PERU FIRM EXPORTS COCA LEAVES

Regulation Tight For Crop That Has Medical Uses

LIMA - As manager of international sales for the National Coca Co., Luis
Hinostroza may have one of the world's oddest jobs.

His company exports coca leaves and processed cocaine, but only after
meeting reams of red tape from drug-enforcement agencies in the buyers'
countries. It offers coca-leaf teas, some with English-language packaging
for sale abroad even though international norms bar their export.

ENACO, as it is known for its Spanish acronym, is the Peruvian government's
official buyer and merchandiser of coca leaves and one of only two
companies in the world to produce refined cocaine for medical uses.

"We have used coca in this country for 4,000 years. It is not a drug, but
because of the negative image associated with one product it is considered
evil," Hinostroza said in a recent interview. "We are ready to export and
have our products already in English for the U.S. market. We just have to
get this prohibition lifted."

Peasant farmers in the high Andes traditionally chew coca as a nutritional
supplement and energy booster and use it in religious and fortune-telling
rituals. Besides cocaine, which is one of 14 alkaloids in the leaf, coca
has a long list of vitamins and minerals.

ENACO purchases roughly 3,000 tons of coca leaf a year from growers, and
then sells about 2,800 tons for traditional uses. Another seven tons are
ground up at one of its two Lima plants and packaged as teas, often
consumed in the Andean highlands as a remedy for altitude sickness.

The remainder is sold abroad in leaf form or refined into about 330 pounds
of cocaine, with a 92 percent purity level, that is exported mostly to
Europe as an anesthetic used mainly in eye surgery.

Cocaine, coca leaves and teas are all available for sale on ENACO's
website, www.ena co.com.pe. But there are strict controls on the cocaine,
which ENACO sells for $1,000 a pound but which would bring about $50,000 on
the illegal market.

"Purchase of cocaine has to be approved by drug-enforcement agencies in the
importing country. We are very careful with the lab and with the exports,"
Hinostroza said.

The other company producing cocaine is New Jersey's Stepan Co., a
multinational that makes a long line of industrial and household products.

Stepan buys about 110 tons of coca leaves from ENACO each year to make
cocaine for pharmaceutical companies. The U.S. Drug Enforcement
Administration grants Stepan a special license to import coca leaves.

"We process coca leaves for a pharmaceutical product, principally used in
ocular [eye] surgery. That is the primary use for the coca we import," says
Stepan's general counsel, Sam Ebert, in a telephone interview.

ENACO asserts, however, that Stepan also processes the coca syrup used for
flavoring Coca-Cola since 1905. Stepan would not comment on whether it
makes the extract, which lacks the cocaine alkaloid. Coca-Cola officials in
Peru said only that the Atlanta-based firm does not buy raw coca leaves.

Supplying Coca-Cola is a business that the Peruvian company would dearly
like to have.

"It is ironic that we cannot sell our products, but a U.S. company is given
special permission to industrialize coca," said ENACO chemist Silveria
Dongo, who has overseen the company's laboratory for 11 years.

"The DEA wants us to eradicate our coca, which is part of our cultural
heritage, but it has no problem allowing it to be imported so a U.S.
company can do the same thing," Dongo added.

With nearly 90,000 acres of coca under cultivation -- enough for 150 tons
of cocaine -- Peru is the world's second-largest coca producer behind
Colombia, which has three times the acreage and accounts for most of the
770 tons of illegal cocaine sold in the United States and Europe each year.

Peru receives about $140 million a year in U.S. counter-narcotic aid, and
in September 2002 signed an agreement with Washington to eradicate all but
28,000 acres of coca by 2006.

After a steady decline from nearly 300,000 acres of coca in the early
1990s, Peru saw an increase of 8 percent last year, apparently the result
of increased eradication efforts in Colombia under the U.S.- financed Plan
Colombia.

While the possibility of legally exporting coca leaf or coca products
appears unlikely to become reality anytime soon, that has not stopped Dongo
from thinking up coca-baased products.

In her tidy laboratory, amid rows of beakers holding different
caramel-colored liquids, Dongo shows off soaps, shampoos and industrial
products made from coca.

If all goes well, ENACO will launch a power drink later this year to
compete with imported, high-caffeine drinks. The company is keeping the
name of the drink secret for now