270 



Since 1972, the Soviet Union has been consistently the most 

 significant variable factor, other than weather, determining 

 agricultural marlcet prices, trade levels and market fundamentals. 



There has been a direct correlation between Soviet Imports and the 

 total volume of wheat and feed grain trade. The significance of 

 annual Soviet import patterns Is due In part to the historically small 

 role that world trade plays In total grain consumption. In the case 

 of wheat, trade has accounted for Just 18 percent of total use 

 annually, and in feed grains only 11 percent. 



Over the past 10 years, the Soviet Union has accounted for as much as 

 26 percent of world wheat and coarse grain trade annually; In no year 

 has the Soviet Union— or now FSU — accounted for less than 15 percent 

 until the current 1992/93 marketing year. This year we are projecting 

 that the FSU states, dominated by Russian imports, will account for 

 only 13.4 percent of total world trade. The drop Is not due to 

 greatly reduced needs, rather the financing to purchase those 

 commod I t I es . 



in brief, our agricultural system's development over the past twenty 

 years has been ilnlced closely to a trading relationship with the 

 Soviet Union. In years where Soviet Imports fell, that drop In sales 

 led to a poor performance In the U.S. farm sector — lower prices and 

 higher farm program outlays. Conversely, large exports to the Soviets 

 have consistently led to higher farm prices, and reduced government 

 outlays and stoclcs. in addition, the U.S. agri-infrastructure — from 

 upstream Inputs to downstream transportation and exports has been 

 similarly Impacted, with either a negative or positive effect on U.S. 

 GDP. 



USDA economists estimate that for FY 1993 and FY 1994, domestic farm 

 income could fall by $1-1.8 billion, CCC outlays for grains could 

 increase by $0.6-1.4 billion and prices would fall by 10-20 

 cents/bushel for corn and 20-45 cents/bushel for wheat. If no 

 additional U.S. grain and oilseed sales are made to the former Soviet 

 Union during the rest of these fiscal years. 



In brief, we have made a big investment in the Russian marlcet over two 

 decades. We must not throw it away. 



Russla/FSU Credit Sales 



Since 1991. the U.S. and other major exporters like the European 

 Community (EC). France. Canada, and Australia have sought to maintain 

 their sales to the Soviet Union, and then to the successor states of 

 the FSU through various types of programs. 



Food aid — donations or other types of concessional assistance — have 

 been targeted to specific parts of the population and to states with 

 no real resources. 



However, major export programs to Russia have been In the form of 

 commercial credits — either guarantees like the U.S. GSM 102 program or 

 direct credits as have been issued by the EC. Russia, until late 



