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Brazil tea report: an industry in trouble
The Tea & Coffee Trade Journal / December 1995

By Larry Luxner

SÃO PAULO -- Mention Brazil, and coffee's usually the first thing that comes to mind.That's no surprise, considering that during the first eight months of 1995, Brazil exported 8 million bags of coffee worth $985 million -- a jump of nearly 41% over the same period last year. More than 170 Brazilian coffee producers and exporters are listed in the 1995 Ukers' International Tea & Coffee Directory.

By comparison, the number of tea exporters in South America's largest nation can literally be counted on the fingers of one hand. This season, members of the dying Asociación Paulista do Chá Preto say they'll be lucky to export 5 million kilograms of tea -- less than one-eighth of the 35 million kilos exported by neighboring Argentina, whose tea industry is also in trouble.

"This season, we'll have only $3 million in exports," says Thomas Van der Laan, export manager of Agrochá Ltda. in the port of Santos. "Because of the devaluation of our currencty, we get very little value for the dollars we earn abroad. If this continues, everybody will have to close down."

According to Van der Laan, three out of Brazil's seven tea-packing houses have already shut their doors: Braspekoe, Chabras and Cooperativa Agricola de Cotia. That leaves only four tea companies in Brazil: Agrochá, Helio Amaya Ltda., Yamti and Torazo Okamoto S.A.

The center of Brazil's tea-growing industry is Registro, a town of about 70,000 inhabitants located near Juquia in São Paulo state, which is also one of Brazil's chief coffee-growing regions. Yet the tea barons pale in size next to their counterparts in coffee. Only 6,000 people work directly and indirectly in tea, and if the industry dried up tomorrow, it would hardly make a dent in Brazil's overall economy.

It would, however, make a big difference to Hitoshi Okamoto, the 66-year-old president of Chá Ribeira Ltda. in São Paulo. In 1938, Hitoshi's father -- a Japanese refugee who emigrated to Brazil like so many others -- brought tea seeds from Sri Lanka and planted them in the fertile valleys of Brazil. Before that, Brazil grew the Chinese variety, which was sold only on the local market. During World War II, the Brazilian military regime confiscated the business because it was Japanese-owned; the company was returned to the family in 1946.

Today, its day-to-day affairs are handled by Hitoshi's son, Roberto.

"Brazil's climate is very hot and wet -- which is good for tea," said Roberto Okamoto, 39, in an interview at his office here. "The main problem is we're planting at sea level. In terms of flavor, we do not get the flavor of teas produced at higher levels like Darjeeling. The main quality of our tea is its neutral flavor, which can be mixed with anything."

At one time, the industry was producing 11 million kilograms, though in more recent years production has hovered around 7.5 million. This year, it's going to be much less, say experts.

"The industry is going through problems, basically because of the price which is very low right now," said Okamoto. "The Plano Real [introduced by Brazilian President Fernando Henrique Cardoso] has raised our internal costs, and our currency is valued way too high. For the first time in many years, our currency, the real, is worth more than the dollar."

Brazilian tea exporters get around $1 per kilo, slightly better than their Argentine counterparts because, as the younger Hitoshi says, "our quality is better than Argentina's."

Currently, about 70% of Brazil's tea is shipped to the United States. It takes around three weeks to travel from the Brazilian port of Santos to New York. There, the tea is purchased by Lipton, Tetley and other companies for use in blends. Another 20% goes to Europe -- mainly the United Kingdom, Holland and Germany. The remaining 10% of Brazilian tea production is consumed locally.

"Over the last six or seven years, our quality has improved a lot," said Van der Laan. "We've improved the manufacturing process, and the way we treat the leaf when we get it from the plantation." On the other hand, he pointed out, "the international market has been very low for the past 10 years. Now there's overproduction. Because of the overvalued currency, we get very little value for the dollars we earn abroad."

Van der Laan says his company, Agrochá, has around $2 million of Brazil's total tea business, adding that "this year, the season started in October because the quantities are so small. There are no strikes because the ones who were really in trouble have already closed."

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