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Russia: U.S. Food Shipments Could Begin In December

Washington, 5 November 1998 (RFE/RL) -- Assuming the negotiations in Moscow are concluded today or tomorrow, U.S. agriculture department officials say they can begin shipping food to Russia in early December.

After a week of talks in the Russian capital, a team from the U.S. Agriculture and State departments reached tentative agreement Wednesday on a plan to provide $500 million worth of food for Russia's most vulnerable citizens, particularly the elderly.

Agriculture Secretary Dan Glickman told reporters in Washington that final agreement requires the Americans to get assurances that the food will be distributed properly to those in need and that the food aid will be exempted from tax and customs duties.

U.S. officials said experience with food assistance to Russia in the early 1990s prompted their decision to get solid assurances on accountability and taxes.

A large amount of food aid sent to Russia after the breakup of the Soviet Union was diverted by criminal elements onto the black market or lost within the system.

The whole idea of accepting food aid from the United States has embarrassed some Russian officials who have been downplaying the country's need for help. Deputy Prime Minister Gennady Kulik said earlier this week that it was "too early" to speak about what might be needed. The same day Russian government agricultural economist Leonid Kholod said Russia might not need foreign food aid at all this year.

But Glickman said that in private Russian officials have said they need even more food than is in this package.

"This year, Russia's grain production is projected at just 52 million tons, the country's worst harvest in 50 years," said Glickman. "The problems in Russian agriculture have been compounded by the devaluation of the ruble and the crisis in Russia's banking system, so the need is apparent, as is our ability to respond."

Another senior U.S. official added that much of the problem is that grain and other foods aren't always where they are needed most, such as in the cities. In addition, said another, there is a "problem with the potato harvest," although no potatoes will be included in the U.S. package.

Under the program, the U.S. will provide a minimum of 3.1 million tons of food. Glickman said that is a minimum -- "essentially a floor" -- and the U.S. will be prepared to offer as much additional help as the country needs.

The first 100,000 tons of food, probably a mix of meat, grains and other products, will be donated for distribution directly to the neediest Russian citizens by non-governmental and private voluntary organizations. This will be focused on nursing homes, pensioners who have not received their pensions, orphanages and other such facilities.

An additional 1.5 million tons of wheat will be donated to Russia to be sold through the regular markets and distribution networks at local market prices. The proceeds from these sales will be available to the Russian government to use wherever it has the greatest need. It could go to help farms, said one U.S. official, or be used to help rebuilding the banking system, wherever it can help the most.

Another 1.5 million tons of various food commodities will be sold to the Russian government under a low interest, 20 year emergency food loan. The loan carries a five year grace period before any repayment is required.

American officials say that while Russian officials initially requested more than the 3.1 million tons, the U.S. felt this was as much as could be handled by shipping and distribution channels in the next month or so. The effort could be "scaled up," according to one official, assuming early shipments go well.

Transportation costs will be in addition to the food's $500 million cost. Even that figure is only approximate, depending on the exact mix of foods included. American poultry producers, who have seen their Russia market worth hundreds of millions of dollars dry up completely with the fall of the ruble, are hoping to have some of their chicken and turkey meat included.

On top of that, U.S. agriculture officials say they are looking for ways to open up an inexpensive line of credit to allow Russia to resume buying at least some American poultry. The closing of the Russian market has seriously hurt American producers.

Glickman acknowledged that while designed to help Russians weather a serious food shortage this winter, the program is also designed to help U.S. farmers whose record crops this year have seriously depressed prices. Glickman said it will "help American farmers and ranchers who have been hit hard by an agricultural crisis here."