I was born in a little hospital on a hilltop in Munnar, in the the Western Ghats, South India. These lush, green, achingly beautiful hills provide the perfect environment for growing one of the world’s favourite drinks; tea. As far as the eye can see in any direction there are acres and acres of precisely trimmed tea bushes as green, shiny and precious as emeralds.
We left Munnar at the end of the nineteen sixties, when the Finlay Muir & Co, the Scottish company that had owned these tea plantations since 1894, was beginning to hand over the Kanan Devan Hill Production company to India’s Tata Tea (now Tata Global Beverages). Towards the end of Finlay Muir’s era there were many clashes between workers and management. My childhood memories are peppered with images – real or reported – of angry workers chanting slogans, managers being ‘gheraoed‘ – trapped inside the Headquarters Office and getting chilli powder thrown in their eyes if they tried to escape, smashed car windows and blood spattered suits…
The Tata group prides itself on its corporate social responsibility or CSR and when it took over KDHP it improved workers’ wages and living conditions and instigated a range of welfare initiatives for the workers and the local community. But by 2005 it became clear that the plantations had ceased to be profitable for them and they decided to focus on their instant, packaging and branded tea products instead.
I had been living in the UK for many years and working for an international development organisation when I heard that Tata Tea had handed over ownership of the plantations to the workers. Wonderful though it sounded, I was skeptical that a business corporation would do something like this purely out of the kindness of its heart. If the plantation was unprofitable for Tata Tea, wouldn’t it become a financial mill stone for its poor and far less business-savvy workers?
Earlier this year I had the opportunity to visit Munnar again and to meet with Santjith Raju, the HR manager of what was now the Kanan Devan Hill Plantation Company Private Ltd. Mr Raju very kindly took the time to explain in more detail how the new system was working.
He told me that Tata Tea was unwilling to simply sell the plantations to the highest bidder as they were concerned that the welfare projects they had spent two decades developing would be discontinued. Seeking some way that the workers could gain ownership of the plantations and benefit directly from any profits, it at first experimented with a co-operative model on Tenmallai Estates. But this did not succeed, partly because the workers did not have sufficient levels of education.
Under the guidance of Mr T.V. Alexander, the company decided instead to offer the employees the opportunity to buy 69% shares in the company, with Tata Tea retaining the remaining shares. Everyone from the managing director to the tea pluckers were given the opportunity to buy shares with minimum levels appropriate to their income. So tea pluckers would need to buy a minimum of just Rs 3,000 in shares (approximately £30 at today’s exchange rates) while managers would need to buy a minimum of around a million rupees worth (approximately £10,000).
The company’s managers traveled around the area educating the workers as to what this would mean for them, how they would benefit, what the risks might be, etc. It also helped those who needed them to get bank loans to buy the shares. Shareholders have so far had a 159% return on their investment.
At the time there were 26 tea estates with 18,000 employees, including managers and assistant managers for each estate. By implementing a voluntary retirement scheme and merging several of the estates – creating just seven large estates subdivided into sections – Tata Tea reduced the number of employees to 13,000 and drastically reduced management overheads. A sectional office can be managed by a single member of staff. The company no longer had to contribute to the costs of the regional office in Kochi or the head office in Kolkatta. Kanan Devan Hill Plantation Company Private Ltd now sells its tea to the highest bidder at domestic auctions, including Typhoo and Tetley. Tata Global Beverages is just another of its customers.
KDHP salaries are governed by a tripartite group including the Kerala Labour Ministry, Kerala tea producers and the worker unions. A tea plucker’s salary is currently Rs 212 per day (the statutory minimum wage for Kerala is around Rs 170 per day). This is just £2 per day at current exchange rates, but these workers also get free accommodation, electricity, water and medical care. As per Indian law, the company also pays into a provident fund for their retirement. There is a production incentive scheme for workers calculated from a monthly base amount with an increasing rate per kilo plucked on top of this base. Workers are usually able to earn about Rs 6,000 or Rs 7,000 a month in incentives. And of course on top of all this, there is the dividend that they earn as shareholders – assuming the company continues to make a profit.
But the employees are not just passive shareholders and wage-earners. They also have the opportunity to play a role in the management of the company. A body of elected representatives from among all levels of workers advises the board of directors. Every three years, two men and two women from each estate are elected. They are given appropriate training to boost their confidence and skills. Together they then looking at budgets and targets month by month to track the performance of their estate and compare it with other estates. With their long experience of planting and nurturing tea they are often able to make very practical suggestions for improving the yield of their estate. These suggestions are included in minutes which are circulated within KDHP.
Each year, the most productive worker is given a place on the board and 7 out of 8 times, this has been a woman. These board members are given training to ensure they are confident to take an active part in board meetings and, in return, they provide a valuable workers’ perspective. For example one worker representative informed the board that since the increase in tourism in the area the price of basic commodities like rice had shot up beyond the reach of plantation workers. The Board immediately responded by arranging for subsidised rice to be provided to the workers.
