By Jithendra Antonio
Though the Plantation sector has played a vital role in the country’s economic and social development, being the largest employer in the country, the worker wage increase due from April 2011 would reverse the impact, Chairman of Malwatte Valley Plantations PLC W.L. Bogtstra says.
In the lately published annual review of the company, Bogtstra stresses that the average annual wage increase amounting to approximately 38% per annum will have a considerable impact on future Profit margins of plantation companies.
“The labour cost component will be around 60% of cost of production for tea and rubber plantations,” he says adding that the new wage hike will increase Cost Of Production (COP) further, and further increases in electricity cess levied on tea and rubber will affect all plantation companies.
“Hopefully, higher tea and rubber prices will cushion the impact and enable companies to post strong earnings growth in Financial Year 2011. During the financial year ended 31 March 2011, increases in electricity charges and the cess levied on tea and rubber sales both have had a negative effect on the Cost of Production (COP).
According to Bogtstra Tea export income could decline this year (2011) due to the Middle East crisis.
“The Egyptian problem did not matter much, being a small market, but Libya, however, is one of our major markets for the leafy grades,” he outlines adding that last year, Libya purchased about 9.9 million kilos or 3.5 % of total tea exports.
source - www.dailymirror.lk
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