Historic, Archive Document Do not assume content reflects current scientific knowledge, policies, or practices. aHD1992 -U56 Former USSR Update Agriculture and Trade Report Economic Research Service U.S. Department of Agriculture November 10, 1994 Former Soviet Union (FSU) total grain imports in 1994/95 FSU 1994/95 Grain Import Demand Remains Very are projected at just under last year’s low of 19 million tons, Weak, Despite Drop in Output down about 50 percent from the average of the 1980’s. Sharply reduced use of grain for feed by a much smaller As of November 1994, USDA forecasts 1994/95 (July/June) livestock sector is a major factor behind the decline in FSU grain imports, including intra-FSU trade, at 17.3 consumption and import needs. Partly compensating for the million tons, compared with 1993/94’s estimated 19.2 dramatic fall in bulk imports is a marked shift towards high- million tons, and less than half the level imported on value products, reflecting newly released private demand for average during the 1980’s (table 1). Despite a projected 15- higher-quality products with Western-style packaging. percent reduction in 1994/95 FSU grain output from 1993/94, import demand continues to be dampened by: 1) Total FSU grain output is forecast by USDA down 15 hard currency constraints and growing debt obligations, 2) percent in 1994 (as of November), largely because of poor decreased grain utilization (mainly grain for feed) and less planting conditions in the fall of 1993, a harsh winter, and waste, 3) relatively stable production and procurement in severe drought during the growing season in many regions. 1992/93 and 1993/94, 4) the discontinuation of import However, final State procurements may not end up subsidies, 5) internal FSU political forces that oppose considerably below last year, as farms are limited by on- imports in order to protect domestic producers, 6) sizable farm storage facilities, and few alternative channels for grain stocks, and 7) higher 1994/95 world prices for wheat. marketing exist. The pace of Russian State grain However, even with the sharp drop in grain imports, the procurements (federal and regional) is lagging substantially FSU remains one of the world’s eae eragee e. with behind last year as farms hold out for better prices. Unlike Russia the primary FSU importer. ee » past years, when farms sold their output nearly all at once to the State, they are now selling in small increments as reyr Pm a agreement on price is reached. mt ! > , Table 1——FSU grain production‘and imports * Contractions in the livestock sector have increased this year, as reduced rates of growth in the private sector (non- Country/ Grain production ain imports commercial subsidiary holdings) offset less of the State Year ” 92/93 93/94 94/95 92/93 93/94 94/95 mh So sector’s continued decline. Total FSU meat output by the =F = State sector was down 15 percent for the period January- Million tons September 1994, compared with the same period last year. FSU-15 186:2 179.7 151.5 OD Om 19226 eet The farm input industries of the FSU may experience the Russian Fed. 102.4 94.8 82.5 Pj \1) 8.8 6.6 Ukraine B5ies 42.4 Soa ShOMeO)4 Ba 4/, toughest year yet in 1994, as demand for inputs hits a new Kazakhstan Oem? \red 8 line 0.0 0.1 0.0 low. On the positive side, input producers are starting to Belarus 70 1.83 6.1 1.6 alee We respond to some of the demands of farms, with indications Moldova 2.0 3.0 ‘ibe 0.3 0.4 0.8 that fertilizer quality and equipment specifications are Central Asia 4.5 4.7 SZ ays) 5.4 By improving. Transcaucasus 2.0 1.9 1.6 Wes Viots 1.9 Baltics 3.9 4.4 S}5) 1.9 1ROmaeOrS Private farms are likely to account for as much as 10 percent of grain output in Russia and Ukraine this year. Output by ! Official USDA data for total grains in cleanweight, State food processing enterprises in the FSU is estimated including wheat, coarse grains, and milled rice. * On a July/June marketing-year basis; 1993/94 are down for the fifth consecutive year in 1994, with private preliminary data; 1994/95 are projections as of Nov. 1994. output and imports of Western foods replacing much of the Source: USDA. State sector’s production. ee rere NNN Eee Approved by the World Agricultural Outlook Board Another reason for lower FSU grain imports is that export fiscal 1992 and 1993, a large share of U.S. exports, both assistance and food aid, which to a large extent have bulk and processed, were facilitated through credit and aid financed agricultural imports (primarily grain) since 1991, programs, a significant drop in the level of fiscal 1994 have been reduced to most regions of the FSU. For assistance and in centralized-Russian-government imports example, U.S. fiscal 1994 food assistance (not including implies that a larger percentage of U.S. agricultural commercial export credit guarantees) to the FSU consisted of commodities are being imported through private trade. It is over 950,000 tons of commodities, worth nearly $240 still likely, however, that fiscal 1994 exports of traditional million, compared with about 7 million tons ($1.2 billion) in assistance commodities such as flour, certain dairy products, fiscal 1993. Fiscal 