LA PAZ, Bolivia (Reuters) - Bolivian President Evo Morales visited a coca-growing region on Saturday to open a Venezuelan-funded factory where coca leaves will be made into legal products such as tea and soft drinks.

Morales rose in politics as the leader of Bolivia's coca farmers and part of his anti-drug policy is to encourage licit uses for coca -- the plant used to make cocaine, which is also revered by Andean peoples for its medicinal properties.

"Manufacturing coca (products) doesn't do any harm because coca isn't a drug," Morales told hundreds of coca farmers gathered in a stadium in the town of Irupana, in the Yungas region 85 miles from La Paz. The event was broadcast on state television.

Coca has been cultivated in the rolling green valleys of the Yungas for centuries and the region's coca crops are considered grown for traditional uses such as chewing or making tea to ward off hunger and altitude sickness.

The law allows 29,650 acres to be grown in the Yungas, although government and U.S. officials have expressed concern that cultivation is rising in the world's third-biggest cocaine producer.

Washington funds coca-eradication programs in Bolivia's other main coca-growing region, Chapare, where Morales led sometimes violent protests against forced crop destruction. U.S. officials say most Chapare coca is used to make cocaine.

The government is optimistic of finding markets for the country's legal coca products in Venezuela, Cuba, China and India -- which officials say have already expressed interest.

Morales has formed close ties with fellow leftists Venezuelan President Hugo Chavez and Cuba's Fidel Castro since taking office in January, and Chavez has pledged $1 million to fund two coca-processing factories, Agriculture Minister Hugo Salvatierra told state television.

"They're going to make flour, tea, soft drinks and other products in the first two plants," he said.

Coca tea bags can be found in any Bolivian supermarket and health shops already stock a selection of coca-based products ranging from cakes and cookies to syrups and skin creams.