RUSAG-L: Current Events #80

Please keep in mind that the following current events information represents information about events in Russian agriculture we received during the past week, while the actual events may have occurred earlier.

The sources for the information below include, but are not limited to, the following: the Open Media Research Center (OMRI), Interfax News, Food and Agriculture Report, the Foreign Broadcast Information Service at the Central Intelligence Agency's Central Eurasia Daily Report (FBIS), Nexis/Lexis through Mead Data Central, Inc., and The Washington Post.

The Russian Agricultural ListServ is sponsored by the University of Maryland College of Agriculture at College Park, the Research and Scientific Exchanges Division, Foreign Agriculture Service/International Cooperation and Development, U.S. Department of Agriculture, and the National Committee on International Science and Education of the Joint Council on Food and Agricultural Sciences.

23 July 1996:
-The Wall Street Journal lists the current exchange rate at R5149 per dollar. (The Wall Street Journal, July 23, 1996).

-The Russian Duma voted to increase the minimum wage from 75,900 rubles ($14.70) to 95,320 rubles per month. Pensions were also tagged to increase by 37 percent. Vasilii Barchuk, head of the Pension Fund, argued against the pension increase, saying that the bill would require additional expenditures of approximately 15 trillion rubles by the end of the year and lead to massive delays in dispensing pension payments. The two increases are scheduled to take effect August 1. The bill now goes to the Federation Council for consideration. (OMRI, Part I, No. 140, July 22, 1996).

19 July 1996:
-The new political party, Popular-Patriotic Union of Russia, or NPSR, will hold its founding congress on August 7. The party, which is chaired by Nikolai Ryzhkov, will attempt to draw voters who oppose Yeltsin but are reluctant to vote for a communist candidate. Although the party will include the Communist Party (KPRF), it will exclude some of the more extreme supporters of Gennadii Zyuganov's presidential candidacy. Other members include Derzhava leader Alexander Rutskoi and the Agrarian Party leaders Mikhail Lapshin and Vasilii Starodubtsev. (OMRI, Part I, No. 139, July 19, 1996).

-The government approved a new privatization plan on July 18 that favors regions and local authorities and greatly diminishes the privatization rights of company employees. The program forbids the liquidation of bankrupt companies with a federal equity stake of more than 25 percent and, in a new twist, requires that company assets be based on the company's market value on the first day of the quarter preceding the company's privatization request. The plan bars the privatization of mineral resources such as: forests, water, and off-shore resources. (OMRI, Part I, No. 139, July 19, 1996).

-Alexander Lebed, speaking at a meeting on economic security, told members of the Federation Council that, while he supported maximum regional independence, he thought the state should play a greater role in economic affairs. He said that he considered land ownership one of the most important aspects of economic security and that he supported private ownership of land. However, Lebed argued that private ownership of land should be achieved gradually, through regional referendums. (OMRI, Part I, No. 139, July 19, 1996).

19-12 July 1996:
-Russia wants to broaden agricultural cooperation with the U.S. through an additional working committee on agriculture science and education. The current committee, which falls under the Chernomyrdin-Gore commission for economic and technical cooperation, already has working groups on reform and privatization, access to the market and trade questions, as well as farm engineering. Russia will propose an agreement on cooperation in veterinarian science and will seek U.S. help in setting up a national Russian farm equipment market information system based on the statistical center of the Ministry of Agriculture. Russia has also shown interest in increasing cooperation in protein-vitamin feeds, processing and farm equipment joint ventures. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 4).

-The State Duma failed to override the Federation Council's veto of the land code. 269 deputies voted in favor of the Code, but 300 votes were needed to override the veto. The Communist Party, Zhirinovsky's Liberal Democratic Party, and the Agrarians voted for the Code, and Our Home is Russia, Yabloko and most of the Russian Regions bloc voted against the Code. The Duma is expected to create a conciliatory commission of both houses for further work on the Code, but the Commission is not expected to overcome the problems associated with the Code. Namely, deputies object to the Code's lack of constitutional norms on private ownership of all types of land plots, including agricultural land. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996,p. 4).

