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Russia's entire production in 1991 was 89 percent of 1990 and the full production 

 in 1992 was only 80 percent of the 1991 total. The standard of living, the real 

 per capita income in January 1993, was 43 percent of the January 1991 average. 



But, on the bright side, private farms are becoming more important in 

 furnishing the Russian food supply. In 1992, it is estimated that private 

 farmers produced 10 percent of the bread wheat in the country on only 3 

 percent of the land. Private farmers, gardeners, and "dacha" (summer home) 

 owners produced over half of all fruits and vegetables in Russia, including 60 to 

 70 percent of the potatoes. This shows again that production and efficiency 

 increase with independent farmers. I found that pride of ownership works in 

 Russia just as it does everywhere in the world. 



Another thing that makes agricultural production, processing, and distribution 

 extremely difficult is the fact that interest rates are now 80% to 160% per year. 

 In most cases there is no credit available to private farmers or independent 

 businesses at any rate. I talked to three bankers who all told me agricultural 

 loans are a poor risk. They said "farmers and small privately owned businesses 

 cannot pay back loans at such rates of usury." 



I requested the use of the city hall in Tekova to hold a meeting with the private 

 farmers of that region. Of 41 private farmers in the region, 40 came. We 

 discussed what is working and what is not working with Russian agriculture. 

 They told me of their fears and frustrations. The greatest fear is the 

 possibility that the financial reforms will eventually result in hyperinflation and 

 the restoration of dictatorial rule and centralized control over the economy. 

 They said virtually all farms in Russia, both private and state, are deeply in 

 debt. No one expects the state farms to repay their debts but a real threat of 

 bankruptcy hangs over the private farmers. They said if present conditions 

 continue, many private farmers in Russia could be forced into bankruptcy. 

 They said the toted lack of credit along with the high interest rates makes it 

 impossible to buy equipment, fertilizer, or any of the other production inputs. 

 They also complained that they only had the rights to "use" the land but cannot 

 sell or mortgage it. Another big concern was the few options for marketing 

 their products and the lack of private processing facilities. One big contention 

 was that the loans from the World Bank and other sources never seem to trickle 

 down to them, but there is always a generous supply of credit to the inefficient 

 state-run collective segments of agriculture and industry. 



I asked what is working and what can the USA do to help the Russian private 

 farmers. Eugeny Fadeev, an articulate and dedicated leader and spokesperson 

 said what seems to be working is their movement towards the formation of 

 farmer-owned cooperatives based on the American farmer-owned cooperative 

 model . He said this will be the best way to provide credit, storage facilities, 

 food processing, marketing, and distribution. He said only with a team effort, 

 with all farmers working together, will they survive. 



The group's first request was that some U.S. aid needs to be earmarked for the 

 private farmers and businesses in Russia. They also said more training needs to 

 be provided for management in the privatized businesses and for the owners of 

 private farms. Mr. Fadeev specifically asked for an expanded effort in exchange 

 programs for the private sector rural leaders to be sent and trained in the USA. 

 They also asked for help in developing an Extension Service modeled after the 

 U.S. extension system. Finally they asked for continued support of VOCA. 



TG.017, 3/25/93 



