Managing Direct Raw Material Costs (DRMC) to Reduce Dry Tea Production Costs: A Study in the Tea Sector
Managing Direct Raw Material Costs (DRMC) to Reduce Dry Tea Production Costs: A Study in the Tea Sector

Summary/Abstract: Tea is one of the major agricultural products of the Eastern Black Sea region. Tea cultivation is carried out by approximately one million growers over a total area of eighty thousand hectares. Tea production in the region not only meets Turkey’s entire domestic demand for tea but also contributes to the country’s export capacity. Tea farming helps Turkey reduce its dependence on imports, thereby contributing to the decrease of the current account deficit, while also providing employment opportunities in the region. The future of the tea industry largely depends not only on the quantity of fresh tea produced but also on its quality and cost. Therefore, the growth of the sector depends on improving the quality of fresh tea leaves and reducing production costs. This study focuses on the management of direct raw material costs, which constitutes the first stage of the Value Chain Analysis (VCA), with the aim of reducing the cost of fresh tea leaves - the main raw material of the sector - for sustainable tea cultivation. The scope of the research covers Turkey’s main tea-producing provinces: Rize, Trabzon, and Artvin. Data were collected through face-to-face interviews and surveys conducted with tea growers. The findings indicate that labor and fertilizer are the most significant constraints in improving the cost of fresh tea leaves. Based on the other findings obtained, both academic and practical recommendations have been developed to improve tea production costs.

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