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that we prepare a proposal. Siibsequently, an initial study was 

 carried out by Land O'Lakes and, last year, a feasibility study 

 undertaken jointly with AKKOR, the Association of Peasant Farms and 

 Cooperatives of Russia. AKKOR represents and provides services for 

 the rapidly growing private fanning movement which now numbers over 

 200,000. These studies were financed privately by Land O' Lakes and 

 the Ministry. 



The joint analyses indicated that it is feasible and financially 

 viable to form a private dairy cooperative in the Venev District 

 (160 kms. south of Moscow) which would first provide farm supplies 

 to members and, then, begin small-scale butter and cheese 

 processing. In December 1992, the cooperative was formed and has 

 begun its operations. This effort is being undertaken to 

 demonstrate an integrated approach to dairy development and to 

 serve as a model for other regions. At each step. Land O' Lakes and 

 AKKOR will undertake symposia and prepare how-to publications which 

 will widely disseminate lessons-learned and promote agribusiness 

 formation throughout Russia. 



To carry out the project. Land O' Lakes successfully sought support 

 from A.I.D. to provide long-term advisors on site and short-term 

 technical assistance, training and U.S. management internships over 

 four years. We are now in the process of placing long-term staff 

 in the field and intensifying our technical assistance. 



The third activity which Land O' Lakes plans to undertake in Russia 

 involves a butter monetization project. We are proposing to USDA 

 that Land O'Lakes sell 12,500 metric tons of Section 416(b) surplus 

 better in Russia over two years. The revenues generated from the 

 sale of butter will finance the purchase of dairy and animal feed 

 processing equipment, and technical assistance for the installation 

 and operation of equipment at the newly formed Venev cooperative. 



In addition, the project will introduce the concept of Russian 

 value-added branded products to consumers. Most branded packaged 

 products currently sold are imported. Newly privatized food 

 companies in Russia can increase their market share and financial 

 returns through the further processing of commodities for retail 

 sale. 



Butter is currently sold in bulk at retail outlets. The project 

 will introduce Venev-label prepackaged butter of high quality to 

 consumers and, thereby, create a market for the model cooperative. 

 After two years, the Venev cooperative will be able to replace the 

 donated butter with their own product. Thus, U.S. food assistance 

 has a double impact of providing a needed commodity and as an 

 engine of private agribusiness development. 



Based on these experiences in Russia, I would like to make a few 

 observations : 