1994 U.S. GSM-102 credit guarantees and vegetable oil were shipped through USDA aid programs offered to the FSU have also declined, totalling $80 million, such as Section 416(b) and Food for Progress. compared with $530 million used in fiscal 1993. The growing FSU debt burden, Russian and Ukrainian defaults The outlook for growth in U.S. high-value exports may be on export credit programs during 1992-94, adequate mitigated by the decision of several FSU countries to agricultural output and consumption in most of the FSU, and institute import tariffs to protect less-efficient domestic tighter donor budgets have been the primary factors driving producers. A significant shift towards protectionism has the reduction in export assistance and food aid. Moreover, occurred in Russia, which accounts for 60-70 percent of several FSU countries have not used export financing made total U.S. exports to the FSU. In March, new import tariffs available to them for agricultural purchases, or have been were announced for most agricultural goods, but by April slow to act upon available assistance (for example, the recent implementation of these tariffs had been delayed until July sale of 400,000 tons of wheat that was facilitated through 1. After July 1, the import tariffs were reinstated, although Russia’s FY 1993 Food for Progress package). several cities (including Moscow, St. Petersburg, and Ekaterinburg) have requested exemption from the new While humanitarian assistance will continue to regions tariffs. The most significant new tariffs included a 15- affected by civil war and food supply disruptions, it is likely percent tariff on imported meat and milk products (these that export financing and other assistance programs will tariffs have already been adjusted to 8 percent for beef and remain low by historical levels. To date, $20 billion in pork, and to 20 percent for poultry) and a 20-percent tariff private sector GSM-102 commercial credit guarantees for on white sugar, commodities of which the United States Russia and $90 million in concessional food assistance have increased exports in fiscal 1994. Other FSU countries been announced for six FSU countries. introducing or planning to introduce import tariffs on agricultural commodities include Ukraine, Belarus, Latvia, Value of U.S. Ag Exports to FSU Down Slightly, and Lithuania, all of which are significant livestock and Composition Continues Shift dairy producers. Moreover, several FSU countries have instituted more stringent certification requirements for U.S. agricultural exports to the FSU in fiscal 1994 are imports to reportedly protect consumers from low-quality projected at $1.5 billion, down slightly (6 percent) from goods. fiscal 1993’s $1.6 billion. Late shipments of fiscal 1993 food assistance and strong sales of semi-processed and high- While it is still unclear to what extent these new tariffs and value products have compensated for weak bulk exports of regulations will affect U.S. sales to the FSU, there may be grain and oilseeds, which traditionally made up 80-90 some reduction or limitation of further growth in the near percent of total U.S. agricultural exports to the FSU. term as importers adjust to the new policies. For example, strong Russian food imports during April-June suggest that Preliminary fiscal 1994 data (October-August) show total traders took advantage of the Government’s postponement of U.S. exports to the FSU at $1.4 billion, down slightly (5 the March tariffs (table 2). As a result, the pace of imports percent) from the same period in 1992/93. Grain, oilseeds, will likely slow down as traders assess whether or not and oilseed product exports account for around half of the exemptions will be allowed to urban areas, or if the tariffs total. Significant increases in U.S. sales of animals and will again be reevaluated, as pressure to reduce or limit the animal products, fruits, sugar, and chocolate products have level of trade protectionism increases. The Russian boosted the share of non-bulk commodities exported to the government has already announced a phased decrease in FSU. In addition, U.S. exports of nonagricultural products tariff levels over the next 10 years; however, government have increased as a share of total exports to the FSU. officials have indicated that they will move more slowly to reduce agricultural tariffs. As Russia moves closer to GATT This trend of increased high-value exports began in fiscal membership, this issue will become even more sensitive. 