832.61311/8–3047: Telegram
The Ambassador in Brazil (Pawley) to the Secretary of State
1202. During past week the subject of Brazil’s wheat supply has been broached by Rubens de Mello, Chief Economic Division Foreign Office, Aranha,60 Goes Monteiro,61 Foreign Minister Fernandes and finally President Dutra. All are alarmed because present supply of wheat will be exhausted by October.
We are informed Argentine reluctance to fill quotas established under agreement probably due to fact they are selling wheat to Britain and Spain at 60 pesos the quintal whereas Brazilian agreement is at rate of 40 pesos the quintal.
All persons mentioned requested urgent assistance from US, either directly or through IEFC, to meet minimum requirements of 40,000 tons per month during September, October, November and December. All expressed deep concern over political repercussions should Brazil run out of bread, which would be case if new supply wheat is not obtained. Brazil would accept flour as readily as bulk wheat in this emergency.
I offered no encouragement but took occasion to inquire whether, if able obtain allotments with US help either from IEFC or US direct, Brazil would be willing rejoin IEFC. Both Foreign Minister and President stated categorically that they would rejoin immediately and would welcome opportunity correct original error of withdrawing without loss of face.
Foreign Minister and Rubens de Mello added if US desired Brazil would make available to Britain its surplus rice to extent latter requires for sterling area, not however for resale in dollar area.
If wheat problem develops unfavorably and Brazil is confronted with no bread in November or December, the political difficulties of the Dutra Government would be indeed serious. Such a situation would play directly into hands Communist Party in their efforts to embarrass and hamper administration.