Foreign Relations of the United States: Diplomatic Papers, 1942, The American Republics, Volume VI

837.61351/3536a

Proposal by the Department of State Concerning the 1943 Cuban Sugar Crop ²⁹

December 8, 1942

On Saturday, December 5, representatives of the United States Commission submitted to the Cuban Commission, a price of 2.65 cents per pound of raw sugar delivered into ocean carrier, all charges paid, this figure to include all Cuban taxes. This price would be applicable to 2,500,000 short tons of Cuban raw sugar to be produced in 1943, and was submitted subject to certain basic terms, the principal of which are as follows:

Size of crop

(a) The size of the crop is to be limited to 3,225,000 short tons of raw sugar, of which 2,500,000 tons would be purchased by Commodity Credit Corporation; 500,000 tons would be held in Cuba for a United Nations stockpile, as outlined below and, 225,000 tons would be produced for local consumption in Cuba.

(b) The 500,000 tons for the United Nations stockpile would be produced by Cuban producers at a figure to be negotiated between the Cuban Government and the producers without any participation by the United States.

The United States Government will contribute 1 cent per pound, the balance to be contributed by the Cuban Government and the sugar industry. The 1 cent per pound would be payable against presentation of warehouse receipts. Title to this stockpile sugar would be vested in a joint United Nations instrumentality, which would exercise jurisdiction of its final disposition as a relief undertaking.

Price

(a) The price which Commodity Credit Corporation has agreed to pay the Cuban Sugar Institute for the 2,500,000 short tons of raw sugar has been fixed at 2.65 cents per pound, delivered into ocean carrier, all charges paid, basis northside ports, with existing differentials between north and southside ports to be seller’s account. This price includes all Cuban taxes.

(b) The 2.65 cents per pound price would be a firm price and would not be subject to change.

(c) Polarization allowances would be based on the contract price.

Terms of Payment

(a) On 1943 sugar that is shipped, payments would be made in the amount of 95 percent of the 2.65 cents price, against 10 day drafts on Commodity Credit Corporation or its assignees, with customary shipping documents attached, the documents to be drawn in such form and shall be forwarded in such manner as Commodity Credit Corporation may direct.

(b) On 1943 sugar that is not shipped, Commodity Credit Corporation would make an advance of 90 percent of the 2.65 cents price on sugar in port warehouses and 80 percent on sugar at batey or other points. This advance would be made on October 1, 1943. Sugar that may be moved from batey to port warehouses after October 1, 1943, but which remains unshipped, would receive an additional advance of 10 percent of the 2.65 cents price upon presentation of port warehouse receipts.

(c) Warehouse and other costs shall be included in the price until January 1, 1945. After January 1, 1945 warehouse charges shall be for the account of Commodity Credit Corporation.

Shipping

(a) Conversations between the Cuban Commission and the United States Commission have disclosed complete agreement regarding the urgency of facilitating rapid loading of vessels. It is recognized by both parties that any other procedure would simply perpetuate difficult problem regarding the movement of Cuban sugar and moreover, would not be compatible with the vital interests of the United Nations in their joint war effort. The War Shipping Administration, in order to accelerate the turnaround of vessels, is rewriting its charter party, copies of which will be provided the Cuban delegation within a few days. The charter party will require longer hours of loading and a higher rate of demurrage.

(b) The Cuban Government on its part will take the necessary action to expedite loading by removal of the limitation on the number of bags loaded per day per gang; and by suspending other practices which now tend to delay the loading of ships.

Because of the uncertainties in demands of the war, the United States Government must reserve the right to send ships to any port and the sugar is to be placed at that port by the sellers upon receiving instructions from Commodity Credit Corporation. Vessels arriving laden may discharge at any port, sub-port, or embarcadero which an agency of the United States Government may direct.

General Terms

(a) Raw sugar would be released by Commodity Credit Corporation under certain conditions to Cuban refiners who have received refining allocations from the Cuban Sugar Institute.

(b) The 1942 crop purchase sugars will be moved before 1943 crop shipments are made unless Commodity Credit Corporation, in order to facilitate shipments should direct in specific situations to the contrary.

(c) Certain changes will be necessary in the terms for shipment of sugar to other than United States destinations.

(d) If the 1944 Cuban sugar crop is not purchased by an agency of the United States Government, the Cuban Sugar Institute will agree that shipments to the United States of new crop free sugar shall not exceed one-third of the total raw and refined sugar exports to the United States until such time as sugars previously purchased by an agency of the United States Government shall have been shipped.

29. Handed to the Cuban Commission on December 8, 1942.