Historic, Archive Document Do not assume content reflects current scientific knowledge, policies, or practices. aHD1992 -U56 FORMER USSR UPDATE: Focus on Russian Grain Marketing Economic Research Service WRS-96-S1 U.S. Department of Agriculture March 18, 1996 Summary and provided other subsidies to make up for the low procure- ment price. Reduced State procurement and increased private grain sales have heightened the influence of market forces on Russian Soviet grain prices were a mere fraction of world market grain prices, moving them closer to world levels. In 1996, prices and did not fluctuate according to supply and demand further movement of domestic prices toward world market conditions. In 1990, for example, the State paid farmers 300 levels should continue. Despite progress in deregulation of rubles on average for a ton of grain, or about $16 per ton at Russia’s grain market, barriers remain to the creation of an the official exchange rate. In contrast, the price of U.S. food efficient market for grain. They include continued restrictions wheat (#2 hard red winter, FOB Gulf ports, less the average on grain prices and free movement imposed by many regional bonus paid under the Export Enhancement Program or EEP) governments. Another barrier is the country’s poorly devel- averaged $112 per ton, about seven times the State procure- oped physical and institutional infrastructure. While only ment price. In 1990, the average price of a loaf of bread minimal progress in reducing these barriers can be expected averaged 18 kopecks, less than one penny at the official in the near term, over the next 10-15 years they should be exchange rate. largely removed. (All prices cited are nominal unless otherwise noted. Where Higher domestic prices should encourage higher grain pro- appropriate, prices are converted into dollars to allow for duction while reducing consumption, resulting in lower de- comparability between years in light of triple-digit inflation mand for total imports than would be the case with lower rates since 1992. Also, the prices discussed below are char- prices. Higher grain prices in Russia would help maintain acterized as either State procurement or non-State prices. the sizable gap between Russian prices and comparable prices Non-State prices are intended as a rough approximation of in Kazakstan or Ukraine, encouraging grain exports from free market prices because they are more subject to the forces those two countries to Russia. While these factors could de- of supply and demand than State procurement prices.) press Western grain exports to European Russia, higher do- mestic Russian grain prices should give the Russian Far East The State also controlled all foreign trade during the Soviet added incentive to import grain from world markets to over- era through foreign trade organizations. As with domestic come high domestic transportation costs. Also, higher grain grain trade, the government determined the quantity and prices could further depress Russian wheat imports by en- source of grain imports each year. Because>it had to pay couraging flour imports in their place. world market prices for imports, the Soviet government had to heavily subsidize imported grain in order to:sell it to flour State Control Was Key During Soviet Era mills, livestock farms, and other consumers at artificially low During the Soviet era, the State was the dominant marketer domestic prices. = of grain. Through its procurement system, whereby it dictated eSteas to farmers how much grain it would buy and at what price, Changes Were Limited in 1992-93 the State dominated grain marketing. While farmers could With the collapse of the Soviet Union in laté~1991, Russia sell or barter excess grain for goods or services, the volume embarked on a path of market-oriented economic reform that of State procurements was set high enough in any given year has transformed the grain sector through price liberalization to limit this practice to small or moderate levels. coupled with reduced subsidies, declining State control of grain marketing channels, and increased influence of market The State procurement system was intended to maintain con- forces on price formation. During the initial stage of reform trol over the country’s grain market for two main reasons. (1992-93), authorities sought to maintain State control over The