RUSAG-L: Current Events #79

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.

26 June 1996:
-The Washington Post lists the current exchange rate at R5075 per dollar. (The Washington Post, June 26, 1996).

20 June 1996:
-Russia's GDP fell 3 percent between January and May of this year, compared with the same period in 1995. Industrial production fell 4 percent, while light industry and construction materials decreased by a steep 24 percent. Meanwhile, inflation fell from 4.1 percent in January to 1.5 percent in May. Foreign trade grew by 12.1 percent in the first four months of the year, reaching $42.8 billion. (OMRI, No. 120, Part I, January 20, 1996).

14-21 June 1996:
-Russia's newly appointed Agriculture Minister, Viktor Khlystun, told a meeting of businessmen at the U.S. Chamber of Commerce that the government plans to introduce a new farm credit mechanism. Under the envisioned reform, farmers would still pay one-third interest at the Central Bank of Russia's refinancing rate with the other two-thirds coming from what Khlystun called a "cheap resources fund." The fund would be set up from commercial structures and banks, not from the budget. Khlystun said the idea was to keep money from the fund from being invested in the money market and to move away from government funding of cheap farm imports. (Interfax Food and Agriculture Report, Vol V, Issue 25, June 14-21, 1996, p. 4).

-Ivan Gridasov, chairman of the crops department at the Ministry of Agriculture and Food, warned that this year's harvest may fall short of official expectations. Gridasov said the 1996 harvest will be difficult because of the drawn out spring sowing and a sharp decline in harvest equipment. He explained that only 64% of machine demand is being met, which means two-to-three times more work than normal for each harvester, effectively slowing down harvesting and increasing harvest losses. Spring sowing covered 58.1 million hectares of a planned 69.3 million ha. Grain and bean crops were sown on 37.2 million ha of a planned 41 million ha, sugar beets on 1.035 million ha of 1.113 million ha, and sunflower seeds on 3.4 million ha of a planned 3.925. Gridasov said the area of fodder crops, barley and oats, had been reduced, but the wheat area increased by 1.1 million ha to 25 million ha, the first increase since 1986. (Interfax Food and Agriculture Report, June 14-21, 1996, Vol V, Issue 25, p. 5).

-Government analysts expect Russian meat output to drop 8 percent to 5.5 million tons and milk production to decrease by 3 percent to 38 million tons of milk. In 1995, total cattle numbers were at 39.7 million, 17.3 million less than in 1990. Milk yields during the same period dropped from 2,781 kilos to 2,007 kilos. Russia needs approximately 4.8 million-5.1 million tons of beef but produces only 1.7 million-2.0 million tons. Experts say beef cattle numbers will have to increase substantially from the current 250,000 head for Russia to meet its domestic demand. (Interfax Food and Agriculture Report, Vol V, Issue 25, June 14-21, 1996, p. 5).

-The President of Russia's Grain Union, Alexander Yukish, told Moscow's first Grain Union conference that he expects Russian farmers to harvest 10 million tons more of grain in 1996 than in 1995. Russian farmers sowed one million ha more winter grain than in 1994 and, according to Yukish, grain crops have wintered well. Yukish did add, however, that some grain areas were suffering from critical levels of pest infestation and infections and that harvesting and storage equipment was not yet ready for harvest. Russia harvested a record low 63.5 million tons of grain in 1995. (Interfax Food and Agriculture Report, June 14-21, 1996, Vol V, Issue 25, p. 7).

-Russia reduced its import purchases of cotton by 37.8 percent between January and April of this year. Russia imported 33,070 tons, worth $55.7 million, compared to 53,180 tons in 1995. The lowest price paid was $1,748 per ton of cotton from Kyrgyzstan and the highest was $2,472 for Kazak cotton. Russia plans to import only approximately 200,000 tons of the 350,000 tons demand because of reduced CIS supplies. (Interfax Food and Agriculture Report, June 14-21, 1996, Vol V, Issue 25, p. 9)

13 June 1996:
-Russian Deputy Foreign Trade Minister Vladimir Karastin announced that Russia will sell Iraq food and medicine under the terms of a recent UN resolution. The resolution allows Iraq to sell a limited amount of oil in exchange for humanitarian aid. (OMRI, No. 115, Part I, June 13, 1996).

