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Grain, US, and Russia

March 5, 1993



PRIOR to its breakup, the Soviet Union was the largest foreign consumer of American-grown grains, as well as a major consumer of a number of other United States farm commodities.

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The USSR is no more, and though Russia is the paramount entity of the new Commonwealth of Independent States, it has not assumed responsibility for loan payments of other states; rather, the commonwealth began defaulting on its American bank loans for farm products last November. To the consternation of American farmers, direct grain sales to the vast market have virtually dried up. But the commonwealth this week provided a glimmer of hope for eventual resumption of business with the US: It paid $15 mill ion of its past-due debt.

This triggered immediate response by grain-exporting states: US Rep. Pat Roberts (R) of Kansas met with a Russian delegation in Washington and wrote a letter to Secretary of Agriculture Mike Espy urging him to "act decisively to end the ... drought in grain exports." But a spokesman for Mr. Espy made it clear that the commonwealth and other former Soviet nations will have to come up with more money. Russia itself is more than $400 million in default on $4 billion in loans.

The US government has had to cover some $8 million in bad loans. Some of that is Russia's responsibility, the rest is that of the members of the former Soviet Union.

Resumption of grain sales will not come soon or easily. US officials point out that other creditor nations are involved in dealing with the debts left unpaid by the Soviet Union's demise. They are waiting to see what Russia and Ukraine do about the debt.

Mr. Roberts rightly notes that there is no provision in the credit-guarantee program "covering a single nation breaking into several nations."

As Rep. Bob Smith (R) of Oregon points out, "While the Russians [and others] have short-term credit problems, they are an enormous long-term benefit to our farm economy."