The Secretary of State to the Ambassador in Brazil (Berle)
2469. For Daniels from Sellon.64 Reference telephone conversation Oct. 17.
We expect greatest rising price pressure in coffee in period immediately after ceilings are suspended here and in winter months before [Page 697] next Brazilian crop can be accurately estimated. Therefore, both Dept. and OPA consider it essential Brazilian Govt. agree stand ready sell substantial quantities next few months. Prefer commitment to sell up to million bags monthly during November-March inclusive on basis 5,000,000 bags available. However, believe it would be agreeable here if commitment were for 750,000 bags a month during Nov.–Mar. 500,000 each for April and May and 250,000 June. Lower figures than above thought by OPA impractical to accomplish purpose.
Strongest price pressure of govt. coffee on market must be exerted Nov.–Mar. and particularly early this period. This means govt. sales assurances during this period must be large enough influence market. It should be made clear to Souza Costa that OPA is prepared to reestablish ceilings in case of undue advance in average retail coffee price here after ceiling suspension. If pressed, Daniels may indicate that undue advance means about 5 cents a pound.
If above proposals or reasonable variations cannot be agreed to in principle by Souza Costa by October 22, suggest that Emb intimate that proposals will be withdrawn and publicized. Situation here such that further delays would be most unfortunate.
In paragraph 3.a.3 of memorandum of understanding65 insert “from the first day of each month” after word “ready”.
Colombia ready now sign its portion of memorandum. [Sellon.]