50. Memorandum from Mulliken to Carwell, June 81
SUBJECT
- Meeting with Colombian Ambassador on Coffee Price Stabilization
Mr. Poole and I attended a meeting in Mr. Blumenthal’s office on Tuesday afternoon, June 6, at which the Colombian Ambassador discussed his Government’s views on what the U.S. should do in the way of price stabilization. He considered it most important that the U.S. be prepared to offer tangible proposals at the Montevideo meeting in July which will indicate progress in connection with Point 5 of President Kennedy’s program for cooperation with Latin America. Since coffee is the most important commodity to the majority of the Latin American countries, he hoped that we would begin with a coffee agreement. In his opinion price stabilization is the best way to convince the small farmer in Latin America that the U.S. takes a serious interest in his problems. Money contributed through aid programs is administered by local governments, sometimes to achieve their own political objectives, whereas the proceeds of export sales go directly to the producer.
He expressed the hope that the U.S. would agree to participate in a coffee agreement designed to raise coffee prices by about 5 cents a pound. He also hoped that we would propose measures for placing existing stocks in the hands of an international body. He considers it dangerous to leave them at the disposition of individual governments [Typeset Page 132] for bargaining purposes. He commented that these stocks would not be nearly as large as they appear if the governments holding them were obliged to grade them and throw out coffees which are not suitable for export sale. He also recommended that a part of the proposed increase in prices be turned over to a fund which could be used for developing new markets, improving methods of cultivation, and resettling marginal coffee cultivators in areas where they would undertake diversified farming. He thinks this is the only way to attack the over-production problem. He also expressed the hope that the U.S. would impose import quotas or at least require certificates of origin in order to assist the exporting countries in policing their export quotas.
Mr. Blumenthal encouraged the Ambassador to expand on his views and said that the U.S., while anxious to cooperate with the producing countries, believes that the coffee problem is primarily one for the producers to solve themselves. He hoped to hear from the other large producing countries’ governments within the near future regarding their attitude toward the coffee agreement developed by the Coffee Study Group. He said the U.S. Government had been studying the proposal carefully and had developed a few ideas of its own which it was anxious to check against those of the producing countries, but that it would take a little time to reach a cleared position even within our own government.
[Facsimile Page 2]Mr. Blumenthal questioned the desirability of giving the coffee question any real prominence on the Agenda of the IA-ECOSOC meeting, since the problem is world-wide in scope and is being considered in international forums. He thought the appropriate procedure would be to discuss with the Latin American producing countries at the meeting of Directors of the International Coffee Agreement which is to be held in Rio later this month, their views on whether 1) we should strive for a long-term agreement; 2) whether they wanted consumer participation; 3) whether they favored import quotas; and 4) whether they were prepared to turn over to any international body their unsaleable stocks, and at what prices. The next step he foresaw was to call a meeting of the Coffee Study Group in Washington, probably sometime in July, and learn the views of the consuming countries. Then, if there appeared to be substantial agreement, we might undertake to negotiate an agreement. Mr. Blumenthal stated that he hoped to be in touch with the Embassy again before the meeting in Rio to discuss some of the technical problems in greater detail.
Comment:
On the following day Mr. Blumenthal called a meeting of representatives of the geographic areas which have an interest in coffee, i.e., Africa and Southeast Asia, and outlined the steps which E is taking to [Typeset Page 133] develop a position on coffee. They correspond closely to the summary contained in my memorandum of May 24. Mr. Blumenthal has already discussed the main features of his proposal with Mr. Leddy in Treasury, the Assistant Secretary for International Affairs of the Department of Commerce and with Assistant Secretary Duncan of Agriculture. No one had any objection to his moving ahead in an effort to develop a U.S. position which would incorporate the following points:
1. U.S. participation as a consumer in an international agreement to stabilize coffee prices at approximately the existing level.
2. Acceptance by the U.S. of an obligation to freeze non-participating countries at their present levels in the U.S. market (as is done under the International Sugar Agreement).
3. A possible contribution by the U.S. to financing of presently accumulated stocks of coffee of exportable grade provided producing countries will relinquish them at a small fraction of current prices.
Mr. Blumenthal has asked Mr. Rourk to provide us with a detailed statement of the position before the end of next week. His proposals, as outlined, [Facsimile Page 3] appear to be entirely acceptable from the standpoint of ARA. I am not sure that Point 3 will prove acceptable to the Treasury Department. I pointed out that if we were to impose quotas on imports from non-participating countries it would require legislation, and I thought he would be well advised to discuss the proposal with appropriate congressional leaders and with the Industry Committee of the National Coffee Association before we make any public statement regarding our position. I understand that he has asked the Coffee Advisory Committee to come to Washington next week, and has already discussed the plan in broad outline with the President of the National Coffee Association.
Attachment:
Memorandum of May 24, 1961.
cc: ARA-Mr. Coerr
EST-Mr. Wellman
WST-Mr. Lane
OAP-Mrs. Bracken
CMA-Mr. Vallon
- Meeting with Colombian Ambassador on coffee price stabilization. Official Use Only. 3 pp. DOS, CF, 611.21/6–861.↩