1993, when the FSU ranked in the top 10 markets for U.S. exports of dairy products, poultry, wines and beer, and snack CIS Registers Positive 1994 Extra-Trade Balance, foods. The transition from a planned economy has released Imports Remain Low previously unsatisfied consumer demand for higher quality products and Western brand names, also contributing to According to data from the Commonwealth of Independent increased FSU high-value agricultural imports. Whereas in States (CIS) Statistical Committee, exports offset increased imports and led to a $9-billion extra-CIS trade (includes effectively capture private trade. Second, the imposition of trade with the Baltics) surplus for the first half of 1994, up import tariffs and taxes in several CIS countries in 1993-94 $1.1 billion from the same period in 1993. Russia’s has probably encouraged the understatement of imports to reported $8 billion surplus accounted for 90 percent of the avoid payment. Lastly, export statistics may be slightly total. Only Armenia and Belarus registered negative trade more accurate as many of the commodities exported (such as balances. Extra-CIS exports continue to be largely oil and other raw materials) are considered to be "strategic" comprised of raw materials such as oil, gas, coal, and and are controlled by State trading organizations and through minerals, while imports are dominated by purchases of licenses and quotas. While high currency surrender rates machinery and equipment and consumer products. and export quotas have led to some level of undocumented exports and "capital flight," strong State export control may have minimized some of the discrepancy. However, as State Table 2——Russian agricultural imports, 1994 control of exports is loosened, as is currently taking place in Russia, the accuracy of export statistics could also decline. Jan—March Jan—June Jan—Sept FSU Grain Area Continues To Decline as Farms Adjust Volume Value Volume Value Volume Value to Market Changes As of November 1994, USDA estimated total FSU grain 1,000 $ 1,000 $ 1,000 $ output at 151.5 million tons, down 15 percent from 1993 (in tons million tons million tons million cleanweight, including wheat, coarse grains, and milled rice). Fresh —frozen meat 10.6 14.0 PANS hae PAPET A 292.8 361.7 FSU grain yields in 1994 are projected about 10 percent Poultry 1OLSPa1S:2 B23210NN288'8 1 283/0M S51t2 below last year, primarily due to drought in many FSU Dry milk na na 18.4 36.4 na na regions. Grain area, which has steadily declined since the Butter 14.2 189 95.85 12310 138.6 180.3 early 1980’s, is down another 5 percent in 1994 from 1993, Citrus SEO) | oZilsil 502.4 306.4 628.7 377.2 Apples 10.8 3.7 129.4 45.1 190.8 68.7 the lowest in over 40 years, largely as a result of above- Coffee AMY 5.4 12.5 446 20N /a OSs/ average winterkill, reduced winter grain seedings in 1993, Tea 8.2) Bali7at 46.5 121.6 69.4 179.4 and efforts to reduce costs. During the Soviet period, when Grains 372.2 61.8 1591.4 249.6 2436.0 379.9 there were large subsidies for inputs, transportation, etc., wheat THERON alae ai grain area was sharply expanded, reaching a high of 123 corn 17 S:Sae SO ee O2 Onl 130.5) 6261-5 200:6 Veg oil 5.5 6.2 S27a G60 44.7 50.4 million hectares in 1977. Estimated 1994 area is about 94 White sugar’ 104.5 43.5 1224.6 403.8 835.0 301.4 million hectares. As FSU governments have implemented Sugar, raw 24.8 8.0 na Ha waeS lee O1S market reforms, such as price liberalization and subsidy Pasta na na 43.3 45.6 na na reduction, relative input prices have increased sharply, causing farmers to cut back sown area. Most FSU na = Not available. governments, however, are continuing to provide some form ! January—June white sugar data include raw sugar. of subsidies for harvest and seeding operations and have Sources: Interfax and Goskomstat Rossii. increased procurement prices to account for inflation. The accuracy of these trade statistics continues to be of Grain output in the Russian Federation is estimated at 82.5 considerable question. For example, first quarter 1994 extra- million tons (excluding pulses, buckwheat, and minor CIS trade data for Russia, as reported by Goskomstat Rossii, grains), down 13 percent from a year earlier, and is the appear to understate imports by $3.5 billion, when compared result of smaller grain area and drought reduced yields. with data from the State Customs Committee. Thus, a $5.2- Russian 1994 grain area fell because of weather-related billion trade surplus implied by Rosgoskomstat data is problems during fall seeding, as well as farmers’ decisions reduced to $2.5 billion using the customs figures. While to reduce area under less profitable crops. For example, the some of the countries have made progress in improving their decline in total 1994 Russian wheat area is estimated to have data collection capability, it is still very likely that official been considerably less than the drop for some of the less trade data do not fully capture trade flows, particularly profitable coarse grain crops such as rye. Wheat is one of through private channels. In addition, as some portion of the most profitable grain crops (and is one of the least costly extra-CIS trade is conducted on a barter or countertrade to grow). basis, the large trade surplus is misleading given that no exchange of currency is involved in these transactions. Harvest progress in Russia, as of mid-October, was behind 1993’s pace because of rainy weather in certain regions, The evolving CIS trade regime explains to a large extent the late-maturation of the crop, irregular supplies of fuel, inaccuracies of official trade data, particularly of imports. lubricants, and spare parts, and uncertainty about First, the declining share of centrally purchased State procurement prices. As of mid-October, winter grain imports (particularly of food