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

[Washington,] December 17, 1942.

A. Since the determination of the size of the 1943 crop, the discussions have revolved about the problem of price. The criteria of the Cuban and the United States Commissions have been similar; namely, that the grinding of a crop is to furnish labor income, not employer profit. The United States Commission on this basis made the offer of 2.65¢ f.o.b. in the ship’s hold, certain charges previously borne by this Government to be borne by the industry. This price, together with 1.00¢ per pound for 500,000 tons of relief sugar, would provide Cuba an income from sugar production of $142,500,000.

B. The Cuban Commission, in its memorandum of December 11,³⁰ set forth arguments designed to demonstrate the inadequacy of this price on the conditions stipulated. The United States Commission has been glad to re-examine the proposed terms in the light of the Cuban contentions and to set forth the following terms, which, after several days of exhaustive study, represent the final conclusions of the United States Government.

C. Certain modified and new conditions have been prepared, which are set forth hereafter. It is estimated that they will provide additional benefit to the Cuban sugar industry to the extent of at least $12,050,000.

Modified and New Conditions

(1) The total crop for export remains the same (i.e., 3,000,000 short tons), but 2,600,000 tons will be purchased by the United States at 2.65¢ subject to the provisions stated below:

(2) The price of 2.65¢ is for sugar placed within reach of ship’s tackle, if the Cuban Government informs us now by note that the following conditions will obtain by January 15, 1943:

(a) The number of bags that a ship’s captain or barge operator calls for per sling will be the rate for the loading of that particular ocean carrier.

(b) Any limitations on the rate of loading of a ship or barge, other than those governed by charter party or by mutual agreement between the ship or barge operator and the shipper of the sugar, will be eliminated.

(c) In the rotation of stevedores in the loading of ships and barges, there will be no men included who fail to do average work.

(d) These changes are to apply to all sugar now purchased or purchased in the future by an agency of the United States.

These changes, which represent a vital contribution of Cuba to the war effort, will be the equivalent of a considerable, although not precisely measurable, increase in merchant shipping, with corresponding effect on the ability of the United States to expedite movement of commodities and war materials among the United Nations.

If the changes in existing practice described under paragraphs 2(a), (b), and (c) above have not been effected by January 15, 1943, the 2.65¢ price will be on the basis of f.o.b. in ship’s hold; and article 3, paragraph (a), of the new West Indies Sugar Charter Party, of which a copy will be furnished, will be modified accordingly.

(3) The United States will contribute 1.50¢ to the production of the remaining 400,000 short tons for relief.

The changes under paragraphs (2) and (3) represent a minimum increase of income to Cuba of $7,300,000.

(4) The 2.65¢ price will be adjusted to changes in United States ceiling price for raw sugar, subject to the following conditions:

(a) The first 0.22¢ increase which may occur in the United States ceiling price will not be applied to the Cuban price;

(b) No increase in the ceiling price effective after May 31, 1943 will apply to the Cuban price.

(c) Any increase in the domestic ceiling price which may be applicable to the Cuban price will apply only to that portion of and sugar made subsequent to the effective date of the price ceiling change.

(5) The Commodity Credit Corporation will make the 80% and 90% advances on sugar at batey and port warehouses, respectively, as agreed to, on June 1, 1943 instead of on October 1, 1943. This will represent a net saving in interest on pignorated sugar, according to the Cuban memorandum of December 11, 1942, of about $1,500,000.

(6) The Defense Supplies Corporation will purchase up to 75,000,000 gallons of the exportable surplus of the 1943 production of blackstrap molasses at ¼¢ per English pound of blackstrap molasses having a minimum sugar content of 52%, delivered f.o.b. ocean-going vessel at ports of shipment acceptable to an appropriate agency of the United States Government.

This purchase will increase the income from the crop by about $2,250,000.

(7) On March 1, 1943, the Commodity Credit Corporation will pay over to the Cuban Sugar Stabilization Institute $1,000,000 as a fund to defray excess cost of moving sugar from batey to ports other than natural shipping ports, which movement will be undertaken by the producer on direction of Commodity.

The Institute will draw on buyers for a portion of the value of each shipment (for example, 10 points). The proceeds will be placed in the same fund with the $1,000,000 and utilized for the same purpose.

If the extra transportation costs in connection with movements to other natural ports should exceed the fund, the producers will be expected to pay the excess. If these costs are less than the fund, the surplus funds may be prorated among the mills when all of the 1943 crop has been exported from Cuba.

The net increase of income to Cuba under this proposal is therefore at least $1,000,000.

(8) The Cuban producers will be expected to bear the cost of warehousing and insurance of unshipped sugars.

(9) The previously stipulated conditions for the sugar transaction, insofar as they are not affected by the foregoing modifications and conditions, remain as set forth in the memorandum delivered to the Cuban Commission on December 8, 1942, a copy of which is attached.^30a

(10) The United States Commission has heard with pleasure from the Cuban Commission that the Cuban Government will maintain the same level of wages in the sugar industry throughout the grinding season except as affected by an increase in price which may result from the operation of the arrangement described under paragraph (4) above, since the United States Government has given its contribution of 1.50¢ per pound on the 400,000 ton stockpile for the payment of wages at the same levels previously prevailing.

30. Not found in Department files.
31. Supra.