Office of the Historian

374. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1

Washington, September 2, 1966, 10 a.m.

SUBJECT

  • Indian and Pak PL 480 Agreements

After our talk yesterday morning about the relation between our domestic bread prices and our India-Pak PL 480 programs, I asked the Budget Bureau informally for an opinion. The Bureau has headed the interagency operation of which I spoke.

The attached2 strikes me as a good updated analysis based on the facts developed during the July inter-agency review of our wheat situation. It is not a formal memo checked with Agriculture. I believe you will wish to read it.

The argument is that we set the FY 1967 PL 480 planning figure only after reviewing domestic projections of consumption, exports and the carryover necessary to keep prices in line. Speculation in the market has kept prices unexpectedly high. But this is a largely irrational element on which cutting PL 480 shipments would have almost no significant effect. It might even have the contrary effect by indicating panic about the domestic position.

Therefore, though the reaction of speculators is impossible to predict, it looks to me as if these Indian and Pak agreements would have no effect on domestic prices. I would hate to hold the small Pak agreement up much longer; and I believe the pared down proposal for India [Page 729] is about as far as we should go, given their pre-harvest and pre-election requirements and our commitments. That proposal—only running through February—gives us the chance to make a fresh assessment after the Indian November harvest is in.

But if you still feel uncomfortable, we might hold back on the larger Indian deal—I propose delaying signing until late September anyway—and ask for a formal Agriculture-Budget answer to your question.

Walt

I’m satisfied; go ahead with your approach on both India and Pakistan

Go ahead with Pakistan now; ask for a formal Agriculture-Budget analysis on India3

See me

  1. Source: Johnson Library, National Security File, Country File, India, India’s Food Problem, Vol. 1. Secret. A handwritten “L” on the memorandum indicates it was seen by the President.↩
  2. Reference is to a September 1 memorandum from Assistant Director of the Bureau of the Budget Charles J. Zwick to Rostow, entitled “Effect of P.L. 480 sales on domestic wheat prices.”↩
  3. Johnson checked this option.↩