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Coconut plantation land diversification
 

Coconut plantation land diversification

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Dip Agri,BSc in Plantation Mgt.

Dip Agri,BSc in Plantation Mgt.

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    Coconut plantation land diversification Coconut plantation land diversification Document Transcript

    • CoconutPlantation LandDiversification MR. Ajith De Silva A.G.M Plantations Chilaw Plantations
    • PlantationLandDiversificationIn the Plantation context, diversification can be regarded as the re-allocation of some of estatesproductiveresources, such as land, capital, estate equipment and paid labor, into new activities. These can be newcrops or livestock products, value-adding activities, provision of services to other estatesand, particularlyin richer countries, non-estate activities such as restaurants and shops. Factors leading to decisions todiversify are many, but include; reducing risk, responding to changing consumer demands or changinggovernment policy, responding to external shocks and, more recently, as a consequence of climatechange.Definitionof DiversificationTheterm is defined as diverting the current set up in to different segments or expanding throughinnovative ways in a broader way that would benefit the organization. When you take in toaccount our pilot project of Chilaw plantations land diversification it‟s important that we identifythe areas we could use our finances to maximum use in transforming a plantation in major time.What you are looking at now is at major time where sustainability and reusability concepts andinnovativeness play key roles in differentiating the current land.While most definitions of diversification in developing countries work on the assumption thatdiversification primarily involves a substitution of one crop or otherplantation product foranother or an increase in the number of enterprises, or activities, carried out by a particularestate, the definition used in developed countries sometimes relates more to the development.In developing countries such as Sri Lanka, which has been one of the leaders in promotingdiversification, the concept is applied both to individual estates and to different regions, withgovernment programs being aimed at promoting widespread diversification. The concept in SriLanka is seen as referring to the “shift from the regional dominance of one crop to regionalproduction of a number of crops ...... (Which takes into account)..... The economic returns fromdifferent value-added crops... with complementary marketing opportunities”Opportunities Changing consumer demand. As consumers in developing countries become richer, food consumption patterns change noticeably. People move away from a diet based on staples to one with a greater content of animal products (meat, eggs and dairy) and fruits and vegetables. In turn, more dynamic plantations are able to diversify to meet these needs. Changing demographics. Rapid urbanization in developing countries has an impact on consumption patterns. Moreover, a smaller number of estates, in percentage terms at least, have to supply a larger number of consumers. While this may not imply diversification it does require adaptation to new plantation techniques to meet the higher level of demand. 2
    • Export potential. Developing country plantations have had considerable success by diversifying into crops that can meet export market demand. While concern about food miles, as well as the cost of complying with supermarketcertification requirements such as forGlobal GAP may jeopardize this success in the long run, there remains much potential to diversify to meet export markets. Adding value. The pattern witnessed in the West, and now becoming widespread in developing countries, is for consumers to devote less and less time to food preparation. They increasingly require ready-prepared meals and labor-saving packaging, such as pre- cut salads. This provides the opportunity for plantation‟s to diversify into value addition, particularly in countries where supermarkets play a major role in retailing. Changing marketing opportunities. The changing of government policies that control the way in which plantations can link to markets can open up new diversification possibilities. Improving nutrition. Diversifying from the monoculture of traditional staples can have important nutritional benefits for estates in developing countries.Threats Urbanization. This is both an opportunity and a threat, in that the expansion of cities places pressure on land resources and puts up the value of the land. If plantations are to remain on the land they need to generate greater income from that land than they could by growing basic staples. This fact, and the proximity of markets, explains why farmers close to urban areas tend to diversify into high-value crops. Risk. Plantations face risk from bad weather and from fluctuating prices. Diversification is a logical response to both. For example, some crops are more drought resistant than others, but may offer poorer economic returns. A diversified portfolio of products should ensure that estates don‟t suffer complete ruin when the weather is bad. Similarly, diversification can manage price risk, on the assumption that not all products will suffer low prices at the same time. In fact, plantations often do the opposite of diversification by planting products that have a high price in one year, only to see the price collapse in the next, as explained by the cobweb theory. External threats. Plantationsthat are dependent on exports run the risk that conditions will change in their markets, not because of a change in consumer demand but because of policy changes. A classic example is the Caribbean banana industry, which collapsed as a result of the removal ofquota protection on EU markets, necessitating diversification by the region‟s plantation. Domestic policy threats. Agricultural production is sometimes undertaken as a consequence of governmentsubsidies, rather than because it is inherently profitable. The reduction or removal of those subsidies, whether direct or indirect, can have a major impact on plantation and provide a significant incentive for diversification or, in some cases, for returning to production of crops grown prior to the introduction of subsidies. Climate change. The type of crop that can be grown is affected by changes in temperatures and the length of the growing season. Climate change could also modify the availability of water for production. Plantations in several countries, including Canada, 3
