811.5017/10–2545: Telegram

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

3225. Further conversation this morning between Souza Costa and DNC (Departamento Nacional de Cafe) officials and Daniels and [Page 699] Green66 on current coffee proposals. Full agreement reached on following text of proposed agreement:

Same text as memorandum transmitted in Department’s telegram 2440, October 13, 10 [11] a.m., from beginning through section 2. Section 3 reads as follows:

“3. In fulfilling its commitment under paragraph 2(d) it is understood that:

The Brazilian Government through offering for sale coffee it may own or control, up to a total of 4 million bags if necessary, will assure the sale of coffee to the United States market in the following quantities and in the following manner:
One million bags for shipment from Brazilian ports each month from November 1945 through June 1946 inclusive;
If it is found that in the month of November exports of Brazilian coffee for the United States should not reach 1 million bags, the Brazilian Government will offer for sale, in the first half of the month of December, coffees up to the amount necessary to make up the deficit for the month of November, up to the limit of 500,000 bags, at prices which will permit resale in the United States at prices that are not more than blank cents per pound above the equivalent of present OPA price ceilings for the grades in question;
In the first half of the month of January and of the following months the Brazilian Government will follow the same procedure, offering for sale coffees in the amount necessary to make up any deficit in the normal exportation for the previous month, in the same conditions as provided above, with respect to both the limit of 500,000 bags and the stated price. Any deficit in the normal exportation for the month of June 1946 shall be made up in the month of July following, in the same conditions hereby established;
Any amounts sold or shipped by the Brazilian Government under procedure set forth above shall not be counted as part of the normal exportation for the purpose of calculating the 1 million bags. For the same reason any surplus of the normal exportations above the total of 1 million bags in any given month shall be credited to the exports of the following month for the purpose of calculating the normal exportation of that month;
All such coffees are to be offered through the regular channels of trade;
The type and quality of coffee offered by the Brazilian Government are to be suitable for the United States market;
If in the discharge of these commitments, the Brazilian Government sells coffee now pledged as collateral for loans, it is understood that in so doing all steps necessary to protect the investory rights and interests in such collateral will be taken;
Nothing in the foregoing paragraphs shall obligate the Brazilian Government to sell coffee at prices less than the equivalent of the present OPA price ceilings for the relevant grades of coffee, plus blank cents.”

[Page 700]

Sections 3d and 4 same as in Department’s memorandum. Foregoing complete text of proposed agreement, with exception of blanks for prices at which Government stocks would be sold.

  1. David S. Green, Senior Economic Analyst in the Embassy in Brazil.