265 



the annual food use of wbeat has been virtually flat, varying from 35 to 37 million tons. The use 

 of wheat as feed over the same period averaged 44 million tons, and exceeded 63 million tons in 

 1990/91. Anything done to improve efficiency in grain feeding of livestock will have a 

 dl^oportioaate effect on Import demand for wheat 



The second and potentially more powerf\il force that could lead to a reduction in grain 

 imports is the determination of newly independent states to reduce dependency on others for their 

 food supply. No symbol of that dependency is as powerful as the need to import grain. Grain has 

 the status of an icon of independence in the FSU. Its successor states will malce heroic efforts to 

 cut back or eliminate grain imports. The one sector in which a drive for self-sufficiency could 

 command the widest public support is grain production. It is unrealistic to expect imports by the 

 states of the FSU to drive the demand side of world grain trade through the 199%, as Soviet 

 demand did for the past twenty years. 



It is dear that the major current adjustment in grain imports by the FSU is occuning in 

 coarse grains, used almost entirely for animal feeds. Animal numbers have fallen steadily since 

 1990/91, and especially in hogs. Prior to the break-up of the Soviet Union, per capita levels of 

 consumption of meat were approaching the levels of western Europe, were above the levels of 

 Norway, Sweden, and Finland, and approximately equal to the level in the United Kingdom. 



The livestock sector emerges as a major source of shock absorption capacity as consumer 

 prices begin to reflect true costs of production. The significance for world trade, and especially for 

 the United States, is that the restructuring now under way in Russian agriculture seems likely to 

 result in sharply lower import requirements for feed grains, including feed wheat 



This cotild also be a shift of great significance for the European Community. In years of 

 bad weather, much soft wlmer wheat produced in the EC is not of milling quality. The growth of 

 imports of feed-quality wheat by the FSU in the 1980s bad provided an important market for EC 

 wheat The growth of this market coincided with the transformation of the EC from a major grain 

 importer In the 1970s to the world's second largest grain exporter by the end of the 1980s. Any 

 cut-back in Russian demand for coarse grains and feed-quality wheat will be felt keenly by the EQ 

 and especially in years in which weather is unkind. The EC ha.^ yet to experience the problem of 

 finding ejqwn markets for large quantities of unmillable wheat. Demand by the former USSR, and 

 Russia in particular, pos^ned that experience. That demand is falling and seems likely to 

 continue to sb""if 



In this view, a transformed FSU will erode the base of current grain price support and 

 production guidance policies in the European community, Canada, and the United States. The 

 pressure for agricultural policy reform in those three regions will intensify. 



VL What Can Hie United States Do To Help? 



The most immediate step needed is to find a way to un-block the funds already available 

 to finance shipments of agricultural and other goods, but not drawn upon because Russia and other 

 states of the FSU have been unable to satisfy the conditions attadied. Why is this urgent? 



