Favorable climate and soil conditions enabled Uganda to develop some of the world's best quality tea. Production almost ceased in the 1970s, however, when the government expelled many owners of tea estates--mostly Asians. Many tea farmers also reduced production as a result of warfare and economic upheaval. Successive governments after Amin encouraged owners of tea estates to intensify their cultivation of existing hectarage. Mitchell Cotts (British) returned to Uganda in the early 1980s and formed the Toro and Mityana Tea Company (Tamteco) in a joint venture with the government. Tea production subsequently increased from 1,700 tons of tea produced in 1981 to 5,600 tons in 1985. These yields did not approach the high of 22,000 tons that had been produced in the peak year of 1974, however, and they declined slightly after 1985.

The government doubled producer prices in 1988, to USh20 per kilogram, as part of an effort to expand tea production and reduce the nation's traditional dependence on coffee exports, but tea production remained well under capacity. Only about one-tenth of the 21,000 hectares under tea cultivation were fully productive, producing about 4,600 tons of tea in 1989. Uganda exported about 90 percent of tea produced nationwide. In 1988 and 1989, the government used slightly more than 10 percent of the total to meet Uganda's commitments in barter exchanges with other countries. In 1990 the tea harvest rose to 6,900 tons, of which 4,700 were exported for earnings of US$3.6 million. The government hoped to produce 10,000 tons in 1991 to meet rising market demand.

Two companies, Tamteco and the Uganda Tea Corporation (a joint venture between the government and the Mehta family), managed most tea production. In 1989 Tamteco owned three large plantations, with a total of 2,300 hectares of land, but only about one-half of Tamteco's land was fully productive. The Uganda Tea Corporation had about 900 hectares in production and was expanding its landholdings in 1989. The state-owned Agricultural Enterprises Limited managed about 3,000 hectares of tea, and an additional 9,000 hectares were farmed by about 11,000 smallholder farmers, who marketed their produce through the parastatal Uganda Tea Growers' Corporation (UTGC). Several thousand hectares of tea estates remained in a "disputed" category because their owners had been forced to abandon them. In 1990 many of these estates were being sold to private individuals by the departed Asians' Property Custodian Board as part of an effort to rehabilitate the industry and improve local management practices.

Both Tamteco and the Uganda Tea Corporation used most of their earnings to cover operational expenses and service corporate debts, so the expansion of Uganda's tea-producing capacity was still just beginning in 1990. The EEC and the World Bank provided assistance to resuscitate the smallholder segment of the industry, and the UTGC rehabilitated seven tea factories with assistance from the Netherlands. Both Tamteco and the Uganda Tea Corporation were also known among tea growers in Africa for their leading role in mechanization efforts. Both206 th companies purchased tea harvesters from Australian manufacturers, financed in part by the Uganda Development Bank, but mechanized harvesting and processing of tea was still slowed by shortages of operating capital.

Data as of December 1990