Annual Performance Report

2011

Ministry of Plantation Industries

No. 55/75, Vauxhall Lane, Colombo 02

Content

Page 1. Ministry of Plantation Industries

1.1 Introduction 1

1.2 Vision 1

1.3 Mission 1

1.4 Purposes 1

1.5 Objectives 2

1.6 Scope 2

1.7 Development activities carried out during the year 2011 2

2. Financial Review 4

3. Sectoral Review

3.1 Tea Sector 5

3.2 Rubber Sector 8

3.3 Oil Palm Sector 12

3.4 Foreign Funded Development Projects

3.4.1. Smallholder Plantations Entrepreneurship

Development Programme 13

4. Divisional Performance

4.1 Administration Division 16

4.2 Accounts Division 17

4.3 Internal Audit Division 18

4.4 Development Division 20

4.5 Planning Division 22

4.6 Plantation Management Monitoring Division 23

4.7 Tea, Rubber & Coconut Estates (Control of Fragmentation) 25

Annex 1 - Financial Progress in year 2011 27

1. Ministry of Plantation Industries

1.1 Introduction

The Ministry of Plantation Industries was first established in year 1971 for

development of the plantation crops including tea, rubber, coconut, palmyrah,

sugarcane, mulberry and cashew. With the amendment to the functions of

Ministries on 29th

January 2007, development of the traditional plantation crops

of Sri Lanka such as tea, rubber and coconut was assigned to this Ministry and

Janatha Estates Development Board, State Plantation Corporation and state

owned Plantation Companies such as Kurunagala, Chilaw and Elkaduwa also

came under the purview of this Ministry. Thereafter, as per the amendment to

the functions of the Ministries on 30.04.2010, in addition to the traditional

plantation crops such as tea, rubber and coconut, development activities of

sugarcane, and the development of oil palm under the plantation crops which are

not assigned to any other Ministry, ware also assigned to this Ministry. Later, on

the amendment to the functions on 22.11.2010, in addition to tea and rubber,

development activities of oil palm under the plantation crops which are not

assigned to any other Ministry are also to be carried out by this Ministry.

1.2 Vision

“Achieving national prosperity through development of the plantation industry”

1.3 Mission

“To enhance the productivity, profitability and sustainability of the plantation

industry through ensuring an economically, socially and environmentally viable

plantation sector”

1.4 Purposes

i. To make quantitative increase in the production of tea and rubber cultivations.

ii. To improve tea and rubber exports through value addition.

iii. To increase the annual amount of foreign exchange from the export of tea

and rubber.

iv. To enhance the productivity of the plantation sector through the researches

carried out for development of the plantation sector.

2

1.5 Objectives

i. Enhancement of productivity.

ii. Increase of the annual replanting rate.

iii. Implementation of research and development programmes.

iv. Expansion of cultivation in non-traditional areas.

v. Value addition and promotion of brand names

1.6 Scope

In line with the Rapid Economic Development Programme under the Mahinda

Chinthana Idiri Dekma, the following activities are carried out by the Ministry

of Plantation Industries under the National Plantation Industry Policy

Framework formulated to achieve the above purposes and establish sustainable

development in the plantation sector.

i. Implementation of polices, plans and programmes on the plantation sector.

ii. Formulation, implementation and operation of National Plantation Industry

Policy based programmes and projects.

iii. Promotion of the optimum productivity of the lands managed by the

Plantation Companies.

iv. Training of employees aimed at the efficient management of the estates

managed by the Plantation Companies.

v. Development and promotion of tea and rubber industries and the matters

pertaining to the related research activities.

vi. To reap the maximum use from the plantations through multi cropping and

compact farming system and increase of production and employment

thereby.

vii. Issuance of permits in respect of the control of fragmentation of tea,

rubber and coconut estates.

1.7 Development activities carried out during the year 2011

i. Taking necessary action to amend the Acts of the institutions coming under

the Ministry in conformity to the current and future requirements to facilitate

the achievement of aimed development activities.

3

ii. Initiation of basic researches and cultivations for development of the rubber

industry in Northern and Eastern provinces.

iii. Taking necessary measures to ensure a reasonable price for small holders,

growers in the plantation sector and consumers.

iv. Promotion of methodologies for attraction of the possible highest amount of

foreign exchange to the country through value addition of export crops.

v. Identification of suitable lands for new planting as per the census on

uncultivated lands owned by the plantation Companies.

vi. Improvement of the productivity through encouragement for environmental

friendly cropping and processing of products.

vii. Settlement of issues of the small holders and stakeholders in the plantation

sector.

viii. Encouragement for researches in tea and rubber plantation sectors.

ix. Human Resources Development in the plantation sector

4

2. Financial Review

(Rs. Million)

Allocations are not made by the Treasury for institutions such as Kalubowitiyana Tea

Factories Ltd. and Tea Shakthi Fund which are business entities coming under the

Ministry.

