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Has Magwa tea estate finally turned?

Nov 26 2017 06:00
Lubabalo Ngcukana

Following years of uncertainty due to labour unrest and a protracted business rescue process, the Magwa tea estate in Lusikisiki, Eastern Cape, seems to have finally turned over a new leaf after a quality harvest this month.

The yield will be sold to renowned local brands and exported.

Mlibo Qoboshiyane, the MEC for rural development and agrarian reform in the province, said there were early positive signs at Magwa, which employs 901 people, following a business rescue plan to save the estate.

After much dispute between stakeholders, the department approached the Grahamstown High Court, which in turn appointed a business rescue practitioner.

Qoboshiyane, who joined hundreds of tea pickers at Magwa tea estate recently, said his department had already spent R20 million on rescuing Magwa.

The plan included merging neighbouring Majola tea estate with Magwa, which began operations in the 1960s, to form one viable entity.

The MEC said Majola tea estate was in the process of being liquidated. The other major tea estates in South Africa are located in KwaZulu-Natal and Limpopo.

“I went through the plucking process, weighed the harvested tea and took a tour of the processing plant. The tea harvested is due to be taken to China, India, Pakistan and some European countries, and some it will be sold to local brands including Lipton, Five Roses, Glen, Trinco and Tetley,” said Qoboshiyane.

The Eastern Cape treasury has allocated R85 million of the R116 million already committed by the Eastern Cape to the running of the estate.

The MEC said his department would also look at other ways to boost the operations of the estate and its finances, and that a number of potential investors had already expressed interest.

The season’s good rains and ideal climate conditions could yield a crop of 705 923kg, which will sell for an estimated R16.2 million – R23 per kilogramme.

The unrest in Magwa started in 2011 as workers embarked on violent protests because they were not being paid. They blockaded the roads that led to the plantations and disrupted other operations at the estate.

When City Press visited the estate in 2015, little had been done to bring the estate into operation again and scores of workers were desperate for income.

The tea crops, which must be kept pruned to a specific height to ensure a profitable harvest, were overgrown.

Qoboshiyane said the department was in the process of publishing an expression of interest notice to generate private and public sector interest and investment in the merged estates.

“The proposed ownership is a shareholding structure that will be 51% for the private equity partner, 26% for the community, 13% for employees and 10% for the department of rural development and agrarian reform,” Qoboshiyane said.

Vuyisile Ntlabati, the president of the Eastern Cape Chamber of Business, said they would welcome a business equity holding because government had thrown money into the project, but it continued to fail because it was not run by businesspeople.

“If there is now equity, it means government has changed its stance. All these years, they have been doing it themselves when there is budget.

“If a business partner has a majority shareholding, there is not a problem. The jobs would be sustained. We would cherish an equity. We have long been saying that we must let businesspeople run businesses. The government must assist businesses to run. That way, things can be sustainable,” Ntlabati said.

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treasury  |  tea farming


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