RUSAG-L: Current Events #74

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.

12 March 1996:
-The current exchange rate is listed at R4823 per dollar. (The Washington Post, March 12, 1996).

-Despite opposition by the Agrarian Party faction in the Duma, Deputy Prime Minister Alexander Zaveryukha defended President Yeltsin's land decree. Zaveryukha argued that the decree would make it easier for former collective and state farmers to claim personal land shares from their farm and to, either sell the land, or bequeath it to their heirs. The decree also liberalizes the size limits of dachas. Zaveryukha's support puts him at odds with his own Agrarian Party, which will challenge the decree's constitutionality. The Duma begins debating a new Land Code in April. (OMRI, No. 51, Part I, March 12, 1996).

-A top Russian Agricultural Ministry official says Russia may still implement a March 16 ban on the import of U.S. chicken parts. The official, Vyacheslav Avilov, said the U.S. had still not filed an official report outlining American efforts to comply with Russian health requirements. Last week, Prime Minister Viktor Chernomyrdin assured the U.S. that no ban would take place. (Monitor, Vol II, No. 50, March 12, 1996)

-Alexander Zaveryukha, Deputy Prime Minister of Agriculture, temporarily suspended his membership in the Agrarian Party. Zaveryukha, as a member of Yeltsin's team, has found himself at odds with his Party over Yeltsin's recent land decree. Zaveryukha said he expected a major disagreement to emerge between the Agrarians and their Communist allies over the land issue. The Communists are against private ownership of land, while the Agrarians want the peasants to own their plots of land, but not to be able to sell them on a free market. Zaveryukha also said he expected the government to soon legalize the sale of land to foreign buyers. (Monitor, Vol II, No. 50, March 12, 1996).

7 March 1996:
-IMF director, Michel Camdessus warned Russian leaders that any attempts to increase export and import tariffs could jeopardize the $10.2 billion three-year extended loan Russia is hoping to receive from the IMF. When Camdessus visited Russia last month, government officials assured him that Russia would reduce duties and refrain from imposing quotas on either exports or imports. According to Camdessus, Russia stands to receive $4 billion in the first year of the three-year program. (Monitor, Vol II, No. 47, March 7, 1996)

-The land decree signed by President Yeltsin on March 7 aims to clarify the property rights of rural workers who have been given land shares. The decree forbids local authorities from levying lease payments or forcing land holders to buy out their plot, but does not clarify to what extent plot owners are free to sell their land. The decree only applies to land allocated before 1991. (OMRI, No. 48, Part I, March 7, 1996).

6 March 1996:
-Gennady Zyuganov pledged to oppose legislation permitting the free sale of land before a meeting of the Agrarian Party and the Agrarian Union in Moscow. Agrarian Party leader, Mikhail Lapshin, contends Zyuganov needs the support of the countryside in order to win the presidential elections. Lapshin says the Party will support Zyuganov only if he agrees to a ban on the free sale of land. Lapshin also noted the Agrarians' intention to challenge the constitutionality of Yeltsin's land decree. The Russian constitution legalizes land ownership but does not address the sale or purchase of land. (Monitor, Vol II, No. 46, March 6, 1996).

-President Yeltsin announced last week that the ruble corridor, which fixes the ruble range for trade against the dollar at between 4,550 and 5,150, will remain in effect only until July 1. After July 1, if Yeltsin remains in power, the ruble may be pegged to domestic inflation or, alternatively, to the rate of the EU or of a basket of foreign currencies other than the dollar. Lobbies for Russia's industrial exporters have long advocated abandoning the fixed rate, since a strong ruble makes it hard to cover their ruble costs from their export earnings. This has been particularly true of oil exporters. However, allowing the ruble to float in line with domestic inflation, would signal that the Russian government has abandoned efforts to restrain inflation. (Monitor, Vol II, No. 46, March 6, 1996).