    • India, Kenya, Mozambique and Sri Lanka have already initiated diversification as a response to climate change. Government policy in Kenya to promote crop diversification has included the removal of subsidies for some crops, encouraging land-use zoning and introducing differential land tax systems.Opportunities for diversificationIn making decisions about diversification plantations need to consider whether income generatedby new plantation enterprises will be greater than the existing activities, with similar or less risk.While growing new crops or raising animals may be technically possible, these may not besuitable for many plantations in terms of their land, labor and capital resources. Moreover,markets for the products may be lacking. The United Nations Food and AgricultureOrganization(FAO) has been one of the development organizations promoting diversificationby small farmers. So far, it has produced booklets identifying beekeeping, mushroom farming,milk production, fish ponds and sheep and goats, among others, as diversification possibilities.Measures of diversificationAgricultural diversification is measured in a number of ways throughout the world. For example,one such measure is the index of maximum proportion, which is "defined as the ratio (proportion)of the plantations primary activity to its total activities". [Crop Diversification AchievementsOutput project target achievement short fall or excessForest developmentOil palm developmentOther crop development 4
    • Social and Environmental ProgramsIn land diversification not only about the infrastructure and physical resources but also thehuman resource plays the vital role because it‟s the human resource that is available that driveforward the plantation so it‟s important their needs and wants are considered and steps are takento uplift their living conditions and that would directly impact on making the maximum use ofland diversification.When you take in to consideration the human resource that is available in the plantation theirbehavior to this plantation land diversification is very important.In plantation also we have to take to account the organizational behavior because behavior equalsperformance.Therefore it explains why a superintendent is interested in a subordinate‟sbehavior.The performance brings in the output. The superintendent is responsible for the workersperformance. The effectiveness and efficiency of an organization is highly influenced by itsculture to understand the linkage it‟s better to understand the meaning of concept of culture.in aculture there is the essence of it which is called core values. When the majority shares of theChilaw plantations core values as shown below and accept the core values it results in adominant culture. A dominant culture is the force which effects the identity the way that thingsare done .the attitude .the customers however within the dominant culture certain sub units orcertain group of people may have a special cultural relationships which brings out which is nonas subculture. When you have primary values and when they are accepted throughout theorganization they become the core values of an organization.The core values of Chilaw plantations. CPL VALUES WE Value Honesty, Integrity, Sincerity, Commitment, Loyalty, Discipline, and Punctuality WE Respect Confidentiality, Independency, Transparency,and Spirituality WE Treasure Innovative, Qualified, and Skilled Professionalism WE Achieve Our Winning Goals through Leadership, Empowerment and Motivation of Our Staff WE Strengthen Our Teamswith Human Resource Advancements WE TreatThreats and Problems as Challenges and Opportunities WE Aspire To Be Accepted and Respected WE Pursue To Be Wanted and Demanded WE EnjoyLife Holisticallyand Serving Our Motherland.The living environment of estate workers has long been characterized by lower standards whencompared to the general rural population in Sri Lanka. Apart from resulting in low self-esteem,standards of health have also been adversely affected. The project hoped to improve the living 5
    • environment as well as empower them by providing training in a range of topics to improve theoverall quality of life. The implementation of the programs were delayed due to the relativelyhigh contribution (50% of cost) that the Regional estates were expected to contribute. However,implementation was successful due to subsequent changes to the financing method.Chilaw PlantationsVisionChilaw Plantation aspires to be the world‟s best Coconut growing and marketing Company.MissionManaging the natural, financial and human resources of the company to maximize the national wealth andprosperity of the island. 1. Name: Chilaw Plantations Ltd (CPL)MARKET OPPORTUNITY Coconut Plantations are categorized under Agricultural products. Slowly and surely astechnology advances the Demand for genetically superior high quality coconut seedlings, Increasevalue of lands for development activities, The newest product in the estate the dragon fruit could accessuntapped markets and potential for further growth, Increase demand for livestock products are thingsthat we can assume that there could be further advances etc…The above mentioned things all dooccur up to now but there is no major advancement in any particular category that offers ease ofaccess to any specific user.We will be mainly targeting local users who would like to purchase, handle and selling ofproducts. We will also be targeting the entire segment of general planters and consumers as well.The decision to invest in this particular plantation now is because we feel the available markethas grown to a significant proportion as such that we need not worry about having to think twiceabout launching the products and services. 6
