Economic and environmental dynamics of tea production through material flow cost accounting (MFCA)

The focus of the investigation is on the analysis of tea production in Iran by utilizing the Material Flow Cost Accounting (MFCA) technique, with the aim of determining the costs of both the economic and environmental aspects. The main driving principle of this study is to establish the true costs of the entire tea production process. The MFCA method provides a thorough material flow analysis to identify hidden costs associated with tea cultivation. It was found that the overall production expenditures involved, including human labor, agricultural machinery, fertilizers, pesticides, and fuel, stood at $6726.5 ha^-1 while the gross value of production was $5606.8 ha^-1. The negative gross return is primarily attributed to environmental costs, including emissions of toxic gases from fertilizers (ammonia and nitrous oxide), water and soil pollution caused by pesticide use, and a yield loss of 631.5 kg ha⁻¹. Among these, yield loss is identified as the most significant factor reducing profitability, although it is often overlooked in traditional cost accounting (TCA) models. In comparison to TCA, the MFCA approach — by incorporating environmental costs — demonstrates a more favorable benefit-cost ratio, indicating better financial performance when sustainability factors are considered. The research consequently asserts that in order to promote not only the economic viability but also the environmental sustainability of tea production, some production processes should be reformed and government policies updated. The restructuring should concentrate on the new machinery use, improvement in agricultural methods, as well as the adoption of policies which are focused on decreasing the environment costs and waste, all of these will lower the result of the tea farming industry in the area from the long-term point of view.