NEW troubles have emerged at two Transkei tea estates bought by the government to assist emerging farmers, says Agriculture Minister Tina Joemat-Pettersson.

One trouble spot is the Magwa estate in Lusikisiki, which has had a long history of troubles and went broke in 1997 and again in 2003.

Since 2004, the operating company has been Magwa Enterprise Tea, a wholly- owned subsidiary of the Eastern Cape Development Corporation (ECDC).

However, Joemat-Pettersson wrote in reply to a parliamentary question, the project is not operating at full capacity.

This is because of provincial Agriculture Department funding delays and non-adherence to an adopted business plan. These delays and non-adherences began in August 2007, she said in reply to a parliamentary question put by Piet Pretorius (DA).

The other troubled operation is the Majola estate at Port St Johns, still owned by the workers and community, on terms and conditions similar to those that applied to Magwa prior to its insolvency.

But, says the minister, “since September 2003 there has been no fertiliser applied by the estate. Inorganic fertilisers in the form of NPK macro-elements are the most basic forms of plant food, especially when it is to be administered in bigger quantities”.

“Our estate needs a minimum of 250 tons of these fertilisers to be applied each season. The price of this input increased in such a way that in September 2003, Majola Tea could no longer afford to apply.

“This increase was matched against constant tea prices that were just dropping in real terms. There has always been a shortage of labour since working for a tea estate at that time was not that attractive.”

The most important challenge to the viability of the two estates had been the price of tea, the minister said.

“Bulk black tea’s current cost of production at Magwa is at about R14/kg,” she said.

“The current market price for the purchase of bulk tea fluctuates between R11/kg and R20/kg, which (according to Magwa management) is sold at between R67/kg and R69/kg in retail outlets.

“Companies like Unilever and National Brands buy the tea from Magwa, and blend it with various teas purchased from countries like Malawi.

“Tea can be purchased from Malawi at between R8/kg and R9/kg due to lower labour costs, and because the tea is imported duty-free.

“The purchasers then package, market and distribute the tea and sell it to retail outlets, who add a margin of about 27% to the purchase for on-sale to consumers.”

High oil prices, high input costs, high interest rates and the cost of living were all negative factors, she said. – I-Net Bridge