first was food security, as Soviet authorities sought to grain marketing and price formation, albeit with some changes ensure adequate supplies of food, including grains, for the from the Soviet era. population to prevent political unrest. The second reason was to guarantee low and stable prices for bread, an achievement As the State reluctantly ceded some control in subsequent widely touted by Moscow. By fixing the price at which it years due to increased momentum of reforms and budgetary bought grain from farmers, Moscow could also control the limitations, significant deregulation of the Russian grain sec- price at which it sold the grain to flour mills and, in turn, the tor took place for the first time in decades. This included retail price of a loaf of bread. The State also dominated grain sharply reduced State procurements, freer movement of grain, storage and processing facilities such as elevators and flour and increased influence of market forces in determining mills. At the same time, Soviet authorities supplied farmers prices. Also, foreign trade was liberalized by removing the with fertilizers, energy, and other inputs at subsidized prices Approved by the World Agricultural Outlook Board form elements within Yeltsin’s government was reflected in a Presidential decree issued in December 1993, which in- Table 1——Russian grain prices’ tended to reduce the scope of the federal-level procurement while making regional authorities responsible for meeting local grain needs, eliminate State-set prices in favor of market 1991 1992 1993 1994 prices, and remove all obstructions to the free movement of grain within Russia. While this decree would have signifi- 1,000 rubles per ton cantly liberalized Russia’s grain market, anti-reform forces inhibited its full implementation. Average all prices 8.84 46.7 State procurement Walker 60.4 Non- State? 5.48 31.0 Procurements Decline as Private Trade Grows Federal and regional grain procurements from all farms were Dollars per ton cut by more than half to 12 million tons in 1994, and fell even further in 1995 (table 2). The Russian government Average all prices 40 50 clearly did not intend procurements to drop so sharply, because State procurement 53 65 Non- State? 25 33 targets both years were significantly higher than actual levels achieved. For the first time in decades, the State was no longer Russia’s dominant grain marketer, with its share falling ' Data are for sales by State enterprises only. from nearly two-thirds during 1991-93 to 30-40 percent in 2 Includes sale by private grain traders, commodity 1994-95. Federal procurements collapsed almost entirely in exchanges, and farms through own shops. Does not 1994-95, boosting the regional share of total procurements to include barter or in—kind payment. 90 percent in 1995. The rising relative importance of regional Source: Russia Economic Trends (published by Tsentr procurements was due in part to increased political and eco- ekonomicheskoi kon"iunktury, Moscow), various issues nomic clout at the regional level, a major departure from the Soviet era. State’s monopoly on import and export operations and estab- lishing limited domestic convertibility of the ruble, which Russian farmers abandoned the State procurement system gave potential importers access to hard currency. over the past 2 years largely due to inconsistent and irrational procurement price policy and lack of prompt payment. AlI- In January 1992, the Russian federal government lifted whole- though the December 1993 decree stipulated that all State sale and retail price controls for a significant number of procurement (both federal and regional) was to be at market products, at the same time slashing subsidies. Farmers were prices, many regions continued to fix local procurement caught in a price squeeze because prices for inputs such as prices. At the federal level, Moscow raised farmers’ expec- fertilizers were generally more heavily subsidized than grain tations in 1994 by announcing “orientational prices” that were prices during the Soviet era. Once subsidies were removed, nearly double the 1993 procurement prices, and which turned input prices rose more than output prices. Price liberalization out to be considerably above levels offered by private grain and weak fiscal and monetary controls also unleashed high traders. The federal authorities