and consumer goods) has seeding for the 1995 harvest was slightly behind last year, lowered the accuracy of State statistics, which do not likely due to financial difficulties associated with lagging sales of grain, disruptions in purchasing fuel and spare parts, In the Central Asian countries, 1994 crop estimates are delays in harvesting the 1994 crop, and prolonged dry mixed; while Uzbekistan and Turkmenistan may have near weather in the North Caucasus and Volga Valley, Russia’s record harvests, in Kyrgyzstan and Tajikistan estimated main winter grain regions. Severe dryness in these regions grain crops are down 6 and 15 percent respectively, from may have impeded winter crop development. The high last year. The governments of Uzbekistan and Turkmenistan profitability of growing wheat provides an incentive to keep have been increasing giain area to rely less heavily on winter wheat area for the 1995 harvest largely unchanged, imports. In addition, favorable weather in Uzbekistan, the although dry conditions may have been an obstacle. largest Central Asian grain producing country, boosted yields Following a sharp cut in rye area in 1994, 1995 area may above last year. Grain harvests in the Caucasus are continue to decline, as demand for rye remains low. estimated slightly down from last year due mainly to Reportedly, several million tons of rye are still held in problems associated with continued political unrest. stocks, with no immediate prospects for sales. Despite Increasing Private Trade, the State Dominates In Ukraine, the 1994 harvest is estimated at about 33.7 Grain Marketing million tons, 20 percent below the high 1993 level. The large drop resulted mainly from decreased yields, while area Final State procurements of the 1994 crop in the FSU fell only slightly. Large portions of winter grain area countries may not fall sharply below last year, despite the (mainly winter wheat) were damaged by winterkill, and were slow pace of sales to date. As of October, State reseeded with spring grains (mainly spring barley). Spring procurements were below last year in most FSU countries, barley, however, is not as high yielding as winter wheat. with the exception of Turkmenistan, Uzbekistan, and Persistent dry weather during the growing season also Belarus, where the governments continued to provide large reduced yields, particularly in the southern and southwestern financial outlays for procurement and maintained near- portions of the country. The Ukrainian government complete market control. In most FSU countries, farmers provided large subsidies to agricultural producers, and are particularly reluctant to sell to the State because of last despite gloomy forecasts and reported input problems, the year’s very late payments, which were not indexed to harvest proceeded at a faster pace than last year and with inflation in many cases. Most farmers are holding out for smaller losses. higher prices, but are eventually expected to sell to State procurement agencies, given few alternative channels. As of mid-October, winter grain seeding in Ukraine was completed on about 6.5 million hectares, more than 80 Having previously announced that the Russian Government percent of the planned area. Grain area in 1995 is expected would no longer set procurement prices, the federal to remain fairly stable since the State continues to allocate government in July published recommended prices of about large subsidies for agricultural inputs and operations. 220,000 rubles ($98 at the September exchange rate) per ton However, extremely dry conditions in the southeastern parts for average wheat from this year’s harvest, considerably of Ukraine may have adversely affected seed germination above the average 1993 price of about 65,000 rubles per ton and plant establishment and could cause some area decline. ($70), and market transaction prices at that time. It was noted that these new indicative prices, which were not Grain output in Kazakhstan is estimated at 17.9 million obligatory, would provide an adequate profit to both grain tons, about 15 percent below the 1993 crop. Grain yields in producers and processors. However, it was not specified 1994 were reduced by dry conditions in certain regions, and how procurement agencies would finance grain purchases at area fell an estimated 6 percent. Kazakh farmers have been these high prices. Since the announcement on recommended taking marginal land out of production (total grain area is prices, transaction prices for average wheat have been down nearly 20 percent since 1981) in order to use costly running between 150,000-180,000 rubles per ton ($65-$77 at inputs on better lands and more profitable crops. While the the September exchange rate), substantially below the 1994 area for wheat, a profitable crop, is estimated relatively suggested 220,000 rubles per ton. If transactions were made unchanged from 1993, coarse grain area is estimated down. at the recommended 220,000 rubles per ton for average According to the Kazakh Agricultural Academy of Sciences, wheat, domestic prices could exceed import prices in some the agronomically ideal grain area in Kazakhstan should regions, once