-Although Russian farmers have received some funds to finance this year's harvest, officials still expect Russia to have a tough harvest. First Deputy Prime Minister Vladimir Kadannikov told a meeting of the Federation Council that farmers had 26,000 less grain harvesters this year than last year and only 64 percent of the amount needed. Farmers had bought 3.5 million tons of fuel in the first half of 1996, while they need another 5 million tons by November 1. In an effort to correct the situation, Russia's largest farm equipment producer, Rostselmash, has received 538 rubles directly from the government, and the Ministry of Finance has ordered 800 billion rubles be issued to farmers by July 20 to buy feed and grain harvesters. The government has also ordered the Ministry of Fuel and Energy and oil companies to make fuel deliveries in exchange for commodity credits at average prices. However, despite government efforts, Kadannikov said the government would have to find an extra 4.5 trillion rubles for this year's procurements, primarily grain. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 5).

-Arkady Zlochevsky, head of the OGO grain trading firm, told Interfax that he expects a grain harvest of approximately 80 million tons this year. He said Russia has absolutely no need to import grain and that the country could have gotten by without any foreign grain imports this year. Zlochevsky added that the stable condition of Russia's grain market casts doubt on the accuracy of official figures for last year's harvest. He put grain prices from the new harvest at around 850,000-900,000 rubles per ton and said he did not expect prices to go any lower because of favorable conditions for trading grain on the world market. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 7).

-Gomselmash, a major farm machinery manufacturer from Gomel, Belarus, plans to test the country's first rotary grain harvester. The harvester, which is heavier than the Russian Don-1500, is expected to do less damage to the soil and ultimately be less expensive when total costs of harvesting are taken into account. The Polesye-Rotor costs 90 billion rubles (approximately $17 million) to create. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 10).

-According to the Ministry of Agriculture and Food, Russia produced only 39.3 million tons of milk in 1995, 15 percent less than in the lean year of 1993 and almost 3 million tons less than in 1994. Worse, officials do not expect the situation to improve this year. Ministry officials said that state and collective farms, which accounted for 64.3 percent of all milk production in 1993, have not received enough feed. Stocks, at 38.4 million tons, were more than a third less than in 1993. Consumption of dairy products also fell, particularly for the more expensive dairy products like butter and sour cream, but consumption did not fall less than production due to imports of dried milk and dairy products. Last year, Russia imported 241,000 tons of butter, which was 60 percent of domestic output. According to Ministry officials, Russian dairy products struggle to compete with their foreign equivalents because the latter are more conveniently packaged and accessible for importers. In addition, officials argue that other countries subsidize their milk and dairy products, cheapening Russian dairy products. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 10).

-The total crop area in Russia this year is 99 million hectares, 3.4 million ha less than last year. Grain crops total 1.2 million fewer ha, and the sunflower seed area is down 200,000 ha. Sugarbeet and potatoes have remained at last year's levels of 1.1 million ha and 3.4 million ha respectively. The vegetable area dropped 5 percent to 700,000 ha. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 14).

18 July 1996:
-Deputy Prime Minister Alexander Zaveryukha announced recently that Russia intended to impose quotas on the import of several food products. Zaveryukha said that chicken legs, along with dairy and meat products, sugar, and vegetable oil would be subject to imports. Prime Minister Viktor Chernomyrdin and Foreign Trade Minister Oleg Davydov quickly denied the report. The report, which threatened the specter of a trade dispute much like the one that occurred in February over limiting imports of U.S. chicken legs, came during Chernomyrdin's trade talks with U.S. Vice-President Al Gore. (The Monitor, Vol. II, No. 170, July 18, 1996).

16 July 1996:
-In a conference in Moscow last week, the Interior Ministry attributed 40 to 50 percent of Russia's GDP to the "shadow economy." This would mean that the reported decline in GDP has been substantially lower than reported, the real economy being 1.4 times the size officially claimed. A large part of the 40 percent represents new firms that are providing non-criminal goods and services but not reporting their existence in order to avoid paying taxes. Many of Russia's new businessmen want the government to cut tax rates on the grounds that, if that is done, more businesses will register and the government will end up collecting more tax revenues. (The Monitor, Vol II, No. 138, July 16, 1996).

