832.61333/10–2445: Telegram

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

3218. ReDeptel 2490, October 22, 6 p.m. This afternoon coffee proposal discussed with Souza Costa and DNC (Departamento Nacional de Cafe) officials. Minister expressed general approval of Dept’s proposal with following exceptions; total amount which DNC (Departamento Nacional de Cafe) can guarantee to offer for sale at conditions stated 4 million bags; sale to be made at price 5 cents in advance of existing ceilings instead of 3 cents; commitment to assure monthly shipments of 1 million bags to last until next July, but Brazilian Govt. committed to sell not more than 500,000 bags per month (because of practical limitations of transport etc.).

This proposal involves redrafting clause 3.a.3 of Dept.’s memorandum to read that in any month DNC (Departamento Nacional de Cafe) will offer within 15 days amount of coffee to make up any deficiency in attaining million bag shipment for previous month (subject to aforesaid limitation of 500,000 bags).

Embassy believes that there is merit in Brazilian contention that they cannot responsibly guarantee an amount in excess of 4 million bags of types and qualities suitable to American market and, therefore, this figure should be accepted.

In sum, complete agreement is now in sight subject only to Brazilian desire to have no commitment to sell Govt. coffee stocks at price less than 5 cents in advance of ceilings. Recent quotations are at around this figure, and Souza Costa said in semi-joking manner that he would be shot if he sold Govt. stocks at 2 cents under existing quotations at present. Further meetings with Souza Costa scheduled for 11:30 tomorrow morning and further effort will be made to obtain agreement at 3 cents above ceiling. Since this is not deemed probable, recommend Dept. defer writing letter to Coffee Board until exact text of proposal is available in form actually agreed to with sole exception of price of sale of Govt. coffee. It should be possible to cable this text tomorrow afternoon.