transportation costs and taxes are included decline another 20 percent to about 16 million hectares. (U.S. wheat price, CIF, minus the EEP bonus was about $160). In Belarus and the Baltics, 1994 harvests are projected down 15-20 percent, and in Moldova by over 60 percent Reflecting the standoff between grain producers and buyers, from last year. While grain area fell slightly in these as of late-October, Russian farmers had sold only 1.8 countries, the yields were substantially reduced due to a hot million tons of grain to the federal fund, and 8 million to the and dry summer, particularly in Moldova. In addition to regional funds, compared with 28 million tons (federal and drought, Moldova experienced severe winterkill which regional) a year earlier. The 1994 federal grain fund, which damaged about 50 percent of its winter crop. is to supply the military, part of the needs of Moscow, St. Petersburg, and the northern regions, is targeted at 11 million tons, including 8 million tons of milling wheat. The sector were down 8 percent in mid-October compared with regional fund target is 25-27 million tons, of which 7.5-9 is 1993, but were actually up from the same time in 1992. In milling wheat. Although grain sales to date are down Russia, forage crop area in 1994 is estimated at about 40 substantially from the same period in 1993, there are million hectares, down 2-5 percent from 1993, and 10 significant supplies of 1994 grain held on-farm and kept in percent from 44.6 million hectares in 1990. Increased area storage facilities, as well as remaining grain stocks from the sown to forage crops in the Russian private sector, which 1993 crop in storage. Farms have transferred over 6 million accounted for almost 3 percent of total forage area last year, tons of grain to State-owned elevators, which demand high has offset some of the overall decline in area. In storage fees. Given the lack of alternative outlets, limited Kazakhstan, 1994 forage crop area is expected down from on-farm storage facilities, and expensive State storage 1993’s 10.8 million hectares, which was down 5 percent facilities, farmers will likely sell below their preferred from the peak in 1991 (11.4 million). According to prices. In contrast to previous years, when the State Rosgoskomstat, State output of mixed feed in Russia procured all its grain needs immediately after the harvest for continues to fall in 1994, down 30 percent (January-July) the entire next year, in 1994/95 procurement agencies are from the year before. likely to make grain purchases in increments throughout the course of the year. Growth in Private Livestock Sector Lessens, State Sector Cuts Back Even Further In Ukraine, government plans called for procurements of 13 million tons in 1994, 1 million below last year. As of late- Falling consumer demand, worsening terms of trade, and October, State procurements totaled about 11 million tons of competing supplies of higher-quality or better-packaged grain, half of which was wheat. In June, the procurement imports, continue to force contractions of the livestock price for third grade wheat was raised to 3.5 million sectors of all FSU countries (table 3). Those countries that karbovantsi ($80 at market exchange rate), considerably have least reduced State subsidies to livestock producers or higher than the 1993 price, in nominal and real terms. In meat consumers (such as Turkmenistan and Uzbekistan), addition, a 50-percent bonus was to be awarded for supplies show smaller reductions in the sector. The overall decline above contract levels, and the government put a temporary of the livestock sector in the FSU may be greater in 1994, as limit on the export of wheat, rye, flour, cereal, and pasta to little to no growth in the private sector’s noncommercial ensure sufficient domestic supplies. subsidiary holdings offsets less of the State sector’s continued contraction. In Kazakhstan, planned State procurements were set at about 5 million tons in early summer, down 2 million from 1993, reflecting lower funding from the federal budget. As Table 3——Livestock product output, State—sector of early November, the State had procured 4 million tons of only, January—September 1994 grain. Country Total meat as % Milk as % Egg as% FSU Grain Utilization Continues To Decline output, of output of output of livewgt. 1993 1993 1993 As of November 1994, USDA estimated total 1994/95 grain utilization 7 percent down from last year, largely the result of lower feed use. Feed use is decreasing due to the 1,000 % 1,000 % Mil. % continued reduction of livestock inventories. With the tons tons continued decline in sown area, estimated seed use is down Azerbaijan 31 79 96 72 40 43 in 1994/95. Industrial use of grain for producing vodka, Armenia 1 56 4 93 3 42 beer, and starch is also estimated slightly lower, reflecting Belarus 671 89 2,944 99 1,460 94 Kazakhstan 595 74 U2 78 1,182 78 decreased domestic output and increased imports of Kyrgyzstan 52 74 162 70 39 31 beverages. Although per capita consumption of bread by Moldova 68 70 332 81 111 56 humans continues to rise in many republics, reduced waste Russia 4,100 85 20,900 83 20,000 92 of bread, such as feeding