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11 January 1999

TRANSCRIPT: WORLDNET WITH USDA OFFICIAL ON FOOD AID FOR RUSSIA

(Goldthwait food distribution will be carefully monitored) (8140)
Washington -- A food aid package, negotiated between Russia and the
United States, is set to be implemented in time to help the Russian
people through this winter. The deliveries should start to leave the
United States before the end of this month so the deliveries will be
completed by the end of June.
Speaking on WorldNet's "Washington Window" January 11, Christopher
Goldthwait, general sales manager of the Foreign Agricultural Service
of the U.S. Department of Agriculture, said that the food package
should benefit both the Russian people and the U.S. farmers.
The Russian people are greatly in need of the food due to the
shortfall in production over the 1998 drought-ridden summer and the
financial crisis in their country which prevents their purchase of
what little food is available. During this critical economic period,
workers have not been paid and pensioners have not received their
checks. Neither group has buying power.\
During the same period, American farmers have produced record crops,
which seriously depressed domestic food prices. The aid package to
Russia will provide a market for surplus U.S. commodities.
Goldthwait said, "There are three parts to our program. The first is
100,000 tons of commodities that are suitable for direct distribution
to needy people. These commodities will be distributed by five private
voluntary organizations, including the Red Cross.
"The second portion of the program is a donation of 1.5 million tons
of wheat, milling wheat, and this portion of the program will probably
start to move the quickest. Wheat is one of the two principal foods --
bread -- in Russia -- the other being potatoes.
"The third portion is a concessional loan covering a variety of other
commodities -- corn, soybeans, soybean meal, rice and some meat
products, especially pork and beef. Those commodities will be actually
purchased, but on concessional terms -- that is, very long repayment
with very low interest rate. In a nutshell, those are the three
components to our program."
Questioned about distribution of the food aid, Goldthwait said, "The
Russian government has provided us with a list of distributors that
they have selected whom they believe will be capable of handling the
large magnitude of commodities that is involved here."
A participant in the WorldNet from the city of Tomsk asked how
American taxpayers feel about the food assistance program. Goldthwait
responded, "The taxpayers in this country, I think, are generally
supportive of the program. They recognize that the program fulfills a
dual need. It provides commodities and food to our colleagues in
Russia who are undergoing an unfortunately short crop situation. It
also helps American farmers who ... have produced a surplus crop this
year. So we view it really as a win-win [situation], and the taxpayers
in this country are generally very supportive of it."
Asked if there would be coordination between the United States and the
European Union regarding the food aid, the USDA official said, "Yes,
there will in fact be close coordination. We have been exchanging
information with the Europeans during the process of developing the
agreements that we have with Russia, and the Europeans again have been
providing us with information [on the transportation and distribution
of its food assistance for Russia] as they have developed it.
"When we get to the actual process of shipping and distributing the
commodities, we will be providing full information to the European
Union and they to us so that we don't overload ports with arrivals
that conflict, so that we don't overload the internal distribution
channels. We very much want all the commodities to reach the people
most in need, and we think that careful coordination with the European
initiative is going to be necessary for us to maintain that kind of
internal control."
The official stressed that this assistance to Russia was help for the
short term, that "the condition that would be most beneficial there
would be improvement of the financial situation."
Other issues and suggested solutions to Russia's economic crisis were
also discussed in the program.
Following is a transcript of the WorldNet program:
(Begin transcript)
WORLDNET "WASHINGTON WINDOW"
UNITED STATES INFORMATION AGENCY
Television and Film Service of Washington, D.C.
GUEST: Christopher Goldthwait, General Sales Manager, United States
Department of Agriculture Foreign Agricultural Service
TOPIC: Food Aid for Russia
HOST:  Jim Bertel
DATE:  January 11, 1999 TIME:  09:00 - 10:00 EST
MR. BERTEL: Hi, I'm Jim Bertel. Welcome to "Washington Window," where
we discuss today's most important issues one on one with leading
newsmakers.
The Russian summer of 1998 was the cruelest in almost half a century.