    • BUSINESS CONCEPTCPL is an old company in the plantation industry. We at CPL believe in providing customerswith innovative products and services so that they can do things easier. We mainly sell coconut,coconut husk, coir, sheep, goat, paddy etc. We believe that we have the capacity to provide aninnovative solution to all plantation related products that currently exist. We know it is anextremely challenging task but we are up to it always.We will mainly be focusing to sell our products to the following categories of people. 1. Curry market 2. Oil mill owners 3. Retailers 4. Wholesalers 5. Government 6. Cargills,Keels SuperInitially we will be distributing the product across various parts western province and around thecountry. Thereafter based on the response and feedback we will be hoping to go worldwidecountries such as Pakistan, Australia, UK, US, Europe etc….The above-mentioned categories of people would all prefer to buy more according to therebuying power. Retailers, people who do selling and people doing whole selling would really likethis product since there is a big curry market. This will enable them to create an exact replica ofwhatever image they were attempting to recreate. 7
    • BUSINESS MODELIn business strategy, a business model should be planned and developed since this helps infiguring out the probability of profitability of new products and services. It will provide a meansof identifying different paths of revenue generation and profit maximization that CPL can pursuewith regard to the products and services they offer. It also provides an insight into the currentmarket situation, competitor profiles and existing market competition.COMPETITIONWhen launching new Products and Services it is extremely important to consider the competitionthat exists within an industry so as to determine the amount of profits we can reap from thatparticular industry. Competition influences the marketing strategies a company will take in orderto maximize revenue and thus profit. CPL has competition mainly from KPL, NLDB, CICAgriBusiness and etc…In order to survive in the market processing, further processing and value added products andservices have to be introduced to the market. 8
    • SWOT ANALYSISThe SWOT analysis is a tool which can be used to highlight the strengths and weaknesses of ourparticular product. Analyzing the strengths of our product will help us to find out any businessopportunities that will enable our company to have a stronger market position. Also being awareof any weaknesses that exist in our product will help us to minimize any threats that may reducethe demand for the product. Therefore SWOT analysis proves to be a useful tool that helps tocarve business strategies in order to keep a sustainable share in the market. While the strengthsand weaknesses are affected by factors internal to the company, the opportunities and threats arerelated to the external environment which can be defined by the PEST (Political, Economic,Socio-cultural and Technological) factors. CPL STRENGTHS WEAKNESSES - Quality of Coconut /Copra is above standard - No value added Products. -More than 100 years in the industry -Poor Marketing andproduct -Highly Suitable Landscape & soil for Development programs. INTERNAL Coconut Plantations and other -Weak Management. Crops. -Unavailability of State of the art -High Valued Assets and large Equipment, Coconut Estates. machinery,laptops,palmtops OPPORTUNITIES THREATS -Increase demand for livestock -High price fluctuation in the products. market. -The newest product in the estate the -The staff and Laborers because of dragon fruit could access untapped lack of knowledge mishandling of EXTERNAL markets and potential for further finances,equipment,livestock etc. growth NEGATITIVE POSITIVEThe above diagram shows the SWOT analysis of Chilaw Plantations. It shows the strengths,weaknesses, opportunities and threats that will be faced by CPL once launched fully in to themarket. 9
    • CPL SWOT ANALYSIS STRENGTHS (Internal) WEAKNESSES(Internal)1) Quality of Coconut /Copra is above standard. 1) No value added Products.2) More than 100 years in the industry. 2) Scarcity of Labor and Low Productivity.3) High Valued Assets and large Coconut Estates. 3) PoorMarketing and product Development programs.4) Highly Suitable Landscape & soil for Coconut 4)Dependence on Basic Market as a supplier of rawPlantations and other Crops. materials.(Fresh nut,copra,husks,trees)5)Availability of lands for development of main 5) No Financial backing to start on new AgriProduct- Coconut Business Ventures.6) Opportunities for Crop Diversification. 6) Profits earned by the estate are given to otherEg:Dragon purposes not related to the estate without utilizing itFruit,Bannana,Mango,Cinnamon,Ginger,Coffee,Pe to increase the salaries of the staff and laborers.pper,Arecanut,Pineapple7) High Valued Lands for Infrastructure 7) Low Palm density, resulting low yields. SenileDevelopments. Palms.8)Potential for 8) Poor Re/Under Planting Program.InterCrops,Livestock,Cashew,Timber Plantations9) At Present The Bingiriya Area Estate is running 9) Weak Management.at a profit.10) Assured profit due to high coconut prices. 10) Non Availability of Proper Cadre system and Human resources.11) Availability of reserve investment funds for 11) Poor Capital Assets Management.new investments and development.12) Gov. Owned Business with Organized 12) Unutilized Land.management structure.13) Copra manufacturing, Further manufacturing of 13)Unutilized Fixed Deposits,Funds,TechnicalCoconut oil and Virgin oil. Personal14) Coir Husk Industry. 14)Unavailability of State of the art Euipment,machinery,laptops,palmtops,15) Turning Coconut Plantation into Agro 15) Private Mgt until May2008 resulted in lessBusiness. Under Planting & infrastructure maintenance.16) Making Coconut Milk, Coconut Ghee, Coconut 16) No trained Personnel in the estate.Powder.. 17) Staff and Laborers are not updated or given training of latest methodologies used in the world in plantation management. 10
