. r. CURRENT AGRICULTURAL SITUATION IN RUSSIA Y 4. AG 8/1:103-9 Curreit Agricultural Situatioa in R... nr^ARINGS BEFORE THE SUBCOMMITTEE ON FOREIGN AGRICULTURE AND HUNGER OF THE COMMITTEE ON AGRICULTURE HOUSE OP REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION MARCH 30, 31, AND APRIL 1, 1993 Serial No. 103-9 "^'2%».. AU6 61993 Printed for the use of the Committee on Agriculture ^•'Rlfil'^ U.S. GOVERNMENT PRINTING OFFICE 68-443 WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-041045-2 . r. CURRENT AGRICULTURAL SITUATION IN RUSSIA Y 4. AG 8/1; 103-9 Curreit Agricultural Situatloa in R. ARINGS BEFORE THE SUBCOMMITTEE ON FOREIGN AGRICULTURE AND HUNGER OF THE COMMITTEE ON AGRICULTURE HOUSE OP REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION MARCH 30, 31, AND APRIL 1, 1993 Serial No. 103-9 Printed for the use of the Committee on Agriculture U.S. GOVERNMENT PRINTING OFFICE 68-443 WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments.CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-041045-2 ^ { COMMITTEE ON AGRICULTURE E (KIKA) DE LA GARZA, Texas, Chairman GEORGE E. BROWN, Jr., California, PAT ROBERTS, Kansas, Vice Chairman Ranking Minority Member CHARLIE ROSE, North Carolina BILL EMERSON, Missouri GLENN ENGLISH, Oklahoma STEVE GUNDERSON, Wisconsin DAN GLICKMAN, Kansas TOM LEWIS, Florida CHARLES W. STENHOLM, Texas ROBERT F. (BOB) SMITH, Oregon HAROLD L. VOLKMER, Missouri LARRY COMBEST, Texas TIMOTHYJ. PENNY, Minnesota WAYNE ALLARD, Colorado TIM JOHNSON, South Dakota BILL BARRETT, Nebraska BILL SARPALIUS, Texas JIM NUSSLE, Iowa JILL L. LONG, Indiana JOHN A. BOEHNER, Ohio GARY A. CONDIT, California THOMAS W. EWING, Illinois COLLIN C. PETERSON, Minnesota JOHN T. DOOLITTLE, California CALVIN M. DOOLEY, California JACK KINGSTON, Georgia EVAM. CLAYTON, North Carolina BOB GOODLATTE, Virginia DAVID MINGE, Minnesota JAY DICKEY, Arkansas EARL F. HILLL\RD, Alabama RICHARD W. POMBO, California JAY INSLEE, Washington CHARLES T. CANADY, Florida THOMAS J. BARLOW III, Kentucky EARL POMEROY, North Dakota TIM HOLDEN, Pennsylvania CYNTHIAA. McKINNEY, Georgia SCOTTYBAESLER, Kentucky KAREN L. THURMAN, Florida SANFORD D. BISHOP, Jr., Georgia PAT WILLIAMS, Montana BLANCHE M. LAMBERT, Arkansas Professional Staff DiANNE Powell, StaffDirector Vernie Hubert, ChiefCounsel and Legislative Director Gary R. MitAchell, Minority StaffDirector ..i^vi.. James Davis, Press Secretary \u- i*.-- Subcommittee on Foreign Agriculture and Hunger TIMOTHYJ. PENNY, Minnesota, Chairman ^CHARLIE ROSE, North CaroUna, WAYNE ALLARD, Colorado r Xice Chairman TOM LEWIS, Florida TCHYNOTMHAISAJA..BMAcRKLIONWNEIYII,, KGeeonrtguicaky JCOHAHRNLTE.SDOT.OLCIATNTALDEY,,CFalloirfiodrania SgOTTYBAESLER, Kentucky - -:'KARE^ L,.THURMAN, Florida ,,,»;,;,EARL POTvffiROY. North Dakota "^ CHARLES W. STENHOLM, Texas (II) CONTENTS March 30, 1993 Page Allard, Hon. Wajme, a Representative in Congress from the State ofColorado, openingstatement 6 de la Garza, Hon. E (Kika), a Representative in Congress from the State ofTexas, openingstatement 4 McKinney, Hon. &mthia, a Representative in Congress from the State of Georgia, prepared statement 8 Penny, Hon. Timothy J., a Representative in Congress from the State of Minnesota, openingstatement 1 Prepared statement 3 Roberts, Hon. Pat, a Representative in Congress from the State of Kansas, openingstatement 4 Witnesses Glickman, Hon. Dan, a Representative in Congress from the State ofKansas . 16 Prepared statement 45 Goldthwait, Christopher, Acting General Sales Manager, Foreign Agricultural Service, U.S. DepartmentofAgriculture 32 Prepared statement 56 Kauzlarich, Richard, Deputy Assistant Secretary, Bureau of European and CanadianAffairs, U.S. DepartmentofState 24 Prepared statement 50 Severin, Keith, senior associate, Soviet and East European Affairs, E.A. Jaenke &Associates 38 Prepared statement 87 March 31, 1993 Penny, Hon. Timothy J., a Representative in Congress from the State of Minnesota, openingstatement 99 Roberts, Hon. Pat, a Representative in Congress from the State of Kansas, opening statement 103 Witnesses Cashman, Martha, vice president, international development division, Land OT,akes, Inc 113 Prep£u-ed statement 174 Evans, Cooper, member, board ofdirectors, Volunteers in Overseas Coopera- tiveAssistance 100 Prepared statement 139 Gashler, Ted, associate dean, trade & industry division, Northcentral Tech- nical College, Wausau, WI 101 Prepared statement 163 Infanger, Craig L., Resident Agricultural Policy Advisor, Russian Federation, Ministry ofAgriculture 129 Prepared statement 193 Johnson, Stanley R., director. CenterforAgricultural and Rural Development, Iowa State University,Ames, lA 115 Prepared statement 180 Joseph, Burton M., president, Joseph Companies, Inc 117 Prepared statement 189 (III) IV April 1993 1, Penny, Hon. Timothy J., a Representative in Congress from the State of Page Minnesota, openingstatement 203 Witnesses Brookins, Carol L., president, World Perspectives, Inc 223 Prepared statement 268 McCoy, StevenA., president. NorthAmerican ExportGrainAssociation, Inc .. 