The Brazilian Embassy to the Department of State
With reference to the Department of State’s Memorandum, of March 26, 1946,37 the Brazilian Government, while willing in principle to agree with the United States’ proposal to the effect of disposing as surplus of the remaining 500.000 bags of coffee from the 2.000.000 furnished for the use of the U. S. Armed Forces, wishes to call the attention of this Government to the advisability of a deferment of the proposed transaction in view of the difficult internal situation which now reaches its peak owing to the disappearance of the Brazilian bonus on coffee as well as to the fact that the subsidies presently in effect will expire next June 30.38
2. Moreover, as we are informed that, legally, the disposal of said amount of coffee by the U. S. Army could only be made at the ceiling-prices established by the OPA, therefore 3 cents below present market levels,—which are the ceiling prices plus 3 cent subsidy—it would have a very disturbing effect on the market for Brazil coffees. This would coincide with the end of Brazilian bonus on its coffee, as well as with a very slow demand for Brazilian grades in the American market (due to unfavorable “differentials” with other growths of coffee, brought about by OPA ceiling-prices) and would put the Brazilian Government in a particularly difficult position before its coffee industry, at a moment when no definite assurances can be made as to the decontrol of coffee or a satisfactory adjustment of prices.