Tea Value Chains Viability in Limpopo Province of South Africa: A Cost–benefit Analysis

Abstract

The research was conducted to investigate the production of value-added tea as part of the resuscitation of Tshivhase-Mukumbani Tea Estate. Data were mainly obtained from records kept at the Tshivhase-Mukumbani Tea Estate, through a review of literature and interviews of the selected respondents. Evaluation of economic viability of the value-adding initiative was based on Net Present Value (NPC) and the Benefit-Cost Ratio (BCR) calculated from time-series data obtained for the period 2005–2012. The quantity of value-added tea produced varied across years, geographical locations, and seasons, with production higher for wetter seasons. The NPV was consistently negative, while the BCR was below unity throughout the study period, implying that the value-adding initiative was economically not feasible. Initiatives for achieving economic sustainability of the value addition were (1) Improve the marketing of the made tea brand Midi Tea as organic and longer shelf life. (2) Good labor contracting management practices to deal with labor disputes and unrest. (3) Good supply chain and procurement management practices to reduce the cost of production (4) Monitoring the impact of climate variability and mitigate by providing irrigation (5) Intercropping tea with a suitable winter yielding crops such as avocadoes or Macadamia.