were unable to pay these high inflation for the first time in decades, further increasing farm- prices in 1994 due to shrinking budgetary resources, and had ers’ costs. Russian farmers began to demand higher prices for their grain (to cover mounting production and input costs) and increasingly withheld grain when they felt the procure- Table 2——State grain procurements in Russia ment price was too low. The government responded by raising, but continuing to regu- 1990 1991 1992 1993 late, grain prices. Between 1991 and 1993, average grain procurement prices were increased more than 100-fold in 1,000 tons ruble terms, and more than eight-fold in dollar terms, to 60,400 rubles ($65) per ton (table 1). This policy enabled the State Total ! 34,000 23,600 26,100 28,200 12,100 to maintain its two-thirds share in total Russian grain mar- Of which: keted, with the volume of State grain procurements rising federal na na na na 2,300 from 1991 to 1993. Despite much higher procurement prices, regional na na na na 9,800 farmers increasingly faced payment delays, which proved As % of total costly in light of accelerating inflation. Nevertheless, the share harvest 29 26 24 28 15 of procurements in the total grain harvest increased from 26 As % of total marketed 76 65 64 66 40 percent in 1991 to 28 percent in 1993, its highest level since 1990. Lack of viable alternative marketing channels also helped to shore up State procurements. ‘ Total procurement from all farms. Numbers in this table differ slightly from those in table 4, which presents procurement In 1993, certain elements within the Russian government from State enterprises only. suggested radical reform of the grain sector involving sharp Sources: Statkom SNG, various FBIS reports. curtailment of State procurements. The influence of pro-re- 2 Economic Research Service, USDA Former USSR Update/March 1996 Table 3——Russian grain sales by major purchasing entity’ Country 1991 1992 1993 1994 1995 1991 O92 993 1994 995 7,000 tons Share in percent Total Grain Marketed 34,575 37,820 26,450 26,500 100 100 100 100 100 State procurements 21,540 23,864 8,861 7,500 2 62 64 63 34 28 Non-— ‘State channels 13,035 13,956 17,589 19,000 2 38 36 37 67 72 Private traders and commodity exchanges* 4,771 4,690 6,771 7,400 ? 14 13 12 26 28 Other 8,263 9,266 10,818 11,600 2 24 23 24 41 44 Barter 484 1,248 2,539 3,000 2 1 2 3 Public via catering or in lieu of wages 7,607 7,942 8,252 8,300 2 22 20 21 Other (residual) 173 76 26 300 2 1 0 1 Data are available for former State enterprises only. Private producers accounted for less than 10 percent of total grain marketed during 1991-95. ? Estimates for 1995 based on actual results for Janu—aO crtobyer . 3 Includes direct sale by farms through own shops and stalls. Sources: Russia Economic Trends (published by Tsentr ekonomicheskoi kon"iunktury, Moscow), various issues; Informational statistical bulletin No. 1, Russian Statistical Committee, Moscow. to offer farmers lower prices for their grain, which contributed to grain marketing owing to continued State domination of to the near total collapse of federal procurements. Russia’s infrastructure. The decline of federal grain procurements in Russia has been Most of the growth in non-State grain marketing has resulted accompanied by the emergence of alternative marketing chan- from the increased use of barter and in-kind payment to nels and the initial formation of a free market for grain. workers. This is because many Russian farmers, faced with Already in 1993, a full one-third of Russian grain marketed selling to the State at low prices or to fledgling private grain went through non-State channels and by 1994-95 this share traders that lack sufficient capital to move large volumes of jumped to around two-thirds (table 3). Some of the reduction grain, chose to keep more grain on-farm for private use or in State grain procurements was offset by increased market- on-site processing, barter it for needed goods and services, or ings by private firms and commodity exchanges. Their com- use it as in-kind salary payment for workers. Most grain bined share of total grain marketed rose from just over one- received by workers as in-kind payment is used to feed private tenth in 1993 to nearly 30 percent in 1995. livestock holdings. Commodity exchanges were the first private grain marketing Market Forces