1-8 March 1996:
-Russia's Deputy Prime Minister in charge of agriculture, Alexander Zaveryukha, lauded the government's move to raise chicken import tariffs from 25 percent to 30 percent. Zaveryukha said the action was designed to rescue Russian poultry farming and lessen Russia's dependency on the West. He argued that previous policies, which allowed for mass imports of cheap drumsticks, amounted to a decision not to revive Russian poultry farming. He said President Yeltsin has already received a proposal to supplement higher tariffs with quotas for imports of select foods. (Interfax Food and Agriculture Report, Vol V, Issue 10, March 1-8, 1996, p. 4)

-Mikhail Mikheyev, chairman of the Russian Water Committee, announced that Russian water is not getting any cleaner, despite lower industrial output. He said that 25 of the 60 cubic kilometers of waste water recorded last year was polluted. Total water use was 77 cubic kilometers. In the meantime, experts are pinning their hopes for cleaner water on tighter controls and plans to charge for water use. (Interfax Food and Agriculture Report, Vol V, Issue 10, March 1-8, 1996, p. 4)

-According to recent reports, the issue surrounding U.S. chicken exports to Russia has still not been resolved. Russian veterinarians have threatened to turn the temporary suspension into a full-scale ban unless U.S. authorities ensure their suppliers meet veterinary certification standards. From February 1, Russia increased poultry import tariffs. U.S. Vice-President Al Gore has threatened retaliation if Russia cuts imports of U.S. chicken. Vyacheslav Avilov, Russia's chief veterinarian, said the ban would remain in force until the U.S. guarantees that its produce is free of bacteria and chemicals. In addition, Russia's Prime Minister Viktor Chernomyrdin, who has been working with Vice-President Al Gore to correct the problem, noted that American exporters frequently broke international health rules last year. He said Russia recently destroyed 2,000 tons of American chicken after U.S. and Russian experts declared it unfit. The U.S. supplies 85 percent of Russia's chicken imports. Russia accounts for one-third of the 1 million tons of chicken America produces for export every year. (Interfax Food and Agriculture Report, Vol V, Issue 10, March 1-8, 1996, p. 6)

-Silkworm has infested over 800,000 hectares of Siberian forest in the Tomsk and Irkutsk regions, killing 110,000 ha and destroying about 31 million cubic meters of timber. Silkworm last struck Siberia in the 1950s, infesting over 3 million ha of forest. Timber experts fear the current infestation will overcome 1 million ha of forest this year. Authorities have been very slow to remove infected wood, felling just 500,000 cubic meters of silkworm-infested timber last year. Vladimir Vekshin, who heads the forestry committee in neighboring Krasnoyarsk territory, says the underfunded Federal Forest Service simply does not have the funds to combat the pest. (Interfax Food and Agriculture Report, Vol V, Issue 10, March 1-8, 1996, p. 10).

23 February-March 1 1996:
-According to Alexei Chernyshov, chairman of the State Duma agrarian affairs committee, Russia spent $13.3 billion to import food last year, approximately the same amount it earned by exporting oil. He told a seminar of regional farm officials that Russians depends on imports for two-fifths of their food in what he said amounted to a threat to national security. Chernyshov said a bill vetoed by President Yeltsin last year would have reimposed price parity between prices for inputs and farm commodities. He added that the Agrarians in the Duma would continue to try to force through a slightly modified version of the bill. (Interfax Food and Agriculture Report, Vol V, Issue 9, February 23-March 1, 1996, p. 3).

-The Russian rail ministry introduced freight discounts of between 10 and 30 percent, depending on the distance, to last until the end of the year. The ministry will cover the discounts by increasing charges by 1.4 percent for third class freight, which includes mostly expensive finished goods. (Interfax Food and Agriculture Report, Vol V, Issue 9, February 23-March 1, 1996, p. 3).

