832.61333/955: Telegram

The Secretary of State to the Ambassador in Brazil ( Caffery )

1004. Reference Embassy’s telegram 1135, March 25. Although possible termination of the coffee purchase agreement and a possible increase in the coffee quotas were both mentioned in connection with difficulties being experienced by the Army in efforts to purchase Brazilian coffee in Department’s telegram 892, March 17, the Department cannot agree to oppose an increase in the coffee quotas in exchange for Brazil’s agreement to terminate the purchase agreement. It is believed that termination is desirable from the viewpoints both of the Brazilian and United States Governments regardless of possible changes in the quotas. It is requested that you make the foregoing [Page 623] clear to the Brazilian authorities before they decide whether or not to agree to termination.

If the FEA has to take delivery of the coffee it would appear to be desirable from the viewpoint of this Government that it be purchased during the present war period in view of Army and probable relief demands. The Department would therefore appreciate receiving the Embassy’s comments as to whether or not, in the event the Brazilian authorities are not disposed to favor termination, it would be possible to persuade them of the reasonableness of a proposal that they should either agree to terminate the agreement or to expect the FEA to purchase only so much of the coffee as may be offered for sale during a period of the next 6 to 12 months under conditions as to types and prices established by the agreement.

With reference to a possible increase in the quotas you may point out to the Brazilian authorities that it might very well place the United States delegate in an untenable position and bring the Inter-American Coffee Agreement into disfavor in this country if he were strenuously to oppose an increase in the quotas in view of the high rate of coffee consumption in the United States at the present time, the relatively unsatisfactory stock position, and the fact that Colombian registrations are already closed and the quotas of some of the other countries are nearly completed. In this connection it may be pointed out that the rate of roasting in the United States since October 1, if maintained throughout the quota year will result in the roasting of approximately 16 million bags for civilian consumption in addition to Army demands of at least 3 million bags. It was because of the factors outlined in this paragraph and a sincere desire on the part of the Department to see Brazil maintain her position in this market that the Department has been urging, during the past four months, that everything possible be done to facilitate the movement of Brazilian coffee to the United States and that it has been urging upon our shipping authorities that they supply as much shipping as possible for the movement of Brazilian coffee. You may assure the Brazilian authorities that every practicable effort will be made during the present year to provide shipping for all coffee sold under the Brazilian quota, whether it be the present quota or a larger one.