to animals, appears to be keeping Tajikistan 23 85 93 95 54 59 aggregate food use of grain down. Turkmenistan 55 80 155 91 94 85 Uzbekistan 153 87 695 95 529 87 Ukraine 1,692 87 9,449 90 3,594 76 Drought Cuts Forage Supplies Forage crop area and output are both estimated down this Source: Statkom SNG. year, as farms respond to lower feed needs, take less productive soils out of production, and yields are cut by The reduction in FSU State sector livestock product output drought. Forage supplies per animal, however, will fall to a this year is expected to exceed the decrease in 1993, when lesser degree, as inventories continue to contract in 1994. the rate of decline slowed. For the period January- Supplies of forage per head of animal in the Russian state September 1994, State sector output of total meat (liveweight) in the FSU was down 15 percent, production of the rise in sales of meat this year, surplus stocks of meat milk was down 15 percent, and egg output down 12 percent, held by retailers, wholesalers, and processors are up, compared with a year earlier. State sector meat output fell according to Rosgoskomstat. most sharply in Kazakhstan (down 26 percent), compared with Russia and Ukraine, where meat production was down FSU Sunflowerseed Area Rising, But Yields Remain Low 13-15 percent. Animal productivity in Russia in the State sector, in terms of milk per cow and eggs per layer, were As of November 1994, USDA estimated total FSU oilseed down 9 and 3 percent respectively, for the period January- production at 9.8 million tons, relatively unchanged from September 1994 compared with 1993. 1993’s output. While total oilseed yields in 1994 are estimated slightly down from last year, area is projected In Russia, slight output growth in the private sector slightly above last year because higher sunflowerseed area (January-September 1994), offset only some of the State more than offset lower cottonseed area. sector’s decline, resulting in an overall drop in meat production of 11 percent. Production of meat in the private FSU 1994 sunflowerseed production is estimated at 5 million sector continues to be lowest in Belarus, which at about 20 tons, largely unchanged from 1993, despite a substantial percent of total output, accounts for 40-46 percent in Russia, increase in sunflowerseed area, particularly in Russia. From Ukraine and Kazakhstan, 50-72 percent in Central Asia, 1991 to 1994, higher profitability has driven area up by 20 and almost 100 percent in Armenia. percent. In 1993, sunflowerseeds were about 25 percent more profitable than grains, and more profitable than other Aggregate State sector animal inventories continued their oilseeds such as soybeans and rapeseed. decline during the first 9 months of 1994, with inventories decreasing even faster this year from last, for all types of FSU oilseed yields have been decreasing in recent years and animals. Total October 1, 1994 FSU inventories of cattle, are not expected to improve in 1994. In 1993, Russian cows, hogs and sheep/goats, declined by 11 percent (down 9 sunflowerseed yields were the lowest in 10 years, possibly percent in 1993), 8 percent (down 6 percent), 14 percent the result of reduced application of mineral fertilizers, (down 13 percent), and 24 percent (down 14 percent), decreasing seed quality, and deteriorating equipment. In respectively. 1994, estimated sunflowerseed yields are also down because of drought conditions in some of the main sunflowerseed Increasing supplies of imported meats, which are competing growing regions--North Caucasus and Volga Valley. with domestically produced meat, and reduced State However, the oil content of the 1994 Russian sunflowerseed subsidization of producers in many republics, account for crop is reported to be substantially above average, mainly much of the higher rate of decline in FSU aggregate due to the dry weather. inventories. The sharpest drop in inventories among the major livestock breeding republics occurred in Kazakhstan Marketing of oilseeds has changed dramatically in the last this year. few years. The majority of oilseeds are currently marketed through private barter transactions, where farmers pay the In Russia, overall animal inventories continued to decline in processing enterprises an in-kind fee for crushing, then have 1994 (October 1), as State sector inventories fell faster than the remaining vegetable oil/meal returned to the farm for use a year ago, and private sector numbers grew by less than the and marketing. As a result of increasing private year before (cattle/cows) or fell (hogs and sheep/goats). transactions, FSU State procurements of oilseed crops, After 2 years of strong growth (up 7 percent in 1992, and up mainly sunflowerseeds, have sharply fallen, and should 11 percent in 1993), private Russian cattle numbers grew by continue to fall in 1994. For example, FSU sunflowerseed only 3 percent in 1994 (October 1). The reduced growth procurements in 1993 were only 32 percent of production, and, in some cases, decline in the private sector are largely compared with 73 percent in 1990. In addition, given the due to the physical constraints on families with small relatively