Sri Lanka’s tea output fell 30% in September 2016 for the eighth straight month due to droughts, poor application of fertiliser, low market prices and a ban on pesticides, as Regional Plantation Companies continue to lose money producing high grown teas. With an average cost of production of Rs575/kg and high grown teas fetching Rs440/kg on average at the Colombo Tea Auction, plantation firms lose Rs130 to produce a kilo of tea. This loss will increase further now that daily wages have increased to Rs730. A round of contentious negotiations between plantation companies and unions concluded in October 2016. For the first time, a productivity component was included, which could raise the daily wage to as much as Rs975 a day.

18%

Increase in basic daily wage

58%

Increase in daily wage including a productivity bonus

70%

Labour cost component in the cost of production

Rs15 billion

Accrued losses of Regional Plantation Companies over the last three years