Record-high temperatures baked the water-starved earth as farmers
battled the devastating drought to save what they could of their
crops. In the end, the harvest of wheat, rye, barley and other grains
was the smallest harvest nationwide since 1953. Then the financial
crisis hit, raising the costs of foreign imports and making a bad
situation worse. Anticipating a dire crisis this winter, officials
from Russia and the United States negotiated a food assistance package
that will ultimately benefit both countries, providing Russians with
the needed sustenance to weather this winter's shortages. And it helps
U.S. farmers whose record crops this year have seriously depressed
domestic food prices.
Because of expected food shortages in Russia, the recent food
procurement package negotiated between the United States and Russia is
set to be implemented in time to help the Russian people this winter.
Because of harsh economic conditions, particularly for the most
vulnerable Russian citizens, this package consisting of a wide variety
of goods, like wheat and other agricultural products, is needed to
offset hardships brought on by inclement weather and beyond to
potential shortages into spring.
The package should benefit both the Russian people and the farmers and
suppliers in the United States as distribution begins in the coming
weeks.
In a change from past agreements, this food program calls for a
two-person team from the United States to be stationed permanently in
Russia to oversee the distribution of the food. This will ensure the
grains, meat and other staples reach Russia's neediest citizens.
Joining me to discuss the food agreement and update us on its
implementation is Christopher Goldthwait, general sales manager of the
U.S. Department of Agriculture's Foreign Agricultural Service. Mr.
Goldthwait, welcome to "Washington Window."
MR. GOLDTHWAIT: Thank you very much, Jim.
MR. BERTEL: It's good to have you with us. We're in the heart of
winter right now, and some parts of Russia are in a desperate
situation. Briefly explain the three parts of the program and bring us
up to date on where we are as far as implementation.
MR. GOLDTHWAIT: There are three parts to our program. The first is
100,000 tons of commodities that are suitable for direct distribution
to needy people. These commodities will be distributed by five private
voluntary organizations, including the Red Cross. The second portion
of the program is a donation of 1.5 million tons of wheat, milling
wheat, and this portion of the program will probably start to move the
quickest. Wheat is one of the two principal foods -- bread -- in
Russia -- the other being potatoes. The third portion is a
concessional loan covering a variety of other commodities -- corn,
soybeans, soybean meal, rice and some meat products, especially pork
and beef. Those commodities will be actually purchased, but on
concessional terms -- i.e., very long repayment with very low interest
rate. In a nutshell, those are the three components to our program.
MR. BERTEL: And what about getting the food to the Russians? Has that
begun?
MR. GOLDTHWAIT: We expect that the initial shipments will begin later
this week. We're waiting right now for what we call the work plans,
the final information on internal handling of the first shipments,
which we need before we can actually begin scheduling the procurement
and the shipments themselves.
MR. BERTEL: That's good news.
Well, we are pleased to once again be joined by television stations
all across Russia. Let's continue our discussion with TV Babank (sp),
where journalist Yevgeny Schwartz (sp) joins us. He is joined today in
TV Babank (sp) studios by a special guest, Anatoly Sudigen (sp),
general director of Olivskye Univa (sp). Gentlemen, welcome to
"Washington Window."
Q: Good morning. This is our first program this year, and for that
reason I would like to congratulate everyone with a happy new year,
and I hope you had a good Christmas. I have a question, and also
Anatoly Sudigen (sp) has a question for you as well.
Specifically, the food program will be a benefit to American farmers,
and there are some regions of Russia where everything is quite all
right. We have Mr. Anatoly Sudigen (sp) here, who is general director
of the local joint stock company in -- (inaudible). They are engaged
in growing these crops and processing these crops, and as well as
selling them. How do you think that your help will help this
particular individual?
MR. GOLDTHWAIT: I am not sure that what we are doing will help
absolutely every person in Russia. But we do believe that by providing
our commodities during the time when we expect that domestic supplies
will be the shortest, we will in fact be keeping the supply chain
reasonably full or at least fuller than it has been previously.
Indeed, we would expect that most of the Russian harvest from last
fall would have been marketed by now or over the next month or two,
and not in effect conflict with the distribution and arrival schedule
that we are projecting for our commodities. So another important fact
is that the commodities, many of them, will enter commercial channels
for processing and sale within Russia. We think it's important to use
commercial channels which do exist within Russia rather than create
alternative distribution mechanisms.
MR. BERTEL: Briefly, who will be making the decision on the
distributors within Russia?