low domestic prices, producers with export subsidiary holdings to maintain more than a few animals licenses have found it more profitable to export each. sunflowerseeds. As of early-November, Russian farmers had reportedly concluded export contracts for 1.2 million In all FSU countries, meat marketed through channels other tons of sunflowerseeds from the 1994 harvest compared with than the former State procurement organizations continued to last year’s exports of 870 million tons. grow during 1994. In Russia, nearly 25 percent of marketed meat is now going through alternative channels (up almost As of November, USDA estimated total FSU soybean 30 percent from last year), with about half of that amount imports at 435,000 tons in 1994/95 (October/September), sold directly at farmers’ markets. In 1990, 90 percent of slightly above last year, but down about 50 percent from the meat was marketed via State procurements. Those FSU 1986-90 annual average. Soybean meal imports are countries with the largest share of meat marketed directly at estimated at 1.2 million tons for 1994/95, about 10 percent farmers’ markets include Kyrgyzstan, Moldova, and lower than the previous year, and about 60 percent below Tajikistan. In Russia, despite the drop in meat output and the 1986-90 average. Due to technical and logistical constraints faced by processing facilities, FSU countries tend Kazakhstan, and Uzbekistan, down (January-July) 50 to import more meal than beans. This trend is likely to percent, 77 percent, and 86 percent, respectively. continue in the short term. FSU vegetable oil imports are projected relatively unchanged from the 1993/94’s 896,000 In August 1994, Russia introduced a government funded tons. "leasing" program that was designed to assist farms with the acquisition of farm machinery, and at the same time boost Hardest Year Yet for Input Producers, But Not All Bad output at machinery plants which were operating at only a News fraction of traditional capacity. The effect of the program, which represents a subsidy to producers (because of Dramatically reduced demand for farm inputs continues to preferential payment terms), is to date unclear. force downsizing of the input industries in nearly all FSU countries, with 1994 likely representing the hardest year yet While production of farm machinery fell sharply over the for the sector. Contractions in the fertilizer industry, while last few years, the number of machines per hectare on substantial, have been less than in other input sectors, as Russian State-sector farms has changed little. Given the opportunities for export exist. change in makeup and size of Russian crop areas, Rosgoskomstat reports that the number of tractors on 1,000 Mineral fertilizer output in Russia is expected to drop by hectares of arable land in 1993 was 10.7, actually more than about 25 percent in 1994 from last year, having fallen in 1990, and for grain combines. the number was 6.2, down already 38 percent in 1993 from 16 million tons in 1990. only slightly from 1990. Moreover, the share of smaller The fall in the output of phosphate fertilizers accounts for scale tractors in total output has risen sharply in the last few the bulk of the overall decline in output. Fertilizer output in years, reflecting changes in farm size. In Russia, 24 percent 1994 is estimated down by about 10 percent in Belarus, 40 of all tractors produced were 30 horse power or less, up 62 percent in Uzbekistan, and by nearly two-thirds in percent from 1990. Kazakhstan. Although fertilizer output is falling, there are indications that quality is improving. In Russia, the share of While supplies of diesel fuel and gasoline at Russian State- nutrients in fertilizers reportedly rose to 44 percent in 1993, sector farms on July 1, 1994 were each down about a third up from 40 percent in 1992 and 43 percent in 1991. from the same time in 1993, the decline is likely the result Russian output of plant protectant agents in 1994 (January- of reduced advance purchases of fuels (i.e. acquiring July) was reported down by 56 percent from the same period supplies all at once for the next half-year), and instead last year. buying fuels only when they are in need. The drop in fertilizer deliveries (sales) to farms continues to State Food Processing Sector Output Down Fifth far outpace the fall in fertilizer output. While output Consecutive Year declined 18 and 19 percent in 1992 and 1993, respectively, deliveries to Russian farms fell 45 and 32 percent, The FSU’s gross output of food products by State processing respectively. In 1993, Russian application of mineral enterprises is expected to decline by about 20 percent in fertilizers was reported at 32 kilograms per hectare of arable 1994, marking the fifth consecutive year of falling land, down 61 percent from the 1990 rate of 83 kilograms production. Output of non-food consumer goods continues per hectare. According to one preliminary report, the fall in to decline by an even faster pace in the FSU countries. The fertilizer applications in Russia may have begun to bottom fall in output by State food processing enterprises is largely out this year. explained by the increased availability of food from growing small-scale private commercial processors and food Russian exports of nitrogen fertilizers are expected to preparation (canning, preserving) by households, which are increase as much as 25 percent in 1994 (first-half), reversing satisfying an increasing share of overall food consumption. 