There is also transmitted herewith a copy of a note from the Embassy to
the Foreign Office concerning Cuban domestic consumption sugar, exports
of candy, continuation of Cuban sugar production control legislation,
and United States allocations of food products. This note is based on
Mr. Wilson’s letter of April 4 to the Cuban commission.
The contract was signed for Commodity Credit Corporation by Mr. Clinton
P. Anderson, Secretary of Agriculture; and James A. Marshall, Director
of the Sugar Branch. For the Cubans it was signed by Carlos Prio
Socarrás, the Prime Minister; Dr. Oscar Seiglie, the President of the
Cuban sugar mission; Tomás Puyans, President of the Institute; and
Senator Jose M. Casanova, member of the Institute’s General
Assembly.
Sugar, molasses and alcohol are all covered in one contract. It provides
for purchase of all exportable surplus of sugar of the 1946 and 1947
crops, with the exception of 250,000 Spanish long tons for free export
and 20,000 tons for UNRRA from the
1946 crop and 300,000 long tons from the 1947 crop. The price is 3.675
cents per pound of raw sugar, f.o.b.
Cuban port, subject to escalator clauses, the principal one of which
provides for a price increase if the Bureau of Labor Statistics cost of
living or food price indices rise more than 2 percent above those for
the last quarter of 1945.
The purchase includes a minimum of 115 million gallons of blackstrap
molasses from the 1946 crop and a total of 165 million gallons from the
1947 crop at a price af 13.6 cents per gallon, f.o.b. Cuban port. A total of 40 million gallons of
industrial alcohol is to be purchased under the two-year contract at a
price of 65 cents per gallon.
This contract completes the negotiations that have been in process for
more than a year and for the first time covers two crops in one
contract. Conclusion of these negotiations should go a long way toward
guaranteeing supplies of sugar to the United States and other claimants,
particularly since a large crop is anticipated in 1947. The total value
of three products covered by the contract for the two years represents
an estimated 750 million dollars, and if the operation of the escalator
clause results in appreciable price increases, it might approach a
billion dollars. As a part of the negotiations, the United States
Government has made certain specific commitments to provide minimum
quantities of rice, wheat flour, lard and vegetable oils to Cuba.
[Enclosure]
The American Chargé (Woodward) to the Cuban Minister of State (Alvarez)57
No. 494
Habana, July 16, 1946.
Excellency: I have the honor to refer to
the negotiations, now happily concluded, as a result of which an
agreement was reached by representatives of the Cuban Government and
the Government of the United States for the sale to Commodity Credit
Corporation of a portion of Cuba’s 1946 and 1947 sugar and
blackstrap molasses production and a quantity of Cuba’s production
of industrial alcohol during 1946, 1947 and the first six months of
1948. As in previous years during which similar agreements have been
reached, the discussions relating to the purchases included various
matters over which the Cuban Government and the Government of the
United States maintain control. I am pleased to record in the
succeeding paragraphs the agreements which the United States
Government understands have been concluded in this connection.
Sugar Legislation
The statements of the representatives of Your Excellency’s Government
that no change should be made in the sugar legislation from the
existing sugar legislation in Cuba for the 1946 and 1947 crops and
that the distribution of sugar production should be based on the
existing system of quota allocations have been noted with
satisfaction by my Government.
Cuban Local Consumption Sugar
Quota
It was agreed that the institute will reserve for local consumption
in Cuba 350,000 long tons of sugar each of the 1946 and 1947 crops
and that any proportion of this sugar not used for local consumption
will be released by the Institute for shipment to the Commodity
Credit Corporation, provided the Cuban Government’s authorization to
[Page 802]
effect such shipments
is obtained. In accordance with the Cuban Government’s Decree no.
325 of February 15, 1946, the abovementioned sugar quota is destined
to satisfy consumption requirements in Cuba, including the
requirements of industries which use sugar for the production of
manufactured articles, whether for internal consumption or for
export.
In view of the critical need for sugar in the United States and those
other nations which look to the United States for their sugar
supplies, the Government of the United States is confident that,
should the occasion arise, the Cuban Government will be disposed
promptly to authorize the release for shipment to the Commodity
Credit Corporation of any sugar reserved for Cuban domestic
consumption that is not used for that purpose. For the same reason,
the United States Government ventures to express the hope that the
Cuban Government will be good enough to take such steps as may be
necessary to prevent the exportation, aside from the foregoing, of
any part of Cuba’s local consumption sugar quotas to any destination
in the form of sugar, liquid sugar, molasses or syrups. Such a
divergence of these local consumption sugar quotas, while reducing
the amount of the sugar which might otherwise become available to
the Commodity Credit Corporation at a time when it is desperately
needed, makes little if any definite contribution to Cuba’s overall
economy, contrary to what is the case in respect to candy,
confectionery and other similar manufactured articles which involve
further manufacturing processes and which afford additional
employment to Cuban labor.
