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Like the legendary phoenix rising from the ashes, this is the story of two rural Eastern Cape tea estates which, from near liquidation eight years ago, are now ranked among the world’s top tea producers and have excellent blends.
“It is one of the success stories of communal farming in the whole of South Africa,” says former Eastern Cape Rural Development and Agrarian Reform MEC Mlibo Qoboshiyane.
The Magwa and Majola tea estates, situated in the rolling hills of Lusikisiki, started in 1998 when workers purchased the project through the then still new government’s policy of land distribution.
For years, things went well, with production targets being met.
At that stage, tea was packaged in a tin container. The label bore the inscription: “Your canister is a monument to freedom and free enterprise. We the workers, have purchased our tea estates from our new democratic government. With each cup of tea you make, consider it a celebration of our freedom. You are now inextricably linked to us as a friend ... the final link which distances us from an oppressive past.”
However, this celebration did not last very long. Like many projects of such a nature, managerial and administrative problems crept in, and the Magwa and Majola tea estates were not spared. The project started to experience financial mismanagement, poor administration, the involvement of unions and various disputes.
This led to poor production and workers not being paid for months. The project almost collapsed as infrastructure and equipment were trashed by angry unpaid workers, management was violently ejected and everything was at a standstill.
Before the chaos, the project used to turn over R65 million a season and employed 3 500 people.
Enter Qoboshiyane in 2016, and things started getting better again.
“We took a conscious decision not to liquidate but to go for business rescue. It turned out to be the best decision for the Magwa and Majola tea estates project. Look where we are today,” said a jubilant Qoboshiyane.
The provincial rural development and agrarian reform department approached the Grahamstown High Court to put the estates under business rescue. This decision was also at the behest of the main creditor, the Eastern Cape Development Corporation. The project was placed under the department’s rural development agency to run professionally.
“We set aside R148 million as intervention to resuscitate the project and so far we have used R45 million. We are now also inviting private sector partners to come in. We propose a shareholding partnership structure of 51% private equity partner, 26% for the community, 13% for the workers and 10% for my department. We are already getting positive response from private partners. We have issued expressions of interest to the public, inviting them to be partners,” said the MEC.
The two estates’ blend has been ranked among those of the world’s top tea exporters, going to India, China, Pakistan and the EU, with some of the product sold to local brands.
The two estates are currently being incorporated into one entity, with more than 330 tons harvested in the last seven months, valued at R7.5 million. They give employment to about 1 400 workers.
“The estates are producing high-quality tea, creditors are being paid and the working environment is very conducive and so we expect high yields and an improved turnover. The project is now being run professionally,” said Qoboshiyane.
Eastern Cape Rural Development Agency chief executive Thozi Gwanya said the ranking of the estates’ produce was made in a report by Span Africa, a research group based Kenya. It ranked India number one and Kenya third.
Gwanya said the only challenge was that the tea estates did not have their own blending machines. “Those machines help us do everything all at once ourselves here. That is the only hinderance, but we are working on that,” he said.
Qoboshiyane is doing a sterling job in supporting and encouraging communal farming in the province and is hands-on. He is mostly seen in green overalls among workers, either picking tea or inspecting livestock in communal farms.
He believes research and technology are the key drivers of agriculture in the mostly rural province of the Eastern Cape. His department has injected millions of rands into various agricultural projects, including fish farming in the province.
“At Magwa and Majola we are also looking at agro-tourism – we want to invest in that and utilise the existing facilities such as the golf course and the lodge at the estates. I am so excited because the decision we took of business rescue instead of liquidation, and the money we asked for from the provincial legislature for this project, is now paying off and showing results,” he said.
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