Chamraj Tea Estate, South India

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In Brief

©Simon Rawles

Established:                              1992
Fairtrade Certified:                  1994
Average annual production:  1,200 tonnes
Exports:                                      85% of total
Fairtrade sales:                         9.82% of total (April 08 - March 09)
Total workforce:                       930 (670 women, 260 men)
Total estate residents:            1,350 including children

Background to Chamraj Tea Estate

Chamraj Tea Estate was established by Englishman Robert Stanes in 1922 and is located in the Nilgiri Hills of Tamil Nadu, South India. It is one of a group of four neighbouring tea estates owned by United Nilgiri Tea Estates, the others being Allada Valley, Devabetta and Korakundah. They are set among rolling hills covered in dense vegetation and natural forest interspersed with small villages at elevations above 2,000 metres (6,500 ft) which enables the production of black, green and oolong orthodox teas of distinctive quality. At 2,500 metres (8,000 ft) Korakundah is the highest tea estate in India and is awaiting accreditation from the Guinness Book of Records as the highest in the world.

Chamraj is a leading ethical tea producer certified by eight bodies including Fairtrade, Rainforest Alliance, GLOBALGAP, Ethical Tea Partnership, Kosher, and ISO 14000 (environmental management). Already part-organic certified, Chamraj’s remaining tea fields are expected to receive organic certification by the end of 2009.

Indian Tea Industry Background

British planters first planted tea in India in the 1830s in the Himalayan foothills of Assam followed by West Bengal and later the Nilgiri Hills of Tamil Nadu. While tea was ideally suited to the soil and climate of these undeveloped upland tracts they were sparsely populated and required landless peasant labourers to be brought in from neighbouring states, such as Karnataka in the case of the Nilgiris, to work on the plantations. Living and working conditions were notoriously poor and, post-independence, the national government introduced the Plantations Labour Act, 1951 (PLA) to regulate working conditions. As these remote areas did not fall within the scope of government rural development and anti-poverty programmes, the PLA also made estate companies responsible for the welfare of their workforce including the provision of housing, healthcare and education.

Today, the costs of labour account for around 60% of the Rs110/kg cost of production, with social provision such as housing and healthcare accounting for 5%-8% of total costs¹.  While companies can make a decent return when auction prices surge to levels of $3.00/kg as they have in 2009, they barely covered costs in recent years when auction prices were in the range Rs100 – Rs150. These low prices have inevitably had a direct impact on the appalling conditions that still exist on tea estates in parts of Assam.

Volatile Global Tea Market

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India’s $1.5bn tea industry has been in an almost decade-long slump since 1998, with prices and exports plummeting because of weak domestic demand and increased international competition, coupled with the increasingly poor quality of teas produced in the country.

Traditional markets for Indian tea such as the UK and Russia and Pakistan have largely been lost to Sir Lanka and Kenya. The Structural surplus of tea on the world market contributed to the long-term downword trend in tea prices, particularly at Indian auctions. This severely damaged the incomes of small-scale tea growers and led to the closure and abandonment of tea estates whose owners struggled to cover increasing labour, fuel and transport costs on top of the social provisions laid out in the PLA. South Indian production largely pinned its hopes on supplying the growing domestic market with the low quality CTC² tea that is ideal for the regional preference of tea boiled with milk, water and sugar as it retains its rich red-brown colour.

But 2008 heralded a change in fortune for the Indian tea industry with an increase in exports driven by the global shortage of tea resulting from drought in Kenya and Sri Lanka - compounded by political turmoil and labour unrest respectively – while production in India was also affected by drought particularly in the southern states of Tamil Nadu, Karnataka and Kerala. Expectations within the Indian tea industry are that exports and prices will remain strong, at least until production in Kenya and Sri Lanka picks up, while the wider impact of the shortage can be seen at Kenya’s Mombasa auction where best-grade tea fetched an all-time record of $3.97 a kilo in September 2009.

Chamraj Tea Estate and Fairtrade

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The factory at Chamraj is the largest in the Nilgiris. During peak production periods it can process up to 40,000kg of freshly plucked green leaf into 10,000kg of Orthodox black tea, every day, six days a week. During winter, green leaf intake falls to 6,000kg – 10,000kg a day and factory production is reduced to five days a week.
The management of Chamraj Tea Estate bucked the trend of switching to CTC teas, instead continuing to produce high quality Orthodox teas and has reduced labour costs by upgrading its tea factory with state of the art equipment.