Affect Prices channel to emerge as an alternative to State procurement in Russian non-State grain prices have become more subject to 1992 and 1993. However, these exchanges failed to expand market forces, and are beginning to better reflect domestic market share due to competition from higher prices offered supply and demand conditions. In the last 1-2 years, there by procurement agencies in 1993 and 1994, structural defi- has been greater price differentiation between different grain ciencies (large number of small sized exchanges), and a lack crops, and also between different classes of grain. Moreover, of adequately developed contacts with grain producers and it appears that world market prices are increasingly influenc- consumers. ing Russian price levels and movements. Private grain traders, led by the largest Russian firm, OGO, Due to significant market fragmentation, it is virtually impos- eclipsed commodity exchanges and expanded their market sible to calculate a single average market price for wheat or share in recent years through aggressive business practices other grains in Russia. It would even be difficult to calculate that include rapidly expanding contacts with individual grain an average market price for non-State transactions, given the producers and consumers, and purchase of their own grain relative importance of barter and in-kind transactions, which elevators, mills, feeding compounds, and even bagging facili- are almost impossible to accurately value. The best proxy for ties for imported grain. In addition, private grain traders have non-State grain prices in Russia during 1992-93 was the generally offered farmers higher prices and prompt payment average price paid at commodity exchanges. During 1994-95 for their grain. The major constraint on private grain traders offers by private grain traders overshadowed commodity ex- to date is a lack of sufficient capital and monetary resources change turnover and therefore provide the best proxy of non- to purchase grain for resale to clients. Another constraint is State prices for the past 2 years. limited access to transport, storage, and other services related Former USSR Update/March 1996 Economic Research Service, USDA 3 Figure 1 Russian Grain Prices, by Grain Type* Table 4——Russian and U.S. food wheat prices dollars per ton 1992 1993 1994 1995 Dollars per ton Russian State proc. 58 Non-— ‘State 52 1765 U.S. Incl. EEP! 118 104 1114 Excl. EEP? 152 141 150 1257 1 Including the average bonus paid under the Export Enhancement Program (EEP). ? Excluding the average bonus paid under the Export Feed barley Enhancement Program (EEP). Sources: 1) Average annual Russian prices (#3 hard) State procurement: AgraEurope, Krest'ianskie vedomosti, Interfax, Reuters. 95 1 = 1 1 1 ae i i It i Non-State: 1992-93: average prices of transactions on Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Russian commodity exchanges as 1995 reported by Krest’ianskie vedomosti. *Average monthly prices reported by OGO. Non-—State: 1994—95: average of weekly prices reported by OGO private grain trading company, Moscow. 2) Average annual U.S. FOB Gulf prices (#2 HRW): USDA. Figure 2 Seasonality of Russian Food Wheat Prices* (#3 Hard) The most consistent price information on private grain trade is available from OGO, which publishes data on average prices change in % from prev. month of its grain transactions throughout Russia for major grains. 40 Many experts believe that OGO prices tend to overstate the actual prices paid by private Russian grain traders by 10-20 30 percent. Nevertheless, these data are useful in identifying key trends in Russia’s non-State grain prices. 207 An examination of these prices demonstrates the increased influence of market forces on non-State price formation. For example, the data show that the price of Russian food wheat (#3 hard) sold at commodity exchanges or by private traders more than tripled in dollar terms from $54 per ton in Novem- ber 1992 to around $150-200 in late 1995. This helped drive the price of Russian food wheat reportedly paid by OGO in late 1995 to within 5-10 percent of the U.S. FOB Gulf price -10 for #2 HRW, from around half of the U.S. FOB Gulf price during 1992-94 (table 4). Because the OGO price likely over- -20 it i 1 1 i Il i =f 1 i states the Russian non-State food wheat price by 10-20 per- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec cent, the average Russian non-State price for food wheat in late 1995 was probably closer to 20-30 percent of the U.S. —+- 1994 —* 1995 FOB Gulf price. At the same time, the price offered by federal procurement organizations was within 30-40 percent of the * as reported by OGO, Moscow. U.S. FOB Gulf price. production and imports. Projected Russian 1995/96 corn output nearly doubled from 1994/95, and corn imports also The sharp increase in 1995 Russian grain prices in real terms can also be explained by the large drop in grain output and increased, possibly due to relatively high internal prices. As a result, corn prices fell in the fourth-quarter 1995. Rye and tight stocks. Prices by grain type also reflected the increased barley prices showed the largest yearly increases, 433 and 402 influence of market forces (figure 1). For example, prices paid for corn, as reported by OGO, were extremely high during percent, respectively, due to sharply reduced 1995/96 produc- most of 1995, reflecting the sharp drop in 1994/95 corn tion (less than half of 1994/95 levels) and even greater declines 4 Economic Research Service, USDA Former USSR Update/March 1996 in stocks. Previously, rye and barley prices were among the gional controls on grain movement represent an indirect “‘tax’ > lowest due to surplus supply. on Russian grain producers, even if fertilizers and other inputs are subsidized, by restricting farmers’ ability to sell their grain Moreover, Russian non-State food wheat prices have shown for the highest price the market will bear. These controls increased seasonality in recent years, which suggests increased reduce the farmgate price for Russian grain. influence of supply and demand conditions on prices. During 1994-95, non-State wheat prices tended to peak during late Another reason why domestic Russian prices are below world summer (just before the harvest) and then drop significantly market levels is the country’s deficient physical and institu- in September and October as supply was augmented by the tional infrastructure. Examples of such deficiencies include: new harvest (figure 2). 1) an obsolete and inefficient domestic rail network that gen- erates excessively high transportation costs, 2) continued State While the influence of market forces has increased, some domination of grain storage and processing facilities, which degree of State control of grain prices still takes place, par- reduces the efficiency and competitiveness of downstream ticularly at the regional level. Many localities continue So- channels, 3) underdeveloped marketing and distribution net- viet-era practices of artificially maintaining local grain prices works, and 4) inadequate dissemination of market information at below-market levels through subsidies and State procure- needed to alert farmers to attractive sales opportunities and ments. And while the barter and in-kind sales do not represent alternative marketing channels. These deficiencies lower the State regulation per se, they reflect distortions in Russia’s effective price a Russian farmer receives for his grain by economy that have inhibited creation of a more efficient grain raising the costs he incurs to sell it. market. Among the infrastructure deficiencies listed above, transport Despite Freer Grain Flows, Restrictions Remain costs probably pose the largest burden for Russian grain pro- ducers. Transport costs have risen dramatically since 1992, In contrast to the Soviet era, when Moscow dictated grain as removal of subsidies has unmasked the gross inefficiency flows both internally and abroad, Russian grain producers are of the country’s antiquated rail system. High transport costs now better able to choose their customers based on price, cut into the price paid to Russian grain farmers and help reduce payment conditions, and other indicators. Russia has disman- their price below the world market level accordingly. tled most grain export barriers at the federal level. However, many government bodies at the oblast, rayon, and city levels The mechanism by which this occurs is illustrated in figures have established control on agricultural outflows through quo- 3 and 4, which compare the price of domestic versus imported tas, licenses, taxes, and complete export bans. food wheat in Moscow and Nakhodka in the Russian Far