Institution

Capital

allocations

for year

2011

Recurrent

allocations

for year

2011

Capital

expenditure

up to 31st

December

2011

Recurrent

expenditure

up to 31st

December

2011

Capital

performance

%

Recurrent

performance

%

Ministry

52.21

125.10

47.37

122.26

91

98

Sri Lanka Tea

Board

150.0

200.0

-

122.0

-

61

Tea Research

Institute

150.0

245.0

82.15

233.91

55

95

Tea Small

Holdings

Development

Authority

200.0

225.0

190.47

201.12

95

89

Rubber

Development

Department

100.25

932.86

78.14

611.63

78

66

Rubber Research

Institute

100.0

195.0

31.9

183.1

32

94

Thurusaviya

Fund

5.6

7.08

4.82

6.96

86

98

National

Institute of

Plantation

Management

12.0

15.0

10.01

8.5

83

57

SPEnDP

476.0

-

323.13

-

68

-

Total 1246.06 1945.04 767.99 1489.48 62 77

5

3. Sectoral Review

3.1 Tea Sector

The vision for the tea sector is to make the Ceylon Tea the premier brand in the

global beverage market through enhancement of productivity and production

of cultivations of Plantation Companies and small holder sector for

sustainable development. Sri Lanka Tea Board, Tea Research Institute, Tea

Small Holdings Development Authority, Tea Shakthi Fund and

Kalubowitiyana Tea Factories Ltd. are government institutions in the tea

sector.

In year 2011, the tea cultivation had expanded to the extent of 204,619

hectares of which 120,664 hectares (59%) owned by the tea small holding

sector. The average yield of tea per hectare in the year under review was

1,475.6 kg which is a 0.16% decrease when compared with the year 2010.

The tea production in year 2011 was 327.5mn kg and it is 1% decrease as

against the year 2010. The slight downturn in the tea cultivation was caused by

the unfavorable weather conditions prevailed in the all tea growing districts at

the outset of the year 2011 especially in the first two months.

As per the elevational tea production in the year under review, it was reported

that the low grown tea production was 196.7mn kg (60%) and high grown and

medium grown tea productions were 78.2mn kg (24%) and 52.6mn kg (16%)

respectively. (Bar Chart 3.1)

Bar Chart 3.1: Elevational Tea Production in 2011 (%)

60% 24%

16%

Low Grown

High Grown

Medium Grown

6

Accordingly, low grown tea production which was 196.2 mn kg in year 2010

has shown an increase of 0.5 mn kg (0.25%) in year 2011. During the year

under review, it was reported that the annual average price of all types of tea at

Colombo tea auction was Rs.359.89 per kg and the annual average export

price was Rs. 511.08 per kg. This is a 2% increase in the price as against year

2010.

Taking into account of 327.5 mn kg of tea produced in year 2011 as per the

main tea producing methodologies, Orthodox tea production contributed 92%

of the total tea production (301.9 mn kg.) and CTC and Green tea productions

contributed 7% (22.6mn kg.) and 1% (3.0 mn kg) respectively. Tea small

holders produced 229.0 mn kg of tea in year 2011. It was 70% of the total tea

production. The sectoral tea production in year 2011 is given in Table 3.1.

Table 3.1: Sectoral Tea Production in 2011

Sector Production (mn. kg.) Corporate Sector

Regional Plantation Companies

Tea Shakthi, JEDB,SLSPC & Elkaduwa

94.2

4.3

Tea Small Holding Sector 229

Total 327.5 The quantity of tea produced by tea small holders in year 2011 has shown a

decrease of 0.5% when compared with the production of 230.1mn kg in year

2010. The contribution of tea small holders to the total tea production in year

2011 was further significant due to the tea new planting and replanting

programmes, infilling programmes, extension and advisory services and

training programmes continuously conducted by the Tea Small Holdings

Development Authority for the tea small holders, although unfavorable

weather conditions prevailed in the first two months of the year under review.

The fertilizer subsidy provided to the tea small holders under the National

Fertilizer Subsidy Scheme was continued by the Tea Small Holdings

Development Authority up to the end of first half of the year under review.

The total quantity of tea fertilizer distributed upto May in year 2011 under this

Fertilizer Subsidy Scheme that caused for increase in productivity of the tea

small holdings sector was 35,436.2 mt and its subsidy value was about

7

Rs.1506.82 million. Further, the contribution of the Tea Shakthi Fund was

significant in distribution of tea fertilizer among the farmers and the sale of

fertilizer through the Tea Shakthi Fund under the Subsidy Scheme in year

2011 was 844.2 mt. Its subsidy value was Rs.27.3 million.

Further, tea replanting was continued in year 2011 as well with a view to

increase the tea production, and the total extent replanted with tea by the tea

small holder sector and Plantation Companies during the year 2011 was 1851

hectares.

The total quantity of tea exports including re-exports in year 2011 was 322.6

mn kg and the export income was Rs.164,854 mn. It is 1.26% increase when

compared with Rs.162,789 mn recorded in year 2010.

Russia was the main destination of our tea exports in year 2011 and 49.1 mn

kg of tea was exported to Russia in the year under review. Iran was the second

main destination and the quantity was 30.9 mn kg. The quantities of tea

exports to 10 main destinations in year 2011 are given in Table 3.2. The

quantity was 213.2 mn kg and it is about 70% of the total export.

Table 3.2: Top 10 countries on the quantity of tea exports in year 2011

Country Quantity of Exports

(Mn.kg)

Russia

Iran

Syria

Iraq UAE

Turkey

Azerbaijan

Japan

Kuwait

Ukraine

49.1 30.9 28.8 22.6 21.8 19.2 12.0 11.6 9.1 8.1

Total 213.2

The most important activities carried out for development of the entire tea

industry during the year under review are given below.

