Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

561.333D3/8–3144

Statement Presented by the Price Committee of the Inter-American Coffee Board to the Office of Price Administration ³⁶

October 11, 1944

The Inter-American Coffee Board, at its last meeting unanimously designated a committee of six of its members, the delegates of Brasil, Colombia, Guatemala, Peru, the Dominican Republic and Venezuela to meet with you, gentlemen of the OPA, to discuss current coffee problems which at the present time seem to consist simply of the price situation. My colleagues directed me to express to you the viewpoints of the Board, that is of the fourteen coffee producing countries of Latin America. We all appreciate your courtesies and your valuable cooperation of which there have been so many proofs in the past.

As you well know, ceiling prices on coffee were fixed by the OPA in December of 1941. The Board was consulted and although your final schedule was not entirely satisfactory as a whole, the producing countries found it acceptable at that time as a workable and sound basis for trading, as a cooperative measure in face of the conditions which prevailed at the beginning of the war. The Board expected that there would be a continuation of a satisfactory volume of coffee trading, and the history of coffee business during the last three years has proven beyond doubt that the expectations had solid foundations. Our cooperation has been more than satisfactory to all concerned in the coffee industry of the United States and also to the American consumers.

But three years is a long period of time and the economic life and activities of the producing countries, organisms that are very much alive, followed the logical process of development. It is utterly impossible to freeze entire countries and their populations. Many changes have occurred and what was considered sound and relatively satisfactory in December of 1941, is unsatisfactory and unbalanced today. Our incomes from the sale of coffee (a most important item) were frozen and thus remained stationary while our expenses, the costs of practically everything the producers have to buy, must buy, increased gradually and in the aggregate greatly, reaching considerably higher levels. Wages, for instance, have increased due to Shifting of workers to production essential to the war effort, in some countries and also owing to many obvious circumstances. Moreover, there has developed, in accordance with policies expressed at important international meetings and sponsored by the United States, a trend to lessen the terrible burden of the laborers in coffee plantations, through increases in wages.

Similar problems have been confronted in this country and we have noted with considerable interest and admiration the measures taken to solve the farm situation in the United States. In the matter of ceiling prices, the solutions have been flexible, elastic, adapted to changing conditions. This has protected and increased production and today—I am referring to what has appeared in the press—new records in the volume of production of agricultural production have been set.

Fortunately, the coffee producing countries have managed to survive through drastically changing conditions and therefore, in spite of difficulties, we have fulfilled our obligations and have gladly cooperated in supplying an all-time record volume of coffee to the United States market.

However, we feel that the present coffee price situation is extremely serious, and that unless immediate action is taken, a collapse in coffee production in Latin America is to be feared, with the corresponding damaging effects both to the trade and to the consumers in this country. Producers find it physically impossible to maintain their plantations, pick the coffee and sell it at the present ceiling prices. There is nothing the Governments can do to compel producers to grow or to sell at a loss. They have been selling their coffee at the 1941 levels, and everything they have to buy they must pay at the 1944 levels. Production in most of the countries has declined, and new industries, agricultural or otherwise, are naturally offering more remunerative opportunities to the workers. The countries are growing, are developing, and coffee must follow the trend, or perish. This is inevitable. May I add that the dollar and foreign exchange balances existing in several of the producing countries are not due to high or even satisfactory coffee prices, but simply to the hard fact that the peoples are forced to go without replacement parts for their equipment, without many essentials for their life and businesses, without tools, without efficient transportation. As soon as they can import again in any fair scale, those funds will be sharply and quickly reduced. Furthermore, perhaps it is relevant to say that most of that money will come back to the United States in payment for manufactured goods. The same holds true regarding any increases in coffee ceilings now.

This is not the time, perhaps, to discuss the fairness 1941 ceilings. We found them acceptable and workable, but their level not only was not in excess of previous averages covering different periods, but it actually was below them. In any event, our idea is to discuss present realities and facts.

You know that neither the Inter-American Coffee Board as such, nor the coffee producing countries have brought this question officially before your attention before. The very pressure of things has been felt for many months, but although we very well knew that the “living margin” of the coffee growers was gradually becoming thinner and thinner, we felt that under the circumstances we should wait while trading still was active, before taking any official steps. But we have come to a point where we must act. Therefore, and in conformity with statements from the OPA at different times, I am directed to invite you, formally and officially, to open the discussion, at the earliest possible moment, of a revision of maximum price regulations on coffee. We would not live up to our record of cooperation with the trade and the consumers of the United States, if we abstained from stating our case before you. We have no prejudices, we do not want to force the issue in any way. We are ready and willing to discuss the matter and accept a reasonable and practical solution.

36. Presented to the Office of Price Administration on October 11, 1944, and filed as an attachment to the minutes of the seventy-third meeting of the Inter-American Coffee Board, October 12, 1944.