Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

280. Memorandum From the Deputy Assistant Secretary of State for African Affairs (Westerfield) to the Assistant Secretary of State for Economic Affairs (Solomon)¹

Washington, July 26, 1965.

SUBJECT

• Strengthening LDC Commodity Trade—Your Memo of July 20, 1965²

We certainly welcome your initiative in seeking to reinforce the commodity trade program. This is of major importance in Africa.

In principle, the measures that you suggest are sound, particularly a shift of resources away from production of commodities in oversupply. When diversification is possible, this could do much to alleviate the problem. On the other hand, in much of Africa there may be few alternatives to coffee and cocoa; this is indicated by recent reports from the field. Moreover, smallholders produce most of these crops which are about the only source of cash. The lack of organized extension or field services in many countries to direct a diversification program is also a problem. Nonetheless the possibilities should be explored and I hope that an alleviation of the problem is possible along these lines.

A related approach to the problem could be greater emphasis on research in the possibilities for developing alternative crops or use of resources. (Note that research on diversification in some countries has not held out many, if any possibilities.) In this connection, alternatives should not only be in other crops but may also be considered in terms of economic development generally, as in industrialization. The FAO and other organizations could accelerate their research programs.

The proposed solution to the problems of natural raw materials that compete with synthetics by improving efficiency and quality may do no more than allow the raw materials to hold their own with synthetics. Improved methods of producing synthetics may be expected so that their cost and quality would also be improved over time and represent an increasing challenge to natural raw materials. Obviously if producers of natural raw materials are to maintain their position, they must also improve their efficiency. However, this would not necessarily remedy their situation but could merely leave them in a relatively unchanged position. In some cases lower incomes could result if production is raised because of more efficient methods and this reduces prices.

As we have additional thoughts we will keep you informed.

1. Source: Johnson Library, Solomon Papers, “Commodity Trade,” Box 1. Confidential. Drafted by William Kling (AF/AFI) on July 26. The source text bears a handwritten note reading: “Tony: These are some preliminary reactions. We certainly look forward to constructive approaches to this major problem. Sam.”
2. Not found.