8

Taking action to initiate an annual Fund of Rs.1000/- million with the

contribution of tea exporters as per the decision made to expand

globally the tea promotion and marketing programme for annual

increase of foreign exchange earnings from tea exports, at an

investment of Rs. 5 billion.

Formulation and implementation of policy guidelines for the activities

in the tea sector. In this context, preliminary actions were taken for the

amendment of Acts and Regulations.

Coordination with the stakeholders in the tea sector such as growers,

traders, exporters, brokers, manufacturers of finished products and

Plantation Companies etc.

Appointment of a special Committee for planting material and

fertilizer mixtures in the tea sector and taking steps to settle the related

issues.

Taking necessary action to enact regulations to increase the subsidies

granted for tea replanting.

Making relevant arrangements to hold the session of FAO/IGG on Tea

in January 2012 in Sri Lanka.

Providing policy assistance for research activities of the Tea Research

Institute.

3.2 Rubber Sector

The vision of the rubber sector is to enhance the national production through

establishment of quality and productive plantations, and create an environment

conducive for the improvement of economic and social status of those who

engage in the rubber industry.

Necessary steps were further taken to develop the rubber plantation as a

quality and productive plantation through the various programmes

implemented during the year under review by the Rubber Development

9

Department, Rubber Research Institute and Thurusaviya Fund coming under

the Ministry of Plantation Industries.

The total extent of rubber cultivation in the year 2011 was 127,500 hectares of

which 101,600 hectares that is, about 80% was mature (tapping) cultivations.

The total rubber production in the year under review was 158,198 mn kg. It is

a 3.4% increase when compared with 152,987 mt recorded in year 2010. The

achievement of such increase in the rubber production in year 2011 even under

more unfavorable weather conditions than year 2010, is a success of the

rubber sector. In the year 2011, the sheet rubber production was at a high

percentage out of the total rubber production and the total production of sheet

rubber during the year amounted to 60,699 mt. ( 38%.) Category wise

quantities of rubber products in the year 2011 are given in Table 3.3.

Table 3.3: Categorization of the rubber products in year 2011

Category Production

(Mt.)

Percentage of Production

(%)

Sheet

Sole Crepe

Scrap Crepe

Latex Crepe

T.S.R.

Centrifuge and

Other

60,699 3,384

1,332

59,933

7,981

24,869

38% 2%

1% 38%

5% 16%

158,198 100%

Since the price for natural rubber soared in the international market in year

2011, the private sector was attracted highly to rubber replanting and as a

result, it had an increase in the supply of natural rubber in the rubber market

was visible the year 2011. Accordingly, though the average price for 01kg of

Ribbed Smoked Sheets No.01 (RSS 01) was Rs.592.15 at the Colombo

Rubber Auction in January 2011, a decline to Rs.380,63 was recorded by

December 2011. However, the average auction price for 01kg of Ribbed

Smoked Sheets was Rs.513.05 in the year and the sum of Rs.636 per kg which

was the highest price recorded in the year , was recorded in February 2011.

The farmers who engage in the rubber cultivation as well as the farmers in the

10

non traditional areas got encouraged towards to rubber cultivation due to the

higher prices for RSS 1 fixed at the Colombo Rubber Auction during the first

few months of the year 2011. Due to programmes implemented by the Rubber

Development Department, Rubber Research Institute and National Institute of

Plantation Management in the year, there was a continuous growth in the

knowledge of rubber growers on application of fertilizer, fixing of rain guards

and technical know-how.

The programmes on rubber new planting and replanting were continuously

implemented during the year 2011 as well. The total extent of lands cultivated

under the rubber replanting programme implemented by the Rubber

Development Department at a cost of Rs.359 million in year 2011 under the

subsidy programme, is 2,847 hectares of which 1,122 hectares that is, 39%

owned by the small holder sector in the traditional areas and 1,725 hectares

that is, 61% was in the large estates owned by the Plantation Companies. In

addition, the extent replanted with rubber by the Plantation Companies and

institutions of the public sector out side the government subsidies was 4,141

hectares.

The amount of subsidy provided for rubber replanting programme

implemented in the traditional and non traditional areas during the year under

review amounted to Rs.211 million and the extent cultivated was 1,534

hectares of which 1,006 hectares (66%) were in the traditional areas and 528

hectares (34%) were in the non traditional areas. Further, 644 hectares in

Monaragala District were newly cultivated with rubber in year 2011 under the

IFAD. In addition, the Plantation Companies in the large estate sector and the

government institutions have newly cultivated with rubber in 838 hectares of

their estates in the year 2011. Moreover, the rubber fertilizer subsidy

programme was implemented up to the second half of the year and the total

quantity of fertilizer distributed up to May 2011 was 1,959 mt of which 897

mt of fertilizer (46%) was distributed among the rubber small holders who had

mature cultivations, under the fertilizer subsidy and the quantity of fertilizer

distributed for the lands with immature cultivations was 1,062 mt.

