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53
THIS DOCUMEN15ROPERTY OF HIS BRITANNIC MAJESTY 10801EMENT)
SECRET
C. P. (49) 51
4TH MARCH, 1949
CABINET
31
COPY NO.
INTERNATIONAL WHEAT AGREEMENT
Memorandum by the Minister of Food
The latest telegrams from Washington about the Wheat Conference are attached as an Annex to this paper. It is clear that we have now reached the final stage in the negotiations and it will now be necessary to send our representatives completely definitive instructions.
2.
There are three main points at issue:-
(a) Price range.
The exporters have now made a "firm and final offer" of a maximum of $1.80 for a four-year agreement with a minimum price range of $1.50 falling annually by 10 cents to $1.20 in the last year.
I
In E. P. C. (49) 9 I said that we should be prepared to accept a maximum price of $1.75 with the scale of minimum prices now proposed by the Americans (which, I may remind my colleagues is above the minima accepted in the agreement last year). said that I would not, however, be prepared to go beyond these figures.
My colleagues accepted these recommendations (E. P. C. (49) 6th Meeting, Minute 1). The question now is whether, despite this, we should accept a maximum price of $1.80. It is difficult to estimate what would be the actual cost to us of accepting a maximum of $1.80 instead of $1.75. The position is complicated by the fact that for 1949/50 we are firmly committed to buying 140 million bushels of wheat from Canada at $2 a bushel. It is probable that, apart from this, we should have to pay for all our wheat bought under the agreement during the first two years of its life the maximum of the price range, but that thereafter prices would fall nearer to the minimum. It follows that the additional cost is likely to be confined to the first two years. It might be of the following order:
S
(i) an additional 5 cents per bushel for say 50
million bushels in 1949/50, amounting to $2 millions;
(ii) an additional 5 cents for, say, the whole of
our 190 million bushels of "agreement" wheat, amounting to $92 millions;
(iii) in addition we might well have to make an
additional supplementary payment under the "have regard to" clause of our four-year agreement with Canada, amounting to, say, $7 millions.
In other words this concession might cost pe 108,0f188millions of which, perhaps, 15 millions would actually be payable in
-1.