MR. GOLDTHWAIT: The Russian government has provided us with a list of
distributors that they have selected whom they believe will be capable
of handling the large magnitude of commodities that is involved here.
MR. BERTEL: Well, let's return now to TV Babank (sp) for another
question.
Q: Well, in addition of course we would like to cooperate, we are
prepared to cooperate with those gentlemen from the United States, but
along the lines of implementing new technologies and acquiring credit
so that we could obtain new equipment. I think that we have a good
possibility to cooperate in this area.
MR. GOLDTHWAIT: We do in fact have several cooperative undertakings
that are ongoing, including some in the area of technology and
equipment. These are taking place under the auspices of the
agribusiness committee of what is now the Gore-Primakov Commission,
the binational commission that is handling many of the economic
relationships and scientific and technical relationships between our
two countries. And I would invite you to be in touch with our Embassy
in Washington -- or excuse me, in Moscow -- with some ideas and
perhaps we can have some involvement in the activities of the
agribusiness committee.
MR. BERTEL: And I am pleased at this point to welcome TV Enten (sp) to
"Washington Window." Thank you for joining us, and go ahead with your
first question.
Q: Yes, hello, this is Mr. Delof (sp), from the city of Tomsk. I am
interested how American taxpayers -- what do they think about the food
assistance program?
MR. GOLDTHWAIT: The taxpayers in this country, I think, are generally
supportive of the program. They recognize that the program fulfills a
dual need. It provides commodities and food to our colleagues in
Russia who are undergoing an unfortunately short crop situation. It
also helps American farmers who, as Mr. Bertel said at the outset,
have produced a surplus crop this year. So we view it really as a
win-win [situation], and the taxpayers in this country are generally
very supportive of it.
MR. BERTEL: Let's return now to TV Enten (sp) for another question.
Q: Well, I have the following question: How will the control be
implemented concerning the quality of the products being delivered?
MR. GOLDTHWAIT: We are working right now in fact on the
specifications, including quality specifications that will be required
by the Russian side for the purchase of the commodities prior to
shipment. We always in our food assistance programs provide
commodities of the same quality that would be marketed here in this
country. So we should be providing very, very good quality products.
There is always a little bit of deterioration in quality in the
internal handling, but we will be monitoring the internal handling of
the commodities in this particular case much more intensely than is
normal. So I would hope that at the end of the shipment chain you
would still see very high quality products provided to the Russian
consumers.
MR. BERTEL: Certainly getting the products from here to Russia is a
big undertaking. Who is handling that, and who is going to ultimately
shoulder the costs?
MR. GOLDTHWAIT: We are paying the cost for the ocean freight that will
be used to transport most of the commodities to Russia. In fact, I
think they will all go by sea. There will be many, many vessel loads
-- perhaps as many as 60 or 70 vessel loads. We will have open public
tenders here inviting the competition of a number of American- and
foreign-flag shipping companies to handle the actual ocean freight of
the commodities.
MR. BERTEL: Well, at this point I am pleased to welcome TV Slaviya
(sp) to the program once again. Thank you for joining us, and go ahead
with your comments.
Q: Yes, hello, my name is -- (inaudible). Please if you would answer
this: The United States is planning to help Russia, but in what way?
Will everything be sent to Moscow and then distributed from there? And
if that's the case, where's the guarantee that the U.S. program will
actually work in such a way that the most needy will receive this
assistance? Because I think that two people that will be there from
the United States to control the situation, to monitor this
implementation, is probably not enough. I think we have a rising level
of thievery in our country, and this is a very important factor. Thank
you.
MR. GOLDTHWAIT: First of all, we are planning the distribution much,
much more intently than is normally the case in our food assistance
programs. I mentioned earlier that we are waiting on some paperwork
from the Russian side that will describe the distribution for the
first commodities to be shipped. That information is extremely
detailed. It will give us a breakdown of the commodity distribution
from the point of arrival at a Russian port through the wholesale
level, right down to the eventual entry of the commodities into retail
channels in localities within Russia. So for every shipment, we will
know exactly who is going to handle it, exactly where the commodities
are going, and who is responsible for the distribution at the local
level.