11

The quantity of raw rubber exports in year 2011 was 42,606 mt and it was

27% of the total production in the year. However, 17% drop can be seen in the

export of raw rubber in year 2011 when compared with 51,503 mt of raw

rubber exports in year 2010 mainly due to the value addition of 111,727 mt of

rubber locally in year 2011. Accordingly, Rs.95,169 million was earned from

the export of value added rubber products during the year under review. It is a

49% increase as against Rs.63,968 million of income earned in the year 2010.

Category wise rubber exports during the year under review are given in the

Table 3.4.

Table 3.4: Categorization of rubber exports in year 2011

Category Quantity of Exports (Mt) Export Percentage of the

Production

1. Sheet

2. Sole Crepe

3. Latex Crepe

4. T.S.R.

5. Centrifuge and other

13,560 2,471 20,904 3,656 2,015

31.8% 5.8% 49.1% 8.6% 4.7%

Total 42,606

100%

The activities carried out in year 2011 for development of the entire rubber

industry are given below.

Implementation of programmes for fixing of rain guards in the rubber

estates owned by the rubber small holders and Regional Plantation

Companies under the target of 8000 hectares with the purpose of

enhancing the productivity of the rubber cultivations. In this context,

implementation of special programmes launched for promotion of the

fixing of rain guards in the rubber cultivations, supervision and facilitation

were undertaken.

Taking preliminary actions to commence a plant nursery at Padiyathalawa

in Northern Province to meet the requirement of rubber plants in non

traditional areas.

Taking special measures to expand rubber cultivation in non traditional

areas.

12

Coordination with the stakeholders related with the rubber cultivation.

Formulation and implementation of policy guidelines required for the

rubber sector.

Taking actions to enact regulations for the increase of subsidies granted for

rubber new planting and replanting.

Undertaking basic coordinating activities related with the 3rd

phase of the

City Cluster Economic Development Project to be implemented under a

grant from the Asian Development Bank.

Providing policy assistance required for research activities of the Rubber

Research Institute.

3.3 Oil Palm Sector

By year 2011, Oil palm has been cultivated in approximately 6,557 hectares

under the Plantation Companies (Agalawatta, Watawala, Namunukula, Elpitiya,

Kotagala) to which the oil palm cultivation has been expanded and this Ministry

has granted approval to import the seeds under the tariff concessions for the

Plantation Companies on their requirement for cultivation of oil palm.

The recommendation has been made to import of 157,000 seeds required for the

Plantation Companies to cultivate during the year 2011.

Table 3.7: Expansion of the Oil Palm Cultivation

Plantation

Company

Extent under

mature

Extent under

immature

Total extent

Agalawatta

Watawala

Namunukula

Elpitiya

Kotagala

947

1875

1106

785

-

212

799

336

378

119

1159

2674

1442

1163

119

6,557

4713 1,844 6,557

13

3.4 Foreign Funded Development Projects

3.4.1 Smallholder Plantations Entrepreneurship Development Programme

The objective of the Smallholder Plantations Entrepreneurship Development

Programme is to improve the life style of the project beneficiaries settled under

the Hadabima and Mahaweli resettlement in the Mid – Country Programme area

and the beneficiary farmers who cultivate rubber in Moneragala inter monsoonal

and thereby, shoulder to alleviate their poverty and depressions.

This programme is implemented by the Programme Coordinator’s office in

Colombo, Mid-Country Sub-Programme office and Moneragala Sub-

Programme office. The total cost of this programme amounts to US$ 28.0

million.

The total cost has been financed by the US$ 22.548 million which is the amount

of loan obtained from the IFAD, US$ 3.763 million which is the contribution of

the government of Sri Lanka and US$ 0.715 million which is the contribution of

the participatory financial agencies, and in addition, US$ 1.01 million is to be

made by the beneficiaries as labour or material contribution.

Under the Mid-Country programme implemented in 08 Divisional Secretaries’

Divisions of the districts of Kandy, Nuwara Eliya and Kegalle in Mid-Country

programme area, the agricultural development in the tea small holdings, rubber

and other agricultural development in the Moneragala programme area and

development and strengthening of the small scale growers and entrepreneurs

under the implementing programmes are being carried out. Sum of US$ 15.03

million has been allocated for the purpose. 3,700 hectares have been cultivated

with rubber at the end of the year 2011 out of the target of 5,000 hectares

rubber cultivation in Moneragala district. The remaining 1300 hectares are to be

under taken during the years of 2012 and 2013.

Tea planting has been completed in 56 hectares of the Mid-Country and tea

replanting in 145 hectares is undertaken in various phases. Under this

programme, the beneficiaries are provided with required plants, fertilizer and

planting subsidies on the approved rates.

14

The following financial and physical progress has been achieved in the financial

year 2011 under this programme.

(a) The estimate approved for the year 2011 is Rs.476 million and the

expenditure is Rs.372 million. Accordingly, a financial progress of 76%

has been achieved.