East. For Moscow, despite mounting transport costs, food wheat While these controls should diminish over time, their contin- from European Russia was still about 20 percent cheaper in ued existence inhibits the free movement of grain within late 1995 than imported grain (figure 3). (The calculations Russia and also significantly affects price formation. Re- compare Russian #3 hard to U.S. #2 HRW wheat, although Figure 3 Figure 4 Cost of Domestic vs. Imported Wheat Cost of Domestic vs. Imported Wheat CIF Moscow CIF Nakhodka dollars per ton, CIF Moscow dollars per ton, CIF Nakhodka 300 00 250 eae 200 200+ 150 vat poo, 100F 60} 50/ 0 0 Oct 92 Oct 93 Oct 94 Jan 95 Apr 95 Jul 95 Oct 95Dec 95 Oct 92 Oct 93 Oct 94 Jan 95 Apr 95 Jul 95 Oct 95Dec 95 month & year month & year HME Domestic wheat -—+—Imported> WZ@4Transport HE Domestic: —— Imported++ [=] Transport *Via Baltics, incl. transport to Moscow. *From Eur. Russia; **Via Nakhodka. Former USSR Update/March 1996 Economic Research Service, USDA 5 the U.S. wheat is likely of higher quality.) Thus, Moscow federal and regional authorities to stem the decline in State would probably buy most of its food wheat domestically, procurements over the long term or even restore State domi- provided it is available. Nakhodka is located far from likely nance in grain marketing would be extremely costly in budg- domestic food wheat suppliers in European Russia (West etary terms and would prove unsustainable in the long term. Siberia does not typically export large amounts of food wheat). Rather than pay the nearly $100 per ton to ship grain across Private grain traders will likely take the lead in developing Russia, Nakhodka would minimize costs if it imported grain non-State marketing channels in coming years, and could through Pacific ports (figure 4). Even if current transport increase their market share in 1996 with the entry of major charges for domestic grain were halved, it would still probably Russian commercial banks into the grain market. Already in be to Nakhodka’s advantage to import foreign grain. 1995 there were press reports of cash-rich Russian banks such as Menatep seeking entry into Russia’s lucrative grain trading The importance of adequate market information is illustrated market. by Russian farmers’ lack of understanding of the factors that keep domestic grain prices below world market prices. Dur- Barter and in-kind payment are likely to remain a leading ing the 1995 harvest, many Russian farmers withheld grain marketing channel in Russia’s grain market, but should wane from sale to either State procurement organizations or private in subsequent years. These channels may account for a lower traders, insisting that they should receive world market prices share of total grain marketed in 1996 as private grain traders or higher. Various Russian press reports in late 1995 cited capture more of the business by developing better contacts farmers demanding the equivalent of $250 per ton or more with individual producers and offering more attractive prices. for their wheat, contributing to speculation that domestic Russian wheat prices could exceed world market prices.S Reduced State procurement and increased free market sales should enable Russian grain prices to further approach world In fact, prohibitively high transport costs and other factors market prices and track their movement more closely. At the outlined above effectively limit domestic Russian grain prices same time, Russian grain prices should remain below world because consumers have the option of importing grain from market levels in the near to medium term due to continuing the West, assuming importers have adequate access to hard restrictions on grain flows in some regions of the country and currency (which they currently do have in Russia). This continued physical and institutional infrastructure deficien- effectively caps the maximum possible Russian domestic price cies. The latter problem is one that may take 10 years or plus transportation to any given location at the cost of imported more to rectify, because it involves large-scale investment in grain transported to that same location. Not understanding modernizing grain transport, storage, and other facilities, as these market factors, many Russian farmers had inflated price well as developing market information systems and other expectations