The proposed wage revision in Kerala’s plantation sector has set alarm bells ringing across the industry, as it is facing a severe financial crisis due to the high cost of production, low prices and low productivity.

With the wage revision talks scheduled to begin this week, the industry is keeping its fingers crossed to find ways and means to meet the demand.

The Association of Planters of Kerala is of the opinion that any unilateral decision to increase wages will deepen the crisis and render the majority of the estates defunct.

The association wants the stakeholders to take a realistic view of the ground situation, BP Kariappa, Chairman, APK, told BusinessLine. The extreme weather conditions experienced in the past three years have pushed the financial situations from bad to worse. The decisions to pay an interim relief advance along with the wages have deepened the cash crunch further. Kerala plantations pay the highest wages in India and this has pushed the cost of production beyond manageable levels, he said.

The plantation industry is concerned that the prices of every plantation crop has been on the decline for the past two years. Financial institutions are unwilling to extend support to the plantation sector, citing viability issues.

The average auction price of Kerala CTC teas in April 2017 was ₹127.06/kg while it is only ₹102/kg in September 2019. There is nearly a drop of ₹25/kg during this period. The wage during April 2017 was ₹312.42 while it is 389.65 on October 1. There is an increase of ₹77.23 per day in wages.

This mismatch has resulted in many of the tea estates defaulting in statutory payments and the majority of them are on the verge of closure, Kariappa claimed.

The average price of RSS IV rubber during 2017 was ₹143.32/kg where as it is ₹116/kg during October. There is a fall of ₹27/kg during this period. The situation of coffee remains the same as that of tea and rubber. Even though cardamom showed an upward trend in prices, the farmers have lost 60 per cent of their crop due to erratic weather conditions.

The State government has decided to abolish Agricultural Income Tax and Plantation Tax in order to help the plantation industry. However, none of these decisions were implemented even after two years of taking the decisions, he added.