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LABOUR-INDIA: Worker-Turned-Owners Revive Failing Tea Estates

Archna Devraj

MUNNAR, Kerala, Apr 25 2007 (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 enterprises.

So successful has the &#39Munnar story&#39 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.

&#39&#39A 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,&#39&#39 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 &#39quiet revolution&#39 in the tea gardens of Munnar. India&#39s commerce minister Jairam Ramesh said, during a visit last month, that his ministry was examining the &#39&#39KDHP Model&#39&#39 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 &#39Tetley&#39 brand runs world&#39s 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&#39s 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&#39s 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. &#39&#39But this is a story of vision, courage and leadership blended with innovation, teamwork and collective effort,&#39&#39 he added.

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. &#39&#39The 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,&#39&#39 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&#39s fortunes to increased worker productivity, Alexander says average tea leaf plucking per worker climbed from about 25 kg a day to 40 kg. &#39&#39There is a sense of participation and ownership among the workers. They know that their hard work will result in more money in their pockets,&#39&#39 he adds.

A &#39flat&#39 management structure and a &#39bottom-up&#39 management plan has also served the company well. Advisory and consultative committees, consisting of workers&#39 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. &#39&#39Earlier, 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,&#39&#39 she said.

Chandra&#39s presence on the board, once considered a rarefied zone open only to the &#39&#39bosses&#39&#39, has helped her to highlight several worker issues such as timely payment of incentives. &#39&#39With the workers&#39 day-to-day complaints and expectations finding ready redress, their morale has gone up resulting in greater productivity,&#39&#39 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 &#39productivity-linked incentive&#39 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.

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