-Russia's economy continues to show signs of regionalization as more and more regions impose their own levy fees for the transit into or through their territory of goods produced outside it. Lawmakers in the Krasnodar krai have begun charging truck drivers fees on all goods not produced locally, including, not only foreign-goods, but goods produced in other regions of the Federation. Krasnodar krai follows Tatarstan, which recently announced that it was placing tariffs on liquor produced outside the republic. (The Monitor, Vol II, No. 138, July 16, 1996).

AREAS OF INTEREST

UKRAINE

19-12 July 1996:
-Officials at Ukraine's Ministry of Agriculture are predicting that this year's grain harvest will only total 28 million tons. Earlier forecasts had put the total at 30 million tons, still substantially lower than last year's harvest of 34 million tons. Officials are blaming the poor harvest on bad weather. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 7).

KAZAKHSTAN

19-12 July 1996:
-Kazakhstan is set to buy 1,000 harvesters from the Krasnoyarsk combine factory to cope with an expected grain harvest of 13-17 million tons compared with just 9.5 million tons in 1995. Kazakh farmers sowed a grain area of 16.5 million ha compared to 18.5 million ha in 1995. The level of wheat remained at 11.5 million ha. Deputy Prime Minister Zhanybek Karibzhanov announced that farmers had just 60,000 combine harvesters of the necessary 85,000 and that only 44 percent of those were operable. Kazakhstan is also preparing to buy 1,000 combines from Russia's Rostselmash and plans to buy from John Deere in the future. (Interfax Food and Agriculture Report, Vol V, Issue 29, July 12-19, 1996, p. 11).

AZERBAIJAN

19 July 1996:
-On July 16, the Azerbaijani parliament enacted legislation on agrarian reform that allowed for a substantial redistribution of land ownership. 22 percent of the country's agricultural land will be turned over to rural residents in private ownership free of charge. The remainder will be divided among state and municipalities. Foreign citizens may rent and use land in Azerbaijan. (The Monitor, Vol II, No. 141, July 19, 1996).

UZBEKISTAN

19 July 1996:
-Wisconsin-based Case Corporation has contracted to sell 100 Case Axial-Flow combines for grain and rice crops to the government of Uzbekistan. Case has sold more than 700 combines of this type to ex-Soviet Central Asian countries in little more than a year. The Uzbek purchase will be backed by a U.S. Export-Import Bank loan. (The Monitor, Vol II, No. 141, July 19, 1996).

HUNGARY

19 July 1996:
-Hungary's Ministry of Agriculture has banned the import of live animals and animal-derived products from several Balkan countries for an indefinite period of time. The ban comes in the wake of the outbreak of hoof-and-mouth disease in Albania, Greece, Macedonia, Serbia, and Turkey. Custom officials have also instituted strict checks on food packages carried by tourists crossing the Ukrainian, Romanian, and Serbian borders. They will confiscate any packages or products that are potential carriers of the disease. (OMRI, Part II, No. 139, July 19, 1996).

BULGARIA

10 July 1996:
-The drastic decline of the Bulgarian lev has brought inflation to dangerously high levels in Bulgaria. Consumer price inflation soared to 20.3 percent in June, the second highest level since March 1991. Some 5 percent of June's monthly inflation was due to May's increase in liquid fuel prices. The average monthly wage is now at about $65, its lowest since October 1991. The real value of personal savings has been halved in the last three months. Experts suggest the lev's decline was the result of the inability of the Bulgarian National Bank to support the market. The bank's foreign reserves had dwindled to $600 million by May 31. In addition, the bank has large foreign debt service payments looming. The Bulgarian National Bank's fixing fell from 70.7 per dollar at the end of 1995 to 181.36 on July 10, a 61 percent decline. (OMRI, Part II, No. 132, July 10, 1996).