WASHINGTON (B)--The U.S. wants to make sure there is no way Russia can pay for part or all of the 5.1 million tonnes of U.S. farm commodities that it has asked for in donations, U.S. Department of Agriculture and State Department officials said Dec. 14.
One State Department economist said it is obvious that Russia will need to import a substantial amount of agricultural commodities in fiscal 2000, but stressed the U.S. needs a clearer picture of what Russia can afford before any deal on a new aid package can be signed.
Since Moscow devalued the ruble in August 1998, Russian imports from the U.S. have fallen drastically and even stopped completely for some commodities such as poultry. But more than a year later Russia's economic situation has improved significantly, according to a USDA trade specialist.
Revenue from significant increases in oil and natural gas prices are the biggest sources of much needed foreign cash and that new found wealth has the U.S. questioning if Russia can only get the agricultural
commodities it needs through donations.
Robert Eben, an economist for the Center of Strategic and International Studies, said the boost in oil revenue has been a substantial boon for the Russian economy and government coffers due to its share in taxes on the exports. However, he stressed that "it is going to take more than that" for Russia to feed its population without outside assistance.
Eben also pointed out that Russia's military attacks on Chechnya are likely draining those government coffers that the oil export tax revenues are filling.
The USDA official, speaking on terms of anonymity, said Russia's economy looks like it is making a slow but substantial recovery since the devaluation. The aide said Russia's fourth quarter trade data for 1998 showed food imports down by 80%, but stressed that it has since risen to 50%.
Russia purchases of U.S. poultry, for example, dropped to nothing and stayed that way for months after the devaluation last year. Now, however, the USA Poultry and Egg Export Council is predicting Russia will have purchased 500,000 tonnes to 600,000 tonnes of U.S. chicken parts in the 1999 calendar year.
The USDA official said that in theory, the ruble devaluation should have lowered production costs for Russian farmers, boosting production and profits, but there has been no substantial evidence of that happening.
Mary Chambliss, acting-general sales manager for USDA, reiterated Secretary of Agriculture Dan Glickman's recent prediction that a new food aid deal with Russia will likely be wrapped up by the end of this year. She also said she knew of no government study being performed to judge whether Russia can afford to buy the food it has requested to receive as donations.