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January 3, 2026The Declining Trajectory of Kerala’s Plantation Industry
The policy that once protected plantations—the exemption from ceiling provisions of the Kerala Land Reforms (KLR) Act, 1963—is now contributing to the sector’s stagnation.
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According to the GoK-IIM Kozhikode report on Plantation (2021), the sector’s peak was in 2012– 13, when the total value of plantation crops reached ₹21,000 crore. However, this value dropped to ₹9,750 crore by 2016–17, recovering only marginally to ₹13,542 crore in 2020–21, as per the Fourteenth Five-Year Plan of the Government of Kerala.
As India observed National Farmers’ Day (Kisan Diwas) on December 23, commemorating the contribution of farmers to the nation’s food security and rural economy, it is equally important to reflect on the realities faced by plantation farmers and workers—particularly in states like Kerala, where agriculture extends beyond food crops to globally significant plantation crops.
Kerala has long been regarded as the “Plantation Enclave of India” (as per Fourteenth Five-Year Plan, Govt. of Kerala), with crops such as tea, coffee, rubber, and cardamom occupying nearly 29% of the state’s gross cropped area, with over 10 lakh farmers/planters dependent on these crops for their livelihood. As per the Fourteenth Five-Year Plan, Government of Kerala, the state accounts for 37.2% of India’s total plantation area and 29.4% of its total output, with plantations providing permanent employment to over 4.18 lakh workers. The total value of plantation crops in 2020–21 stood at ₹13,542 crore, generating foreign exchange worth ₹2,717 crore—nearly 23% of India’s total plantation export earnings. Despite its strategic economic importance, Kerala’s plantation sector is experiencing deepening structural and financial stress, driven by declining global competitiveness, stagnating productivity, and escalating input costs that have eroded its overall viability.
The Economic Slide: A Decade of Decline
According to the GoK-IIM Kozhikode report on Plantation (2021), the sector’s peak was in 2012–13, when the total value of plantation crops touched ₹21,000 crore. However, this value dropped to ₹9,750 crore by 2016–17, recovering only marginally to ₹13,542 crore in 2020–21, as per the Fourteenth Five-Year Plan, Government of Kerala.
Despite a marginal increase in the total area under plantation crops, from 7.09 lakh hectares in 2010–11 to 7.24 lakh hectares in 2023–24, the combined production for key plantation crops (tea, coffee, rubber, cardamom, and cocoa) has fallen sharply from 9.1 lakh tonnes in 2010–11 to 7.06 lakh tonnes in 2023-24, as per the Agriculture Statistics, Government of Kerala.
While the number of registered plantations slightly increased, from 693 in 2015 to 719 in 2022, the number of operational plantations has dropped from 559 to 511 over a similar period. Furthermore, the estimated average daily employment saw a drastic fall from 74,281 in 2004 to a drastic low of 36,126 in 2015, recovering only partially to 50,148 by 2022, as per the Labour Statistics of the Government of Kerala.
The Dual Challenge: High Costs and Labour Shortage
A major pressure point for planters is the skyrocketing cost of labour, which made Kerala as one of the most expensive regions in India for plantation production. As per the Fourteenth Five-Year Plan, Government of Kerala, between 1980 and 2021, the cost of labour rose dramatically, with statutory benefits accounting for nearly 40 per cent of total wages. This means that when plantation workers receive a daily wage of ₹414.68, the effective wage paid by employers—including statutory and fringe benefits—rises to ₹690.16 per day. This effective wage level is significantly higher in comparison with other plantation crop-producing states across the country.
Simultaneously, the sector is grappling with an acute labour shortage. The traditional workforce has migrated to more lucrative sectors, leaving planters with the challenging reality of rising costs alongside diminishing availability of workers, particularly during the highly labour-intensive harvesting periods.
Rigid Land Laws Hinder Diversification
The policy that once protected plantations—the exemption from ceiling provisions of the Kerala Land Reforms (KLR) Act, 1963—is now contributing to the sector’s stagnation. The exemption to plantation was historically justified by the integrated nature of the enterprises and the need for economies of scale. However, the same legal framework has created a severe rigidity in land use. If a grower/planter attempts to diversify into profitable alternative crops or allied activities, the land risks losing its “plantation” status, potentially being classified as ‘surplus land’ liable for government acquisition. This provision has effectively forced planters into monocropping systems, exposing them to severe losses whenever market prices for their single commodity fluctuate.
Recognising the ongoing financial distress of the sector, the State Government amended the KLR Act in 2012 (Act 6 of 2012) to permit up to 5% of plantation land to be used for alternative purposes such as floriculture, cultivation of vanilla or medicinal plants, dairy farming, or establishing tourism ventures like hotels and resorts. As per some of the members of the Plantation Associations in Kerala, “while this amendment was a progressive step, the allowance remains too limited to drive meaningful diversification or long-term economic recovery”.
Pathways for Revitalisation
The plantation sector has long been the backbone of Kerala’s economy—supporting livelihoods, contributing to exports and preserving ecological balance. However, declining productivity, high costs, and restrictive land policies are threatening its survival. A restructured policy framework enabling efficient utilization of land through crop diversification, mechanization and sustainable resource use is essential to ensure economic viability of this sector to serve both as an economic engine and an environmental asset for the state.
Banisha Begum Shaikh is a Senior Associate, Research & Projects at the Centre for Public Policy Research (CPPR), Kochi.
Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research.
With over 5 years of experience as a research professional, Banisha Begum Shaikh specializes in conducting in-depth sectoral evaluation at both national & state level policy research, policy drafting, white paper development, advocacy, implementation and impact assessment across various sectors of the economy.
Banisha's past research work has reached the policy makers desks at central & state levels with several suggestions being reflected in key policy and regulatory reforms.
