The Chargé in Venezuela (Flack) to the Secretary of State

No. 5448

Sir: I have the honor to refer to the Department’s Airgram No. A–43 of January 21, 19446 quoting, for possible use in discussions with the appropriate Venezuelan authorities, a copy of a communication dated January 10, 1944 from the Inter-American Coffee Board to the coffee producing countries with respect to rumors of an increase in the United States ceiling prices for coffee.

The matter was informally discussed with the chief of the coffee section of the Ministry of Agriculture who stated that the above-mentioned communication as well as various other similar reports from the United States had been and are continuing to be given considerable publicity in the press, trade publications, and in the Ministry’s semimonthly coffee bulletins.

As a result of this publicity, the president of the Venezuelan Chamber of Agriculture explained the basis of his advocacy of the retention of coffee in an open letter dated January 30 which was published in “El Universal” on February 2. Briefly stated, his argument was that the Venezuelan and the Governments of other Latin American coffee producing countries are endeavoring, through representations to the United States Government, to secure an increase in the ceiling price for coffee, and that growers should logically await the result of such representations before selling their coffee. In view of the apparent failure of such representations, as indicated by the above-mentioned letter of the Inter-American Coffee Board, it is anticipated that there will be a clarifying statement on this point from the Ministry of Agriculture in response to the letter of the Chamber of Agriculture.

Officials of the Ministry of Agriculture and the Banco Agrícola y Pecuario as well as coffee dealers agree that the activities of the Chamber of Agriculture have had some effect on growers, and to a lesser extent, exporters. As regards growers, however, the possible effect as regards the withholding of coffee for export is considerably minimized by the relatively large proportion of small growers who are obliged to sell their coffee upon harvesting in order to meet debts and expenses. It is also generally agreed that the disappointing crop outlook, now estimated at between 400,000 and 500,000 bags (60 kgs.), is a far more important factor in any possible export shortage owing to the corresponding speculative activity and rising prices on coffee for domestic consumption. This applies particularly to unwashed [Page 138] grades (trillado) and inferior qualities of washed coffee (lavado) which are now being used locally. In this regard, one important dealer stated that he cannot meet costs at existing United States prices, and is holding his coffee stocks for sale in the domestic market.

As of January 22, total reported coffee stocks amounted to 163,454 bags (60 kgs.) of which 92,776 bags were at ports and 70,678 bags in the interior. Of the port stocks, 42,481 bags were washed coffee (lavado) and 50,295 bags of the unwashed grade (trillado). Official registered sales statistics show that coffee sold but as yet unshipped on that date amounted to only 7,170 bags, presumably chiefly “lavados”. It was stated, however, at the Ministry of Agriculture that registered sales have since increased substantially, chiefly in “lavados”.

Respectfully yours,

Joseph Flack
  1. Not printed.