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Workers-Turned-Owners Revive Failing Tea Estates

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  • Dan Clore
    News & Views for Anarchists & Activists: http://groups.yahoo.com/group/smygo http://tinyurl.com/ysnzpt LABOUR-INDIA: Worker-Turned-Owners Revive Failing Tea
    Message 1 of 1 , May 8, 2007
      News & Views for Anarchists & Activists:

      Worker-Turned-Owners Revive Failing Tea Estates
      by Archana Devraj

      MUNNAR, Kerala, Apr 25 (IPS) -- Faced with unemployment in their failing
      tea estates, about two years ago, tea pluckers in the rolling highlands
      of this southern state responded by forming cooperatives to buy out
      their former employers Tata Tea and turn the gardens into profitable

      So successful has the 'Munnar story' of participative management been
      that the World Bank (WB) recently sent a team to study it, and has plans
      to back similar initiatives in other major tea-growing areas of India,
      especially the famed Darjeeling district of West Bengal and in Assam state.

      "A WB team visited us a few months ago. Clearly impressed by what they
      saw, the team members said they would be willing to fund similar
      initiatives in the north-east," T.V. Alexander managing director of the
      cooperative Kanan Devan Hills Plantations (KDHP), which bought out Tata
      Tea, told IPS.

      The Bank is not the only one to take notice of the 'quiet revolution' in
      the tea gardens of Munnar. India's commerce minister Jairam Ramesh said,
      during a visit last month, that his ministry was examining the "KDHP
      Model" to revive nine other defunct tea gardens.

      Ramesh said there were some 20 closed tea gardens in Kerala, affecting
      nearly 35,000 workers. The new initiative is being discussed with the
      government of West Bengal state where as many as 17 gardens have been
      closed, affecting some 50,000 workers.

      The KDHP company, in which 13,000-odd ordinary tea pluckers and other
      staff now hold 70 percent of the stake, was set up on Apr. 1, 2005, some
      three years after the house of Tatas made known its intention to exit
      the tea plantation sector in Kerala.

      Tata Tea, which owns the famed 'Tetley' brand runs world's second
      largest branded tea operation with a presence in 40 countries. Its
      products in Munnar include instant tea.

      The dipping fortunes of the Tata Tea reflected the state of the tea
      industry in India as a whole. While inefficient management was a factor,
      accession to the World Trade Organisation (WTO) by India and fierce
      competition from new entrants into the global tea market like Kenya also
      took their toll.

      One of the world's major exporters of tea, India netted roughly 500
      million dollars in profits from producing 200 million kg of tea, last
      year, with large chunks of profits estimated to have been eaten away by
      wildly fluctuating global prices.

      The situation called for new strategies especially in plantation
      management, marketing and handling unions in an industry which happens
      to be the country's second biggest employer -- with close to a million
      workers on its rolls.

      Given direct stakes in the fortunes of their company, KDHP worker-owners
      were not only able to wipe off the cumulative losses of 24 million US
      dollars run up by Tata Tea, within a year, but also register a post-tax
      surplus of 500,000 dollars as on Mar. 31, 2006. They also managed to
      declare a 14 percent dividend for its first year of operations.

      In the first half of fiscal 2006-07, KDHP reported a pre-tax profit of
      1.2 million dollars or five times the figure for the same period last
      year. The company hopes to post a pre-tax profit of two million dollars
      by the end of this fiscal that ends on Mar. 31, 2008.

      There are worries. A proposed wage revision notification could impose a
      liability of over 1.5 million dollars and cut the profits, KDHP chairman
      Joy Joseph told IPS. "But this is a story of vision, courage and
      leadership blended with innovation, teamwork and collective effort," he

      According to Joseph, the KDHP experiment was the first time in the
      history of the plantation sector in India, long a bastion of large
      corporate holdings, that workers have come forward to take over a
      company to save their own livelihood and also revive a failing company.

      To be fair to Tata Tea, while exiting the plantation business in Kerala
      state, its management was clear that it would not hurt the workers or
      allow the pristine misty-aired ecology of the Munnar hills to be
      disturbed by letting in industries other than tea.

      High on the list of options considered by the management was selling the
      plantations to a third party. But this was dropped after it became clear
      that there was no corporate or other business outfits capable of turning
      around the plantations.

      Initially, a cooperative model did not enthuse the workers since there
      were fears that it would lack professional management. But a plan was
      worked out combining worker participation with professional management.
      "The unions were sceptical about the plan. It took several months of
      painstaking work to put the framework in place and convince the workers
      to give it try," recalls Alexander, who was earlier a Tata Tea manager.

      After a major bank stepped in as financial partner things became even
      easier. At present 97 percent of the KDHP workforce holds almost 70
      percent of the equity. Tata Tea continues to hold 19 percent of the
      stakes while other parties have the remainder. The new company
      administers 16 tea gardens spread across 23,000 hectares.

      Ascribing the remarkable turnaround in the company's fortunes to
      increased worker productivity, Alexander says average tea leaf plucking
      per worker climbed from about 25 kg a day to 40 kg. "There is a sense of
      participation and ownership among the workers. They know that their hard
      work will result in more money in their pockets," he adds.

      A 'flat' management structure and a 'bottom-up' management plan has also
      served the company well. Advisory and consultative committees,
      consisting of workers' representatives, are involved in the day-to-day
      functioning and decision-making in all areas -- be it the estates, the
      factory, marketing or welfare.

      Chandra, who worked as tea plucker for 17 years now sits on the KDHP
      board of directors as a representative of the workers. "Earlier, we had
      nothing to do with profits or losses of the company. But, now, there is
      a greater sense of responsibility and involvement in these matters," she

      Chandra's presence on the board, once considered a rarefied zone open
      only to the "bosses", has helped her to highlight several worker issues
      such as timely payment of incentives. "With the workers' day-to-day
      complaints and expectations finding ready redress, their morale has gone
      up resulting in greater productivity," she explained.

      The consultative committees hold monthly meetings to advise on such
      issues as productivity enhancement, cost control, absenteeism and to
      review the performance of the estate and the factory.

      According to Alexander a 'productivity-linked incentive' structure and
      policies focused on training, recruitment and remuneration have also
      worked to keep workers on their toes.

      Tata continues to shoulder the social welfare projects of the gardens,
      which include a school for the disabled children of the tea garden
      workers and running employment generation units for them. These include
      vegetable dye, paper making and strawberry preserve units.

      Sensing a hugely popular proposition, the trade unions quickly came
      round and cooperated with the changeover -- though it meant a loss of
      collective bargaining capability under labour laws.

      Not resting on its laurels, the worker-owned KDHP is now going on to
      explore niche areas such as organic tea, flavoured tea and speciality
      teas that are fetching good prices in the export market. (FIN/2007)

      Dan Clore

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