7 June 1996:
-The IMF approved the fourth tranche of its $10.1 billion to Russia. The working committee cited Russia's compliance with the credit agreement in releasing the $330 million. The World Bank also announced another loan to Russia worth $270 million for the improvement of the health care system. Much of the money will be spent on medical equipment and training programs, which will probably have to be imported. (OMRI, No. 111, Part II, June 7, 1996).

7-14 June 1996:
-Russian President Boris Yeltsin signed a decree designed to support market gardeners and small landholders. The decree outlines several provisions that will help small farmers buy livestock, seeds, and fertilizer. It also provides for the establishment of equipment leasing centers and grants 15-25 year credits, beginning in 1997, to help small landholders and gardeners develop land plots. The revenue will come from the state leasing fund, which now totals approximately 2.7 trillion rubles. The state leasing company is scheduled to release 100 billion rubles this year to create a network of leasing companies to organize equipment and services. According to Deputy Minister of Economics Ivan Starikov, private farms currently account for 42 percent of meat, 44 percent of milk, 82 percent of potatoes, and 90 percent of fruit and vegetables produced by Russia's farms. (Interfax Food and Agriculture Report, June 7-14, 1996, Vol V, Issue 24, p. 3).

-The Moscow city government consumer market and services department reported a decrease in the amount of imported goods and an increase in domestic product stocks in its Moscow stores. One year ago, 85 percent of the goods on the shelves at the Novy Arbat Gastronom, one of Moscow's largest central supermarkets, were imports. This year the percent of imports has dropped to 38 percent. The department reported, however, that Moscow's stores are still in bad shape because of high leases, taxes, and community charges. Only the capital's largest and best known stores have a profitability of around 4 percent, while 650 smaller stores are on the verge of bankruptcy. (Interfax Food and Agriculture Report, June 7-14, 1996, Vol V, Issue 24, p. 6)

AREAS OF INTEREST

BULGARIA

21 June 1996:
-Officials at Bulgaria's Agricultural Academy are predicting that the 1996 wheat harvest will not exceed 2.2 tons per hectare, down from 4.5 tons in 1991. This would result in the lowest yield in 20 years and aggravate an already acute grain shortage. Because of high world market prices, the government allowed grain exports last year, despite Bulgaria's own low grain supplies. The government was eventually forced to release emergency supplies and import grain from Romania, Serbia, and India. Two agricultural ministers have already resigned this year over the grain crisis. Officials at the Academy, such as Hristo Kurzhin, are urging the government to consider importing wheat. (OMRI, No. 121, Part II, June 21, 1996, p. 5).

7 June 1996:
-Bulgaria's Agriculture Minister, Svetoslav Shivarov, announced his resignation on June 6. Shivarov had been widely criticized for his failure to deal with the ongoing grain and bread shortage. Shivarov took over the post of Agriculture Minister on January 23 this year. (OMRI, No. 111, Part II, June 7, 1996).

THE BALTICS

17 June 1996:
-The three Baltic countries of Estonia, Latvia, and Lithuania signed a free agricultural trade agreement which lifts import and export duties on farm products and removes quotas on farm and fish products whose origin has been confirmed. The agreement is expected to promote competition and thus reduce food prices. The trade agreement must now be ratified by the parliaments of the three states. (OMRI, No. 117, Part II, June 17, 1996).

ARMENIA

14-21 June 1996:
-According to USAID officials, the US will give Armenia a total of 62,000 tons of grain this year under a $20 million aid initiative. Armenian officials said this latest agreement brings the total amount of U.S. aid to Armenia in 1996 to $150 million. (Interfax Food and Agriculture Report, June 14-21, 1996, Vol V, Issue 25, p. 7).

GEORGIA

14-21 June 1996:
-On June 15 Georgia freed its bread prices, resulting in an increase of around 20 percent. A kilo of good quality bread in Tbilisi now costs 56 tetri or $0.44 and a lower quality bread 47 tetri or $0.33. The Georgian Minister of Agriculture said the government had created a two month grain reserve to protect against private companies pushing grain prices too high. (Interfax Food and Agriculture Report, June 14-21, 1996, Vol V, Issue 25, p. 15).

UKRAINE

12 June 1996:
-President Leonid Kuchma fired Agriculture Minister Pavel Haidutsky for allegedly failing to stabilize the financial crisis in the state-controlled agricultural sector, including failure to pay back-wages of 38 trillion karbovantsi ($200 million). According to Prime Minister Pavlo Lazarenko, Haidutsky also failed to implement 12 policy orders, one of which provided for total price liberalization. (OMRI, No. 114, Part II, June 12, 1996).