Strategically, Chamraj has positioned itself in the market as a manufacturer of ethical tea, gaining Fairtrade, Rainforest Alliance and (part) organic certification and has targeted high value speciality export markets, including the UK, Japan, Germany and the US, which account for 85% of its exports. Deputy Manager, Mr KM Kalappa, commented: ‘It was very easy to meet Rainforest Alliance standards as we were already organic and Fairtrade certified which covered most of their requirements.’

While these marketing strategies are driven by the requirements of their buyers, Chamraj also recognises the unique contribution of Fairtrade in its policy of providing continuous social improvements for its workers and their community. The Fairtrade minimum price covers production costs and allows the estate to invest in sustainable production, while the Fairtrade premium enables workers to improve their lives.

Mr Gerard Pinto, Director of United Nilgiri Tea Estates, explains: ‘Now with Fairtrade ensuring that we get the price which is higher than costs of production we have surplus money, we can plough this back into our factories, into our fields, we can get into our organic cultivation so it’s a winner all along – the company survives, the workers get jobs, we can employ more people, we can give them more benefits. The whole community around us benefits.’

Nearly 10% of sales are now Fairtrade, destined for the UK, Japan, Germany and the US. Mr Hendriksen, the Accounts Manager, said: ‘We’ve increased our business over the last 15 years and most in the last five years because of more requirements for Fairtrade teas.’

Chamraj has a tradition of recruiting married couples for its workforce from the ranks of illiterate peasants and casual labourers in neighbouring Karnataka state who are keen to work on the estate because of its job security and social benefits. There is now a growing labour shortage in the industry with the children of tea workers no longer following in their parents’ footsteps, instead getting a better education with wider job opportunities outside the tea estates. Despite the detrimental effect on its own recruitment, the management Chamraj has a stated ambition that no children of estate workers will follow their parents into the tea fields. ‘We would like to see the workers children have a much better future than the workers themselves’, said Mr Pinto.

Children are encouraged to work hard at school and, if motivated, will have the opportunity to go on to college and have a choice of careers not available to their parents. When their parents retire – supported by a Fairtrade-funded pension – they will be replaced by more migrant peasant labourers whose children in turn will be the first generation in their families with access to education and greater career opportunities.

Fairtrade  Premium Projects

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The purpose of Fairtrade engagement with tea estates is to contribute to the economic and social development of tea workers and their communities. This has two main elements: estates must meet Fairtrade standards based on core ILO conventions for the protection of workers’ rights. They include the right to join a trade union, the right to collective bargaining, freedom from discrimination, decent employment conditions, a safe working environment, and no forced or child labour. Secondly, Fairtrade provides workers with an additional sum, the Fairtrade premium, to tackle poverty, improve the quality of their lives and invest in their futures.

The Fairtrade premium is paid into the bank account of a Joint Body (JB) made up of elected workers and one or more management representatives. The JB at Chamraj meets every two months to discuss and select which projects to fund with the Fairtrade premium. It is made up of 12 elected worker representatives (1 male, 11 female), two senior management representatives and Mr Hendriksen, the Finance Manager and Fairtrade Officer who is responsible for overseeing compliance with Fairtrade standards and co-ordinating Fairtrade matters between workers and management. The management members use their skills and experience to guide the JB in project management, finance, accounts, and administration, while the overall decision-making power rests with the elected members.

Nearly 12 years ago the JB put in place a Pension Scheme which has proved enormously popular with the workers. Tea estate workers normally have to vacate their housing and leave the estate when they retire at 58 unless they are living with adult children also employed on the estate. Now that many children move to the city to work they can no longer look after their parents in the traditional way so when workers retire the have to return to the village they migrated from many years ago, where at best they will be able to build a basic dwelling on family land and will struggle to earn a living in their old age. This non-contributory Pension Scheme provides a lump sum sufficient to buy or build a house plus a monthly income for 10years of up to Rs1,500, depending on length of service. So far 164 workers have benefitted from the scheme.

Rajagopal, 47, is a field supervisor and member of the Joint Body who has worked at Chamraj for 26 years. He has seen his mother benefit from the scheme and is reassured about his own retirement: ‘My mother worked in this estate for 35 years and she’s retired now. Because of the benefits we get from the estate she’s living happily with the amount given to her as a pension.

