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The way I think we could build the Russian market most effec- 

 tively is to do something to deal with the monopoly in the process- 

 ing and distribution system. And one of the ways to do that is not 

 to break up the monopolies. For reasons that were mentioned in 

 my written testimony it is very difficult to completely change these 

 enterprises in a short period of time. 



But, instead, what we might do is to foster — to develop policies 

 that will foster new entry into the processing and distribution in- 

 dustry. And these could be joint ventures from the U.S. side. Ways 

 to encourage U.S. participation will be through various kinds of 

 loan guarantees, risk-sharing with the private sector participation, 

 particularly in the food processing and distribution sector. 



With these loan guarantees, the pressure would be put on the 

 monopoUes to reform. The pressure would be on the existing orga- 

 nizations to reform in order to compete with the newly organized 

 private firms. 



Mr. Allaeid. I thank each of you for your response. 



Thank you, Mr. Chairman. 



Mr. Penny. Mr. Barlow. 



Mr. Barlow. Maybe this area has been covered. 



This is a busy week here with a lot of high school students com- 

 ing in from western and southern Kentucky. I don't know about 

 you all, but a lot of people from Kentucky are in, and I have been 

 trying to get to these hearings as much as possible. 



These hearings are very important, Mr. Chairman, and I very 

 much appreciate the way you are organizing them. We have set 

 ourselves a very daunting task to build relations with a country 

 that we have been at loggerheads with for decades. 



I would like to follow up on what the chairman said — maybe you 

 all have already gone through it — about using private enterprise in 

 the Soviet Union to add value to basic agricultural commodities, 

 and then recycling it back into the economy. We have the experi- 

 ence of McDonald's and a couple of other companies that are using 

 foodstuffs to build very powerful, thriving enterprises within the 

 Soviet Union that help in terms of employment and that help in 

 terms of stability. Can that be done through the companies that 

 you all are associated with with our help? 



Ms. Cashman. Most definitely, yes — speaking from Land 

 O'Lakes' perspective. In fact, we are actively engaged in that right 

 now. 



We also have a proposal pending before USDA on a butter mone- 

 tization program which actually establishes a brand identification 

 that identifies United States branded butter as well as establishes 

 a Russian brand name based on the cooperative. 



And I should make the point, when we talk about cooperatives, 

 we — Cooper was talking about member-owned cooperatives in Rus- 

 sia. And if you talk to a Russian, they will say, well, our co-ops 

 have always been member-owned, worker-owned cooperatives. So 

 what is the difference? 



I think it is important that the distinction we have used is that 

 we are a free-market cooperative. In other words, the cooperative 

 which Land O'Lakes helped establish in December of 1992 actually 

 has individual private farmers who actually own their own sources 

 of production and are members of what is now a farm supply and 