You mention our oversight team. In fact, it's going to be a much
larger team than two people. There will be at least four people
involved full-time in this, but they will be assisted not only by
people on the Russian side, but also by additional staff from our
Embassy in Moscow and from our consulates and other U.S. government
offices that we have in various parts of Russia. So it will be a much
broader effort that it seems when you speak only of a couple of
individuals.
Indeed, we have worked closely with the Russian government to identify
the areas of greatest need, greatest shortfall, and we have done this
on a commodity-by-commodity basis, product-by-product. So we do
believe that we have identified the regions of the country that are in
the greatest need. Further, a portion of the commodities will be
directly distributed to the most vulnerable -- that is, the neediest
-- parts of the population.
MR. BERTEL: Let's return now to TV Slaviya (sp).
Q: I have yet another question for you. The Commerce Department of the
United States, as far as I know, is the initiator of an antidumping
investigation which would limit the imports to a great extent. I think
that if these limitations were not implemented, then this would be a
more effective measure of assistance than the whole food program
itself. Perhaps this is an issue that will help solve your farmers'
problems. I think that the gentleman from Otolof (sp) said that
perhaps credit [for ?] acquiring new technology would be a more viable
form of assistance for Russia today.
MR. GOLDTHWAIT: First of all, I should note that the antidumping cases
are really not my area of expertise. I believe you are referring to
the investigation that concerns steel exports from Russia to the
United States. In point of fact, no measures have been introduced as
of yet, pending the results of the investigation. I think had we not
seen the financial crisis hit Russia, probably credit would have been
the preferred mechanism for imports into Russia for food products.
Indeed until August when the financial crisis hit, we were providing a
small credit program, a credit-guarantee program, to importers in
Russia who wanted to purchase products in this country. Again, because
of the financial situation we have had to suspend that for the time
being. We do look forward to at some point a restoration of calm
fiscal stability within Russia, and we would then perhaps be able to
address the needs through more conventional trade channels.
MR. BERTEL: One casualty of the economic downturn in Russia has been
poultry producers. Here in the United States at one time they were the
largest import into Russia. Is poultry included in this program, or is
that a separate program? Where does that stand?
MR. GOLDTHWAIT: Poultry was not included in the initial program --
again because we were looking at the commodity request list that the
Russian government provided to us. And in fact all of the commodities
that are currently in the program reflected the needs that the Russian
government identified.
We are studying the question of adding poultry to the program, and I
would expect that we will be approaching the Russian government to see
if there is any interest on that -- probably reasonably shortly. But
it would be probably nothing like the volume of trade that we saw in
poultry earlier, where we were seeing perhaps a hundred thousand tons
moving per month, or a little less than that. This has wreaked some
hardship on the American poultry industry.
MR. BERTEL: Well, at this time we are pleased to welcome TV Bars (sp)
to the program. Go ahead with your questions or comments.
Q: In connection with the last question, who was the more active
initiator? Was it the United States with its wonderful bumper harvest
that is trying to sell its excesses to Russia under this so-called
humanitarian program, or perhaps was Russia the more active initiator
or perhaps is a more needy partner?
MR. GOLDTHWAIT: The initiative was actually from the Russian side. We
of course began to get reports back in late August or September to the
effect that the Russian harvest was not going to be a good one. The
prospects were deteriorating. The estimates of the crop size were
declining. It was towards the end of September that we had first some
unofficial inquiries from the Russian side, and then a more formal
request that came during the month of October. So the initiative was
taken by the Russian side. I am pleased that in view of our own
situation we are able to respond positively.
Q: So there was no pressure from the American side on the Russian side
on this issue?
MR. GOLDTHWAIT: No, none whatsoever. And as I indicated, the
commodities that are in the package are those requested by the Russian
side. The only innovation that we added was the 100,000 tons that will
be distributed by private voluntary organizations. We felt that some
portion of the program should go through private hands. Again, in some
regions of the country -- not by any means everywhere -- it's been our
experience that private voluntary organizations identify -- do a
better job of identifying the neediest, most vulnerable groups.
MR. BERTEL: This might be a good time to reclarify what exactly is
involved in the deal. Now, one and a half million tons is an outright
donation?
MR. GOLDTHWAIT: That's correct.
MR. BERTEL: One and a half million tons is being sold under a
long-term loan. And then the 100,000 tons is being donated for the
neediest citizens. Why part donation, part business transaction?
