In late 1975, the Continental Grain Co. of New York City showed the government of the African nation of Zaire that it meant business in its long effort to collect a $16 million debt for wheat.
Continental held back its monthly wheat shipment to Zaire's only large flour mill, a facility 70 per cent-owned by the American grain company.
According to a letter from U.S. agricultural attached John A. Williams in Kinshasa, the rerouting of the wheat was "to help the GOZ [government of Zairea] realize just how important wheat is to their urban population" - though Contiental says it was just trying to get a guarantee that it would get paid.
Whaever the intent of the temporary shutdown in the foreign-controlled wheat and flour pipeline, the results were swift.
"The lines and hoarding that occurred at bakeries was [sic] almost spontaneous. The mill did not shut off the flow of flour to bakers - they just merely showed it down to put pressure on," wrote Williams in a Dec. 3, 1976, letter made available to The Washington Post.
Almost immediately, the Zaire government came to terms with Continental. It agreed in writing to pay cash on all subsequent wheat shipments and promised to pay back $1 million of the old debt each month. Today, the debt stands at around $10 million, but, according to G. T. Steyermark., vice president for corporate development of Continental's milling subsidiary, "we appreciate the effort" of Zaire to meet its obligations.
The incident was a stark example of the growing powr of multinational food companies over developing countries.
As the Zaire example suggests, this power may be unique.
Since the middle of 1975, a number of huge New York banks and Western corporations have unsuccessfully sought to collect loan installments and other debts from the government in Zaire - now rear bankruptcy as the result of the plunge in world copper prices.
According to American officials, the government of President Sese Soku Mobutu had compelling reasons to adopt a more cooperative line when the issue was future deliveries of food, rather than old loans and old deliveries of equipment.
Any prolonged loss of wheat and flour could have extremely adverse political consequences for the already embattled Mobutu government, these experts said.
"One can live without automobiles, but not without eating," said Continental's Steyemark.
In a broader sense, the Zaire situation highlights the growing dependence of formerly self-sufficient countries on American food distributed through multinational grain companies.
In the last two decades, millions of people in the increasingly over-crowded countryside have abandoned local sources of food and moved into cities in search of jobs and other benefits from the "development" promised by newly independent regimes.
These swollen city populations have caused a tremendous growth in the requirement for imported wheat -- the commodity that serves the needs for a food that is relatively cheap, easy to transport and store and popular with the new urban masses.
The dependency on foreign wheat is growing rapidly in Africa. Great Plains Wheat, Inc., a U.S. wheat promotion organization, estimates that wheat imports of Senegal, Sierra Leone, Liberia. Ivory Coast, Ghana, Nigeria and Zaire will rise from 1.3 million tons this year to 2.1 million tons in 1981. More of the available foreign exchange of those countries will go for wheat.
In Zaire, bread made from the flour produced by Continental's mill has begun to push out locally grown manioc in local taste preferences, according to reports of the Department of Agriculture.
"Bread is winning against chikwanga [a manioc preparation]," said one U.S. Department of Agriculture field report on Zaire. "Bread is making inroads at breakfast."
Because bread "was the staple of the colonical masters," the report went on, "bread identifies with progress and modernity for the masses."
These new dietary preferences have created a vast new network of international trade, interdependencies and arenas for multinational companies.
Continental, one of the nations's two largest grain companies, began negotiating with the Zaire government in 1966 about constructing a flour mill. In 1968, Zaire (then the Democratic Republic of the Cong.) signed an agreement with Continental's subsidiary Central Overseas Corp. of Panama to construct the mill at Matadi, the ocean port downstream from Kinshasa.
President Mobutu inaugurated the mill in May, 1973.
[TEXT OMITTED FROM SOURCES] veloped.
In July, 1973, two wheat storage silos collapsed.
In December, 1973, SGA, an import company operated by President Mobutu's uncle, according to the Agriculture Department, received licenses to import West European flour. These imports undercut Continental's flour monopoloy, and also violated the exclusive rights that the American company thought it had.
By mid-1975, Continental's wheat shipments to the Zaire mill -- the source of 99 per cent of the country's flour - had reached 100,000 tons, but the central bank was rapidly falling behind in converting the local currency Continental's Zaire mill earned from flour sales back into the dollars the mill needed to pay for the Continental wheat.
Continental's Steyermark said yesterday that during high wheat prices in 1974 the mill, called Midema, held down flour prices, thus sparing Zare consumers the worst impact of the world flood crisis.
But in late 1975, Continental's directors went to Kinshasa and took a tough line about the debt. Soon after that the wheat shipment was diverted. Steyermark said the action was taken only after all efforts to obtain a guarantee of payment from a responsible official of the central bank had failed.
Not only did the Zaire authorities agree to Continental's payment terms, but in December, 1975, the government ordered flour imports stopped and granted Midema mill unusual authority to approve any further such imports. The agreement stipulated that Midema's written approval would be needed when companies or individuals sought import licenses.
Meanwhile, the U.S. government was deeply involved in attempting to help Zaire out of its worsening foreign plight, with loans and credits that would free more central bank funds to pay overseas creditors.
The U.S. Commodity Credit Crop. granted a $5 million loan for wheat purchases in 1975. And in fiscal 1976 and fiscal 1977, the government also issued Food for Peace loans totaling $31.8 million for cotton, rice, corn and tobacco purchases here.
In 1976, however, U.S. government consideration of a Food-for-Peace dollar credit to Zaire for buying 20,000 tons of wheat was dropped - after Continental in New York objected that it woiuld interfere with its own exclusive commercial wheat sale arrangement with Zaire.
Steyermark said that the company objected because it had no space to store the additional wheat. He added that the company has no objection for such programming in the coming fiscal year.
In Zaire, Williams wrote that Continental's reasons for opposing the initial Food for Peace aid proposal were "valid."