832.61333/1–2446: Telegram

The Chargé in Brazil ( Daniels ) to the Secretary of State


173. Growling uncertainty and concern noticeable in Brazilian coffee circles as end of current coffee subsidy program approaches. Questions are asked with increasing frequency as to what will happen when the $24,000,000 subsidy has been exhausted, or after March 31. Embassy would welcome information to enable it to answer intelligently such inquiries. Is any thought being given to some further arrangement to facilitate importation of coffee in US and improve condition of market after March 31? Strongly recommend that Embassy be kept currently informed of any plans which may be formulated so that it may be in better position to assist and at same time offer suggestions or comment.

No discussions with Minister of Finance or Coffee Dept have taken place since negotiations regarding possible use of DNC stocks were suspended last November upon announcement of subsidy. Does Dept [Page 505] wish Embassy to take any initiative in reopening such discussions with Brazilian officials?

As time goes on it becomes increasingly apparent that current coffee problems, complicated by uncertainty regarding conditions after March 31, are prejudicial to Brazilian-American relations, whereas coffee should in fact be a major element of strength in relations between the two countries.