224 Prepared statement 287 Raup, Philip M., professor emeritus, departmenMtNof agricultural and applied economics, UniversityofMinnesota, St. Paul, 221 Prepared statement 261 Van Atta, Don, research associate. Center on East-West Trade Investment and Communications, Duke University, Durham, NC 204 Prepared statement 235 Wegren, Stephen K., assistant professor, department of political science, Southern MethodistUniversity, Dallas, TX 206 Prepared statement 250 CURRENT AGRICULTURAL SITUATION IN RUSSIA MARCH TUESDAY, 30, 1993 House of Representatives, Subcommittee on Foreign Agriculture and Hunger, Committee on Agriculture, Washington, DC. The subcommittee met, pursuant to notice, at 9:30 a.m., in room 1300, Longworth House Office Building, Hon. Timothy J. Penny (chairman ofthe subcommittee) presiding. Present: Representatives Barlow, McKinney, Baesler, Pomeroy, Allard, and Lewis. Also present: Representative E (Kika) de la Garza, chairman of the committee. Representative Pat Roberts, ranking minority mem- ber of the committee, and Representative Bishop, member of the committee. Staffpresent: Joseph Muldoon, associate counsel; Gary R. Mitch- ell, minority staff director; William E. O'Conner, Jr., minority pol- icy coordinator; John E. Hogan, minority counsel; Dale Moore, mi- nority legislative coordinator; Glenda L. Temple, clerk; Jane Shey, Anita R. Brown, Joe Dugan, and Lynn Gallagher. OPENING STATEMENT OF HON. TIMOTHY J. PENNY, A REP- RESENTATIVE IN CONGRESS FROM THE STATE OF MIN- NESOTA Mr. Penny. I want to welcome all of you to the first hearing of the Foreign Agriculture and Hunger Subcommittee. This will be the first ofthree hearings that will provide an overview ofthe cur- rent agricultural situation in Russia. This hearing is especially timely in light ofthe summit next week between President Clinton and President Yeltsin. The former Soviet Union and Russia have been important agri- cultiu-al markets for the United States for many years now. Obvi- ously, any drastic changes in Russia's ability to import United States grain and other agricultural products will have a significant ripple effect throughout the United States agricultural sector and, for that matter, all ofthe United States economy. In addition, however, our country is well-positioned to provide a tremendous amount of support for the forces of democracy and eco- nomic reform within Russia. I have long maintained that agricul- tural assistance is central to our ability to provide aid, and agri- culture is clearly central to any successful economic and political reforms within Russia and the other former Soviet Republics. (1) We will start today's hearing with opening remarks only from myself and the ranldng Republican on the subcommittee, although we do have the ranking Republican on the full committee here as well, and I would defer to lum for comments in just a moment. No other subcommittee members will be allowed to make opening statements, but we will allow statements to be inserted in the record as requested. We will also ask each of the witnesses to summarize their testi- mony. I would hope that none ofthem would rely on their text, but would instead use the 5 minutes available to summarize as best they can their input to this subcommittee. In addition, we will have a period of time in which we will view a video, in which two Russian farmers are expressing their views about the situation within their country, and then we'll have a tele- phone hook-up with one of those individuals and also £in official from the ag ministry in Russia where we can ask a series of ques- tions. From there we will move on to our other panels for the re- mainder of the morning, and we would hope to adjourn this hear- ing by 12 noon. [The prepared statement ofMr. Penny follows:] I TMOTHTJ»tMMTMIimtSOT*. CTNMOAVMWi*CKtSKCJHO«AMiAnW«UO0AW«MItMUCKAiJNKtHUIMC*K* TJCHOOAHMMNlKTlwSiOStOOCi'*il«nO<L«Wi>OV*CAHlOlWfOOM*NI* llihrHEiH^" ?H.S). J^ouit of iRepre£(entatibc« (cA-MI«.POsW«tsn.Ot.»kMfOoAT.NMDTA„K.OTsA Committre on /a9g*ric•ul«ture *ubtommitt«on:fortign laffritulturfan6^^unger Soom 1301.lonstDorlhIfouarOffittjiuiltiing iBasbinQton,1&€ 20515 STATEMENT OF THE HONORABLE TIMOTHY J. PENNY, CHAIRMAN 80BCOMMITTEE ON FOREIGN AGRICULTURE AMD HONGER 30 MARCH 1993 I want to welcome all of you to the first hearing of the Foreign Agriculture and Hunger Subcommittee. This is the first of three hearings that will provide an overview of the current agriculture situation in Russia. This hearing is especially timely in light of the Summit next week between President