(b) The targeted No. of entrepreneurs’ societies to be formed under the target

of Mid-Country programme is 250. Arrangements had been made to form

60 entrepreneurs’ societies in the year 2011, and since 50 societies have

been formed newly, the total No. of societies formed at the end of the year

2011 is 230. Accordingly, 92% progress has been achieved when

compared with 250 societies which is the total target of the Mid-Country

programme. The No. of societies for loans and savings formed through

these entrepreneurs’ societies has increased up to 174. The No. of

members of the entrepreneurs’ societies is 7829 of which male members

are 4979 (64%) and female members are 2850 (36%). The increase in the

number of members during the year 2011 is 23%. Accordingly, 87%

progress has been achieved in the number of members of the Mid-Country

entrepreneurs’ societies when compared with the total target.

(c) A number of 98 rural rubber development clusters have been formed

newly representing 3378 beneficiaries in the Moneragala district.

(d) 125 roads with the distance of 20 km have been developed in the

Divisional Secretaries’ Divisions of the Mid-Country Programme area and

Rs.57 million has been incurred for the purpose. During the year 2011, 23

roads at the cost of Rs.30 million have been developed in the Moneragala

District as well.

(e) In the year 2011, tea replanting in 50 hectares has been completed in the

Mid-Country Programme area and Rs.8.2 million has been paid as

subsidies. Rubber new planting in 676 hectares has been undertaken in

Moneragala district and Rs.72.2 million has been paid as rubber planting

subsidies during the year.

15

(f) Intercropping has been undertaken in the tea cultivations with 22,260

pepper plants, 9500 coffee plants and 9400 arecanut plants. Under this

programme, 11,300 mandarin plants, 1500 banana plants, 8500 ginger

seedlings, coconut plants and vanilla have also been cultivated in the home

gardens in Mid-Country Programme area. Likewise, cocoa as an

intercropping of the rubber cultivation has been cultivated in 54 hectares in

Moneragala District.

(g) 05 community drinking water projects at a cost of Rs.1.44 million have

been developed in the Divisional Secretaries’ Divisions of Ganga Ihala

Korale, Bulathkohupitiya and Kothmale in the Mid-Country Programme

area.

(h) Contributions have been made to establish 45 commercial tea nurseries

with a minimum capacity of 10 ,000 plants in the Mid-Country Programme

area.

(i) 03 rural level processing centres have been established with the

participation of 41 members selected and trained for production of value

added goat milk. 164 goats have been distributed among 40 beneficiaries

in the Divisional Secretaries’ Divisions of Ganga Ihala Korale, Doluwa,

Uda Palatha Aranayaka, Bulathkohupitiya, for further encouragement of

the production of goat milk.

(j) Contribution has been made to the development of poultry farming in the

Mid-Country Programme area through the distribution of 4950 one month

old chicks for backyard poultry farming.

(k) 60 units containing 6000 mushroom compost bags have been established

for the production of mushroom aiming at the market and it is a special

progress that a beneficiaries are able to earn an average monthly income of

Rs.25,000 through the sale of their mushroom products.

16

4. Divisional Performance

4.1 Administration Division

Basic activities such as institutional and administrative affairs of the

Ministry of Plantation Industries, human resources management, direction

to the local and foreign training courses and personnel development,

activities related with public relations, supply management and taking

actions in respect of the repairs and maintenance.

Making the general public and institutions aware of the important activities

carried out by the Ministry and the institutions coming under the Ministry,

taking relevant actions in respect of the parliamentary questions, the

functions of the Committee on public petitions, the Consultative

Committee Meetings and the letters referred for the requirements of other

Ministries, institutions and the general public and the requests of the

people.

Providing facilities required for implementation of the policy decisions

made by the Ministry from time to time in line with the timely

requirements and preparation of Cabinet Memorandums on the

requirements and submission them to the Cabinet of Ministers.

The activities relevant to the implementation of productive promotion

programmes of the Ministry and the institutions coming under the Ministry

are being carried out, and taking necessary actions for the promotion of

productivity of the various divisions of the ministry, conducting awareness

programmes on the productivity promotion for the staff and direction to

the training programmes and performing the activities in respect of the

Management Reforms Cells and Quality Circles for implementation of the

proposals on reforms submitted by the Ministry of Public Management

Reforms.

Taking action in respect of the staff management of the institutions such

as Sri Lanka Tea Board, Tea Research Institute of Sri Lanka, National

Institute of Plantation Management, Kalubowitiyana Tea Factory Ltd, Tea

Small Holdings Development Authority, Tea Shakthi Fund, Rubber

17

Development Department, Rubber Research Board of Sri Lanka and Thurusaviya

Fund coming under the Ministry, taking action in respect of the Schemes of

Recruitment and Promotion Schemes, taking necessary action to fill the vacancies

in the staffs, staff welfare and human resources management, appointments,

promotions, extension of services and retirements.

All required coordination activities are carried out for continuation of institutional

and administrative affairs of the institutions coming under the Ministry and the

appointment of Chairmen and members to the Board of Directors of the said

institutions, providing facilities to the main operational activities of the

institutions, submission of Annual Reports and Audited Accounts in Parliament

are also undertaken. Further, administrative affairs of the foreign funded

Smallholder Plantations Entrepreneurship Development Programme are also being

carried out.

Coordination the activities in respect of the local and foreign trainings, seminars

and scholarships of the institutions coming under the Ministry. Direction to local

and foreign training courses and scholarships and taking necessary action to

obtain approval of the Hon. Minister, Hon. Prime Minister and H.E. the President

for the said purpose, coordination the activities in respect of the international

seminars and conferences and taking necessary action to approve personal and

official foreign leave.

