ABSTRACT
The Soviet Union and its successor states for two decades have been a key export market for U.S. feed grains, wheat, and soybean meal. Large Soviet purchases of agricultural commodities have had noticeable impacts on U.S. commodity prices, exports, carryover stocks, and on the administration of domestic production policies and commodity programs. With the exception of the 1980–81 grain embargo imposed in response to the Soviet Union’s invasion of Afghanistan, the U.S. Government’s policy of supporting farm exports to this major overseas market successfully survived the ups and downs in U.S.-Soviet political and military rivalry as competing superpowers.
542Although the Soviet Union historically purchased commodities from Western countries on a cash basis, declining hard currency reserves led the central Soviet Government in 1990 to request U.S. credit assistance to support continued purchases of U.S. grain. Congressional support for maintaining sales to this key market for American agriculture, and the Administration’s objective to bolster then-President Gorbachev’s reform efforts, led President Bush in December 1990 to offer U.S. Department of Agriculture (USDA) export credit guarantees.
The Bush Administration, starting in November 1991, expanded the scope of U.S. assistance in response to the poor 1991 Soviet harvest, food shortages reflecting continued economic and political chaos, and the dissolution of the Soviet Union into separate states. This included offering food aid to meet the needs of vulnerable groups in the population, and technical assistance and training programs targeted toward identified agricultural and food sector problems. From December 1990 through mid-November 1992, the U.S. Government offered to the Soviet Union and the new independent states $6.5 billion in various forms of agricultural assistance. Commodity sales backed by USDA credit guarantees accounted for 86 percent of this assistance, food aid for 13 percent, and technical assistance and exchanges represented 1 percent.
Current U.S. policy, as of November 1992, continues to support the twin objectives of maintaining agricultural sales to this important market, and helping the emerging democratic governments markedly boost food availability through farm and food sector reforms. However, U.S. programs in support of these objectives have implications for both the pace and outcome of the reforms themselves, and for the future of the former Soviet Union’s 15 newly independent and diverse states as markets for U.S. agriculture.
Some observers are urging policymakers to take a closer look at whether or not USDA-guaranteed export sales to Russia and Ukraine are helping these countries develop more open agricultural markets. They recommend that U.S. grain sales be used creatively to help introduce price incentives that would encourage Russian farms to sell more of their output to the state. Others question whether the Administration’s emphasis on short-term USDA guarantees is appropriate in light of Russia’s difficulties in paying its foreign debt and its request for a comprehensive debt rescheduling. They identify other options that may have more promise in maintaining U.S. sales to meet Russia’s food import needs, such as making available credit guarantees with longer repayment terms or facilitating barter transactions.
Other observers comment that U.S. policy, by virtue of the programmatic mix and proportions of agricultural assistance offered, reflects a short-term rather than long-term perspective. They urge that more U.S. resources be devoted toward technical assistance and training to help the new states develop market-oriented agricultural and food sectors. This would encourage U.S. agribusinesses to learn about this vast market and position themselves to take advantage of future trade and investment opportunities.
Some analysts foresee that the economic reforms, particularly as they affect the agricultural and food sectors, could significantly alter the nature and importance of this key market to U.S. agriculture. 543Likely changes in import needs could lead to reduced U.S. grain sales but to an increase in oilseed exports, and to increased U.S. exports of agricultural technology and food processing equipment to countries introducing policies intended to boost food supplies.