    • OPPORTUNITIES(external) TREATS(external)1) Increase demand for livestock products. 1) High price fluctuation in the market.2) Close to the fence planting valuable timber. 2)Unser eyed Land utilized for paddy cultivatione.g.: teak, Mahogany, Nadun,Jak tree..etc.….3) The newest product in the estate the dragon fruit 3)High capital expenditure in dragon fruitcould access untapped markets and potential for cultivationfurther growth.4) Rain Water harvesting utilized for Fisheries. 4)Soil erosion5) Mango cultivation in the estate. 5) Robbing of coconut and other products of the estate.6) Getting an extra income through Dragon fruit 6) The staff and Laborers because of lack ofand using that money for the betterment of the knowledge mishandling of finances, equipment,estate. livestock etc...7)Increase value of lands for development 7)No proper watchers ,no proper training and noactivities. mechanism to properly safe guard the estate at all times8) Demand for genetically superior high quality 8) Utilization of Inorganic Fertilizers in adverselycoconut seedlings. affecting the Crops.9)No product completion(Coconut has less 9) No funding from the top management in thesubstitutes in Sri Lanka) accurate time. 10)Dolamatation In proper time 11) Approval from head office on time. 12) Dead and fallen trees should be removed immediately. Otherwise pest will develop. 13)COP due to world market prices.(Petroleum price levels and devaluation of rupee value) 14) Changes of weather patterns affects the production and it‟s an uncontrollable factor. 15)Non Availability of trained labor and reluctance of youth for the industry, specially picking, husking 16)Varying trade and tax policy for importation of palm oil ,which is a competitive substitute for coconut oil 17) Unknown diseases and insect damages for the Dragon fruit cultivation. 18) High capital expenditure for dragon fruit cultivation. 11
    • Marketing and Alliances Marketing ObjectivesEver since the establishment of the company, CPL. has launched a great variety of successfulproducts that are used and trusted by its customers. The first and foremost marketing objective ofour company is to gain the trust of customers and end users within a short period of time. Withover 100 years of experience in the research and development of products for the general publicand various consumers, the company is confident that its latest invention‟s the Dragon Fruit willbe readily accepted by its customers and would greatly aid to their convenience.The company intends to launch the ultimate product, The Dragon Fruit, in the western as wellas the whole market simultaneously in an attempt to earn quite a noteworthy reputation andincrease brand equity from every possible perspective of customers. This is because the productwould face greater competition in the western and whole country, while western province is stillquite a fresh market for such products. However, due to relatively high price of the product, thescope of sales in western province might be better. Another potential market could be the northand east. However, due to the economic slowdown, the demand of the product might be affected. 12
    • Target Customer SegmentThe main target market segment would be general public and professional high-end consumers.Another minority target user would be those wanting to learn or experience newer technologies.The product could be sold to public as well as Agri- companies and various other consumers. Government 2% Target Market cargills and other super oil mill owners markets and and other retailers and plantation whole sailers realted owners 3% 60% Curry market 35% Market Research StrategyMarket Research is a key aspect in the development of any new product. It helps us to get amuch clearer picture of the wants and needs of the customers and hence provide them with bettersolutions; thus reducing the risk of product failure. Considering this fact, it was intended to carryout both primary and secondary market research that would provide the company, with businessintelligence to make informed decisions.Secondary research would enable, to gather information gleaned from studies previouslyperformed by government agencies, plantations. This in turn would provide statistics about thepopulation of plantations. Secondary research would also include study of existing products andtheir limitations. 13
    • Primary research would be carried out through questionnaires and personal interviews withpotential customers. This would enable the company to identify the difficulties which thecustomers face with the existing products and how they can be resolved. This would also help toget a good idea about which pricing strategies to be used and how much the customers will bewilling to pay for the products and services. Marketing MixThe marketing mix for CPL is intended to generate a positive response in the target market byblending the four P‟s in an optimal manner.The marketing management plan would be strategized in following manner. ProductThe „product‟ here are the products [coconuts, dragon fruit etc...] and services. The relevantplantation entities with the government should take care to see that plantations and estates aregiven necessary funding and encouragement to produce quality products and services. Both thesetypes of products and services are equally important to the long-term sustainability of theindustry. 14
    • PriceMarketers should price the products and services according to the demand fluctuation, worldmarket prices and crops, weather patterns, curry market and research. For an example, when therain increases, the crop increases and the price godown. Also, it is reasonable to demand a higherprice from the locals when the world market prices go up.However, in the case of curry market the people in the country has to be considered and areasonable price has to be put up.Due to four main reasons such as the world market price, rain increase, rain decrease anddemand fluctuation the price is expected to be relatively high. But it is still cost-effective,considering the benefits that it offers. This would be reflected in the price. The pricing objectivesto be considered when setting the price for the products and services can be prioritized in thefollowing manner. Survival of the product Quality leadership Maximize profit marginThe demand for the products and service is expected to be elastic, due to the current unstableeconomic situation. Therefore a lot of strategic planning and analysis was needed to be carriedout before setting the price of the products and services, specially the coconut price. In addition,due to rapid technological advancement, high competency and short life-cycle of plantationproducts, its value is expected to depreciate over time. In order to overcome this, the companyintends to improvise the product at a later stage to overcome the limitations and hence staycompetent in the market for a longer time.The price would be set, based on a combination of cost-plus and value-based pricing method.Cost-plus pricing would ensure that the costs are covered up, plus a certain percentage of profitis earned on each unit sold. Value-based pricing on the other hand, will pass on the effectivevalue relative to alternative products; thus ensuring that the product is not under-valued. 15
