846E.2395/9–2953: Telegram
The Ambassador in Ceylon (Crowe) to the Department of State1
94. Reference Embassy telegram 89, September 23,2 Embassy despatch 184, September 25.3
Press today announces prices 1954 Ceylon-Communist China rubber-rice agreement as 49 pounds sterling a metric ton for China rice and 28 pence sterling per pound for Ceylon rubber representing about 9 percent and 12.5 percent reductions respectively from prices of 54 pounds for rice and 32 pence for rubber in 1953 agreement.
Minister Agriculture and Food Goonetilike confirmed price rubber, but said that rice price reduced to 47 pounds per metric ton. He explained press error as follows: Because Ceylon must furnish bags and pay certain other extra costs on Chinese rice and because Chinese rice prices metric tons and Burmese long tons,4 it is necessary add about 2 pounds to basic agreement price Chinese rice to arrive at correct cost comparison with Burmese. Therefore, basic price and actual cost relationships [Page 1582] Chinese rice are: 1953 agreement 54 and 56 pounds, 1954 agreement 47 and 49 pounds.5
This represents rice price decrease about 13 percent in 1954.
Basic 1954 price of 28 pence for Rss one sheet rubber is approximately 55 Ceylon cents premium over average September Singapore price to date. Such an average premium on 50,000 metric tons rubber to be sold China in 1954 would provide Ceylon with a profit of between 12 and 13 million dollars over present Singapore prices.
Press reports Burma offering Ceylon five-year contract at sliding scale prices for any quantity rice between 250,000 to 600,000 metric tons a year. Present rice rations require about 475,000 metric tons annually. With 270,000 tons available under China deal, Ceylon would require about 200,000 metric tons additional from other sources. This does not take into account possibility increase local yields and production paddy.
Goonetilike confirmed press reports and said he could meet Ceylon’s rice requirements entirely from Burma, but had not made firm agreement Burma, pending conclusion Peking talks. Chinese showed determination give almost entirely barter character to trade and raise question how they were to pay for rubber if Ceylon did not take their rice. In still continuing talks, they are showing disposition widen scope of trade providing barter basis further extendable and among other things exploring possibility exchanging coal for Ceylon coconut oil.
Goonetilike indicated rice-rubber contract would come before Ceylon Cabinet for ratification at next meeting October 8.
- This telegram was repeated to London for information as telegram 25.↩
- Supra.↩
- Despatch 184, not printed, reported a meeting between Vaithianathan and a U.S. Embassy official at which the recent Ceylonese rice rubber negotiations with China were discussed in general terms (446E.9331/9–2553).↩
- A metric ton contains 2,204.6 lbs., compared to 2,240 lbs. in a long ton.↩
- For the 1953 figures, see footnote 3, p. 1561. The new rice price of 49 pounds per metric ton offered by China represented a 0.9 cent per pound reduction from the contract price for 1953.↩