Yeltsin and President Clinton. The Former Soviet Union and Russia have been important agricultural markets for the U.S. for many years and it is important to bear in mind that any drastic changes in Russia's ability to import U.S. grain and other agricultural products has a ripple affect throughout U.S. agriculture. Our country also has a tremendous opportunity to promote the forces of democracy and economic reform in Russia. Withholding our support would be a tragic mistake, not only for the plight of hundreds of millions of people in Russia, but for the security and economic health of the U.S. and the world as well. We start these hearings with film footage and interviews with private farmers who have recently ventured out on their own. The reason that the U.S. trades and interacts with Russia is not only for our own farmers benefit but to assist their nascent private farmers as they take the first steps to privatize their economy. For a relatively small financial investment, we could help budding entrepreneurs start and grow businesses, aid farmers in creating supply and marketing cooperatives, and support rural banks that can provide credit. In short, we must promote the private sector through technical assistance projects and, in doing so, help destroy the long tentacles of the Communist system. Nearly 50 years ago, we came to the aid of war-torn Western Europe with the Marshall Plan. Today, that area is a bastion of democracy, the largest market in the world, and one of our biggest trading partners. Clearly the payoff was worth the investment. Unlike the Marshall Plan, an aid program to Russia doesn't have to be expensive. But the vision is similar: We must invest with an eye toward long-term political and economic gains for both East and West. Mr. Penny. I would ask first Mr. de la Garza, then Mr. Roberts, and then Mr. Allard for any opening statements they might have. Mr. de la Garza. OPENING STATEMENT OF HON. E (KIKA) de la GARZA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS The Chairman. Thank you, Mr. Chairman. This is indeed a very timely hearing inasmuch as the President and all of our Nation is interested in the events in the former Soviet Union, and especially in the last few days in Russia. From my long association with members of the former Soviet Union's ministries of agriculture and agencies in agriculture, we have always seen two things: One, that their system would eventu- ally fail, which it has; and, two, that it was at one time, is now, and can be in the future a very valuable market for us in agri- culture. I do hope that any assistance that we render at this time would be in two directions: First, that we assist them in order for them to be able to supply, to the extent possible, their needs in ag- riculture; and, second, that we foster their friendship in such a way that the market is available to us for our mutual benefit. I commend you and the subcommittee for delving into this issue in a very timely fashion. We look for the whole committee to work with you and this subcommittee so that we might, ifwe need legis- lation, be ready to present it. It is possible we won't need legisla- tion at this time. I think that much can be done under existing law, possibly with some executive modification. But should there be a need for legislation, we would be ready to accommodate the Presi- dent and the administration. Thank you, Mr. Chairman. Mr. Penny. Thank you, Mr. Chairman. Mr. Roberts. OPENING STATEMENT OF HON. PAT ROBERTS, A REPRESENT- ATIVE IN CONGRESS FROM THE STATE OF KANSAS Mr. Roberts. Thank you, Mr. Chairman. First, I'd like to associ- ate myselfwith the remarks ofthe chairman of the full committee, and just in case, Mr. Chairman, let me indicate to you that Mr. Al- lard, Mr. Smith, Mr. Emerson, Mr. Barrett, Mr. Bereuter, and my- self have introduced legislation. It's in the hopper. I would hope that we do not need it, but at least in terms of a possible means to answer some of our challenges, we have already done that in co- operation with the Secretary and talking with him. He has not en- dorsed the legislation per se, in that obviously there's an inter- agency task force involved in this in the big picture, but we did, as ofyesterday, introduce the legislation. Mr. Chairman, I want to thank you for calling this series ofhear- ings on the plight ofRussia and what we can do to help. Ofcourse, over the long haul, Russia will move toward the real modernization of their food and agricultural system, and we need to help in that process. But that process is going to take several years, and Russia needs food imports now to feed their population and help to sta- bilize their political situation. We have witnessed this past weekend just how precarious the democratic reforms are in Russia. President Yeltsin once again ral-