Government tells planters to brace for competition from FTAs

COONOOR - The government Tuesday asked the commodity plantation sector in southern India to brace for competition in the domestic and export markets coming from free trade agreements (FTAs) with other countries and regions.

“The plantation sector has to brace for competition that will intensify when India will enter into FTAs with more countries and regions in a globalised world where two-way trade is order of the day,” A.K. Mangotra, additional secretary in the commerce ministry, said here.

Exhorting planters and growers of coffee, tea, spices and rubber to maximise productivity and profitability for long-term sustainability, Mangotra said an FTA with the European Union was likely to be signed by December and similar pacts with Japan and Malaysia were in offing.

“We already have an FTA with the 10-member Association of South East Asian Nations (ASEAN), which covers even plantation commodities for gradual reduction of tariffs by 2019,” Mangotra told about 800 planters at the 117th annual conference of the United Planters’ Association of Southern India (Upasi).

Noting that similar FTAs with other nations will compel them to compete for a share of the domestic and export markets, he cautioned the planters against the “business as usual” approach and being complacent about the current outlook, which is comfortable in terms of prices and exports.

“Unless the sector builds capacities and scale operations, prospects of the three Ps (production, productivity and profitability) will be bleak in the coming years,” he said.

Though plantation area for tea expanded by 1.5 percent per annum, coffee 1.4 percent, rubber 2.5 percent and spices 2 percent, productivity, however, declined to 1,700kg per hectare from 1,739kg/ha in tea, to 765kg/ha from 826kg in coffee, to 1,784kg/ha from 1,879kg/ha in rubber over the past five years, while it remained at 1,796 kg/ha in spices.

“Growers have to use modern practices to increase productivity by taking up replanting and rejuvenation to replace ageing plantations and check production costs to improve margins, as prices are bound to fluctuate and exports depend on international situation,” Mangotra noted.

Expressing concern over flight of labour from plantations, the senior official said it was unfair to blame the state-run Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for labour shortage, as the social scheme was for only 100 days and those below poverty line (BPL) were eligible for it.

“The flight of labour from plantations is a harsh reality of the changing socio-economic dynamics, as the present generation of growers and labourers are getting educated and migrating to cities in search of greener pastures. Unless wages are in commensurate with the cost of living and competitive, the sector will find it hard to even retain the existing workforce,” Mangotra reminded the planters.

Admitting that the sector was burdened with the social costs under the Plantation Labour Act, 1951, he said a labour committee was set up recently to explore what extent the government would be able to share the burden though not up to 50 percent, as recommended by an inter-ministerial committee in 2003.

“Though social costs such as free housing, education and healthcare of the families of plantation labour are borne by large and institutional planters, we have to find a mechanism to ensure the state and central governments step in to bear the cost of social benefits partly if not 50 percent,” Mangotra asserted.

Under the Act, planters are mandated to provide free housing, medical care for employees and their families and education facilities for their children in addition to negotiated wages.