    • PlacementThe Plantation land and business places (place) are extremely important to the industry becausethis is where the products and services (product) are delivered to the various markets. The estatesshould be in good condition if the plantations producers wish to give out a quality product(product or service) at the end of the day.There is no point in producing excellent products and services if there is no place to sell themwith the appropriate technology. More and more producers are using the latest technology intheir productions. But the problem lies in the estates which are seldom upgraded. Thus plantationcompanies together with the ministry should see that necessary improvements are done in theplantation sector so they are equipped with the necessary technology to market products andservices superior.It is also important to note that the threat of other competitors within the local market as well asinternationally are impacting the revenue of the plantation industry can be heightened if theconsumers are disappointed with the quality of the plantations; in other words if they wouldrather buy other products from other plantations.The product is targeted mainly at a mass market. Therefore, the volume of sales is expected to behigh. The most appropriate distribution channel that could be used is manufacturer-retailer-customer. In addition to save costs, it was intended to make use of processing, further processingand other value added products. Due to high volume of sales, there is a need for wholesalers. Bydoing the additional things this would save cost because the shorter the distribution channel,lower the cost. The CPL products would be placed in leading outlets and agri fairs in theinternational market. 16
    • PromotionPromotion or the ways of communication to the target market is crucial if CPL want to get backa profit. Producing a good quality product takes time. And it is necessary to build up hype fromthe begging to the end.Posters, social media, radio, newspapers, TV are some of the ways promotion of plantationproducts and services. With the restriction regarding poster pasting in towns, the significance ofposter are relatively low. On the other hand, promotion through online media is becomingincreasingly favorable with the urban audience. But, the most efficient way to communicate thecoming of a Product or service is through on TV, either at 8 clock news or along with popularTele-dramas. 17
    • Diversification beyond StocksIf theres one thing that even the newest investor understands, or has at least heard of, about aportfolio its diversification - blending a variety ofasset classes to reduce exposure to risk. But awell-diversified stock portfolio is just one component of putting together the best possibleportfolio.Diversifying not just among different stocks, but among different assets, is how an investor cantruly mitigate risk. Even with a well-diversified stock portfolio, an individual is still exposed tomarket risk (or systematic risk as finance professors like to call it), which cannot be diversifiedaway by adding additional stocks.What Exactly Is Diversification?Basically, diversification among various asset classes works by spreading your investmentsamong various assets (e.g. stocks, bonds, cash, T-bills, real estate, etc.) with low correlation toeach other; this allows you to reduce volatility in your portfolio because different assets move upand down at different times and at different rates. Thus, having a portfolio diversified amongdifferent assets creates more consistency and improves overall portfolio performance.How Does Correlation Work?Correlation is simple: If two asset classes are perfectly correlated they are said to have acorrelation of +1. This means that they move in lockstep with each other, either up or down. Acompletely random correlation - a relationship in which one assets chance of going up isequal to the chance of dropping if the other asset rises or falls - is said to be a correlation of 0.Finally if two asset classes move in exact opposition - for every upward movement of one thereis an equal and opposite downward movement of another, and vice versa - they are said to beperfectly negatively correlated, or have a correlation of -1.A Diversified Stock Portfolio vs. A Diversified Portfolio of AssetsWhen we talk about diversification in a stock portfolio, were referring to the attempt by theinvestor to reduce exposure to unsystematic risk (i.e. company-specific risk) by investing invarious companies across different sectors, industries or even countries.When we discuss diversification among asset classes the same concept applies, but over abroader range. By diversifying among different asset classes you are reducing the risk of beingexposed to the systemic risk of any one asset class; in other words, the risk that diversificationwithin an asset class, such as stocks, cannot eliminate.Like holding one company in your stock portfolio, having your entirenet worth in a portfolio ofany one asset - even if that portfolio is diversified - constitutes the proverbial "all of your eggs inone basket" . Despite the mitigation of unsystematic risk (risk associated with any individualstock) you are still very much exposed to market risk. By investing in a number of differentassets you reduce this exposure to market risk or the systemic risk of any one asset class.Most investment professionals agree that although diversification is no guarantee against loss, itis a prudent strategy to adopt towards your long-range financial objectives. 18
    • How to Diversify Your PortfolioTo this point we have talked more in a theoretical sense. Now, lets look at some examples tosink your teeth into. Bonds are a popular way to diversify due to their very low correlation withsome of the other major asset classes, particularly equities. Other fixed-interest investments suchas T-bills, bankers acceptances and certificates of deposit are also popular.Another viable option is real estate, which has proved its worth during various stages in theeconomic cycle, and has a relatively low correlation with the stock market.Its amazing how many people tend to overlook the investment potential of this asset. Investingin real estate doesnt mean that you need to go out and purchase a house or building, althoughthat is a viable option for entering this market.As an alternative to a direct property purchase, individuals can invest in the real-estate marketthrough real estate investment trusts, or REITs. REITs sell like stocks on the major exchanges,and they invest directly in real estate through properties or mortgages. REITs typically offerinvestors high yields as well as high liquidity.Because of the real estate markets relatively lowcorrelation with the stock market, by investing in an REIT an individual is able to diversify awaysome the stock markets inherent risk.Real estate, and more specifically REITs, is just one of the means to accomplish this reduction inexposure to risk. As the illustration above demonstrates, investors have a number of differentoptions that can all help to reduce the risk of investing in any one asset class. 19
