Under the plan, millions of peasant farmers will grow tea on six million hectares of land in western Ethiopia. The diversification will reduce dependence on coffee, which accounts for around 70 percent of hard currency earnings.

"The government sees the expansion of tea plantations as being of great importance... Tea outgrower schemes in which millions of peasant farmers will be involved is expected to enhance the production of tea," said Abaynhe Alemu, deputy general of the Ethiopian Coffee and Tea Development Authority.

He would not say when the plan would be launched.

Dresse Kassa, Tea Production and Marketing Enterprise general manager, told Reuters Ethiopia's neighbours -- notably Kenya and Uganda, expected bumper tea crops in 1998.

That meant fierce competition for bothlocal and global markets and required Ethiopia to double marketing efforts.

Dresse's worry was the possibility that cheap imports or smuggled tea could flood Ethiopia -- harming its local markets as well as hurting its rapid production expansion plans.

"Illicit cheap tea, which finds itself into Ethiopia from neighbour states, has in the past been a real problem," he said.

Tea was first grown in Ethiopia some 70 years ago but commercial farming did not start until the early 1980s.

The first two commercial farms are Gumero, where there are 860 hectares under tea and Wush Wush with 1,244 hectares. Both are in western Ethiopia and have an annual production capacity of 4,000 tonnes of made tea, according to official statistics.

Dresse said that following economic reforms early this decade, 13 private firms had been licensed in the industry.

Most of these firms are traders or packers. Some sell bulk tea to the domestic retail market, Dresse said.

Dresse urged the government to launch quality controlmeasures for the domestic tea market, saying this was necessary to ensure Ethiopian tea consistently met global standards.

Dresse said Ethiopia had not suffered from capricious weather that led to a fall in tea production in Kenya or Uganda last year and Ethiopia's production had continued upwards.

Ethiopia's sold 1,531 tonnes of tea in 1997/98 (July/June) compared to 1,071.3 tonnes in the previous year.

Of the total 1997/98 sales, 226.4 tonnes was exported and fetched $573,365 compared to 115.3 tonnes for $220,426 in the previous year, according to official data.

The balance in both years was sold to the local market.

Ethiopia consumes the bulk of its own tea and coffee.

In 1997/98, Ethiopia exported 183.11 tonnes of tea to the Red Sea state of Djibouti, 23 tonnes to Pakistan and 20.03 tonnes to Canada, Dresse told Reuters.