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Argentine tea exporters face troubling times.

In the overall Argentine economy, tea is relatively unimportant. Yet for the past several years, Argentina has shipped more tea to the United States than any other country in the world.

Last year, according to industry statistics, Argentina shipped Lipton and other U.S. tea buyers 40.4 million pounds of tea, 8% higher than 1989 figures and well ahead of its two closest competitors, China (32.7 million pounds) and Indonesia (25.2 million pounds).

That domination of the U.S. market, however, could be coming to an end. Inflation, labor problems and severe drought in Corrientes and Misiones--the country's main tea-growing provinces--threaten the stability of this $25 million industry, which employs some 5,000 people throughout Argentina.

"We've had a very bad season. Estimates are that production will be down 45% compared to last season," said Miguel Newell, export manager for Argentina's largest tea producer, Casa Fuentes, in an interview here in May.

"Besides having a bad drought, the green-leaf producers went on strike at the beginning of the year," said Newell, whose company, Aspitarte & Co., was acquired by Casa Fuentes for an undisclosed price last year. "They weren't happy with the prices being paid to them."

No wonder. Tea prices this year average 85 cents a kilogram, down from $1.40 in November 1989. During the same period, the cost of living has skyrocketed with the devaluation of the Argentine austral from 650 to the dollar to 9,840 to the dollar today. Inflation is so bad the Argentine government plans to introduce a new currency, the peso, to replace the worthless austral. The peso -- valued at 10,000 australes--will be on par with the U.S. dollar, says a government commission studying the idea.

In the meantime, Abel Actis, president of the Argentine Tea Association, isn't too hopeful.

"We easily lost 20% of our tea production. The tea business is bad because our internal costs are high," said the executive, who is also director of Establecimiento Las Marias. "The prices we receive abroad don't cover our costs."

Las Marias, which owns 1,300 hectares of tea plantations in Corrientes province, along with Casa Fuentes and a third company, Cooperative Picada Libertad, together export more than half of Argentina's tea crop.

A leisurely drive through Misiones province shows how important the tea industry is to this part of the country. Tea plantations, interspersed with thick pine forests and fields of yerba mate (a tree whose leaves are crushed to make a traditional drink of the same name), blanket the landscape from Posadas to Apostoles to the little town of Obera, where Casa Fuentes has its packing facility.

From Misiones and Corrientes, producers truck their tea sacks to Buenos Aires, a 30-hour trip south. At Buenos Aires port, workers load the tea onto vessels belonging either to Ivaran, a Swedish shipping line; Empresas Lineas Maritimas Argentinas S.A., the Argentine state-owned line, or to other companies, for the two-week trip to New York, New Orleans, Baltimore and other U.S. ports.

Once in the United States, says Newell, Argentine tea is blended with more expensive teas from Sri Lanka, India and Kenya. Besides the United States, Argentina exports some 19 million pounds of tea to Chile and 15.5 million pounds to Europe. About 13 million pounds is sold domestically, though Argentines are not traditionally tea drinkers.

In addition, said Francois Clemente, president of the tea exporting firm Mecana Trading S.A., Argentina sells 4,000 tons of tea annually to the Soviet Union, whose most productive tea-growing regions are still suffering the effects of the Chernobyl nuclear disaster. It is the Soviet Union, in fact, where Argentina's first tea seeds are believed to have come from.

Nevertheless, Clemente said in an interview in Buenos Aires, tea has become an economically dangerous industry for Argentina.

"We have to get out of the plain category," he warns. "If we improve our quality and cultivate our plants properly, we'll get better prices. What we have now isn't good enough."

Larry Luxner is a freelance writer based in San Juan, Puerto Rico.
COPYRIGHT 1991 Lockwood Trade Journal Co., Inc.
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Author:Luxner, Larry
Publication:Tea & Coffee Trade Journal
Date:Aug 1, 1991
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