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dents, and those like the common soldiers who are forced to live 

 on very minimal fixed incomes. 



The problem of hyperinflation has had a dramatic impact on Rus- 

 sian standards of living. The Government has attempted to apply 

 brakes to some of the rises in food costs; however, along with the 

 general rise in prices, the price of staple goods has also skyrocketed 

 for most consumers, bringing with it a widespread fear of basic 

 food insecurity and a concomitant threat of social and political 

 unrest. 



It is as a hedge against such unrest that Russian authorities 

 have sought over the years and in the recent year to import grain 

 from the United States and, this year, to import somewhere be- 

 tween 16 million and 18 million metric tons of grain worldwide, of 

 which the United States total would ordinarily be somewhere be- 

 tween 8 million and 10 million metric tons if the means were avail- 

 able to sell that grain. 



Now, our failure to date to answer to the current Russian re- 

 quest does not mean that the Russian food system will collapse. 

 Nevertheless, I think we have to understand very clearly that our 

 failure to provide additional assistance in exports to Russia will un- 

 dercut an already fi*agile food supply situation, again, particularly 

 when viewed from the microperspective, and will result in hardship 

 for the average Russian family. 



Now, it's important to understand that many of the food-related 

 problems we see in Russia today result from what I would term as 

 pipeline disruptions. Even in the past under the previous Soviet 

 system, such disruptions were common. Today, however, more seri- 

 ous challenges exist, resulting from a partial breakdown in pre- 

 viously reliable relationships between producer and Government 

 procurement authorities and entities, between retailers and con- 

 sumers, and even between food surplus and deficit regions within 

 individual Republics. The absence of a generally recognized, legally 

 sanctioned market mechanism has resulted in an inefficient alloca- 

 tion of scarce resources, such as we all know; therefore, surpluses 

 exist side by side with deficit conditions. 



Now, the central procurement authorities in Russia are currently 

 attempting to bridge this gulf, but they are limited in what they 

 can do in terms of maximizing total welfare by constraints on the 

 subsidies that they can pay to producers, by weather-related fac- 

 tors, and by availability of credit from overseas to purchase bulk 

 commodities not otherwise available from domestic stock. 



Now, the situation in Russia is probably most severe or shows up 

 most severely in the livestock sector. There's a critical need for feed 

 grains and protein feeds for animal production; however, with U.S. 

 credit suspended, there's little outlet for this demand. As was al- 

 luded to earlier, as a result, wheat normally destined for human 

 consumption is being fed to animals, and this, in turn, has lessened 

 wheat supplies for food. Producer, Government, and consumer alike 

 have been trapped in a vicious cycle. Now, I should point out that 

 in my view, they're feeding the Russian wheat and using the Amer- 

 ican wheat to make bread. 



Bottom line, much has beeii said and written about the promise 

 of Russian agriculture. Some have predicted Russian self-suffi- 

 ciency in grain in the near term; others forecast a return of Russia 