‘I’m working now but I don’t know whether my children will take care of me when I retire. So this will benefit me, even if my children don’t take care of me the money I get from the pension will help me to either build a house or repair a house and I will live happily.’

The premium has provided craft equipment and abacuses to the estate primary school as well as extending the playground for the 280 children who attend. Tea estates must by law provide primary education in Tamil. But because of its commitment to the education of its employees’ children Chamraj also provides secondary education in both Tamil and English up to age 18, to prepare students for college and university. The salaries of two of the secondary teachers are also partly paid with the Fairtrade premium. English education is normally very expensive but parents here only have to pay a small fee for their children, most of whom are the first generation in their family to have access to this kind of education. Clearly proud, Mr Pinto said: ‘We have children who have become doctors, engineers, graduates, some of them have gone to the US with engineering and information technology and this gives us great pleasure.’

The Fairtrade-funded computer lab originally had 12 computers but management was so impressed with students’ enthusiasm and progress that they bought another 28. Fifteen-year-old Jenifer Jency said: ‘Our standard of education has improved and the computer training has improved our chances of going to college and getting a good job… my knowledge has improved because we have access to all the information on the internet.’

This is endorsed by Madina, a tea plucker who has worked at Chamraj for 19 years. She is a member of the JB and has three children, all educated at the estate schools: ‘Our children are getting a good education here and once they leave this place they are getting better jobs.’

The secondary school has been provided with laboratory facilities for pre-university students to study biology, chemistry, and physics. And a new three-storey, eight classroom multimedia centre is under construction, due to be opened in January 2010. It is jointly funded by the Fairtrade premium, Chamraj and the Tea Board of India.

The popularity of the school is evident - pupil numbers have doubled to 1,200 in recent years and, with 70% of them children from 16 surrounding villages, the wider community is sharing the benefits of Fairtrade.

School buses have been purchased for each school, to ensure that children who live up to 30km can attend school every day. They are a great improvement on the unreliable and crowded government buses that were often late and are much safer for the smaller children than walking along the busy roads.

The 60-bed hospital carries out major surgery such as removal of appendix and has a laboratory to analyse blood tests. Again, 60% of patients are non-estate people from surrounding villages who pay a small consultation fee. The premium has provided an ultrasound scanner for pregnant mothers and x-ray machines to diagnose fractures. All this reduces the need for patients to seek treatment at the hospital in Ooty, some 23km and an hour away by bus, except for estate people who are taken by ambulance. Waterborne diseases are endemic to the region so workers and their families have benefitted from free hepatitis B and typhoid vaccinations and children have blood tests every six months.

Because many male workers were uncomfortable at being treated by the female doctor it was agreed that the premium should also pay for a part-time male doctor who attends the hospital every morning, Monday to Saturday. Dr Omprakash said: ‘The involvement of Fairtrade in this venture has to be realised and appreciated because the services that this hospital is giving is wide and it is open to everyone in need of help and the number of our patients has increased over the last five years and I find that Fairtrade is helping this hospital to achieve its goals.’

The premium has also helped pay for a hostel for secondary school students who live too far away to travel each day, as well as crèches, and an orphanage. Pressure cookers, gas stoves and gas bottles have been provided, so ending the need to spend hours collecting firewood from the forest, along with satellite TV connections, and furniture for the community hall.

Looking to the future, Mr Pinto said: ‘We would love to sell all our tea as Fairtrade tea. That is not only good for the company as it yields higher prices but especially for the workers. Look what has been accomplished with the premium money and imagine what would happen if all our tea was sold as Fairtrade. Major changes could be achieved.’

Mr Hendriksen added: ‘I have a message for the UK people: buy more Fairtrade teas, make us happy, make the community happy where a lot of lives have benefitted out of this. Keep buying Fairtrade teas.’

[1] Sustainability Issues in the Tea Sector, SOMO, June 2008
[2] In CTC manufacture the leaves are passed through a series of cylindrical rollers with small sharp teeth that Crush, Tear, and Curl. This method yields more cups per kilo and is widely used for quick-brew tea bags in the UK.
[3] In Orthodox manufacture a rolls the leaf to produce large leaf particles, known as grades, traditionally used in high quality leaf tea. machine.

Fairtrade Foundation December 2009 

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