825.6374/5–2746
Memorandum by Mr. B. C. Brundage of the Division of North and West Coast Affairs47
[Washington,] May 27, 1946.
In a conversation with Mr. Burns,48 CP, the following information was obtained:
- 1.
- At a Fertilizer Committee meeting of the CFB on the 22nd of this month, Señor Illanes,49 representing Chile, threw a bombshell into the works by announcing that, instead of the contemplated 600,000 tons of nitrates to be shipped to the U.S. for the coming fertilizer year, Chile would promise the United States only 150,000 tons through December 1946 unless the United States is prepared to raise the OPA price ceiling;
- 2.
- There would seem to be some justice in Chile’s desire to have the OPA price ceiling lifted in as much as they are selling their nitrates landed in Egypt at approximately $100 per ton. OPA ceiling price is $30 and has remained stable since 1942 although our farm prices have risen, as well as other types of prices;
- 3.
- A sizeable world deficit of nitrogen fertilizer (amounting to about 30%) has been predicted by the Fertilizer Committee. If the Army plan of bringing our surplus plants back into production is put into practice, this deficit will amount to about 15%. The Chileans know of this expected deficit. This gives them an appreciable bargaining position;
- 4.
- Should Chile press so hard as to raise the OPA ceiling too high, this may bring U.S. synthetics heavily back into competition for the [Page 630] United States market, where they can undersell Chilean natural nitrate by 30%. Chile has probably studied this possibility carefully.
Fertilizer Committee meetings are going on practically all the time on this new issue, and it is expected that the matter will soon come to a head. A Departmental meeting on this level will probably take place this week for the purpose of discussing it as it may affect our particular problems.