221 



he was trying to figure out how to break into the world flax mar- 

 ket—defines himself as a chairman of such an association, yet not 

 only does he call what he is a kolkhoz chairman, but it is perfectly 

 clear fi*om speaking to him that, if anything, his power over his 

 farmers has increased, not decreased. 



It seems likely that very many of the associations of peasant 

 farms are that kind of organization, and we need to go out and look 

 in the countryside and try and figure out on each case to what ex- 

 tent these are real changes. It's a hopeful model. Clearly, the no- 

 tion that you're going to give everybody 40 acres and a tractor is 

 not a realistic one for a whole bunch of reasons and probably 

 should not even be attempted. Whether or not the creation of asso- 

 ciations of peasant farms fi-om collective and state farms is working 

 out in practice as its advocates hope it will is not quite so clear. 



Mr. Penny. Thank you for your testimony. We appreciate your 

 being with us this morning. 



Our next panel includes Dr. Philip Raup, professor emeritus, de- 

 partment of agricultural and applied economics. University of Min- 

 nesota; Ms. Carol Brookins, president of World Perspectives, Inc.; 

 and Mr. Steve McCoy, president of North American Export Grain 

 Association. 



We would ask them to come forward and request that you pro- 

 vide testimony in the order you were introduced. That would be 

 from my right to left;. Bear in mind your written testimony will be 

 included in the committee record, and we would ask that you sum- 

 marize as best you can your remarks for the committee. 



Dr. Raup. 



STATEMENT OF PHILIP M. RAUP, PROFESSOR EMERITUS, DE- 

 PARTMENT OF AGRICULTURAL AND APPLIED ECONOMICS, 

 UNIVERSITY OF MINNESOTA, ST. PAUL, MN 



Mr. Raup. Thank you for the opportunity to meet here, and I 

 want to congratulate the subcommittee for having launched these 

 hearings. They're very timely, and it's encouraging to know that 

 probing in this depth is going on. 



My name is Philip Raup. I'm a professor at the University of 

 Minnesota. I grew up on a wheat farm in western Kansas, so I still 

 have a very direct connection with the kind of agriculture that 

 dominates in the Soviet Union. I'm going to try to make a few very 

 straightforward points in my comments and hope the discussion 

 will bring out more detail. 



It came out this morning and it's been underlying the rest of the 

 hearings that the basic cause for the problem in the Soviet Union 

 is twofold: They have no price on time, and they have no price on 

 space. The price on time is the interest rate. The price on space is 

 a market for land. Everything that's been said about havmg ineffi- 

 cient feeding, holding too many uncompleted construction projects, 

 is a consequence of not having a price on inventory. With no inter- 

 est rate, there's no pressure on you to move the product through. 

 There's no pressure on you to complete the project. 



This has had a major impact on agricultural policy and not only 

 in the former Soviet Union or in Russia, but also in Western Eu- 

 rope and in the United States. It permitted them to emphasize the 

 livestock sector very heavily, which they did after 1972, and there 



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