4.2 Accounts Division i. The financial progress for the year 2011 is given in Annex 1. The financial

progress is 73% of the net allocation. Since the funds relevant to the total

estimated allocation were not released to the institutions coming under the

Ministry by the General Treasury, the financial progress could not be achieved at

an optimum level.

ii. In year 2011, Rs.2.62 million has been provided to the officers of the Ministry as

loans and advances within the approved limits of the Advance Account “B” for

Public Officers.

18

iii. Since the total amount of imprest requested in releasing the imprest from

the Treasury were not received, some purchases could not be made as per

the Procurement Plan 2011. However, basic essential items could be

purchased during the year.

iv. Follow-up activities of the report of inventory survey in year 2010 were

finalized. The inventory survey activities were completed as at 31.12.2011

and reports of the Board of Survey have been submitted by 31.03.2012.

v. Answers have been sent for all 11 audit queries made in respect of the

activities of the Ministry in year 2011. Auditor General’s reports for year

2010 of the Smallholder Plantations Entrepreneurship Development

Programme which comes under the purview of the Ministry have been

submitted to the IFAD for necessary actions.

vi. The Appropriation Account 2011 and the Advance Account”B” for Public Officers have been submitted to the Auditor General on 28.03.2011.

vii.All duties assigned to the Accounts Division could be handled

successfully.

4.3 Internal Audit Division

I. Internal Audit Inquiries and Special Monitoring Activities

(a) Smallholder Plantations Entrepreneurship Development Programme

Sub office of Monaragala

The distribution of rubber plants in the year 2010 and up to March 2011

by the Monaragala Sub office under the Smallholder Plantations

Entrepreneurship Development Programme was audited.

Sub office of Kandy

Field inspections were conducted and audited the following projects

initiated by the Kandy Sub office in December 2010 and January 2011

in the Divisional Secretaries’ Divisions of Ganga Ihala Korale and Uda

Palatha in Kandy District and the Divisional Secretary’s Division of

Bulathkohupitiya in Kegalle District.

19

1. Mushroom farming.

2. Poultry farming.

3. Goat farming.

Progress of the above projects is to be inspected in the year 2012 as well.

(b) Tea Shakthi Fund

A special audit inquiry was conducted in respect of the computer

accounts system which was established in the year 2010 under the Tea

Shakthi fund and later become defunct.

(c) National Institute of Plantation Management

Payments and settlements of Advances released by the National Institute

of Plantation Management for various purposes in year 2011 and the

maintenance of vehicles were audited.

(d) Thurusaviya Fund

A special audit inquiry was conducted on the expenditure incurred by the

Thurusaviya Fund for “Dayata Kirula National Exhibition” in year 2011

and In addition, audit inquiries were conducted in respect of the other

expenses incurred in the year 2011.

(e) Kalubowitiyana Tea Factory Ltd.

On a complaint made in respect of the irregularities occuring in receiving

green leaf to the Kalubowitiyana Tea Factory, the process of receiving

green leaf was inspected.

(f) Tea Small Holdings Development Authority

Preliminary inquiry was conducted in respect the complaints made on

the informal appointment to the post of Deputy General Manager

(Extension) of the Tea Small Holdings Development Authority.

20

II. Submission of recommendations on the courses of action to be taken to

rectify the shortcomings pointed out in the reports issued by the Auditor

General in respect of the Tea Shakthi Fund

Recommendations have been made on the courses of action to be taken to study

and rectify the shortcomings pointed out in the Auditor General’s Reports issued

by the Auditor General for the years of 2007, 2008 and 2009 in respect of the

Tea Shakthi Fund.

III. Holding of Audit and Management Committee Meetings

During the year 2011, 04 Audit and Management Committee Meetings with the

participation of the Chief Executive Officers, Chief Internal Auditors / Internal

Auditors of the all institutions coming under the Ministry, Heads of the

Financial Agencies and the Audit Superintendents of the Auditor General’s

Department were held. The activities of the Internal Audit Divisions of each

institution were reviewed at the said meetings and in addition, conducting of

Audit and Management Committee Meetings of such institutions and the

progress of answering to the audit queries issued by the Auditor General was

discussed extensively and the necessary instructions were issued. Following-up

of the adoption of the instructions given thereat was also undertaken by this

Division.

IV. Conducting Inquiries under F.R. 104

Inquires have been conducted under F.R. 104 in respect of 02 vehicle accidents

met in the year 2011.

