387.61351/4505
Mr. Gustave Burmeister34 to Mr. George F. Scherer of the Division of the American Republics
Dear Mr. Scherer: Reference is made to Habana cable #806 dated December 6 concerning a proposal of the Mexican Government in conjunction with the Pepsi Cola Company to purchase 100,000 tons of Cuban refined sugar.
It is the consensus in Agriculture that no such proposal should be given favorable consideration.
In the first place, the prospective Caribbean supply of sugar is approximately 500,000 short tons below requirements upon this area as a source. The United States has commitments to furnish 700,000 tons of sugar to North and West Africa and Russia under lend-lease and to certain other United Nations and friendly neutrals besides a large military and civilian ration demand. Also the equivalent of 1,000,000 tons of Caribbean sugar probably will be required for the production of industrial alcohol, and 1,120,000 tons are needed to fill British and Canadian requirements. It is also important that stocks in the Caribbean as of the end of 1944 be maintained at a level that will provide sufficient sugars to maintain the shipping schedule in early 1945, and to forestall the development of a shortage situation when the United States bargains for the 1945 crops.
In the second place, Mexico has not taken any definitive steps to curtail the consumption of sugar, as have the United States, the United Kingdom, Canada, Russia and French North and West Africa. On the contrary, consumption of sugar in Mexico has been rising sharply during the war years as a result of increasing purchasing power, whereas in all of the other countries mentioned above, consumption has been reduced to levels considerably below normal. In this connection it is noted that a part of the proposed import from Cuba is for the Pepsi Cola Company and is for the purpose of producing unra-tioned flavoring syrups for export to the United States. It is the consensus in Agriculture that the import of these syrups into the United States should be restricted and that the sugar value should be chargeable to the importer’s sugar ration. It is not unlikely that this action will be taken in the near future, in which case the Pepsi Cola Company would not require the sugar in Mexico.
[Page 185]Finally, it should be pointed out that Mexico is just starting to harvest a new crop of sugar cane and there is no likelihood of a sugar shortage developing there during the next 9 months. Reports have been received that the new cane crop has suffered damage from hurricanes and flood, but no accurate appraisal of the extent of the damage can be made until after harvest is complete. It is suggested, therefore, that no further consideration be given to the question of Mexico’s import needs until sometime next summer when a clearer picture of the supply and requirements situation will be available.35
Very truly yours,
International Commodity Specialist