The Ambassador in Cuba (Norweb) to the Secretary of State

No. 508

Sir: I have the honor to enclose a copy of a memorandum4 prepared by the Cuban Sugar Stabilization Institute, in cooperation with the Cuban Ministry of Commerce, in which it is calculated that Cuban sugar withdrawals for local consumption from November 1, 1945, through January 31, 1946, will be 67,337 long tons. Only 20,000 tons are said to have been available as of November 6, leaving a deficit of 47,337 tons to be drawn from stocks contracted for sale to Commodity Credit Corporation.

This memorandum is of interest particularly with respect to the Department’s instruction no. 175, October 25, 1945, and the Embassy’s reply thereto in its despatch no. 442, November 5, 1945.* 5 The memorandum shows lucidly the circumstances responsible for Cuba’s present predicament, which apparently will result in violation by the Sugar Stabilization Institute of its contract for the sale to CCC of Cuba’s entire 1945 sugar crop, excluding the 250,000 long tons reserved for local consumption and the 150,000 reserved for exportation to countries other than the United States.

The Sugar Stabilization Institute estimates that available sugar stocks for local consumption, as of November 6, were 20,000 tons, of [Page 949] which 12,337 tons consisted of OCC sugars improperly diverted to domestic consumption and which must be replaced, reducing the net amount available for local consumption to 7,663 tons. As Cuban requirements before the 1946 crop becomes available are estimated at 55,000 tons, there will be a deficit of 47,337 tons which presumably can be filled only by utilizing sugars belonging to CCC. The following table shows how this figure is arrived at:

Long tons
Total stocks for domestic consumption, Nov. 6 20,000
Less: Export sugar improperly included in domestic stocks 12,337
Net stocks for domestic consumption, Nov. 6 7,663
Less: Requirements before 1946 crop:
November 1945 20,000
December 1945 20,000
January 1945 15,000
Prospective deficit in sugar contracted by CCC 47,337

The Cubans suggested that CCC consider this 47,337 ton deficit as a loan, to be repaid from the 1946 crop, at the 1945 price of 3.1 cents per pound. As sugar stocks for exportation to CCC were reported on October 31 as 442,403 tons, this loan would reduce the remaining exports from the 1945 crop to 395,066 tons.

A reduction of 47,337 tons in deliveries to the CCC obviously is a serious blow to United States supplies. The Embassy appreciates the position of the Secretary of Agriculture who asked that a formal protest be made to the Cuban Government regarding violation of the 1945 contract, and, in accordance with the Department’s instructions, the Embassy has strongly emphasized to the appropriate authorities of the Cuban Government the necessity of reducing sugar distribution for domestic consumption to a minimum for the remainder of the year. The fact is, however, that a reduction below the quantities shown above would cause a serious sugar shortage, a situation which inevitably would subject the Government to the severest possible criticism, and which the Government for political as well as economic reasons will wish to avoid at all costs.

It is evident that both the Ministry of Commerce and the Sugar Stabilization Institute are endeavoring to sidestep responsibility by casting blame for this development on each other. The Ministry disowns responsibility because even now it has not yet distributed the entire 250,000 tons reserved by Cuba, while the Institute contends that the basic fault lies in the Ministry’s failure to issue local consumption certificates early in the year, for an amount equivalent to [Page 950] the export sugars diverted by mills to local consumption before the Ministry established its control.

If the conclusions of the memorandum are correct, the Embassy sees no way in which CCC can obtain all of the sugar for which it has contracted. There appears to be no alternative but to accept as gracefully as possible the Cuban proposal, as the Cuban Government in any event will probably divert to local consumption the amount of sugar indicated. While a protest against the violation of the 1945 sugar contract should be made, for the record as well as to impress on the Cubans their failure to fulfill a legal contract, about all that we can expect in return is a polite expression of regret that past circumstances have made necessary this action by the Sugar Stabilization Institute.

Respectfully yours,

For the Ambassador:
C. A. Boonstra

Acting Agricultural Attaché
  1. Not printed.
  2. Titled “Discussion with Minister of Commerce Regarding Cuban Sugar Consumption in Excess of 1945 Agreement.” [Footnote in the original.]
  3. Neither printed.