ALBANIA

11 March 1996:
-Albania is relying on foreign aid and contracts from Romania, the U.S., and France to alleviate its wheat shortage. In addition, Albania concluded a contract with the EU, which will send $1.5 million of wheat to Albania. The EU wheat is expected to go to orphanages, hospitals, schools, and needy individuals, while wheat from other sources will be sold on the general market. (OMRI, No. 50, Part II, March 11, 1996).

UKRAINE

6 March 1996:
-Ukrainian lawmakers passed a bill on March 5 to ban alcohol and tobacco advertising in an effort to thwart growing substance abuse in the country. The ban was part of a bill that regulates the advertising industry, which has grown to a $900 million a year industry. Officials estimate that cigarette and liquor advertisements account for 40 percent of all advertising revenues. Ukrainians deputies also claimed that alcohol production was the only Ukrainian industry that had not experienced a decline. (OMRI, No. 47, Part II, March 6, 1996).

1-8 March 1996:
-Crimean farmers, facing a depressed Ukrainian market, are working at just 10-15 percent capacity and not raising enough revenue to replace their equipment. Tractors have dropped in number 15 percent since 1990 to 21,000 and only 13,000 of them are in working condition. Last year, farmers could sell one ton of potatoes for 56.5 karbovanets ($312) and one ton of vegetables for 22.7 million krb ($125). In contrast, a Niva combine costs 8 billion karbovanets ($44,000) and a Don combine 19 billion krb ($105,000). Whereas a Crimean farmer could purchase a plowshare last year for 5 liters of milk, he now needs to sell 50 liters of milk. (Interfax Food and Agriculture Report, Vol V, Issue 19, March 1-8, 1996, p. 5)

-Roman Shpek, Ukrainian deputy prime minister in charge of economic policy, announced that the World Bank will loan Ukraine $250 million to support farm reforms and privatization and another $300 million in backing for companies after privatization. Shpek said the farm loan would be made for 17 years at 7 percent annually. (Interfax Food and Agriculture Report, Vol V, Issue 10, March 1-8, 1996, p. 7).

23 February-March 1 1996:
-Ukraine's President Leonid Kuchma vetoed yet another agrifirm privatization bill which would have given farmers the right to a free 51 percent stake in local processing plants. Kuchma argued the bill would violate the rights of many Ukrainians and turn farm privatization into a special case. Government officials and lawmakers will now have to form a group to work out a new bill. (Interfax Food and Agriculture Report, Vol V, Issue 9, February 23-March 1, 1996, p. 4).

The following was taken from Interfax Food and Agriculture Report, Vol V, Issue 9, February 23-March 1, 1996. p. 13.

CIS Food Output in 1995

1-meat
2-butter
3-vegetable oil
4-milk products
5-sugar
6-flour
7-groats
8-pasta

1 2 3 4 5 6 7 8

Azerbaijan 5.0 0.7 11.6 9.8 396 0.4 4.7
'000 tons
as of % 1994 50 51 123 24 94 178 46

Belarus 324 64.9 6.6 785 140 971 71 36.1
77 88 127 62 103 82 79 86

Georgia 0.05 0.02 4.1 0.2 325 0.13 2.4
15 73 24 78 37 52

Kazakhstan 270 30.1 43.2 336 108 1500 137 7.6
66 65 97 61 111 77 54 63

Kyrgyzstan 7.8 1.9 2.6 13.9 69.7 262 2.4 7.5
51 50 84 49 85 86 33 116

Moldova 29.2 5.6 20.3 38.6 197 192 4.0 11.2
81 68 79 45 128 84 129 137

Russia 2,500 419 773 5,400 3,100 14 1,400 587
76 86 85 76 115 88 90 87

Tajikistan 1.7 0.7 20.5 18.0 289 1.3 7.7
49 48 80 50 81 51 89

Turkmenistan 15.4 1.8 45.7 91.2 425 33.7 17.4
75 56 66 77 98 88 88

Ukraine 623 214 573 1,100 3,800 4,400 389
65 86 108 54 115 89 78