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by Dr. A. Nugawela

The plantation sector in the country, consisting mainly of mono-cropped large plantations and smallholdings, originated during the colonial period with tea, rubber and coconut as the main crops. Of the total land area of the country - 26.7 per cent i.e., 1,752,000 ha, is agricultural land and during 2000, 180,000, 158,000 and 439,000 ha were under tea, rubber and coconut respectively.

The plantation sector covers 44.4 per cent of the total agricultural land of the country. Apart from the above-mentioned crops, oil palm, cocoa and some fruit crops, e.g., mango and rambutan are also planted to a small extent. The tree crop sector contributes immensely to the social and economic development of the country. In 2000, the contribution to the national GDP was 2.6, 0.4 and 2.2 per cent from the tea, rubber and coconut sectors respectively.

Protection of the environment and creation of employment are the other benefits. Protecting the environment has become a key issue. In 1901, the forest cover was 70 per cent of the country, but had dwindled to 23.9 per cent dense forest and 6.9 per cent of sparse and open forest in 1993. In this context the 11.9 per cent under plantation crops out of the total land area of the country is also significant as they resemble natural forest to a great extent.

Relative performance of tea and rubber

The rubber extent and annual production show a downward trend in the country. In the tea sector, however, there is a steady increase in both the extent and annual production .

Since the rubber industry is contributing, significantly towards the socio-economic development of the country while protecting the environment if this downward trend of extent and production continues, the country will lose the benefits from this industry.

The decline in performance in the rubber sector can be attributed to poor prices and the resulting low investment on re-planting and revenue areas. From 1995 to 2000, the average Colombo Auction Price for rubber (RSS Grade 1) has declined by 24 per cent while tea prices for the corresponding period increased by 88 per cent. The daily labour wage has increased from Rs. 72.24 to Rs. 112.00 in the plantation sector during the same period.

Little or no returns to the grower due to poor farm-gate prices often result in poor agro-management, i.e. non-adoption of soil conservation, weeding, and fertiliser applications. Abandoning of tapping or even over-exploitation of trees to enhance yields cannot be ruled out under these circumstances either. Adoption of such strategies when faced with low prices could lead to poor productivity levels. The national productivity levels for rubber and tea shown in Table 3 confirm this trend.

It is interesting to note that during this period, the only year in which productivity levels of rubber increased over the previous year is 1996. It may be that relatively higher farm-gate prices during the 1995 and 1996 period (Table 2) generated sufficient revenue to support improved agronomic practices in existing rubber revenue areas. Further, harvesting may have been undertaken in all revenue extent to take advantage of the higher prices prevailing.

This also confirms that progress made in any industry is mainly price-driven. Further, it contradicts the argument put forward by a few that, technology developed and recommended by our research institutes does not suit the current needs of the industry.

Alternate crops

It is evident that poor prices lead to poor productivity in commercial plantings due to curtailing of inputs. Further, it appears that the current scenario does not drive growers towards investing in the rubber industry. Therefore, rubber growers are looking into alternate crops such as tea, oil palm and timber species.

With regard to rubber, an additional revenue is possible by selling the old rubber trees. Currently the value of a rubber tree is ca. Rs. 600 and with a stand of ca. 400/ha at the time of uprooting, an income of about Rs. 240,000/ha can be obtained. A mahogany tree of ca. 25 years fetches about Rs. 12,500. Accordingly, with 200 trees per hectare, the possible revenue is ca. Rs. 2.5 million.

Nevertheless, it is important to note that generally price fluctuations and increasing volatility exists in the global commodity markets. Therefore, the financial viability of a crop is also subject to change. A stable and reasonable price for commodities is essential for the growers to invest in the plantation sector with confidence.

Environmental impacts

Replacing natural climax vegetation which is rich in biodiversity (over 200 species/0.25 ha) and biomass (400-450 tonnes/ha) and also efficient in soil water and nutrient balancing and conservation with any plantation crop will have adverse effects on the environment.

There is however, little information if any on the effect on the environment of changing from one plantation crop to another. In this context, both socio-economic and ecological implications need to considered.

Ideally plantation crops are established with adequate measures for soil conservation. Terracing, draining and leguminous covers are used to check soil erosion. Further, substantial and relatively permanent biomass in these plantations, ca 100 tonns/ha, would lead to evapotranspiration rates similar to those of natural forests. Therefore, such plantations are unlikely to contribute to disruption of rainfall patterns or to global warming. Mahogany plantations would be relatively close to natural forests in these attributes.

Conclusions

Naturally, investors will try to maximise the return for their investment. Therefore, among the different possibilities in the tree crop sector, the most rewarding crop will be chosen for their investments. Social and environmental issues may not be very important concerns to the investors.

Hence, future trends in the relative extent of these tree crops in the country will be determined by prevailing farm-gate prices unless an artificial situation is created to discriminate against or favour a particular crop in relation to the other as could happen.

For example, if the Government decides to minimise adverse effects on the environment proved beyond doubt to be caused by a particular tree crop cultivated widely for economic reasons.

A stable and reasonable farm-gate price for all commodities will boost the interest of growers in investing in all possible crops with equal confidence.

In order to supplement the price of a particular commodity when market prices are low, the government will need to build up a fund by adopting appropriate methods. Nevertheless, the fluctuating nature of commodity prices has inevitable adverse effects on the economic management of plantations.

Under any circumstances, the ideal solution to this problem is for the investor to grow a healthy mixture of different tree crops in an estate. Processing will then need to be centralised rather than left to individual estates.

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