earning two or three times the wage they would have otherwise made, depending on their ability and motivation.

The Revenue Share Model offers flexible working hours, it’s not regimented and they have more time with the family and for us as a business, areas we could otherwise not have plucked because of the worker shortage, are getting plucked.

Why is sustainability good for business?

Alawattegama: Sustainability is a term that has been trending recently. But in the tea industry, even if you go back 50 to 60 years the spirit of sustainability has been a constant. Tea is a long-term crop, and for the people involved in this industry it is a livelihood, a continuum from one generation to the next and from family to family.

In the three RPCs of the Hayleys Group, we have 150,000 people resident on our plantations but only 25,000 are registered workers who directly contribute their labour to the estate enterprise, but we look after and care for the dependents and non-workers because it’s a community. So we have this tremendous responsibility to ensure that equitable and sustainable livelihoods continue and to do that we must have a profitable and sound business.

Our driving theme is that doing good is good for business. We have many innovative initiatives to allow people to live happier, contended lives.

Besides that, the physical assets of the land, soil, water and vegetation ecosystem have to be preserved in their pristine form, because the tea crop is dependent on that ecosystem.

You can’t assign a cost to these things like looking after the people and the ecology, but it’s part of the sustainability value chain because you need both people and the physical assets. So people and the environment are at the core of our business and everything radiates from that. We do everything possible to ensure people and the ecology fit into the business model.

Can you take us through your sustainability initiatives and their impacts on the environment, communities and financial performance of the company?

Alawattegama: If I talk about the environment; we partnered with the government to plant indigenous tree species in the Talawakelle area where most of our estates are located and especially near the Devon and St.Clair waterfalls. In partnership with Rotary International, we are also planting a million trees. Highland tea plantations are situated in catchments from where all of Sri Lanka’s great rivers originate. Coordinating with the Mahaweli ministry we also planted bamboo to prevent river bank erosion.

Besides the challenges of environmental and biodiversity conservation, all our factories are equipped with solar panels in a push to increase the share of renewables in our energy mix. We also grow the trees we need for solid wood fuel.

During the fertiliser shortage, we focused on SMART Precision Agriculture in contrast to the broadcasting of fertiliser where we know as much as 70% of it is either washed off or volatilized. We also “buy back” weeds, compost them and place them on the soil as bulk manure.

We have a nice term for all this now, regenerative agriculture, but we’ve been doing all these things for decades.

People are at the core of our business. Every month we select the best tea pluckers from each of our 300 or so divisions in Hayleys-owned plantations, and last month we had a group-wide ‘Best Tea Plucker’ competition where the grand prize was the equivalent of one-and-a-half years’ wages. It’s revolutionary for the agriculture sector that people are celebrated with fanfare, recognition and celebration.

Hayleys plantations are the only ones in agriculture ranked by Great Place to Work, an independent third party that interviews the workers to determine the ranking. We had almost 95 plus positive scores in most areas. So the workers have spoken.

Recently, we conducted our own survey under guidelines similar to the ones used by Great Place to Work in our plantation divisions, measuring 10 parameters including maternal care, child care, innovation, clean and tidy homes. Following an independent audit of the outcomes, we had a staff symposium where we recognized the best divisions in our estates.

Talawakelle Plantations has been honoured by ACCA with its sustainability reporting awards. Why is it significant?

Alawattegama: It is a recognition of all the hard work of everyone, workers, staff and corporate management. ACCA recognises our annual report’s transparency on impacts across the spectrum of stakeholders. We have also won several awards in Sri Lanka and the region for sustainability and its reporting.

More than the award itself, it’s the work that goes into it and what we become as a company by doing these things, rather than purely profit-oriented we have to focus on a greater vision and establish the systems to get there.

We don’t target it but the awards come because the whole system is aligned to doing good to the environment, the product, the asset we manage and the people.

We won 7 awards including 4 Gold, 2 Silver and a Bronze at the Asian Sustainability and Integrated Reporting Awards competing against companies from Japan, Singapore, Thailand, and others. Talawakelle and Kelani Valley Plantations were the only companies from the agriculture sector to be shortlisted in the World Sustainability Awards held in Germany.

At a senior management level, you believe in sustainability. How do you align teams to believe in the same thing?

Dr Rajadurai: I’ve been in this role for over a decade and our teams are now aligned to this thinking and vision. Our leadership at corporate and estates live the values.

One of our core values is to deeply engage with the workers; we are very comfortable talking to them and organising various activities. Otherwise, work can get boring because of the repetitive nature of agriculture jobs in the provinces. Our staff does a fantastic job, to keep the fires burning.

Businesses are resource constrained for investing during an economic crisis. Why should they invest resources into sustainability? What advice would you give?

Dr Rajadurai: Our belief is not about surviving but thriving. We are very confident because our past positive and proactive actions are now reaping rewards for us. We are very confident that our teams, at every level, will perform to expectations or exceed them. We are very confident about the future.

The second thing is we have changed the landscape of the plantation industry. Instead of this 100-year colonial legacy top-down, highly supervised work environment, we have opened up and encouraged people to work in a revenue share model. If we don’t change the model, with the current cost and the outputs, there will not be a future for the Sri Lankan tea industry. We are transforming fast and if as an industry we do that we will be a global force to reckon with because of this model.

With this model, people are empowered and they will want to pluck more. Whereas now it is hardwired into their DNA to pluck the minimum, which is 18 kilos whereas they have the potential to pluck 30 to 40 kilos; and under revenue share, they are achieving it. Once the workers migrate to that kind of a system they’ll enjoy more financial freedom, more free time and a higher quality of life.

I have worked in tea for 40 years and a lot has changed since. Rice farming will be rice farming but the way it is done will change. I hope that the tea industry is going to change fast. Everyone in the industry, workers, management, the state, communities and the unions who are tied to this, is going to benefit and thrive.