Wednesday, January 26, 2011

In-flight WTF

I was on a plane a couple of weeks back, from lovely, pleasant Madras to freezing, gray as the Tirpitz Amritsar. The in-flight magazine had one of those travelogue things, this one about a home stay type place somewhere in the Western Ghats in Kerala, on a cardamom/clove/other spice estate.

The family that owns and runs the place apparently used to live in Bombay and this was an ancestral estate of sorts that they were planning to get rid of. When they visited the homestead, they were enthralled by how beautiful and quiet and un-city like the whole setup was; so instead of selling the plantation, they sold their stuff in Bombay and moved lock, stock and barrel back to Kerala and went about the business of reviving the thing.

All well and good. The article had liberal doses of numbers in it. Some paper napkin arithmetic follows, bear with me.

Total acreage: 20 acres
Plant density: 400 / acre
Yield per plant per annum: 5 kg
Market price of said spice: Rs. 275 - Rs. 1700 per kg, depending on market conditions etc.
Revenue p.a. = Rs. 4 crore (at a sale price of Rs. 1000 per kg)

Then the gentleman goes on to reveal some of his costs. Apparently they have 6-7 full time workers, and hire another 10-15 during picking season. These people are paid Rs. 150 per day, apparently.

Total outlay on labour, generously speaking = 365 days * 20 workers * Rs. 150 ~= Rs. 11 lakh p.a.

Finally, in a somewhat rueful manner, this stunning comment:

"Everywhere from villas and townships, to the new airport that's coming up, construction pays way better for a far worse standard of living. None of my workers' children want to get into farming."


You're making 4 crores a year, you spend 11 lakhs on labour, and this is your biggest crib?

I hope they replace the entire estate with a strip mall and (i) the workers get paid something approaching a fair wage and (ii) we get to work on the project.

Readers are invited to acquaint/re-acquaint themselves with this tale.


Space Bar said...

ha! or he could have a eureka moment and realise that if he paid the workers better than the airport/strip mall folks, they'd be happy, he'd be happy and nobody complains about standard of living.

csm said...

obviously the reporter has messed up the output data calc.
cardamom yields are apprx 100 kgs per acre and not 2000 kgs as on paper napkin.

Ludwig said...

[SB] Zigzackly

[csm] I'm not sure it's cardamom. All I remember is that it's a spice, and I forgot to write down what it was.

In any case, there may be lots of other factors at play in terms of costs (packaging and marketing, transportation, bribing, taxes etc.)

My only point was that to focus on labour as the one problem, seemed out of whack, given (if the numbers are right) what a small proportion it is.

Richa said...

This is like people in my apartment complex complaining about the ironing guy increasing prices from Rs. 2 a shirt to Rs. 2.50. I mean, really! It takes him at least 5-8 minutes to iron each item, which makes his total hourly income a whopping 20 Rs. or 160Rs per day if he gets a full load which is rare. More likely it is not even 100Rs per day. The number of emails discussing this "outrageous increase in price", "they charge us whatever they feel like", "there is no quality control", etc. is truly embarrassing.

Ludwig said...

[Richa] Seriously. What they deserve is what they can get away with, if you ask me. Just like the rest of us.