Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

381. Letter from Martin to McGovern, May 31¹

May 31, 1961

Dear Mr. McGovern:

Mr. Ball has asked me to comment on your memorandum of May 9, 1961 to the President with regard to the possibility of exchanging wheat and feed grains for imported foods, such as coffee and cocoa. It is suggested that the coffee and cocoa could be retained in Civil Defense stockpiles, and that its acquisition might assist in stabilizing world market prices.

As I see it the first consideration would be whether Civil Defense as a matter of policy would consider that a stockpile of cocoa beans and coffee beans was essential in an emergency. There is the further consideration of whether the quantity of wheat exchanged would really be in addition to normal commercial sales and sales under Public Law 480, and thus represent a demonstrable increase in our surplus disposal. Producers of cocoa and coffee would of course only be interested in an exchange if the quantities involved were clearly in addition to what they could otherwise sell for cash. They would also want assurances that the cocoa and coffee would not be thrown on the market later and depress prices.

Unfortunately the magnitude of the coffee surplus is such that storing a pound of coffee for each person in the United States would make no appreciable reduction in the surplus. In cocoa the threat of low prices recently eased when the market absorbed a record crop. Steps are well under way toward intensive discussions of international commodity agreements for both commodities. Thus I feel that further study of the exchange proposal may suggest that the timing is not propitious for its advancement.

Sincerely yours,

Edwin M. Martin

Assistant Secretary

Attachment

May 9, 1961

SUBJECT

• Exchange of Wheat and Food Grains for Imported Foods

To further the Food-For-Peace effort, this office is considering with interested U.S. agencies the desirability of exchanging some of the U.S. stocks of wheat and food grains for imported foods such as coffee and cocoa for retention in Civil Defense stockpiles.

It is contemplated that such exchanges, developed on a mutually beneficial basis, would assist in stabilizing world market prices and enhance United States relations with the supplying countries.

For many years, the exporting countries of Latin America have been especially interested in establishing price stabilizing stockpiles. The operating problems have been considered in a number of international bodies including the Food and Agriculture Organization and the United Nations Committee on International Commodity Trade with which the United States only last year became affiliated.

We do not propose to discuss this idea publicly because it might raise unwarranted expectations both here and abroad.

George McGovern

1. Proposal to exchange wheat and feed grains for imported foods. Attached is a copy of a May 9 memorandum from McGovern to Kennedy explaining proposal. No classification marking. 3 pp. Department of State, Central Files, 800.03/5–961.