High Holy Tea.

Mate, the South American tea, is hailed for its healthful and medicinal properties.

AS AN EVENING COMMUTER BUS RUMbles over the red-earth sierra of Argentina's northeast province of Misiones, which is a thumb of land poking into Brazil and bordering Paraguay, a passenger stoops by the driver, reaches for a thermos mounted beneath the windshield and refills a palm-sized gourd with hot water.

The 40-something man, in pressed casual wear, offers the gourd to a lean woman seated on the aisle in the front row. She receives it as if the ritual were familiar and sips from the protruding metal straw until slurping the last liquid. Then she returns the gourd to the man, who refills it and passes it on.

While intriguing to an outsider, this intimate scene is as ingrained in Argentine culture as tango or soccer. The liquid they're drinking is mate (pronounced am-tay), a tea known for its healthful and medicinal properties. And this agrarian route, from the town of Apostoles to the provincial capital of Posadas, is in the epicenter of South America's mate-growing country

Indeed, the region's iron-rich tierra roja and subtropical micro-climate provide the world's only suitable growing conditions for shrubby mate trees. Despite attempts to grow them as far away as Asia, they prosper only in a limited area encompassing southern Brazil, Paraguay's Itapua region and--primarily--Argentina's provinces of Misiones and Corrientes.

In Argentina, the US$365 million mate industry accounts for about 35% of Misiones' economy, second only to timber and pulp. A quarter of a million bushy yerba mate trees grow on 422,000 acres.

For a visitor riding from Buenos Aires 300 miles north into the gaucho province of Entre Rios, and then continuing another 250 miles to Misiones, mate sightings pop up everywhere, being enjoyed across the generations. At a Sunday morning soccer match in the Entre Rios hamlet of San Gustavo, it seems everyone cradles thermoses and sip on gourds, from teens lounging on the grass to grandparents; even the parrilla man tends a grill full of meat with a mug in his free hand. The scene is similar that afternoon at a nearby track where local farmers enter their steeds--even a jockey resting along the rail between races has a mate with his family. Upon reaching Posadas, it is no surprise to encounter a policeman walking his latenight plaza beat with thermos under arm.

Homespun baron. The slow-paced city of Posadas is situated on the Alto Parana bordering Paraguay. Among several mate concerns, ifs the base of Grupo Amanda, the country's oldest and fourth-largest producer. Its president is Juan Alfredo Szychowski, called by everyone "Don Pancho:'

The antithesis of Buenos Aires pretension, Don Pancho greets a visitor with understated old-world modesty. Slightly rumpled in an open-collared shirt topped by a thin sweater, he has a striking facial resemblance to Rodney Dangerfield. Don Pancho's office, with its worn desk, could be mistaken for the plant foreman's.

Don Pancho integrates mate sips into his early morning conversation with the ease of a pipe smoker. Although gourds can be lavish, even gilded, Grupo Amanda's president sips from a chipped white porcelain, mass-produced model. Under his desk glass are snapshots of a son, two daughters and 14 grandchildren. Framed portraits of his parents and Amanda's founders, Juan and Bronislada, are mounted on the wall.

Don Pancho credits his parents with ingraining the "moral capital" of humility and simplicity After introductions, he is eager to pace his visitor with mate lore and the story of his parent's journey from Poland.

Mate derives from the Quechua word mati, or cup. Long before the Jesuits arrived in 1609, the Guarni Indians steeped mate leaves from their rain forest trees as a medicinal and energy drink. They dubbed it "the drink of the gods" and even placed mate leaves in the tombs of their chiefs. But the Jesuits initially regarded it as "the devil's drink." It seems that mate's diuretic properties made it impossible for the indigenous people to sit through a church service.

Don Pancho's father was 11 years old when his family sailed to Buenos Aires from Poland in 1897 in response to government land offers. They journeyed upriver to Posadas, then rode oxcarts for four days to Apostoles. Once there, the family settled on 200 acres.

Life was harsh, early crops were meager and child mortality was high. Juan recalled the ordeal to National Geographic in 1956: "The second year, we harvested our first corn. We ground it by hand with a stone, and when mother baked the first fresh bread, the whole family came in from the fields to eat it hot. Nothing has ever tasted so good since. But it was four years before any of us really had enough to eat."

Exiled. Feeling defeated, Juan and his father left for Buenos Aires in 1914, intending to earn the family's passage back to Poland. The First World War scuttled those plans. They returned to Apostoles and began to grow rice and mate, building farm machinery with skills Juan learned in the capital as a blacksmith's apprentice. Much of the handiwork is displayed in Amanda's museum, with surround-sound narration, at its plantation outside Apostoles.

The town is a rural cocoon. It claims the dual titles of "City of Flowers" and "National Capital of Yerba Mate." Reflecting the heritage of many of its 30,000 residents, two central churches are filled either with Polish or Ukrainian ornaments, and a cafe buffet might offer pirogis as well as empanadas. Amanda's farm is 13 kilometers from town, the last seven bouncing down a dirt road. En route, trucks brimming with harvested leaves lumber along Apostoles country roads, evidence in May that the cultivating season has begun.