Candy
It was agreed that:
- 1)
- For 1946, within the quantity of local consumption sugar
of 350,000 long tons, raw value, a quantity not to exceed
30,000 short tons of sugar equivalent may be set aside
during the calendar year 1946 to cover the needs of the
confectionery industry of Cuba for export to the United
States; that candy and other confectioneries composed of 20
percent or more of sugar by weight may be exported from Cuba
to the United States only upon issuance by the Cuban
Government of an export license; and that export licenses
will not be issued for such candy during 1946 in excess of
30,000 tons of sugar equivalent and not in excess of 75
million pounds of candy.
- 2)
- For 1947, within the quantity of local consumption sugar
of 350,000 long tons, raw value, a quantity not to exceed
40,000 short tons of sugar equivalent may be set aside
during the calendar year 1947 to cover the needs of the
confectionery industry of Cuba for export to the United
States; that candy and other confectioneries composed of 20
percent or more of sugar by weight may be exported
[Page 803]
from Cuba to the
United States only upon issuance by the Cuban Government of
an export license; and that export licenses will not be
issued for such candy during 1947 in excess of 40,000 tons
of sugar equivalent and not in excess of 100 million pounds
of candy.
- 3)
- Any import control will be administered by the United
States Department of Agriculture on the basis established in
(1) and (2).
- 4)
- The Ministry of Commerce of Cuba will endeavor to spread
the issuance of export licenses over the year, as far as
possible, in order to avoid concentration of shipments in
the early part of the year and early exhaustion of the
quota.
Food Supply
The United States has agreed to assist Cuba, if necessary, in the
procurement of such foodstuffs as are allocated to Cuba from United
States sources, it being understood that all prices for commodities
obtained in the United States will be at the prevailing prices for
such commodities at the time of procurement.
Flour: The United States guarantees Cuba
2,000,000 bags (200 pounds each) of wheat flour for the year 1946
and a similar amount for the year 1947. United States regulations
have been amended to enable millers to produce export flour of 72
percent extraction.
Rice: The United States guarantees that Cuba
will receive an allocation of rice from United States sources of 70
million pounds for the six-months period April 1 to September 30,
1946. The United States will also support Cuba’s request to the
International Emergency Food Council (successor to the Combined Food
Board) for allocations from areas other than the United States of 80
million pounds of rice for the same period. This will give Cuba, if
Cuba procures the amount allocated by the International Emergency
Food Council, a total of 450,000,000 pounds of rice for the rice
crop year which began on October 1, 1945 and runs to September 30,
1946, including a small amount of rice of advanced licensing that
was granted prior to October 1, 1945.
From October 1, 1946, to September 30, 1947, the United States will
support a request to the International Emergency Food Council by
Cuba for 400,000,000 pounds of rice from United States sources and
for not less than 50,000,000 pounds from other sources. If there is
no International Emergency Food Council during this period, the
United States will guarantee Cuba 400,000,000 pounds from United
States sources. The United States will further assure Cuba that it
will cooperate in an effort to enable Cuba to procure such amounts
of rice as may be allocated to Cuba from other than United States
sources.
Lard: Unfortunately, the lard situation, due
to foreign relief programs and insufficient supplies, is so serious
that the United States can only guarantee Cuba 60,000,000 pounds for
the calendar year 1946.
[Page 804]
The United States will endeavor to assure this supply in
approximately equal quarterly amounts. The United States also
guarantees Cuba this amount for 1947, but will meet with
representatives of Cuba late in 1946 to discuss the prospects for
1947, and, if it is possible, will increase the amount for 1947.
Edible Oils: The United States guarantees Cuba
10,000,000 pounds for the calendar year 1946 and it is contemplated
this will be supplied by soybean oil. A like amount is guaranteed as
a minimum for 1947, but the situation will be reviewed at the end of
1946 as in the case of lard.
Tallow: This commodity is also seriously short
and the United States can only guarantee such amounts as are
allocated Cuba from the United States by the International Emergency
Food Council for the calendar years 1946 and 1947. At present this
allocation is 13,664,000 pounds for 1946 from both United States and
foreign sources. In case there is no International Emergency Food
Council in 1947, the United States representatives will meet with
representatives of Cuba and, in the light of the situation then
existing, will decide the amount of tallow that can be provided Cuba
during the year 1947.
Malt: This commodity is also in short supply
and the United States Government is unable to guarantee Cuba more
than 100,000 bushels for each of the second, third, and fourth
quarters of 1946. The prospects for 1947 can be mutually reviewed
late this year and attempts will be made to increase quarterly
quantities for 1947.
Fertilizer: No quantity or type of fertilizer
can be guaranteed by the United States, but, with the great need for
sugar in the world, Cuba can be assured of the best efforts of the
United States Government to assist it in meeting its fertilizer
requirements.
I should appreciate receiving from Your Excellency a reply indicating
that the understandings set forth in this note are shared by Your
Excellency’s Government.
Please accept [etc.]
[File copy not signed]
Chargé d’ Affaires
ad interim