OPEN COMPETITION

Evening Post, Volume CXXIV, Issue 110, 5 November 1937, Page 9

OPEN COMPETITION

BRAZILIAN COFFEE

PRICE CONTROL POLICY

ABANDONED

(Received November 5, 9 a.m.)

RIO DE JANEIRO, November 4. The Government has announced the abandonment of its programme for control of the price of coffee and the adoption of a policy of open competition and reduction of the export tax by 75 per cent. . ■■ ■■: ;.. 'This is a result of its. failure to qottclude a price agreement with other producing countries.

Brazil has been making efforts for the control of coffee since 1906; In that year the harvest was reckoned at 20 000,000 sacks, sufficient to bring down prices in calamitous fashion, and hit the country hard. A planter ana merchant from Sao Paulo devised a plan under which the State would prohibit fresh planting, buy up the entire harvest, and sell it at a later date when conditions were more favourable. The Government raised a loan and bought 2 000,000 sacks for £3,000,000. These were shipped to New York, Hamburg, and Havre, and stored under seal. More money was raised to continue these operations, and, in 1908, 8,000,000 sacks were bought and stored. These restrictions operated for seven years, and as large harvests continued, the reserves went on mounting. After the outbreak of war in 1914 some markets diminished, others vanished because of blockade. In 1917, however, the French, offered to buy 2,000,000 sacks and the Americans bought 1,000,000 for their expeditionary force. After the war the situation was improved by the growtu of the United States market which was ascribed to Prohibition. But in 1924 an exceptionally heavy harvest again accentuated the growers' troubles, and the Government, tiring of its former plan, attempted to control export instead of production, restrictions on which had been evaded by growers. But this also brought a crop of troubles. As soon as it was seen that prices were being maintained, plantations were extended and many small people took to growing coffee as a sideline. In 1929 Government control collapsed. But in 1931 the influence of the depression forced the Government to intervene again. This time it began to destroy the coffee. It. determined to confiscate one-fifth of the harvest and destroy it. But there was an outcry and the grow/rs agreed to levy an export duty of 10s per sack, the proceeds being devoted to the purchase and destruction of coffee. This year, it was reported, the Brazilian coffee council had determined to destroy 12,000,000 sacks. The crop was once more expected to be a heavy one.