Kerala, which has a long history of communist governance, has 98% unionisation. The company maintains a “cordial relationship” with the unions. Since the change to worker-ownership there have been instances when unions have declared a bandh or general strike, yet KDHP workers have continued to come to work.
During the formation of the new company, Tatas also retained 27% of the shares, as well as responsibility for the welfare projects, including a school for differently abled children of plantation workers. They also continued to support an income generation and rehabilitation project for these children once they graduate which makes high quality jam, recycled paper and organically dyed textiles. Fruit for the jam making is bought from plantation workers who have all been given plots of land on which to grow their own vegetables, cotton for the paper-making is recycled from the garment factories of Tamil Nadu and the textile dyes are made with entirely natural, organic ingredients. These are not small-scale charitable operations, but successful enterprises that just happen to be run by people who are differently abled. They get some support but on the whole they are clearly empowered, in charge and thriving on their productivity and creativity.
When I was a child in Munnar, the managers’ children went away to expensive English medium boarding schools (or boarding schools in England), while the workers’ children went to a local Tamil medium school in Munnar town. Now the new High Range School caters for all the children in the area “from the managing director’s daughter to the tea pluckers’ children”. It has an excellent academic reputation. Mr Raju is himself a product of this school and the fact that his father was a staff member and he is now the HR manager of KDHP is testament to the social mobility that the new system has made possible.
KDHP is a company founded on social as well as sound business principles. As such it continues to seek ways of reinforcing its ethical credentials. It has an organic division, has gained Rainforest Alliance and Fairtrade certification and links up with the Ethical Tea Partnership.
A recent “happiness survey” commissioned by KDHP from an independent consultant found a 97% satisfaction rate among workers. But, interesting and positive as this all sounded, none of it could be described as independent corroboration of the success of the project. Only speaking directly to a worker and seeing at first-hand how they lived would confirm what Mr Raju and others were telling me.
Luckily, I had an opportunity to do just this. When my family lived in Munnar, like other managers’ families, the company provided our household with a domestic staff. These servants lived in a row of tiny, two-room houses, “the lines” on the hillside behind our spacious bungalow. Raman, was our syce, responsible for looking after our horses, cows and other animals. Now, over forty years later, his son, Chinnakan, is soon to retire from a long career as the company’s Generator Mechanic. I visited him in the small, but well built and comfortable house close to the centre of Munnar where he lives with his family. Both his sons and his daughter are well educated and have good jobs, mobile phones, computers… their children attend English medium schools. Chinnakan drives his own car and also shares a motor cycle with his son. He has built himself a fine house in the nearby town of Udumalpet where he will retire. All this would have been unheard of for someone like Chinnakan in my day. Chinnakan confirmed that being a shareholder in KDHP had played an important part in making all this possible.
It’s a very impressive success story at a time when the tea industry is struggling with plunging prices and media exposés of exploitation and abuse on tea plantations elsewhere in India and the world. (Tata Tea tried a similar model in its estates in Assam but with much less success.)
Ironically, despite all of this, KDHP is now facing manpower shortages. Or perhaps it is partly because of the benefits the company has brought. The children of tea pluckers are now not just literate, but well educated . Their horizons are much wider and few are likely to want to follow in their parents’ arduous footsteps through the tea bushes. But KDHP managers are already thinking ahead, with an eye on the vast Australian farms which are mechanised to the point that a single person can manage hundreds of hectares of agricultural land. They can visualise a time when tea is plucked by machines suspended from cranes on the steep hillsides.
The High Range has seen many changes over the centuries – the social and physical landscapes shifting and changing in unison. From the days when Muthuvan tribes-people trekked across its virgin forests hunting deer, bison and wild boar, to the clearing of the forests and planting of tea, coffee and cardamom (but mainly tea) by hardy Scottish planters, to the reshaping of the landscape by a devastating flood in 1924. The green hills have been etched with red, dust roads, now impeccably tarred. The slopes have been traversed by narrow gauge railways and Heath-Robinson-like ropeways, now all gone. Colonial tea-planters, European and Indian, have been replaced by all Indian worker-owners. And now a new invasion of tourists – including droves of cooing honey-moon couples – is taking place, with an accompanying crop of brash new hotels and home-stays.
One day giant cranes may be swaggering across those emerald hills, nibbling at the surfaces of the tea-bushes, operated by a single person from a small control-room in the Headquarters Office in Munnar. The grandchildren of today’s worker-shareholders will be busy working in their air-conditioned offices in Kochi and Coimbatore (perhaps still supplementing their savings from their inherited KDHP shares). And the honeymoon couples will still be gazing, hand in hand, over the breathtaking views from Top Station.
So be it. It will just be another phase in the endless reinvention of one of the most beautiful and productive places on earth.
Please read my subsequent blogs on this issue. All was not as rosy as it seemed!