Full story
Does Russia really need food aid? Even
donors ask
10:26 a.m. Nov 25, 1998 Eastern
By Sebastian Alison
MOSCOW, Nov 25 (Reuters) - As even some food
aid donor countries begin to question whether Russia
really needs aid this winter, a Russian agricultural
specialist said there were some areas of specific need
but warned Russian firms could suffer.
''Today there is a fairly urgent need for food aid,''
Andrei Sizov of Russian agricultural consultancy
SovEcon told Reuters. ''Otherwise there's a real
threat that Russia will be left with an underfed army
and unfed prisons.''
He said a poor grain harvest, the lowest in over 40
years, and the fact both the government and grain
trading companies had no money to buy grain meant
aid requests were now unavoidable.
''The state has certain responsibilities,'' he said. ''It
must supply the army, prisons, hospitals. The state
has to guarantee them grain, but cannot buy it on the
internal market.''
On Tuesday U.S. Senate Agricultural Committee
chairman Richard Lugar, returning from a nine-day
trip to Russia, said many Russians had derided a
U.S. aid package as an attempt to offload surpluses
and said many did not expect to need aid.
''This is not a country where a lot of people are
going to starve this winter,'' he said.
Russia's total grain harvest this year is expected to be
43 to 45 million tonnes, Deputy Prime Minister
Gennady Kulik said earlier this month. This is a
massive fall from last year's 88.5 million tonnes.
But a more serious problem is that following a
currency devaluation on August 17, Russia's ability to
pay for imports has been drastically reduced. It
imported $13 billion worth of food last year, a third
of all food consumed.
Following the devaluation, the U.S. lost little time in
offering food aid. The Department of Agriculture is
now working on final details of an aid package
valued at $885 million by USDA general sales
manager Chris Goldthwait.
The European Union was quick to follow.
After a meeting of farm ministers ended in Brussels
on Tuesday, EU farm chief Franz Fischler said a
proposal on a package including wheat, rye, beef,
pork, rice and milk powder would be issued within
two weeks.
But when Russia decided to accept food as payment
from Ukraine and Belarus for debts for natural gas,
questions arose whether Russia needed aid at all,
especially as Russian wheat exports, included in all
aid offers, were extremely high.
Sizov said this was inevitable as, although there was
clear demand for wheat on the home market, the fact
that there was no money to pay for it meant
producers had no option but to export.
This also meant producers would not have their
markets cut from under them by aid deliveries, as
they were not being paid in any case.
But he said grain traders would certainly suffer as
free food arrived.
''From the point of view of traders, it deprives them
of a market. These volumes, 500,000 tonnes of corn
and 250,000 tonnes of soya beans, are enormous,
they're twice Russia's annual imports,'' he said.
''If a Russian grain trading company had previously
been importing this, then their market has contracted
because of these deliveries. They will be left without
work,'' he said.
Traders also stood to suffer if Russia introduced
measures to limit exports, as donors have insisted
they do.
Sizov added that deliveries of corn, soya beans and
soya bean meal were particularly important for
Russia as they would help continue the recent
positive trend seen in the poultry sector, which Russia
has said it will target for support.
This is unlikely to be welcomed by U.S. poultry
farmers, who have seen their largest single market all
but disappear since the financial crisis started.
((Moscow Newsroom, +7095 941-8520
moscow.newsroom+reuters.com))
REUTERS SA PL
Copyright 1998 Reuters Limited. |