in 1995, withheld some of their grain from the institutions characteristic of a mature market economy. market (either temporarily or altogether), and thereby inhib- ited free flow of grain within Russia, possibly lowering their Although it is difficult to predict the direction of Russian grain own welfare in the process. prices, it is possible that they could increase in real terms this year if unusually bad weather conditions cut the 1996/97 Russian farmers have also decried their reduced share in the Russian grain harvest, if world prices grow, or if private grain retail price of a loaf of bread as an indicator of their lower trade in Russia expands faster than the moderate pace ex- welfare relative to grain processors. As of 1995, this share pected. A slower increase, or even a decrease, in Russian declined to an estimated 15-20 percent from historically high grain prices could occur in the event of a bumper 1996/97 levels supported by massive subsidies during the Soviet era. grain harvest, a decline in the world price, or stagnant expan- Farmers and some sympathetic policy makers have demanded sion in private Russian grain trade. In any case, it is unlikely reinstatement of producer subsidies to restore farmers’ share that higher domestic grain prices will have a strong effect on in the retail price of bread to the artificially high levels of the bread prices, since the share of grain in retail price of bread Soviet era. Farmers’ retail share is likely to fall further in is not expected to increase from its current 15-20 percent. coming years to levels more typical of Western market econo- mies, assuming continued economic reform. Higher grain prices could have implications for Russia’s for- eign grain trade. First, higher domestic prices should encour- Outlook for 1996 and Beyond age increased grain production while reducing consumption In 1996, rising private grain sales and stagnant or declining and waste, resulting in lower imports. Already there are State procurements, barter, and in-kind transactions could indications that farmers are responding to higher prices by increase the influence of market forces on Russia’s grain increasing winter grain area and the pace of plowing for spring sector. Federal grain procurements are expected to fall slightly grains. An improved 1996/97 crop could limit Russia’s im- ports for the third year in a row (table 5). in 1996, and over the next decade, private sector channels should crowd them out entirely. At the regional level, how- ever, pressure to maintain grain procurement will likely con- A second implication of potentially higher grain prices in tinue. Even though higher prices may tempt farmers to sell Russia would be to maintain the sizable gap between Russian to private grain traders and certain regions may face resource prices and comparable prices in Kazakstan or Ukraine and to constraints in financing purchases, the volume of regional encourage grain exports from those two countries to Russia. grain procurements could be maintained or decline only Ukrainian and Kazak food wheat prices were less than two- Slightly over the next year or two. However, attempts by thirds the Russian level in 1995 (figure 5), and are unlikely to catch up with Russian prices in 1996. With Russian do- 6 Economic Research Service, USDA Former USSR Update/March 1996 Table 5——Supply and use of grain, total FSU 15 and major FSU countries * Marketing year Area Production? Trade * Availability Utilization Stock beginning July 1 Imports Exports Fos Feed & resid. Total change FSU-15 1,000 ha 1,000 tons Grains’ 1991/92 99,790 192,536 73,413 201,172 (8,636) 1992/93 100,165 185,000 211,630 73,776 130,189 203,965 7,665 1994/95 92,985 142,454 146,237 69,611 89,869 159,480 (13,243) 1995/96°® 90,550 119,550 125,890 67,404 74,244 141,648 (15, 758) 1991/92 45,910 72,028 93,693 49,338 49,052 98,390 (4,697) 1992/93 47,119 89,714 107,017 49,480 52,544 102,024 4,993 1994/95 42,265 60,238 63,860 46,370 30,316 76,686 (12,826) 1995/96° 44,535 59,735 65,365 46,343 28,262 74,605 (9,240) Coarse 1991/92 53,880 80,435 98,843 24,075 78,707 102,782 (3,939) grains’ 1992/93 53,046 95,286 104,613 24,296 77,645 101,941 2,672 1994/95 50,720 82,216 82,377 23,241 59,553 82,794 (417) 1995/96° 46,015 59,815 60,525 21,061 45,982 67,043 (6,518) Russian Federation Grains’ 1991/92 56,656 85,079 109,219 39,200 