832.6584/3–347
Memorandum by Mr. Richard F. O’Toole of the Division of Brazilian Affairs to the Chief of That Division ( Dawson )
Subject: February 27 Memorandum of Brazilian Embassy Proposing Agreement for Supplying American Wheat to Brazil.
Pursuant to the request contained in the above memorandum for a discussion of this matter Mr. Highby (IR) and I joined Mr. Carneiro,52 of the Brazilian Embassy, at Mr. Glen Craig’s53 office in the Department of Agriculture this afternoon.
Mr. Craig remarked to Mr. Carneiro that he felt sure that since Brazil is represented in IEFC Mr. Carneiro was probably acquainted with the overall difficulties of the wheat supply situation. However, he went into some detail to demonstrate that UK, Belgium, Holland, France and Italy are in a particularly difficult supply situation. He then said that in this country we had no surplus wheat available, and therefore to meet Brazil’s request it would be necessary to take it away from those countries mentioned above, which he was sure Mr. Carneiro would not expect. Mr. Craig then assured Mr. Carneiro that there were no supply agreements with any country other than current allocations on a monthly or quarterly basis as the case may be. He added that both he and his associates deeply regretted that Brazil or any other country had to look to Argentina for wheat in light of all circumstances but that he could hold out no hope that Brazil could obtain wheat other than from Argentine sources, even if the price went to $4.00 a bushel. Mr. Carneiro was told that even if it came to the worst we could do nothing for Brazil or any country until the [Page 469] middle of June when the new crop came in. He expressed the opinion that even then the situation would be almost as bad as it is today. However, he conceded, that if Brazil should by any chance find herself completely bare of supplies, as she was last summer, undoubtedly an effort would be made to dig up a small spot supply to help out but that this could not be viewed as a definite commitment.
Mr. Carneiro referred to the fact that so far this year Argentina has not met the monthly target of 100,000 tons of wheat for Brazil. Mr. Craig then sent out for figures of actual export liftings of flour to Brazil, from this country, which in January were equivalent to 111,000 tons of wheat. Mr. Craig then pointed out that this flour, plus the amount of wheat received from Argentina, heavily exceeded the IEF allocation for Brazil for January. He went on to say that these flour shipments were a heavy drain on our flour supply and that if it continued to go to Brazil in the same proportion he would not be surprised to see the amount allowed to be exported limited to the 15,000 or 20,000 tons per month normally supplied to northern Brazil.
Mr. Carneiro was undoubtedly disappointed at the result of the meeting but he appeared to accept the decision gracefully, although he did say, in semi-jocular vein, that he thought perhaps Brazil ought to raise the price of her rice.