    • Improving Welfareof Plantation Labour force in Sri LankaThe living environment of estate workers has long been characterized by lower standards whencompared to the general rural population in Sri Lanka. Apart from resulting in low self-esteem,standards of health have also been adversely affected. "A larger labour force does not necessarily guarantee a larger output. In fact, in estateswhere there is a labour shortage the current difficulties are felt less, because they do not have toemploy large numbers even at times of low output. PEOPLEThe Democratic Socialist Republic of Sri Lanka (formerly known as Ceylon) is an island in theIndian Ocean about 28 kilometers (18 mi.) off the southeastern coast of India with a populationof about 21 million. Density is highest in the southwest where Colombo, the countrys main portand industrial center, is located. The net population growth rate is about 1%. Sri Lanka isethnically, linguistically, and religiously diverse.Sinhalese make up 74% of the population and are concentrated in the densely populatedsouthwest. Sri Lankan Tamils, citizens whose South Indian ancestors have lived on the island forcenturies, total about 12%, live throughout the country, and predominate in the NorthernProvince.Indian Tamils, a distinct ethnic group, represent about 5% of the population. The British broughtthem to Sri Lanka in the 19th century as tea and rubber plantation workers, and they remainconcentrated in the "tea country" of south-central Sri Lanka. In accordance with a 1964agreement with India, Sri Lanka granted citizenship to 230,000 "stateless" Indian Tamils in1988. Under the pact, India granted citizenship to the remainder, some 200,000 of whom nowlive in India. Another 75,000 Indian Tamils, who themselves or whose parents once applied forIndian citizenship, chose to remain in Sri Lanka and have since been granted Sri Lankancitizenship.Other minorities include Muslims (both Moors and Malays), at about 7% of the population;Burghers, who are descendants of European colonists, principally from the Netherlands and theUnited Kingdom (U.K.); and aboriginal Veddahs. Most Sinhalese are Buddhist; most Tamils areHindu. The majority of Sri Lankas Muslims practice Sunni Islam. Sizable minorities of bothSinhalese and Tamils are Christians, most of whom are Roman Catholic. The 1978 constitution--while assuring freedom of religion--grants primacy to Buddhism.Sinhala, an Indo-European language, is the native tongue of the Sinhalese. Tamils and mostMuslims speak Tamil, part of the South Indian Dravidian linguistic group. Use of English has 20
    • declined since independence, but it continues to be spoken by many in the middle and uppermiddle classes, particularly in Colombo. The government is seeking to reverse the decline in theuse of English, mainly for economic but also for political reasons. Both Sinhala and Tamil areofficial languages.There lots of estate workers who are Tamil and are living in line houses. They have beenworking plantations for generation as labourers.Social and Environmental ProgramsIn Plantations not only about the infrastructure and physical resources but also the humanresource plays the vital role because it‟s the human resource that is available that drive forwardthe plantation so it‟s important their needs and wants are considered and steps are taken to uplifttheir living conditions and that would directly impact on making profits.When you take in to consideration the human resource that is available in the plantation theirbehavior to this plantation is very important.In plantation also we have to take to account the organizational behavior because behavior equalsperformance.Therefore it explains why a superintendent is interested in a subordinates behavior.The performance brings in the output. The superintendent is responsible for the workersperformance. The effectiveness and efficiency of an organization is highly influenced by it‟sculture to understand the linkage it‟s better to understand the meaning of concept of culture.in aculture there is the essence of it which is called core values. When the majority share the Chilawplantations core values as shown below and accept the core values it results in a dominantculture. A dominant culture is the force which effects the identity the way that things are doneThe attitude, the customers however within the dominant culture certain sub units or certaingroup of people may have a special cultural relationships which brings out which is non assubculture. When you have primary values and when they are accepted throughout theorganization they become the core values of an organization. 21
    • The core values of Chilaw plantations. CPL VALUES WE Value Honesty, Integrity, Sincerity, Commitment, Loyalty, Discipline, and Punctuality WE Respect Confidentiality, Independency, Transparency, and Spirituality WE Treasure Innovative, Qualified and Skilled Professionalism WE Achieve Our Winning Goals Through Leadership, Empowerment and Motivation of Our Staff WE Strengthen Our Teams with Human Resource Advancements WE Treat Threats and Problems as Challenges and Opportunities WE Aspire To Be Accepted and Respected WE Pursue To Be Wanted and Demanded WE Enjoy Life Holistically and Serving Our Motherland.In order to improve the living standards of plantation labours the earnings should be distributedevenly by the plantation owners. There should be motivation from superintendents to uplift thewelfare of these hard working labours. Through salary increases and bonuses the population oflabours are mostly motivated to work effectively and efficiently, but the sad part has been fordecades this plantation community of labour‟s have been neglected and their wellbeing hasn‟tbeen