RUSAG-L: Current Events #48


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 Institute or
(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.


NOTE:  RADIO FREE EUROPE HAS CHANGED MANAGEMENT.  THE NEW

       ORGANIZATION IS KNOWN AS:  OPEN MEDIA RESEARCH INSTITUTE

       OR OMRI.

7 January 1995:
-The Washington Post list the current exchange rate at R3512 per
dollar.  (The Washington Post, January 5, 1995)


5 January 1995:
-$51.22 million was sold at the Moscow Interbank Currency
Exchange on January 4, this year's first day of trading US
dollars.  Russia's Central Bank was the primary seller,
offering $10 million sums at rates of 3,569 and 3,570 rubles per
dollar.  The ruble lost more points to the dollar at the
Interbank money market, trading between 3,606 and 3,609 rubles
per dollar in same day payments and between 3,622 and 3,629
rubles per dollar in one-day spot transactions.  (OMRI, Vol. 1,
No. 4, January 5, 1995)

-According to the Ministry of Foreign Economic Relations, Russia
increased trade by 7 percent in 1994 with non-CIS countries,
compared to 1993.  Roughly 70 percent of the increased trade went
to industrialized countries, particularly the EU, and consisted
of exports of raw materials and oil and petroleum products.
Russian machinery exports were down 16 percent, making up less
than 5 percent of the country's total exports.  Russia imported
approximately $28 billion of goods and services, an increase of 5
percent over 1993.  Foodstuffs and consumer goods accounted for
over half of the imports.  (OMRI, Vol. 1, No. 4, January 5, 1995)

-Employment and Labor Minister Gennadii Melikyan has stated that
actual unemployment in Russia is much higher than the official
number of 1.5 million registered unemployed.  Melikyan believes
the figure is closer to 5.1 million.  In addition, if people on
leave without pay and the underemployed could be accounted for in
the equation, Melikyan argues the figure would increase another
4.8 million or to roughly 13 percent of the working population.
Unemployment is expected to become a major problem for Russia in
1995.  (OMRI, Vol. 1, No. 4, January 5, 1995)

-The Federal Employment Service issued a report citing
substantial staffing reductions in several of Russia's industrial
enterprises.  The report noted 10 percent staffing reductions in
transportation and communication enterprises and a 7 percent
reduction in the agricultural sectors.  Downsizing is expected to
continue throughout 1995.  (OMRI, Vol. 1, No. 4,
January 5, 1995)


4 January 1995:
-Deputy Prime Minister Alexander Zaveryukha blamed past and
current government credit policies toward the agroindustrial
sector for the shortages of grain, meat, milk, sugar, and
cooking oil the population is presently encountering.  Zaveryukha
noted that the farming sector only received 10 of the 18 trillion
rubles allotted by the government for 1994.  The current budget
allocates only 8 trillion rubles, which, according to Zaveryukha,
will all go to pay the interest on 1994 loans.  Zaveryukha
expects farm production to fall by 6 to 7 percent this year, even
if the government manages to clear its arrears of 11 trillion
rubles for last year's farm purchases and if the government
retains the same volume of subsidies.  (OMRI, Vol. 1, No. 4,
January 4, 1995)


30-16 December 1994:
-Agrikhim, the joint-stock company composed of 27 Russian
agrichemical plants, delivered 1.3 million tons of fertilizers to
Russian farmers this past year compared to the 9.3 million
tons planned.  Agrikhim officials attribute Russia's fall in
gross grain production this year to the fact that the amount of
fertilizers used over the past few years has declined
dramatically.  Agrikhim officials have also expressed concern
about the low production in the chemical industry.  Agrichemical
plants are currently working at 40 percent capacity and have not
received payment for much of the fertilizer shipped to farmers
last year.  Russian farmers owe agrichemical plants approximately
180 billion rubles.  (Interfax, Food and Agriculture Report,
December 16-30, 1994)

