Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

320. Telegram From the Mission to the United Nations to the Department of State¹

New York, June 23, 1966, 0325Z.

5388. Re: Cocoa Conference.

1. Intensive mtgs of Group of 12 with Prebisch and Conference Chairman Ali over weekend ended in failure to find common basis further negotiations.² In effort get discussion off dead center, it was proposed that range of min prices be agreed as basis for resumption of discussions. Producers suggested 20–22 cents, most consumers 19–21 cents, and US moved to 18 cents. Germany stated that would recommend strongly to his govt acceptance of the zone of 19 to 21 cents. US attempted obtain agreement on 18–22 cents but this not acceptable all other members Group of 12.

2. In desperate last effort, Prebisch held meetings individually with 12 members of Group to float compromise proposal which would have amended draft agreement to incorporate following features: 1) minimum and maximum prices would be replaced by intervention and resale prices; 2) intervention price, which would be 21 cents, would be point at which automatic reduction of sales quotas would begin; 3) buffer stock would not exceed 250,000 tons and would buy from producers only; 4) cocoa in temporary surplus would be bought by buffer stock for 10.5 cents; 5) when cocoa sold from buffer stock producer would receive deferred payment of additional 10.5 cents; 6) once buffer stock reached 250.000 tons, cocoa would be bought at diversion price (roughly 5 cents) and diverted to non-traditional uses such as production margarine; 7) all surplus cocoa would be mandatorily sold to buffer stock, however, producers would have right to buy back from buffer stock any surplus cocoa resulting from quota reduction which was subsequently restored during same quota year; and 8) net assets of buffer stock at end of agreement could be lent to cocoa producers through regional banks to finance econ development. In preparation for resumption of Conference at some time in future, Prebisch also proposed establishment WP which could refine draft agreement, attempt reach accord on unresolved issues and look into possibilities of prefinancing.

3. After lengthy meeting afternoon June 21, and in knowledge US acceptance, producers rejected Prebisch proposal on grounds it represented radical departure from draft agreement and that insufficient time remained in which to obtain instructions from capitals. Understand Nigeria and Ghana would have accepted proposal but refrained from doing so in light opposition other producers, primarily Brazil and Ivory Coast. At request producers, Prebisch withdrew proposal and so informed consumers.

Goldberg

1. Source: Department of State, Central Files, INCO–COCOA 3. Limited Official Use. Repeated to Abidjan, Accra, Addis Ababa, Geneva, Lagos, Lome, London, Rio de Janeiro, Yaounde, and Paris for USOECD.
2. Telegram 5320 from USUN, June 17, earlier detailed the impasse and summarized the main unresolved issues. (Ibid.)