896.6158/10–1846: Telegram

The Ambassador in the Philippines (McNutt) to the Secretary of State

urgent

601. Following is full text note from FonOff requesting review of prices in Philippine copra and coconut oil agreement:

“I have the honor to request on behalf of my government an immediate review of the price schedule fixed for the sale of copra and coconut oil to the Commodity Credit Corporation or its designees and consignees in the United States or other countries, as provided under the terms of the agreement entered into between my government and the Commodity Credit Corporation on the 8th day of August 1946.

I refer to paragraph 8 of said agreement which provides specifically for a renegotiation of prices upon the initiative of either government. It is implied therein that such renegotiation shall be undertaken whenever the world price situation or the United States price situation for copra and coconut oil or competitive fats and oils indicates inequality for Philippine producers arising from the fixed price schedule set forth in the basic agreement.

My government has received information that the United States has increased the previous price established for Argentine oils and [Page 923] seeds by more than 100 per cent, representing a level at least 50 per cent above the ceilings set for Philippine copra and coconut oil.

My government has been informed further that United States price ceilings on domestic corn oil, soy bean oil, peanut oil and cottonseed oil have been advanced by one and three-quarter cents per pound, effective October 1. These oils, of course, compete with Philippine coconut oil. My government therefore requests that discussions be immediately begun with a view to the maximum possible increase in the price for both copra and coconut oil, in order that our producers may not suffer as a result of the provisions of the above-mentioned agreement.

I should like to bring also to the attention of Your Excellency’s Government that increases in price ceilings on a large variety of commodities in the United States have resulted in a corresponding increase in the prices of those commodities as purchased by our importers, with a corresponding increase in the weighted cost of living in the Philippines. It is therefore hoped that immediate steps will be taken so that the returns to our producers may be increased and thus prevent a recurrence of the situation that existed early this year when producers were not receiving enough for their copra, in terms of purchasing power, to enable them to market their produce. The main desire of my government is to have a price structure which will encourage maximum production for the mutual benefit, not only of our two countries, but also of the other consuming countries that obtain their supply of copra and coconut oil from the Philippines. My government has very much in mind the importance of preventing an inflation which would be disastrous to both producers and consumers, and the desirability of cooperation with the international agencies dealing with world food supplies for which reason my government agreed to enter into this exclusive purchase agreement.”

Please pass copy this message immediately to Agriculture for CCC.

McNutt