Office of the Historian

249. Memorandum From the Administrator of the Agency for International Development (Hamilton) to President Kennedy0

Washington, April 14, 1962.

SUBJECT

  • Size of PL 480 Programs in United Arab Republic—Egypt

This is the report you requested on the size of the current PL 480 programs in the UAR.

Food-for-Peace programs in the UAR have been large because of Egypt’s increasing dependence upon food imports to meet its growing needs. Egypt was traditionally a food exporting country, but the rapid growth of population, combined with a restricted supply of arable land, had forced her to import large amounts of food in recent years to supplement local production. This increased need from abroad put an increasing burden on the nation’s foreign exchange reserves which were badly needed for economic development purposes. The PL 480 program, especially through Title I, has contributed much to satisfying these needs and has made a major contribution to the economic development program in the UAR. By saving scarce foreign exchange reserves, which would ordinarily be used to purchase the required food, the UAR was able to purchase capital goods from hard currency areas, including the U.S., and thus become less dependent upon assistance from the Soviet Bloc to meet its capital needs.

While the program was expanded considerably in FY 1962, this was due largely to severe crop failures which sharply increased the country’s needs from abroad. The program, which began in FY 1955 under Title III (donations to voluntary non-profit agencies), was interrupted in 1957 and 1958 following the Suez Crisis and revived in later years under [Page 626] Titles I (sales for foreign currencies) and III. In 1961, severe insect infestation and abnormal flooding of the Nile reduced output sharply in the agricultural sector. The production of corn, which provides a part of the farm population with the main ingredient for its bread, was down 20%. Wheat production remained about the same but in recent years the UAR has been able to produce only about half of its requirements. Cotton production declined about a third and supplies of edible cottonseed oil fell far short of requirements. Exports of cotton normally account for about 70% of the country’s foreign exchange earnings. The decline in the cotton crop alone represents a potential loss of $100 million and has compounded the chronic problems of foreign exchange shortages. To help alleviate these conditions, the PL 480 program was expanded. As a result, the FY 1962 program rose almost $80 million to about $180 million. While the FY 1963 program is expected to decline with improved crop conditions, Egypt’s needs are still expected to total about $140 million.

The following table shows the dollar value of the PL 480 program in the UAR over the last three years, broken down by Title and by commodity:

PL 480 Programs for UAR (Egypt)
(millions of dollars)

FY 1960 FY 1961 FY 1962
Title I1 73.2 80.3 123.7
Title II (Emergency relief due to floods and insect infestation) — — 29.1
Title III 8.2 22.5 27.5
Total 81.4 102.8 180.3

Breakdown by Commodities
(millions of dollars)

FY 1960 FY 1961 FY 1962
Wheat2 57.5 75.4 76.6
Corn 5.4 5.4 43.3
Edible Oils 4.0 6.6 31.2
Other—including ocean transept. 14.5 15.4 29.2
Total 81.4 102.8 180.3
Fowler Hamilton
  1. Source: Kennedy Library, National Security Files, Country Series, United Arab Republic, 3/62–5/62. Confidential. Transmitted to the White House under cover of an April 17 note from Battle to Bundy.↩
  2. A supplementary Title I agreement of $14 million for wheat has been approved but not yet signed. [Footnote in the source text.]↩
  3. A supplementary Title I agreement of $14 million for wheat has been approved but not yet signed. [Footnote in the source text.]↩