The plantation is called La Cachuara, which comes from the Portuguese word cachoeira, or cascade. Early Brazilian workers helped dig a canal from a river on the property to feed a water wheel that powered a hand-built turbine.

Hanging on the walls of the farm's office are two icons--a race car with the Amanda logo and the Pope. Setting out to tour the plantation, its chief engineer, Bernardo Kotik, points out the trees' cluster of shoots, rather than one trunk. Tender and slow to mature, the leaves aren't harvested until their fourth year and aren't in full canopy for eight years. By then, the survivors are hardy through rain or drought, remaining productive for decades.

Stems, leaf or powder? Labor-intensive cultivation with machetes is gradually being mechanized. The drying by fire, or secado, within a day of cutting the leaves, remains critical. It shrivels one tree's 25-kilogram yield of leaves to about eight kilograms of yerba mate canchada. This is finely chopped and packed into 50-kilo burlap bags and stored for six months to two years, what's known as estacionamiento. Quality control is important: Outside a storage warehouse, a worker mounts a truck and, with a dagger, randomly slashes into a few bags sent from storage en route to bins for filtration and packaging.

Final packaging contains varying combinations of palo (stem), haja (leaf) and polvo (powder), depending on the final consumer. Amanda's Argentine blends are 25% stem and a little powder. Paraguayans like more stem and powder, Uruguay drinkers don't like stems and Chileans don't like stems or powder.

Until a few years ago, Argentina's consumers were loyal to their brands, rarely switching. Today, the industry is in upheaval with overproduction, sinking prices and fierce new competition. The top five brands' market share has dropped to under 50% from about 70%.

Opportunities for upstarts grew out of the opening of the economy in 1991 and the dropping of stringent production controls dating to 1937. Since then, the national harvest has jumped 80% to 810,000 kilos, with yerba canchada ready to be sold rising from 150,000 to 270,000 kilos. There's so much supply, producers aren't converting all their raw material into final product.

Competition on store shelves has become fierce, too, with 145 brands, up from about 80 a decade ago. Consequently, the retail price of a kilo package has plunged in two years from $2.50 to $1,75, with some brands aggressively priced as low as $1.

Syrian pipeline. While a bonus for consumers, the country's 28,000 growers have seen their price drop to 35 cents a kilo from more than 65 cents a kilo a few years ago. At the same time, their labor costs are rising due to competition for labor from Misiones' robust lumber and pulp industry. Adding to the woes, exports to Brazil have dried up due to the real's devaluation and growing Brazilian yerba production. As a result, 1998 exports to Brazil of 18,816 tons valued at $10.3 million fell to an estimated 6,000 tons worth about $3 million this year.

The dire market conditions have added impetus to expanding export markets, including the U.S. But producers like Amanda have met with only modest success. Shipments to the U.S. have grown only 31% since 1990 and remain nearly inconsequential at 312,000 kilos. This is dwarfed by Syria's consumption of 11,400 tons, a jump from 6,052 tons in 1990. Even so, with the price collapse, the value of those exports has risen only 38% to $12.55 million.

Presumably, the Syrian taste for mate was acquired by immigrants to the Southern Cone who later returned home. Remarkably, some Syrian towns rate among the world's highest per capita consumers of mate, well exceeding Uruguay's annual eight kilograms per capita and Argentina's six kilos.

Syria has become such an important market for Amanda, its 4 million kilos of exports account for 20% of company sales. "In the Mediterranean region, in every living room, no matter how lavish the house is, there is a gas stove so that kettles of hot water [for mate] can be heated," says Edgard Omar Figueredo, an Amanda liasion to Syria. He says it's mere coincidence that Amanda's distribution plant serving the Middle East is located in Yabroud, President Hafez al-Assad's home town.

In recent years, Chinese delegations have toured Misiones, raising hopes that Asian millions might one day take to drinking yerba mate cocida, which is packaged in tea bags. Amanda is also stepping up U.S. marketing by introducing fruit-flavored mate cocido (peach, lemon, apple) in new packaging to emphasize the herbal qualities, and hopes to identify a Miami distributor. However, the most formidable obstacle may be cultural. Says Don Pancho: "You have to take time to drink mate."

Cancer Fighter?

One often hears unsubstantiated claims that mate may ward off cancer as well as provide cardiovascular, nervous system and muscular system benefits. Still, there appears to be scant hard evidence to support these claims.

The cancer claim comes from a 1995 study in the Australian journal Biochemistry and Molecular Biology International. It concluded that mate does have antioxidant properties. Earlier, a 1964 Pasteur Institute study conduded, "It is difficult to find a plant in any area of the world equal to mate in nutritional value." It also stated that yerba mate contains "practically all of the vitamins necessary to sustain life." Mate drinkers don't need scientific studies to vouch that the drink stimulates the intestines.