23 December 1998
(Agreements give Russia 3 million metric tons of food aid) (930) Washington -- U.S. Agriculture Secretary Dan Glickman said the United States and Russia have signed two agreements that will provide an estimated three million metric tons of U.S. grains, meats, oilseeds and dry milk worth approximately $830 million to Russia. Glickman said the United States is prepared to offer additional assistance if the need arises and if the initial shipments are successful in reaching the needy, according to a December 23 U.S. Department of Agriculture (USDA) news release. USDA's Commercial Credit Corporation (CCC) will provide loans under the first agreement for the Russian government to buy an estimated 1.5 million metric tons of various commodities from the United States. The commodities include 500,000 metric tons of maize (corn), 300,000 metric tons of soybean meal, 200,000 metric tons of soybeans, 200,000 metric tons of wheat, 100,000 metric tons of rice, 120,000 metric tons of beef, 50,000 metric tons of pork, and 30,000 metric tons of nonfat dry milk. Under the second agreement the United States will donate an estimated 1.5 million metric tons of wheat to Russia under the Food for Progress Program, section 416(b) of the Agricultural Act of 1949, which authorizes overseas donations of U.S. commodities. Following is the text of the USDA news release: (begin text) Washington -- Agriculture Secretary Dan Glickman today announced that the United States and Russian governments have signed two food aid agreements, one for U.S. concessional credit sales and one for donations, totaling 3 million metric tons of grains, meats, oilseeds, and dry milk. "This is a particularly appropriate time of year to talk about sharing America's agricultural abundance with others," Glickman said. "We will be providing a substantial food assistance package that should help the Russian people through some very difficult times, and we are prepared to consider additional assistance, if the need arises and the initial shipments are successful in reaching needy beneficiaries." Under the first agreement, the United States Department of Agriculture's Commodity Credit Corporation (CCC) will provide long-term, low-interest-rate loans for the Russian government to purchase 1.5 million tons of various commodities from the U.S. Commodities to be purchased are 500,000 metric tons of corn, 300,000 tons of soybean meal, 200,000 tons of soybeans, 200,000 tons of wheat, 100,000 tons of rice, 120,000 tons of beef, 50,000 tons of pork, and 30,000 tons of nonfat dry milk. The current commodity value of these sales is estimated at about $400 million. CCC will also finance an estimated $62 million in transportation costs and pay an ocean freight differential of around $58 million. The products will be sold in Russia at market prices, thereby increasing available food supplies for the Russian people. Under terms of the agreement, the Russian government will act in accordance with an agreed food distribution plan, which will target regions with substantial food deficits. All proceeds from the commodity sales will go into the Russian Pension Fund to help meet pressing social needs. The Russian government or its agent is expected to begin tendering for these products next month, and shipments will begin soon thereafter. Under the second agreement, the United States will donate 1.5 million metric tons of Section 416(b) wheat to Russia. Section 416(b) of the Agricultural Act of 1949 authorizes overseas donations of surplus U.S. commodities. The current commodity value of this wheat is estimated at around $225 million. CCC will also pay an estimated $85 million in transportation costs. The donated wheat will be sold or distributed to various regions in Russia and processed into flour. The agreement calls for about 75 percent of the flour from donated wheat to be sold at market prices, with proceeds going into the Russian Pension Fund. The remainder is intended for direct distribution to vulnerable portions of the population, such as orphanages, hospitals, and homes for the elderly. Initial shipments of U.S. wheat under Section 416(b) are expected to begin in January. The wheat will be provided from CCC stocks acquired through surplus purchases. Both agreements mandate extensive monitoring and reporting arrangements on the distribution of the commodities. To assist in this effort, USDA is sending a monitoring team to Russia whose members will serve with an independent United States-Russia food distribution monitoring group. In the agreement the Russian government also guarantees that import duties and taxes will not be levied on the entry, initial distribution, or sale of U.S. products received as part of the food assistance package. The United States will retain the right to delay or stop shipments if any abuses are detected. We are also exercising care to avoid any actions that would disrupt international agricultural markets, hinder the development of agricultural markets inside Russia, or reduce incentives for Russian farmers. In addition to the two government-to-government agreements, USDA will also be signing agreements with several private voluntary organizations for the humanitarian distribution of 100,000 tons of various U.S. commodities in Russia under the Food for Progress program. Details will be announced in coming weeks when final agreements are signed with selected private organizations. These commodities will be distributed to some of the most vulnerable Russian citizens, especially the elderly and the poor. Although signed in Moscow by the deputy prime minister of the Russian Federation and a U.S. embassy official, the two government-to-government agreements do not become effective until the official documents are returned to Washington, D.C., and countersigned by USDA's general sales manager. (end text)