even thought of by the owners in going to make quick money and for them to reap thebenefits of the harvest by only the top management of plantations. Pay checks have been delayedand not paid in some instances.Developing Livestock functions within the plantation and thus adding value to the plantationsproducts and services and making the most by diversifying the land.Cows, buffaloes, goats, pigs, sheep and etc…… could be done as livestock.The cow dune and other animals waste could be utilized as “Bio Gas”. Then the bio gas surreycould be used for agriculture plantations which would do more value adding to the plantation asa whole.The output of the bio gas could be utilized as a long term sustainable, renewable energy sourceand would save money to the plantation in one way and make the plantation in the other handself-sufficient with its own private mini power plant with the use of bio gas.Bio gas could be given to people through pipes as gas for gas cookers to utilize which wouldonce again save money for plantation and generate money revenue to the plantation through itsprocesses. The surrey of the bio gas could be used as a fertilizer to cultivate banana or plantains. 22
    • Because there‟s moisture in the surrey. Moisture that makes the process of fruit bearing fasterand nutritious without using artificial chemicals that are harmful for the human body.Utilization of the waste of the Bio-Gas as a fertilizer for plants such as vegetable‟s, coconut,green vegetables and fruits. The waste also can be Recycled, Reuse and reduce the carbon footprint in Plantation Industrialization processes and in other related systems that happen dayout day in Plantations.Inter cropping and mix cropping could be done in between coconut trees. By doing thismaximum land utilization happens leaving no room for wastage of the land available within thePlantation Land.Pineapple could be done as a underplantation.Lime,Lemon,Oranges,Mandarin all this tonic giving acid juices could be done asunder planting making the space in between coconut plantations very rich, grapes,cashew couldbe also done as inter cropping. But in the Sri Lankan context most of these under planting,intercropping and mix cropping are done in plantations because of lack of knowledge and not enoughresource personnel to carry out the activities in doing so and adding value to your products andservices as wellas getting an extra income through these cultivations. And all the above add up toland diversification.Mukunuwanne, Gotukola like green vegetables could be grown and using the surrey or thewaterish waste of bio gas by just connecting the green vegetable cultivation with a pipe to thegreen vegetable‟s growing system.Pepper, coffee, giniciriya are crops that you could do while having coconut as your main crop.By starting with a substantial amount of capital and assigning a suitable land for thesecrops,coffee and pepper could be used to export and to look forward for untapped local ,globalthrough that creating a glocal market and expanding it to mass production would in the long termhelp the coconut plantation even when a recession is hit or if the coconut plantation industry ishit with some disease. To keep the plantation alive in turmoil situations because of variousdisease‟ spreading to coconut trees and the only option is to destroy them. In that kind of ascenario to totally uproot the mass plantations of coconut and to replant new coconut‟s plantsneedsa substantial amount of finances as well as human resource and to build again a plantationfrom the scratch in such a scenario is hectic.Continously pushing forward for innovative ,value adding ventures at present, in major times will do wonders for the plantation as well it willset a benchmark for the whole Sri Lankan Agriculture and Plantation Sector and it could be asignificant contributed to the GDP,when Sri Lanka is only a service oriented country wherethrough the HR personnel in diverse areas Money is injected to the National economy, in orderto develop a country “Production” should increase through, „ continuous research & developmentand the income of the final product or service should be evenly distributed among the populationor work force population of the country”, by implementing such a practical mechanism only a 23
    • country could prosper. Having pepper,coffee,giniciriya,doing inter-cropping, mix- croppingand various cultivations in vast amount of lands and the diversification of land plays a major rolein major time .And the diversed crops and cultivation within that was planted in between coconuttrees would pay dividends .“Dragon fruit” a new plant in the Sri Lankan context a foreign plant to the Sri Lankan soil isbecoming very popular among the metropolitan population in Colombo and around suburbs.Thisforeign plant is also being exported and a substantial amount of revenue and foreignexchange is brought back to this country by a few entrepreneurs. „Cinnamon” in the 1960,1970a very popular export spice that attracted the merchants from the middle east and an exportmoney making venture for lots of businessmen in the good old days. A spice that has lots it‟s duerecognition and reviewing this spice and exporting once again to untapped markets would inyears to come by looking forward for mass production by starting small and keep this as avaluable and marketing this spice through branding would create good name for the plantation inthe years to come and would keep the loyal customers as wellas stake holders interested as wellas shareholdersinjecting more money to the plantation.Grass could be planted among land that where crops are not planted and also would keep outweed plants and create a green carpet to the umbrella shading which would in turn create a subculture in the natural environment, that is unique to the coconut plantation. “Weed Management”plays a pivotal role in this aspect when we take in to consideration grass planting. Livestockproducts animals in diary buffaloes, cows could feed them “.Maze and Sogam” could betransformed in to “Silage”.“Pig and sheep manure” could be used as fertilizers for coconut trees. This in turn acts like“organic matter”.“Rain water harvesting” could be used to build water tanks like our forefathers used to do. It issaid that SriLankan‟s wereso advance in Irrigation Engineering, the era when kings used to rulethis country Sri Lankan irrigation engineers where send to Kashmir to help people both inPakistan as well as India. The dry zone of Sri Lanka was rich in water when the kingdoms realmwas managed by our Kings and Queens. In a drought period utilizing rain water and storagewould enable the plantations throughout the year to have a good supply of water as well as tocreate mini irrigation systems inside the coconut plantation and fisheries could be done and onceagain expanding rainwater harvesting and fisheries will create alternative revenue and cashinjecting ways as wellas lots of job opportunities and create lots of alternative income ways tothe plantation as a whole and it would be able to enlighten the hard working labours day to daylivelihoods. By spending the money generated through this rain water harvesting and fisherieswould motivate these people and could be taken as an intrinsic factor that would increase labourproductivity. Hence happy employees generate high productivity. 24