-According to Pyotr Sabluk, a Ukrainian deputy prime minister,
private farmers and gardeners accounted for 40 percent of
Ukraine's agricultural production in 1994, despite the fact that
private farmers own just 5.6 million hectares of land.  Ukraine
has 41.9 million ha of farmland, 69.4 percent of the country's
total area.  (Interfax, Food and Agriculture Report, December
16-30, 1994)


SPECIAL REPORT:  RUSSIA'S FOOD PREDICAMENT


     Throughout the year, RusAg's Current Events has presented
pieces of information highlighting agricultural conditions in
Russia.  The main focus centered on the problems associated with
the breakdown of one system, a system of state and collective
farms with centralized price controls, and the attempted adoption
of another system, oriented toward a market system of supply and
demand.  As the RusAg reports indicated, the problems emerging
from this kind of change are mindboggling.  So it is not
surprising that, after a couple of years of attempted
agricultural reforms, Russians now find themselves facing a
shortage of certain foodstuffs.
      Officials at the Russian Trade Committee, who, along with
ministries and commercialized wholesalers, is responsible for
food supplies, is predicting a year of marked shortages in key
food supplies, such as meat, sugar, dairy products, and vegetable
oil.  These products had been available over the first ten months
of 1994 but began to decline dramatically by November of the same
year.  Committee officials blame a 15-20% downturn in domestic
production, as well as government tariffs that discouraged
imports, for the shortage of foodstuffs.
      Milk procurement fell 21% between January and October 1994
or 4.9 million tons less than the same period last year.  In
October 1994, milk procurement was 1.4 million tons
and butter production was 25,000 tons, compared with consumption
of more than 2 million tons and 51,000 tons respectively.  The
government needs 190,000-200,000 tons of dried milk to replenish
its reserves.  Russia was expected to produce only 106,000 tons
this past year.  Things are not expected to get much better in
the first quarter of 1995.  Officials say the country will have
2.5 million tons less dairy products than it will need,
specifically, 70,000 tons less of butter and approximately 30,000
tons less of dried milk.
     In addition to shortages in dairy products, Russians can
expect shortages in vegetable oil and sugar.  Russians produced
just 594,000 tons of fat and oil commodities, 61% as much as
targeted.  Sugar beet procurement was expected to close at 15
million tons, 10 million tons less than last year.  According to
committee officials, this will allow producers to make 1.5
million tons of sugar, 1 million tons less than last year and not
near enough to meet consumer demand until the 1995 refining
season.
     The shortage of foodstuffs appears to have effected most of
the regions of Russia.  Some regions, such as Sverdlovsk and
Nizhny Novgorod, have practically no reserves of butter.  Even
some butter producing regions, like Kirov and Belgorod, have
stocks that are expected to last no more than 4-9 retail days.
Representatives of 31 regions, meeting at a wholesale fair in
Moscow, confirmed serious food shortage supplies to the capital
as well.  Regions had sent 104,000 tons of meat to Moscow (the
city needs 650,000 tons); 15,000 tons of butter (50,000 tons
needed); 1,600 tons of dried milk (45,000 tons needed); 10,500
tons of vegetable oil (160,000 tons needed), and 32,500 tons of
sugar (50,000 tons needed).
     In an effort to alleviate shortages, the Trade Committee has
asked the Russian government to restrict exports and to lift
tariffs on imports.  The problem, of course, is that there simply
is not enough money to buy foodstuffs.  Members of the committee
petitioned the government for several loans to finance emergency
reserves, claiming the interest payments on money borrowed from
the Central Bank would outstrip the factory-gate price of
products and their retail and wholesale markups.  The Russian
government has not yet responded to their requests.
     Distractions, such as the situation in Chechnya, may prevent
the Russian government from acting quickly to correct the severe
food shortages facing its population.  And yet, what options are
available to the government are unclear.  What is clear, however,
is that some immediate action is needed to help pull Russia out
of the food crisis and to help prevent the social unrest
associated with food shortages.  If the above statistics are
indeed accurate, the social situation in Russia could quickly
escalate to crisis proportions.