CAB129-52 — Page 14

C. (52) 154

9TH MAY, 1952

Page 14

CABINET OFFICE

COPY NO. 61

RECORD COPY

CABINET

SOUTH AMERICAN MEAT NEGOTIATIONS

Memorandum by the Chancellor of the Exchequer

My colleagues agreed that expenditure on meat from Argentina and Uruguay should, subject to review later in the year in the light of the balance of payments position, be limited to £25 millions plus the value of possible economies in other imports which might amount to £6 millions (C.C.(52) 32nd Conclusions, Minute 7). It has been possible by reason of other economies to raise the figure of £25 millions to £30 millions. It was also decided that there should be no purchases of canned corned meat for the stockpile (C.☺. (52) 26th Conclusions, Minute 6).

2. Negotiations in Argentina and Uruguay have now opened. The Argentine Government have offered us 200,000 tons of carcase meat at

£192 per ton (compared with £126 per ton paid in 1951/52) and 30,000 tons of canned corned meat for which they have not mentioned a price, The Uruguay Government are not prepared to mention quantities or prices; they say that the quantity will depend on our price.

3.

It is now necessary for our Ambassador to reply to the Argentine Government and he will shortly have to make some advance on the present price of £126 per ton. We have notionally divided the £30 millions into £24 millions for Argentina and £6 millions for Uruguay. As soon as the Ambassador advances the price beyond £126 per ton he will have reached a point at which he cannot afford within the ceiling to buy 200,000 tons of meat and he must, without disclosing that he is working to a monetary ceiling, make it clear that he will not be buying the full quantity of meat offered.

4.

There is nothing in the balance of payments position which should move me from the view that we must limit our purchases of South American meat to the £30 millions proposed. I do, however, think that we must now reach conclusions on quantities in order that the Ambassador in Buenos Aires may say how much meat he will buy. I recognise that by doing this in advance of having a firmer idea of price there is some risk that the total sum earmarked may be slightly exceeded. I am prepared to take this risk subject of course to my right to say that any particular price asked by Argentina is an excessive price to pay for any meat at all and I therefore recommend that we should decide now to buy 200,000 tons of carcase meat in South America of which 160,000 tons in Argentina and 40,000 tons in Uruguay. I believe that we must now

decide on a figure which will be final, We do not want a repetition of last year's unhappy negotiations and we must not therefore be indecisive.

5. I recognise that there will be criticism both here and in South America when it is found we are not prepared to buy all the meat offered. This, however, is an inevitable feature of our balance of payments and was a risk which we faced when we decided that we must limit purchases to £30 millions.

6.

I would propose, however, that we should instruct the Ambassador

ΟΙ

in Argentina to say at a suitable time that we are prepared to buy cargase meat in excess of 160,000 tons or canned corned meat to the extent that Argentina

-1-

处

buys extra less essential Argentine imports (including textiles) from

us. We would have to link these supplementary purchases not only with thPageuk5offizport licences but with actual Argentine phageases 200.

7.

I consider that unless Uruguay approaches us again we should now leave the negotiations there in abeyance until we have more idea where we are getting in Argentina but that eventually they should follow the same pattern as Argentina. I understand that there are reports of increasing pressure on the Government to send meat to us, if necessary at last year's price provisionally; I would accept such a proposal if it were made. It may not be necessary or even desirable to have the same arrangement for linking additional purchases with their purchases of our less essentials; this would be for consideration later on.

8.

I therefore recommend to my colleagues that -

(a) We should endorse our decision to limit our purchases of South

American meat for balance of payments reasons and authorise our negotiators to buy 160,000 tons of carcase meat in Argentina and 40,000 tons in Uruguay.

(16)

ጓ

(c)

(a)

Our negotiators should be authorised to make some modest advance on last year's price (say 10%) and that the Minister of Food and I should be authorised to agree to further advances as necessary, reporting back to our colleagues when we think the time has come.

At a suitable moment we should tell the Argentine authorities that we will be prepared to buy additional quantities of carcase meat or some canned corned meat to the extent that they buy extra less essential imports from this country.

The negotiations in Uruguay should be left to develop in the light of progress made in the major deal,

15

Treasury Chambers, S. W. l.,

9TH MAY, 1952.