Sri Lanka’s Plantation Sector - A Journey Through Change

In a serene, mist-covered landscape, digital overlays highlight the precision of modern agricultural technology on lush, rolling hills.

What It Was, What It Is, and What We Missed

For more than 150 years, plantations have shaped Sri Lanka’s economy, exports, and rural life. Coffee, tea, rubber, coconut, cinnamon, and later oil palm have all played defining roles in the nation’s growth. From railway lines built to transport coffee, to today’s tea auctions that still influence global markets, the plantation sector is deeply woven into the story of Sri Lanka.

Yet the sector we see today is very different from what it once was — and different again from what it could have become.

This first article explores the evolution of the plantation sector after independence, how the Regional Plantation Companies (RPCs) came into being, and how Sri Lanka’s agricultural trajectory compares with that of other Asian nations that transformed rapidly while we slowed down.

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Plantations After Independence: A Sector Searching for Direction

When Sri Lanka gained independence in 1948, the plantation sector was already a global powerhouse in tea and a major producer in rubber and coconut. But the decades that followed were marked by significant structural shifts:

1. Changing ownership and identity

British-owned “sterling companies” were gradually replaced by local ownership as part of economic reforms. Nationalisation in the 1970s brought the sector under state management, but this shift also introduced political influence, heavy bureaucracy, and slower decision-making.

2. A complex labour legacy

Plantation communities — primarily Indian-origin Tamil workers — faced decades of political marginalisation, poor housing, and limited access to services. Although significant progress has been made, the sector continues to carry this social responsibility.

3. The RPC transformation

Chronology of Sri Lanka's Plantation Sector: Post-Independence Transition from British Control (1948-1970s) to State Ownership and Nationalization (1970s), culminating in the establishment of 23 Regional Plantation Companies in 1992.

By the early 1990s, state-run plantations were running at a loss. In 1992, the government created 22 Regional Plantation Companies (RPCs) — later becoming 23 companies — and handed management to the private sector through long-term leases.

This RPC model remains the backbone of commercial tea and rubber plantations today.

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Why Plantations Still Matter to Sri Lanka

Despite recurring challenges, the plantation economy is still vital:

• Tea is one of Sri Lanka’s largest export earners, with around 320,000 hectares under cultivation and more than one million people depending on the sector for livelihoods.

• Rubber, though smaller, supports thousands of smallholders and provides raw material for key industries.

• Coconut and cinnamon (where Sri Lanka produces more than 85% of global Ceylon cinnamon) remain pillars of rural income.

• Oil palm, although controversial, has high productivity potential and reduces expensive edible oil imports.

The combined plantation economy contributes to foreign exchange, employment, rural infrastructure, and national food security in ways that are often overlooked.

Yet, despite its importance, Sri Lanka’s agricultural productivity has not kept pace with global trends.

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How Other Asian Nations Surged Ahead — and What Sri Lanka Missed

Between the 1960s and 2000s, several Asian countries underwent agricultural revolutions:

Malaysia & Indonesia (Oil Palm & Rubber)

• Malaysia increased oil palm yields to 20–26 MT/ha of FFB, and Indonesia now produces 55% of the world’s palm oil, using precision agriculture, R&D, mechanisation, and strict estate management.

• Sri Lanka averages 8–12 MT/ha, depending on estate age and conditions.

• Both countries integrated digital systems, mechanised harvesting tools, fertiliser mapping, GIS, and worker productivity analytics decades before Sri Lanka.

India (Tea, Rubber, Spices)

• India diversified aggressively: CTC tea, organic spices, high-density rubber planting, and export-oriented processing.

• India built commodity boards with powerful research wings (Tea Board of India, Spices Board, Rubber Board), creating continuous innovation cycles.

• Sri Lanka’s research investment slowed, and technology adoption remained conservative.

Vietnam (Coffee, Pepper, Spices)

• In 1990, Vietnam had negligible coffee production.

• By 2020, it became the world’s second-largest coffee exporter through:

• Large-scale replanting

• Farmer training

• Market access programs

• Aggressive digital extension services

Vietnam’s transformation is one of Asia’s greatest agricultural success stories — while Sri Lanka’s plantation sector maintained traditional models longer than it should have.

Sri Lankan plantation practices juxtaposed with modern technology-driven farming in Southeast Asia, highlighting traditional manual labor and advanced precision agriculture techniques utilizing drones and digital monitoring.

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What We Missed — A Candid Reflection

Looking back, several opportunities slipped through Sri Lanka’s fingers:

1. Slow technology adoption: While Southeast Asia embraced digital agriculture early, Sri Lanka remained dependent on manual records, paper registers, and “visual judgement.”

2. Limited replanting: Countries like Malaysia replanted estates cyclically; Sri Lanka postponed replanting due to cost, creating large areas of ageing tea, rubber, and coconut.

3. Inconsistent policies: Frequent shifts — from fertiliser bans to land ceilings to crop restrictions — discouraged long-term investment.

4. Labour-management gaps: Skilled labour migrated abroad, and productivity stagnated. Meanwhile, wages rose (correctly) to Rs. 1,350/day, with proposals to increase total earnings to around Rs. 1,750 — increasing pressure to modernise.

5. Missing the “agri-industry mindset”: Malaysia and Indonesia treat plantations as precision-run industrial operations:

   • KPIs

   • Cost optimisation

   • Digital traceability

   • Worker productivity analytics

   • Mechanisation

   • Continuous research

Sri Lanka, in contrast, often viewed plantations through a social welfare lens, limiting competitiveness.

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Where We Stand Today

The RPC model has improved efficiencies, diversification, certifications, and sustainability efforts such as:

• Improved financial controls

• Certifications and sustainability standards

• Crop diversification

• Enhanced infrastructure

• Implementation of specific technologies

However, major challenges persist:

• High cost of production

• Ageing estates

• Labour shortages

• Productivity gaps

• Climate pressure

• Global competition

Anyone working in plantations feels this daily — especially the challenge of shifting teams from “old school” habits to data-driven methods.

And yet, the sector has remarkable resilience. It has survived wars, global recessions, nationalisation, privatisation, and policy turbulence. With strategic direction, it can still thrive.

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Key Message

Sri Lanka’s plantation sector stands at a turning point.Understanding the past is essential to shaping what comes next.

To remain competitive, resilient, and sustainable, the industry must strengthen:data, replanting, technology adoption, policy stability, skilled labour, and leadership willing to modernise.

This article sets the foundation. The deeper exploration — of productivity, modernisation, and digital transformation — follows in future pieces.