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fication is lost. And, therefore, we are doing nothing to build long- 

 term markets for U.S. agricultural commodities overseas. 



Land O'Lakes recommendation is to actually look at value-added 

 processing that would — and you would ship the product out in 

 consumer portions, essentially. Butter, for example, could be done 

 in a 1-pound brick. And that, rather than have a specific company 

 br£ind identification, there should be generic U.S. Government — or 

 U.S. brand identification. But there is a major problem in that 

 commodities that we are shipping are doing nothing or very little 

 to support the long-term development of markets for American ag- 

 ricultural products overseas. 



But, second of all, if we are going to be partners — and it is a 

 global economy so you can't just produce here and think that you 

 are going to be doing this in isolation and the world is your mar- 

 ket, as a result. I think it is very important — and this is what we 

 have been doing in Russia and every other country we have worked 

 in — we have worked consistently with the processing sector and the 

 production sector. In fact, we work with the entire system. 



We don't want farmers to start producing more just to have to 

 dump it. We want to make sure that there is a processing sector 

 that is there, that is capable of taking whatever is produced at the 

 farmgate and actually processing that into some value-added prod- 

 uct that would then be sold to the consumer. 



So, yes, it is technical assistance, and training is needed to im- 

 prove the capabilities within the Russian food processing sector, 

 distribution sector. And, yes, it is doing value-added commodities. 

 Yes, it probably still involves some bulk commodities. It is all of the 

 above. If we are going to really address this in a logical way, that 

 is the best way. 



Mr. Joseph. Our experience is that the Russian rural system is 

 like the American rural system except they have never had a 

 chance to make a profit. These are decent, shrewd, wonderful, 

 hard-working people. 



We have several joint ventures in Russia. We are prepared to 

 enter into more joint ventures with Russian rural business people, 

 most of them coming fi*om the farm economy. We would like very 

 much to construct a number of factories there that will produce 

 these storage units that I have referred to in my written material. 



We think that, given the opportunity to have this storage, this 

 alternative to shipping at these horribly low prices to the state en- 

 terprise — through the state enterprise system, will give the Rus- 

 sian rural system a chance to make some money, and, with profit, 

 they can do marvels. 



I don't think it is a very complicated kind of business when you 

 put the question to us: WTiat should we do? Let's find a technique 

 and a method to let them make a profit. 



Mr. Johnson. My view is that the mix of our commercial activity 

 will change. We have been largely exporters of bulk commodities. 

 As their agriculture develops and becomes more diversified and be- 

 comes more linked with Western markets, we will have opportuni- 

 ties to export processing equipment and to participate in commer- 

 cial activities developing materials, technologies, and technical 

 assistance. 



