Folded into the rich green foothills of the Caucasus Mountains that come tumbling down to the Black Sea here is the northernmost commercial tea-growing area in the world.

The Caucasus help make it possible [WORD ILLEGIBLE] out the northern cold. Meanwhile, winds from Asia Minor, sweeping across the Black Sea, bring subtropical temperatures, enabling [WORD ILLEGIBLE] and banana trees to flourish in a [WORD ILLEGIBLE] as far north of the Equator as New York City.

Men and women and their back-[WORD ILLEGIBLE] toil have added tea to the [WORD ILLEGIBLE] setting and reaped profits from an unique combination of soil and climate.

THE DAGOMYS state farm produces about 900 tons of cured tea a year, harvested from tens of thousands of bushes that roll in tidy green [WORD ILLEGIBLE] across the jagged hillsides on the northern boundary of the city. The farm's outpout equals about 1 per cent of the entire production of the Soviet Union, according to officials, but it is perhaps the top 1 per cent. Its "bouquet" green tea, painstakingly plucked by hand - the top three leaves only - won international prizes in the late 1950s from such tribunals as the Brussels World's Fair.

Dagomys, which roughly translates from an ancient local tongue as "Three rivers" or "wet place" is a microcosm of the state farm branch of Soviet agriculture. It is a virtually self-contained community of 1,600 workers and their families, most of whom live in state-owned apartments or cottages clustered in the valleys on the roughly 5,000 acres of the farm.

There are schools, a community center and a clinic, shops and a restaurant. All are state-owned, although workers with garden plots may sell the produce themselves and keep the proceeds.

THE BUSHES mature after 10 years and produce top-quality leaves for perhaps another 70 years. These bushes, a strain of northern Chinese tea first cultivated here at the turn of the century, are carefully pruned to 30 to 40 inches at height and must be harvested more or less continuously from sping through fall. Brigades of up to 120 workers handle that.

Hillside tea cultivation is back-breaking work, involving endless hours of stooping, plucking, stowing and then moving on. Women do most of this work at Dagomys and they last about seven years at it. The average montly salary is about $260, augmented by piecework - the more picked, the more earned.

The tea crop earned about $2.9 million last year, of which about $600,000 was profit, according to a spokesman. Only about 2 per cent of the entire crop qualifies for the label "bouquet." Most is of a lesser quality.

Overall, the farm produces more cash from less work with its other crops, but, said agronomist Kuzma Volkolupol, "tea is the mainstay."

DURING PICKING season, the leaves are piled in concrete cooling sheds and then sent down into Sochi within a few hours a tea factory that cull, dries cures and packages the leaves under the brand name "Kraznodarsky," for the local region. It is one of the premier teas of the Soviet Union.

Part of the reason for this is that as Soviet living standards rise, tastes are seeking greater rewards. Complaints are being voiced against the most common tea, Georgian, as too bitter.

As it stands, this nation of tea-lovers - with the ubiquitous samovar ready for use everywhere - had to import tea last year to meet demands. According to the 1976 trade figures, just released, the Soviet Union exported 14,240 tons of tea last year, principally to Belgium, Poland and Czechoslovakia, and imported 60,121 tons principally from India, but also from its ideological foe, China, which shipped in 4,100 tons.

AGRONOMIST Volkolupol's life provides some insight into the Soviet experience as the country nears the end of its 1/20th year. He was born into a Ukrainian peasant family in 1915.

He lives in a small apartment in one of the farm's residential blocks, and although at 62, he qualifies for a pension of about $160 a month, he likes his work and his pay - about twice as much - so he keeps working.

His children have not known starvation, he says.