Question NW2930 to the Agriculture, Land Reform and Rural Development.

Reply:

1.  Agriculture in the Eastern Cape Province to which these entities fall. The national government is interested in the functioning and performance of these entities because they contribute to the agricultural economy, rural development and livelihoods.

From the responses of the province and our own assessment, we cannot say the two entities have reached optimal sustainability.

According to the Eastern Cape Department of Agriculture, No. Magwa-Majola Tea Estate has not reached operational sustainability currently, however great strides have been made in turning the entity around since the Business Rescue Exit (16 February 2016 to 4 June 2019). The COVID-19 pandemic, falling tea prices, increased import of cheap tea’s and the Russia and Ukraine conflict-induced supply chain disruptions resulted in high import and export inflation.

The geo-political instability and recession in countries such as Egypt, Pakistan and other former Soviet Union countries has resulted in tea from Kenya, Rwanda and Tanzania being redirected to South Africa creating a highly competitive trading environment. Production efficiency increased over the year by 206% from 19KG (2019/20) to 59KG (2022/23). This is how we understand the operation and use of data in our planning and decision-making process.

The Board and Management of Magwa Enterprise Tea (MET) met on 7 June to review all current and previous plans and strategies with the aim of developing a more implementable and realistic turnaround strategy that will lead to a self-sustaining tea business. This process is continuing with the view of presenting a final strategy with short, medium, and long-term goals. The focus of the company and its turnaround strategy is as follows:

• Change of business model from bulk to teabag revenue; streamlining product portfolio and developing a focused channel strategy.
• Factory and machinery upgrade.
• Food safety certification.
• Plant restoration.
• Crop and revenue diversification.
• Stakeholder management and resolution of land ownership.
• A circular economy: organic fertiliser, change from coal to wood briquettes for factory boiler.

MET is a State-Owned Enterprise (SOE) and it would be beneficial for state facilities (government offices, prisons, hospitals, and municipalities) to consume only Magwa-Majola tea brands rather than tea manufactured by companies competing with MET.

Progress is being made on the following:

• Mechanisation (motorised tea harvesting equipment), 30% of the estate harvesting will be mechanised while 70% remains manual – also creating new job opportunities for youth in engineering and mechanics; increased production and revenue and profitability while cost per KG is decreased. The change in the operating model will see 1494 jobs in the field of operations being maintained and sustained. The project costing and roll-out programme are being finalised and await funding. The entity will break even in the second year after the implementation of the tea harvesting machine.

• Diversification programme to de-risk the entity’s dependency on a single commodity - Forestry Enterprise Development Agreement under review by the Board; Bee-hive keeping and Biotech flu-vaccine for broiler chicken from green tea extract. These are highly profitable and sustainable programmes.

• Land tenure resolution - Land settlement agreement for Location 32 Lambasi also known as Magwa owned by the former Department of Land Affairs has been agreed to be handed over to the claimants; the agreement was signed by former Minister of Agriculture and Land Affairs: Ms L Xingwana on 18 November 2006; however, the transfer of ownership and title deed is outstanding to-date. MET together with the Office of the Premier and Mr Zama Memela of the Land Claims Commission to resolve the transfer.

2. MET Management Response:

Both Magwa and Majola employment statistics:

Financial period	2019/20	2020/21	2021/22	2022/23	2023/24
Permanent	647	481	474	452	365
Seasonal	1032	847	506	296	152
Total	1679	1328	980	748	517