Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-04-27
COFFEE BREAK
Brazil Faces q Financial Crisis

matte attention. State Depart
ment officials fear:
/. That Brazil will be forced
into more trafhc with countries
behind the Iron Curtain, with
which II has been successfully re-
opening an almost-extinct trade.
2. That an economic crisis in
Brazil will disrupt hemisphere
unity and affect the economies Of
other Latin American republics.
This month the Brazilian Coffee
Institute reported the conclusion
Of negotiations with Czechoslo-
vakia for the sale Of about l80. 900
bags Of coffee priced at $l2 million.
Brazil. in turn, will purchase farm
machinery for coffee planters. to
be distributed through its Min
istry Of Agriculture.
A government spokesman said
that even though Russia has been
unwilling to pay the price Brazil
wants for its coffee, negotiations
are still open.
In q recent speech. Roy r.
Rubottom, jr., Assistant Secretary
Of State for Inter-American AZ
fairs, emphasized. "the gravity Of
the challenge for the United
States posed by the Soviet bloc
efforts in Latin America Cand)
its capacity TO choose selected
targets for an economic offensive"
This" he said. will require
sustained vigilance and care on
the parts of the countries APP
preached and ! am confident that
our hemisphere partners will not
be found lacking"
Told of this. a Brazilian official
said, I'VE are not interested in
buying ideas from Russia. Brazil
is a rapidly growing country IN
need Of large sums Of money to
maintain that growth.
Nevertheless. it should be I'M
derstood that we will continue to
supply the United States demand
for high-grade coffee. We will sell
elsewhere when that demand is
satisfied"
Brazil grows the bulk Of the
worlds coffee % million bags
leach weighing 1872 pounds this
year and "a million expected next
year. 1t supplies around 10 per
cent Of the coffee consumed in
the United States.
Debt Burden
For the next four years. Brazil
has to meet mounting payments
on contracted debts abroad-$290
million this year. $299 million
next year, $342 million In 1860
and $l87 million in 1861. And 10
per cent of Brazil's foreign cx-
change-which 1t needs to meet
those debts-comes from coffee
sales.
United States Government fig
ures show Brazil earns $l.4 billion
a year from sll its sources. This
year they will be lucky II they
earn $l.3 billion" an official here
said.
The free market price Of the
cruzeiro has fallen from 80 to
the United States dollar in De-
cember. 1857, to l22 today.
Brazil's present rate Of coffee
exports is the lowest since 1852.
even though its warehouses are
oulging with more than 7 million
bags Of coffee. That surplus is
expected to double with holdover
from this years crop.
To support the purchase policy.
the Government has spent thus
far more than IA billion cruzeiros
t$l40 Million or Is per cent OF
all the money in circulation in
Brazil.
This self-imposed stockpiling
and the heavy foreign debt are
the main factors forcing Brazil to
seek buyers anywhere-including
Russia. Which may explain why
the United States takes dim view
Of that policy, as demonstrated in
this comment by Mr.. Rubottom:
1.-THE problem Is under urgent
and continued study. In some re-
spects our approach to the (coffee)
problem is different from theirs;
in fact, we have quite frankly dis
agreed with some Of their efforts
to maintaA prices at levels which
might operate to reduce consump-
ton"