1993’s trend when exports fell 43 percent from 8 million Other reasons for the general decline in consumer demand tons in 1992. Potassium fertilizer exports are continuing to for State-processed foods in many FSU countries include decline in 1994 (down about 30 percent), having dropped 34 reduced real incomes, and increased supplies of higher- percent in 1993 from 1992’s 4.1 million tons. quality and better-packaged food imports, as well as non- food consumer goods. Production of tractors and grain combines has come to a near-halt this year in Russia, reflecting the free-fall in In the Central Asian republics, however, where State demand. Production of tractors in Russia, which was down processing enterprises are still the primary suppliers of most 58 percent in 1993 from 1990’s 214,000, could be down as staples, output by the State sector remains largely much as 80 percent in 1994 from last year. Output of grain unchanged. For example, while January-August 1994 combines is expected to fall even more sharply than tractors aggregate State output of food products in Russia and in 1994. Production of grain combines in 1993 fell to Ukraine is down 20 percent and 25 percent, respectively, 33,000 from 65,700 in 1990. Similar trends are affecting output is down only 3 percent in Turkmenistan, and is other FSU countries, with production of tractors in Belarus, actually up by over 15 percent in Uzbekistan. In Russia, total output of processed meats and dairy on average only 2 head of cattle, 2 hogs, and 6 sheep, with products fell 24 percent and 17 percent (January-September over a third of the private farms having no animals. In 1994), respectively, from the year before. However, output Kazakhstan, the average number of animals per farm are 5 of sausage, more expensive meats such as veal, certain cattle, 52 sheep, less than 1 hog, and 19 hens. As a result, cheeses, cream, and chocolate all rose. Similarly, while the share of total meat produced by private farms is only 1 State output of flour and bread declined 15 percent and 18 percent in Russia and Kazakhstan. percent, respectively, during the first 9 months of 1994, production of higher-quality breads and baked items The number of private farms in the FSU continued to grow, increased. Rising demand for high-quality foods is albeit at a much slower pace, in 1994, totaling over 680,000 accounted for by a growing class of high-income consumers. (as of July 1, 1994) and up over 3 times from 1992. The private farms occupy nearly 21 million hectares, or nearly 10 Private Farms May Account for Up to 10 Percent of percent of total arable land in the FSU. In mid-1994, 1994 Russian and Ukrainian Grain Crop private farms in Russia totaled 286,000 on 12 million hectares, or an average 42 hectares per farm. In Ukraine, Private farms (as separate from private household subsidiary farms numbered only 31,300 on about 675,000 hectares, an plots) are beginning to have a substantial impact on grain average of 21 hectares per farm. Kazakh private farms output in some FSU countries. In both Russia and Ukraine, numbered 20,000 on 7 million hectares, or 387 hectares per grain production on: private farms this year may approach 10 farm. Private farms grew the fastest this year in Moldova percent of total output, with farms forecast to produce 7-10 and Uzbekistan, although both countries only have just over million tons in Russia, and 3.5-4 million in Ukraine. In 10,000 farms each. 1993, private farms accounted for 6 percent of total Russian grain area (3.8 million hectares), and produced over 5 When all forms of private sector agriculture (both farms and million tons of grain (5 percent of total output). In household plots) are combined, their output accounted for 38 Kazakhstan, private farms produced over 600,000 tons (3 percent of total agricultural output in Russia in 1993 (up percent of total output) of grain last year on about 3 percent from 24 percent in 1990), and 36 percent in Kazakhstan of the country’s grain area. In Russia, private farms (up from 29 percent in 1990). account for an even larger share of total sunflowerseed output, already at 10 percent in 1993. Unlike the crop sector, private farms continue to play a (For further information, contact Christian J. Foster, much smaller role in the livestock sector, greatly Jaclyn Y. Shend, or Sharon S. Sheffield, Former Soviet overshadowed by the other meat producers (state-sector and Union Team, Europe/Middle East/Africa Branch, CAD, private subsidiary holdings). Russian private farms maintain 202-219-0625.) United States Department of Agriculture FIRST CLASS 1301 New York Avenue, N.W. POSTAGE & FEES PAID Washington, D.C. 20005-4789 USDA PERMIT NO. G-145 OFFICIAL BUSINESS Penalty for Private Use, $300 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). 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