4.4 Development Division

The following measures were taken by the Development Division in year 2011

to develop tea and rubber cultivations and also to develop related industries and

value added products.

i. In terms of the Cabinet Decision dated 06.10.2010, further actions

were taken to amend the Acts of all institutions coming under the

21

Ministry to meet the current needs. The all activities such as convening of the

Committee appointed by the Cabinet of Ministers in this regard under the

Chairmanship of the Secretary to the Ministry and with the participation of the

Ministry of Finance and Planning, Ministry of Economic Development,

Ministry of Technology and Researches, Ministry of Industries and Commerce

and the representatives of the Central Bank, making observations and

recommendations on the amendments to the Acts and facilitation were

undertaken.

ii. Participation at the Dayata Kirula National Development Exhibition held on

February 2011 at Buttala, coordinating all institutions coming under the

Ministry.

iii. Action was also taken to provide policy guidelines for research and

development activities carried out by the institutions and settle the issues

arisen in that regard.

iv. Special measures were taken to expand the rubber cultivation in non

traditional areas. In this context, actions were taken to make policy decisions,

execute them and facilitate to expand the rubber cultivation in Moneragala and

Ampara Districts, conduct researches for determination of feasibility for

rubber cultivation in Northern Province.

v. Organization of preliminary activities necessary to the programme for

development of access roads in the plantation sector to be implemented in the

year 2012 with the collaboration of the Financial Commission and the

Provincial council and facilitating the relevant decision making process.

vi. Progress review of the all institutions and the foreign funded project coming

under the Ministry of Plantation Industries and taking necessary steps to retain

the performance at a higher level.

vii. Updating of the web-site of the Ministry.

viii.Coordination with the international organizations on tea and rubber and

coordination of the implementation of agreements entered into.

22

ix. Management of the impact on the plantation sector caused by the climatic

changes.

x. Providing the media the information on the development activities of the

Ministry.

4.5 Planning Division

The following activities were carried out during the year 2011.

i. Formulation of the Action Plan of the Ministry for the year 2011 and

submission it to the Ministry of Finance and Planning and the relevant

institutions.

ii. Preparation of quarterly progress reports and submission of them on time to

the Budget Monitoring Department of the Ministry of Finance and Planning

through the e-mail and Preparation of quarterly progress reports and

submission of them to the relevant institutions including the Audit Divisions.

iii. Organization of the Progress Review Meetings chaired by the Hon. Minister

and submission of the decisions made thereat to the officers concerned and

subsequently, preparation of progress reports and organization of discussions.

iv. Submission of new budget proposals and project concept papers for the year

2011, to the National Planning Department.

v. Preparation of the Performance Report - 2011 relevant to the budget

discussion of the Ministry of Plantation Industries held on 07th

December 2011

and presenting it in the Parliament.

vi. Working together with the Ministry of Plan Implementation regularly in

respect of the relevant awareness and reporting under the result based

management process.

vii. Preparation and submission of reports on the information pertaining to the

progress of the plantation sector to the Annual Report 2011 of the Central

Bank of Sri Lanka as per the required formats.

viii. Coordination of the updating process of the five year Corporate Plan of the

institutions for the year 2011.

ix. Reporting the issues pertaining to the plantation sector from time to time for

submission in the meetings of the District Secretaries.

23

x. Coordination of the development programmes such as Mahinda Chinthana,

Divi Neguma.

xi. Coordination of the basic activities required for mapping of the tea and rubber

lands using the Geographical Information Technology.

xii. Preparation of the Annual Report of the Ministry of Plantation Industries for

the year 2010.

4.6 Plantation Management Monitoring Division

I In year 1992, 439 large scale estates managed by the Janatha Estates

Development Board (JEDB) and Sri Lanka State Plantation Corporation

(SLSPC) were vested with 23 Regional Plantation Companies and privatized.

The ownership of these estates still remains with the JEDB and SLSPC and

the management and the plantations of the estates have been handed over to

the Regional Plantation Companies on 53 year basis. The Plantation

Management Monitoring Division has been established for the management of

these Regional Plantation Companies.

II Functions of the Plantation Management Monitoring Division

Monitoring of the Regional Plantation Companies and review of the

progress.

Monitoring of replanting and field development activities.

Inspection of the factory modernization and human resources

development.

Looking into the matters such as prevention of soil erosion, application

of fertilizer, conservation of water resources and water catchments and

environmental conservation related with the estates.

Inspection of the management irregularities in the estates and taking

remedial measures for them.

Monitoring of the sub-leasing undertaken by the plantation Companies.

Making arrangements to release the lands leased out to the Regional

Plantation Companies, for the common purposes.

Monitoring of the forest management programmes and making necessary

recommendations for timber felling on field inspections.

24

Collection of the lease rentals to be recovered from the Regional

Plantation Companies to the government.

Issuance of eviction orders to the unauthorized occupants in order to

establish the State Lands Possession.

III Performance of the Plantation Management Monitoring Division - 2011

i. Identification of cultivable but uncultivated lands managed under the

Regional Plantation Companies

During the year 2011, a survey on cultivable but uncultivated lands

owned by 20 Regional Plantation Companies was conducted with the

contribution of the Plantation Monitoring Officers and the University

students and collaboration of the officials of the Tea Research Institute,

Rubber Research Institute and Rubber Development Department.

Accordingly, 15,178 hectares have been identified as cultivable but

uncultivated lands and the Hon. Minister handed over the relevant report

to H.E. the President. Accordingly, a Budget Proposal 2012 was also

presented.

ii. Recovering of lease rentals from the Regional Plantation Companies

The amount of lease rentals estimated to collect during the year was

Rs.956 million of which Rs.826 million has been collected.

The arrears of lease rentals to be recovered as at 01.01.2011 were Rs.556

million of which Rs.432 million has been recovered during the year.

The amount of lease rentals to be recovered in the year 2011 was Rs.646

million of which Rs.394 million has been collected during the year.

