Back to Rationing?

The U.S. was mighty close to rationing coffee again. Sad-faced Judge John C.

Collet, Economic Stabilizer, sadly admit ted as much last week. He announced a new subsidy program designed to get more coffee into the U.S. during the next three months. Said he: U.S. coffee supplies are so short that a subsidy is "the only alternative either to a return to rationing or to a price increase to consumers of 5^ or more per pound of roasted coffee." Thus the RFC will pay about $25,000,-ooo to Latin American growers, at the rate of 3^ a pound, for all coffee (up to 6,000,000 Ibs.) sold to the U.S. between Nov. 19 and next March 31.

The new shortage was caused by U.S.

pricing policy. Wholesale ceiling prices on coffee had been set by OPA on the basis of 1941 prices. They were low because of one of the worst coffee gluts in history, although the ceilings were still above the world price. But soon both the cost of coffee production and the cost of living in Latin America soared. Coffeemen found it impossible to market their products at a proit.

Last December coffee producers de manded a 5^-a-pound increase. OPA said no. Shipments to the U.S. began to fall.

In September they fell below the U.S.

monthly consumption rate of 1,500,000 bags. Then a worried U.S. began negotiat ing with coffee producers. With a price increase in the offing, U.S. purchasers were able to buy only 315,000 bags in October, mostly low-grade coffee. By last week the U.S. had only 5,000,000 bags of green coffee beans on hand. But it was so poorly distributed that some form of rationing may yet have to be resumed, unless the subsidy brings in a flood of coffee. There seemed small chance of this.

Disgusted Latin American coffee grow ers complained that the subsidy would not even cover increased production costs.

U.S. coffeemen yelped even louder. Jacob Rosenthal, head of the Joint Coffee Pro motion Committee and onetime coffee consultant to OPA, called the subsidy "utterly fantastic." In order to buy any coffee at all, he said, U.S. buyers have been paying as much as 3^ a pound over ceiling price by upgrading and short weigh ing -- while OPA did practically nothing.

Moreover, OPA's adamant stand against a coffee price raise was inconsistent, because "a few weeks ago a 5/ to 6/ per pound increase in butter prices to consumers was allowed in order to eliminate a subsidy." He concluded: the subsidy "will solve nothing. . . . Why should coffee producers sell coffee when they are on notice that after June 30, when the Price Control Act expires, they will be able to operate in a free market?"

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