222 



was no cost of holding inventory. The result is that they have too 

 many cattle, too many hogs, too many poultry, turnover is slow, no 

 pressure on them to move products through with high levels of 

 feeding efficiency, and this has made it possible for them to sub- 

 stitute heavy feeding of grain for efficient feeding of all nutrients. 

 This has created a market in the Soviet Union for feed grain. 



Most of the wheat in the Soviet Union is fed to animals. Wheat 

 is a feed grain, not only a food grain. This dependence on imported 

 grain for animal feeds in order to, they hope, provide enough meat 

 in the shops so there would not be a repetition in the Soviet Union 

 of the kind of revolt of the workers that occurred next door in Po- 

 land has dominated our agricultural policies and created the mar- 

 kets that now are major sources of support for both farm policy in 

 the United States and farm policy in the European Community. 



That won't be corrected until they have a better set of institu- 

 tions governing and regulating agriculture and trade, and I think 

 the major contribution we can make is to promote the development 

 of these institutions. By that, I mean specifically contracts, com- 

 mercial codes, land registration systems. There's no adequate land 

 titling system in the former Soviet Union now, and it could not 

 support a land market, as we understemd the term. 



I conclude that one of the most likely outcomes is that the Soviet 

 Union will be characterized in the near term, the next decade or 

 two, by a form of sharecropping. I see evidence that this is already 

 emerging. This happened in the United States after the American 

 Civil War and for the same reason. Farmers had no capital, and 

 the institutions to support private farming did not exist. These rea- 

 sons are even more emphatic today in the former Soviet Union. The 

 result is that I think we will see a version of contract farming for 

 which commercial models exist now — contract farming in poultry, 

 turkeys, eggs, broilers, in cattle feeding, in canning crop produc- 

 tion. 



So I'm convinced that the greatest help we could give them is to 

 get some of their people in this country for a period of time long 

 enough to enable them to study these institutions. They won't take 

 them back, they won't replicate them exactly, but they will learn 

 something about the possibility of an intermediate stage between 

 outright family-type farming on privately owned fee-simple land 

 and the present system. That intermediate stage, I think, will in- 

 volve some form of sharecropping, a lease system that we would 

 look upon as sharecropping. 



Finally, I think we should recognize that the source of import de- 

 mand in the Soviet Union, which has been a big market for our 

 products, is likely to disappear. This is not likely to be a permanent 

 source of markets for American or for West European grain as it 

 has been for the last 20 years. 



Thank you. 



[The prepared statement of Mr. Raup appears at the conclusion 

 of the hearing.] 



Mr. Penny. Thank you. 



Ms. Brookins. 