    • THROUGH LAND DIVERSIFICATION BUILDING A COIR FACTORYEstablishing a “Coir Strings Mall”. The coconut tree which is known as “KAPRUKA” inSinhalese is a tree that Sri Lankan‟s think as a tree that gives tremendous amount of advantagesespecially to the households. One such process that could be designed using “ManagementArchitecture” is a design to “Develop a Coir Strings Mall” and this would be done through“Land Diversification”.Through the coir which is available in each coconut creating such a facility and implementing amap making process and next when the map making is done to implement 5s and implement“JAPANESE JIT AND JITODA”, The two main pillars any Organization needs, With thisFoundationthe Chilaw plantations could develop a world class facility. Only the integrity fromthe Top Management to the Front line Managementand Laborer‟s is needed. World famousTOYOTA runs on this Foundationbut they “DON‟T IMPLEMENT 6 ZIGMA”.Here inSriLanka5‟S is the very popular thing but “5‟S is Outdated in the Global Arena and Sri Lankan‟shaven‟t identified the essence of implementing 5‟s but put pictures and fancy words withoutknowing the through meaning how truly it was implemented and it‟s just a basic very smallfoundation methodology used not a methodology to picture in office‟s and make workersmemorize the words of the 5s.„KAIZEN” and other Japanese Philosophies in QualityManagement have come to the “Limelight”. The quality in japan is stated as the attitude of theworkers, which has enabled them to do work efficiently and effectively. Transforming their warmentality to work efficiently with less talk.Creating this facility through Coconut LandDiversification would need a large amount of Capital and a Strategic Corporate Plan or win –winCorporate Strategy for Sustainable Corporate Growth, to keep this facility moving forward in theyears to come in a positive manner.The problem this industry is facing is that the lack of Coconut Husk, Sky Rocketing cost ofLiving in Sri Lanka,electricity & increased fuel charges, finding experienced personnel ,exportdemand declining because of this currently “SRI LANKA‟S COIR INDUSTRY is indiastreateous.“High standard quality supervision and maintaining for a long periods of time, lackof knowledge in “Kaizen”, leanproductivity, and higher plant efficiency through the autonomousmaintenance pillar of total productive maintenance (TPM).Lean enterprise on productivitythrough Lean Transformation,Manufacturing experience, quality assurance, maintaining theresults and challenges, Productivity enhance through Lean and 5s, Acculturation as a strategy togo beyond 6 zigma, the 4 pillar strategy 4 Manufacturing Excelence,Performance improvementin the Public Sector Plantations. The public sector or private sector top management has to makemajor changes to send the income of the public or private companies or plantation‟s towards thehard working labuorers,because according to a recent research done on„„ Sri Lanka‟s economy,90% of Sri Lanka‟s earnings go to the only 10% of Sri Lanka‟s Wealthiestpeople”, the other10% of Sri Lanka‟s earning‟s go to the middle class and lower middle class families. 25
    • Because of this the population in this plantation sector isn‟t motivated to work effectively andefficiently. But if a Practical system, solid process and statistics, facts,figures,insight of industrypeople and analyzing these would pay dividends in the years to come. This would create anenvironment to make the laborer‟s, workers and managers as shareholders and they would bemotivated, not only by money when the plantation implement certain above mentioned kaizenperspectives by changing the attitude of the frontline and middle management human resourcethere would be external factors created to motivate your workers.If a plantation can implement these philosophies the advantages you get through these practicalways is immense. These philosophies will certainly enlighten the Plantation Industry in SriLanka which is rather stagnated and gloomy. 26
    • DEVELOPING A BALANCE SCORE CARD FOR A COIR FACTORY FINANCIAL PERSPECTIVE ROI LCC STRATEGIC LEVEL LP CUSTOMER PERSPECTIVE MANAGERIAL LEVEL Q C D INTERNAL PERSPECTIVE Q O DEFECTS OPERATIONAL LEVEL Q T O O DELAY INVENTORY S O UNWANTED ITEMSLEARNING ANDGROWTH FUNCTIONALPERSPECTIVE LEVEL S S O O DUST UNITENDIFIED ITEMS SEIRI, SEITON, SEISO & SEIKETSU, SHITSHUKE AND SAFETY. (3 S TO START THEN NEXT 3 S TO FOLLOW) 27
    • Appendix-1st pillar - ROI –Return on Investment, LP – Labour Productivity, LCC – Labour CostCompany,2nd pillar- Q – Quality, C– Cost, D – Delivery.3rdpillar- Q- Quantity, Q – Quality, T- Time,0 – Zero Defects,0- Zero Delay,0- Zero Inventory4th pillar - 3 s- denote Seiri, Seitonand Seiso. 5s as a whole could be implemented and youcould add safety as the sixth S. 6S 1. SEIRI 2. SEITON 3. SEISO 4. SEIKETSU 5. SHITSHUKE 6. SAFETYO denotes- 0 –Zero Dust, 0 – Zero Unwanted items, 0 –Zero Unidentified Items.ConclusionThe foregoing estimates suggest that, Sri Lanka could make substantial savings in foreignexchange and improve the productivity of coconut plantations.Diversification is a key building block to anyones financial plan, including the understanding ofwhat diversification does and how it helps an individuals overall financial position. It is crucialthat investors know the difference between systematic and unsystematic risk, as well asunderstand that by diversifying among asset classes they can mitigate exposure to systematicrisk. 28
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