Accordingly, it was able to reduce the total arrears of lease rentals from

Rs.556 million to Rs.376 million.

The Regional Plantation Companies have given consent to pay as

installments the outstanding lease rentals as at 30.11.2009 and

accordingly, it is expected to recover all outstanding balances by 30th

June 2012.

25

IV Review of Financial Progress of the Regional Plantation Companies

Proper studying and analysis of the quarterly and annual accounts statements

of the Regional Plantation Companies and thereby, giving instructions to

the Companies to rectify where necessary and arrangements have been

made to carry out these activities more regularly in the year 2012.

V. Field inspections and other activities on timber felling

Field inspections on timber felling in 71 estates managed under 17 Regional

Plantation Companies had been conducted in year 2011 and actions have

been taken to release lands for common purposes. Likewise, 8 field

inspections were conducted on the cases hearing at the Court in respect of

the lands owned by the Plantation Companies.

4.7 Tea, Rubber & Coconut Estates (Control of Fragmentation) Board

Although the Tea, Rubber & Coconut Estates (Control of Fragmentation) Act was

passed in Parliament in year 1958, provisions were not made available for control of

fragmentation of coconut lands. As a result, coconut estate owners and land sale

agents undertake the fragmentation and sale of large scale coconut estates without any

control, and it caused to decline in the coconut production and coconut based

production. Further, various environment and social issues have arisen due to the

above situation.

Taking into consideration the above facts, the Control of Fragmentation Act No.02 of

1958 was amended by the Control of Fragmentation Act No.20 of 2005. Under the

provisions of this Act, approval of the Control of Fragmentation Board should be

obtained for transfer of the ownership or sub division of the tea and rubber estates

more than 20 hectares and coconut lands more than 04 hectares. The Board of

Directors reserves the authority to grant approval for fragmentation of these estates.

Since approval of the Board should be obtained under the provisions of the Act in

transferring of lands as a single unit even not resulting a fragmentation, approval of

the Cabinet of Ministers has been obtained in year 2011 to amend the Act of

Fragmentation relevant to Section 3, 5 and 8 (1) (b) having considered the

requirement to transfer lands without delay and to minimize the difficulties faced by

the people.

26

Tea, Rubber & Coconut Estates (Control of Fragmentation) Board has held 13 Board

Meetings from 01.01.2011 to 31.12.2011 and the activities carried out during the said

period are summarized below.

Details of the applications forwarded to the Tea, Rubber & Coconut Estates

(Control of Fragmentation) Board during the year

No. of applications received in the year 2011 = 589

Total No. of applications forwarded to the Board of Directors

together with the applications brought forward from the last year = 673

No. of applications forwarded to the Board of Directors

as single units = 206

No. of applications forwarded to the Board of Directors

for transfers within the family and total land demarcations = 467

Acres Roods Perches

Total extent of lands approved for transfers

within the family and other transfers 2,770 01 17

Total extent of lands approved as single units 11,251 03 17

Total 14,022 00 34

27

Financial Progress in year 2011 Annex 1 1. Estimate of Expenditure

Rs.’000

Financing for the expenditure is given below.

Rs.’000

Financing of expenditure Expenditure

11 - Domestic funds

12 - Foreign loans

17 - Domestic funds connected with foreign aids

1,244,585

295,000

28,133

Total 1,567,718

2. Incomes – Lease rentals collected from Regional Plantation Companies

Income to be received for year 2011 Rs.’000

Income Head Annual Estimate

of Income

Revised Estimate

of Income

Income received Percentage of

income receipt

20.02.01.04 638,939 956,395 394,238 41.23%

Outstanding Incomes as at 31.12.2010 Rs.’000

Income Head Outstanding income as

at 31.12.2010

Recoveries in year

2011

Percentage of

recovering of

outstanding incomes

20.02.01.04 555,725 431,708 77.68%

135-1-1

Minister’s

Office

135-1-2

Administration

and

establishment

services

135-2-3

Plantation

Development

programmes

135-2-4

Plantation Development

Institutions

135-2-5

Thurusaviya Fund

Total

Recu

rrent

capit

al

Recu

rrent

capit

al

Recu

rrent

capital Recurren

t

capital Recurr

ent

capital

1. Estimated

provision

50,800 9,350 47,490 5,400 29,490 482,650 880,000 612,000 7,080 5,600 2,129,860

2. Transfers

and

supplement

ary

provision

under

F.R.66

1,077 33,979 -3961 -716 204 -2,449 0 0 0 0 28,134

3. Net

provision

51,877 43,329 43,529 4,684 29,694 480,201 880,000 612,000 7,080 5,600 2,157,994

4.

Expenditure

51,478 40,927 41,328 4,123 29,453 325,453 748,635 314,534 6,965 4,822 1,567,718

5. Percentage

of the

expenditure

99% 94.46%

95% 88% 99% 68% 85% 51% 98% 86% 73%

28

3. Advance Account “B” for Public OfficersRs.’000

Maximum limit of the

expenditure

Minimum limit of the

receipt

Maximum limit of

debit balance

Limits authorized by the

Appropriation Act 6,600 3,200 28,000

Revised limits in the

year

- 3,164 -

Actual Values as at end

of the year

2,619 3,164 15,723