73,956 eh ele (3,937) 1992/93 57,647 101,957 122,312 39,100 78,197 117,297 5,015 1994/95 52,400 TH fxs) 78,432 36,701 49,918 86,619 (8,187) 1995/96° 51,100 60,800 65,525 35,192 40,855 76,047 (10,522) Ukraine Grains’ 1991/92 12,850 36,213 38,198 14,450 25,021 39,471 (1,273) 1992/93 12,141 35,093 36,863 14,450 23,605 38,055 (1,192) 1994/95 11,505 32,383 32,528 14,003 20,448 34,451 (1,923) 1995/96° 12,350 31,850 ' 30,250 14,127 18,210 32,337 (2,087) Kazakstan Grains’ 1991/92 22 hi2 11,250 ; 10,645 5,844 7,863 13,707 (3,062) 1992/93 21,803 28,863 21,563 6,165 11,280 17,445 4,118 1994/95 20,335 15,960 2 : 11,012 5,827 7,051 12,878 (1,866) 1995/96° 18,315 9,260 0 6,710 5,200 3,770 8,970 (2,260) Belarus Grains® 1991/92 2,435 5,996 2,675 8,431 2,220 6,461 8,681 (250) 1992/93 Biose 7,050 2,010 8,780 2,293 6,292 8,585 195 1994/95 2,635 6,018 900 6,893 2,103 4,948 7,051 (158) 1995/96 ° 2,595 5,800 720 6,495 1,910 4,785 6,695 (200) Uzbekistan Grains’ 1991/92 896 Wiis 4,100 5,473 CVeyrs 1,997 5,574 (101) 1992/93 1,030 1,745 3,710 5,455 3,631 lees 5,354 101 1994/95 1,295 1,972 2,425 4,397 3,546 1,500 5,046 (649) 1995/96 ° 1,370 2,707 1,755 4,462 SHteyyT / 1,066 4,593 (131) Moldova Grains’ 1991/92 751 2,991 1,000 3,931 1,080 2,787 3,867 64 1992/93 665 1,974 als 2,669 1,090 1,927 3,017 (348) 1994/95 593 1,464 491 1,915 1,034 1,058 2,092 (aN 7A) 1995/96 ° 729 2,599 170 2,369 1,133 1,134 2,267 102 Other FSU (9) Grains’ 1991/92 4,090 9,561 7,078 16,639 7,042 9,674 16,716 (77) 1992/93 4,347 8,318 5,670 | 13,988 7,047 7,165 14,212 (224) 1994/95 4,222 7,307 3,778 11,060 6,397 4,946 11,343 (283) 1995/96 ° 4,091 6,534 3,545 10,079 6,315 4,424 10,739 (660) 1 FSU includes 15 countries. 2 Production is in cleanweight. * Includes intra— FSU and extra—FSU trade. 4 F.S.I. = food, seed, and industrial use. * Wheat and coarse grains only (excludes rice). ° Preliminary. T Includes barley, corn, millet, oats, and rye. Source: USDA, estimates as of March 1996. Former USSR Update/March 1996 Economic Research Service, USDA 7 United States FIRST CLASS Department of Agriculture POSTAGE & FEES PAID 1301 New York Avenue, N.W. USDA Washington, D.C. 20005-4789 PERMIT NO. G-145 OFFICIAL BUSINESS Penalty for Private Use, $300 Moving? To change your address, send this sheet with label intact, showing new address to ERS Customer Service, Rm. 110, 13801 New York Avenue, N.W., Washington, D.C. 20005-4788. The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs and marital or familial status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact the USDA Office of Communications at (202) 720-2791. To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture, Washington, D.C., 20250, or call (202) 720-7327 (voice) or (202) 720-1127 (TDD). USDA is an equal opportunity employer. Figure 5 mestic grain prices closer to world market levels, Russia may Non-State* Food Wheat Prices prove a more attractive export target for Ukraine and Kazak- in July 1995 stan, due to Russia’s closer proximity and the lack of devel- oped transport and other infrastructure to support exports from Kazakstan and Ukraine to world markets. dollars per ton Third, higher domestic grain prices should give some regions of Russia such as the Far East added incentive to import grain from world markets to overcome high domestic transport costs. The most likely Western suppliers would be the United States, Canada, and Australia given their competitiveness and access to Pacific ports. This assumes little or no progress in reducing the prohibitively high domestic transport costs within Russia, a fair assumption given the decade or more it would take to modernize Russia’s huge and very obsolete transport system. Fourth, higher grain prices could further depress wheat im- ports by encouraging flour imports in their place. Added incentive is provided by Russia’s obsolete, inefficient milling sector, which is not competitive by world standards. Thus, Russian flour consumers may choose to import flour directly, HM Russia [==] Belarus Ukraine potentially reducing demand for grain imports. [=] Kazakstan Moldova * Commodity exchange except Russia (OGO) For further information, contact Jay K. Mitchell (consultant), Sharon S. Sheffield, or Christian J. Foster, Former Soviet Union Team/Europe, Africa, Middle East Branch/CAD (202) 219-0620. 8 Economic Research Service, USDA Former USSR Update/March 1996