Memorandum by Harvey R. Wellman of the Office of Middle American Affairs to the Deputy Assistant Secretary of State for Inter‑American Affairs (Mann)[1]

CONFIDENTIAL [WASHINGTON,] April 21, 1953.

Subject: Discontinuation of CCC Purchase Program for Kenaf Fiber.

At a meeting on April 14 of the Inter‑Agency Committee on the Kenaf Fiber Purchase Program,' the representatives of ODM stated that they were recommending to Mr. Flemming of their agency that the Kenaf Fiber Purchase Program not be continued. Those representatives said that this recommendation would be accompanied by a draft of a letter from Mr. Flemming to Secretary of Agriculture Benson, advising him that ODM could not certify the Kenaf Fiber Purchase Program for subsidization under the Defense Production Act. It is understood that Mr. Flemming will accept the recommendation.

The CCC Fiber Purchase Program has existed only for the crop year 1952. For one year prior to that there was a Purchase Program for kenaf seeds only. I am informed that the decision to engage in a Fiber Purchase Program was motivated by a desire to develop a source of supply of a jute substitute in this hemisphere, because of security considerations. A secondary consideration was the hope that such a program would assist in the improvement of production processes, which have been both inefficient and costly.

This decision was taken, and the program operated, apart from the work of the Cooperative Fiber Commission, sponsored jointly by the Governments of the United States and Cuba, which had existed since 1942. That Commission had developed suitable strains of kenaf, and was and is engaged in efforts to develop more efficient processing methods. Our Government is interested in the work of the Commission for the security considerations stated above, and also on the grounds of technical assistance, since the development on a sound economic basis of a crop such as kenaf in Cuba is a step towards diversification of that country's agricultural economy as well as a means of freeing it from dependence on foreign sources of supply for bagging its principal commodity, sugar. The Cuban Government, of course, is interested primarily only in the latter considerations.

It has been the opinion of this office, and of those offices of the E area of the Department concerned with the Fiber Purchase Program, that the determination for the need for, and the justification of, any such program must be based on security considerations, which are principally the concern of other agencies of our Government. The previous programs were based on such considerations, and were financed by DPA, which has now been absorbed by ODM. At the meeting on April 14, Dr. Morgan of ODM, which now administers the Defense Production Act, stated that his agency has been charged with reviewing all expansion programs with two considerations in mind: (1) a reduced military urgency (based on consultations with the Joint Chiefs of Staff); and (2) a desire to save money under the new administration's economy program. He then stated that ODM had concluded that since neither kenaf nor jute, for which kenaf is a substitute, is a strategic or critical material, the proposed Kenaf Purchase Program for 1953 did not meet the revised criteria to warrant further developmental expenditures for subsidization under the DPA Act. None of the representatives of other agencies present produced evidence or arguments which offset that conclusion. Mr. Brown of the Agricultural Products Staff of the Department was present, and made a statement which had been prepared in consultation with this office. He said that the Department's position on this question has always been that the determination of need for, and the justification of, the Kenaf Fiber Purchase Program must be made strictly on the basis of security considerations. At a previous meeting of the interdepartmental working committee on fibers, the Department's representative recognized, along with other members of the fibers committee, that the documentation of the program was insufficient, and urged that steps be taken to correct this situation as quickly as possible. Some of this material had been presented today, he stated.

He said that the State Department representative had previously pointed out that delay in determining the fate of this program was already causing difficulties in our relations with Cuba, and that the longer the Government took to reach a decision the more serious would be the repercussions if the decision were against continuation of the program. He expressed the belief that there is no doubt that the prolonged consideration that has been given to this program has kept the hopes of its continuance alive in Cuba and other interested countries, and that a decision to drop the Kenaf Purchase Program at this late date could have very unfortunate repercussions on our foreign relations.

This office feels that the discontinuance of the Fiber Purchase Program will be a severe blow to the commerical producers of kenaf in Cuba, who do not apparently have any other market for their product, and may well cause the collapse of commerical production of kenaf in that country. It is our understanding that these producers have invested over one million dollars in the industry as it now stands. However, we are informed that there is at present no market for kenaf, so long as adequate supplies of jute are available, and that the trade considers kenaf a poor and inadequate substitute for jute. In order for the growing of kenaf to become an economically sound industry, it will be necessary for more efficient methods of production to be developed. For Cuban kenaf to be available in the form of bags for sugar or other crops in Cuba or the United States, it will be necessary for a bagging industry to be developed, since the material for jute bags used in the western hemisphere is either received from the far eastern sources as bags, or as cloth which is simply cut to size and sewn into bags, and neither country has a suitable weaving industry. It is our understanding that the present cost of production of kenaf would have to be greatly reduced, to less than half its present level. It does not therefore appear that the commercial production of kenaf is at present a sound venture, or that those persons who have been engaged in it should be encouraged to continue. It was fully explained to the foreign producers who produced kenaf under the previous Fiber Purchase Program that there could be no guarantee of continuance, and that there is no obligation on the part of the United States Government to do so.

For the various reasons given above, this office recommends that the decision reached by ODM be accepted, and that no further efforts be made by ARA to obtain an extension of the Fiber Purchase Program.

This decision will undoubtedly be disappointing to the Cuban Government. However, this office has been informed by Mr. Peterson[3] of IIAA and Mr. Horn[4] of the Department of Agriculture, who has been closely connected with the Cooperative Fiber Program since its inception, that the Cuban Government appears determined to continue with that Program, and that the decision not to continue a Fiber Purchase Program, may well strengthen the determination of that Government, and encourage it to place even greater emphasis on attempts to develop a sound kenaf industry. Mr. Horn adds that the Cooperative Commission is actively investigating various ways of improving the production processes of kenaf, by mechanical, chemical or retting methods, and there is good basis for hope that the investigations will lead to production methods of greatly increased efficiency in the near future. Another difficulty in connection with the kenaf industry has been the lack of mechanical harvesting methods, and Mr. Horn states that that problem is being tackled by our Department of Agriculture. In view of these opinions, this office further recommends that the Department of Agriculture and the IIAA be urged and assisted to proceed as rapidly as possible with the work now going forward in the Cooperative Fiber Commission, and that any tendency on the part of either of those agencies to reduce their support of that Commission be opposed as strongly as possible by ARA.

When the decision of ODM has become final, through the medium of a letter[5] from Mr. Flemming addressed to Secretary of Agriculture Benson, an airgram[6] will be sent to our Embassy at Habana setting forth that decision and the reasons given by ODM, and requesting the Embassy to inform the Cuban Government thereof and at the same time explain our continuing interest in the Cooperative Fiber Commission. It will be submitted to you for prior approval.[7]

[1] Drafted by John L. Topping of the Office of Middle American Affairs.

[2] A memorandum by Willard O. Brown of the Agricultural Products Staff to Mr. Evans, dated Apr. 17 1953, summarizing the referenced meeting, is contained in MID Files, lot 56 D 569, "Kenaf Fiber Project."

[3] Presumably Robert R. Peterson

[4] Claud L. Horn, Head, Research Development Division, Foreign Agricultural Service.

[5] No such letter was found in Department of State files.

[6] Not identified.

[7] In a letter dated Aug. 20, 1953, Assistant Secretary of Agriculture John H. Davis informed Assistant Secretary Cabot that interested Government agencies had concluded that it was inadvisable to continue the kenaf fiber purchase program, because the program had accomplished much of its original purpose of demonstrating the feasibility of producing kenaf fiber in the Western Hemisphere for use in emergencies (837.232/8‑2053).