MR. GOLDTHWAIT: This really gets back to the various resources that we
have available to the Department of Agriculture here in this country.
And it's a little complicated, but we manage three different food
assistance programs, each of which has its own rules, it own
legislation. And some of these programs are better suited for some
commodities or some distribution mechanisms than the other programs.
So this is really a technical matter that we needed to work out on our
side. It really doesn't have anything to do with the situation in the
recipient country other than the fact that we did want some portion of
the commodities to be distributed directly to the most vulnerable
groups. And indeed some of the commodities that are provided under the
other two portions of the program will be directly distributed by the
Russian government to vulnerable populations for which it has the
responsibility of ensuring food supplies.
MR. BERTEL: Well, as I mentioned, we have a number of Russian
broadcasters joining us today. And at this point we move on to TV ASV
(sp). Thanks for joining us. Go ahead with your comments.
Q: Yes. I have the following question for you: Several times we've
dealt with actions like this in other countries just as you have. What
kind of problems have you encountered, and what new experience will
you be gaining here in Russia? And also in your opinion what is the
peculiarity of our national market?
MR. GOLDTHWAIT: That's a very broad question. We do encounter
distribution difficulties from time to time in the execution of our
food assistance programs. To be quite honest, the most difficult
circumstances arise because of civil disorder. And of course we do not
anticipate anything like that in the case of the distribution within
Russia. In Russia I believe the difficulties are going to be in
distributing a large quantity of food stuffs to many, many different
oblasts within the country. And I think that the experience that we
will gain comes from the intensity of the monitoring of that
distribution that we will be undertaking, which is in fact greater
than that which is normally the case in our Department of Agriculture
food assistance programs.
Q: I have a second question for you then. Two years ago the deputies
of the local Orlof (sp) parliament were having some trouble with the
drumsticks that were being sold to us at dumping prices. The question
is: Have you perhaps lost our Russian market in connection with this
crisis?
MR. GOLDTHWAIT: The market for the drumsticks, for chicken products
generally, has declined quite sharply as a result of the financial
crisis. The Russian firms that were importing and marketing the
products have not been able to continue to finance the imports. In
point of fact, the imports of the poultry have fallen down to I guess
perhaps five or ten percent of their previous volume. So this has in
fact been one result of the financial crisis.
MR. BERTEL: You're watching "Washington Window." We're discussing the
U.S.-Russian food procurement program. Let's move on now to TV Esta
(sp) for our next question. Go ahead.
Q: Yes, hello. We have a saying here that when a person wants to feed
someone what you really need to do is give them a fishing rod rather
than a fish, and that the United States is doing something quite
opposite of that. So in connection with this, I have the question of
wouldn't it be better for your country to make an investment into the
agricultural sector of our country?
MR. GOLDTHWAIT: Let me make several points. First of all, yes, indeed,
the fishing rod from a long-term perspective is the preferred
solution. The commodities that we are providing under the food
assistance program are intended to meet a very short-term shortfall
that we anticipate will be quite serious as we get through the winter
and into the spring months, so prior to the next Russian harvest
coming in. We are, however, undertaking a number of technical
assistance programs in the area of agriculture. One thing we will be
doing is providing some planting seed as an addition to the package.
The planting seed is not yet in the package, but we have been
discussing the possibility of adding that. That comes closer to the
fishing rod concept of course.
In fact, prior to the financial crisis we had seen a big increase in
the amount of private sector investment by U.S. companies in Russian
agribusiness. Again, because of the financial crisis, that has dropped
off again for the time being. We would expect than when the financial
situation improves we would see more of that investment interest on
the part of U.S. companies.
Q: This problem can be examined differently. After the August crisis,
the import prices have increased several times. It would be perhaps a
factor here to consider is that now Russian-made products are more
readily available. Perhaps something could be done along this line to
help the Russian farmers.
MR. GOLDTHWAIT: I do understand that the portion of domestically
produced products that you see in the Russian markets has increased
quite sharply since the crisis. So in a very awkward way the financial
situation is benefiting Russian farmers and Russian producers.
Unfortunately, the prices within the Russian market remain quite low.
But there is some positive gain on the part of Russian agriculture
itself. That should over time also make investment from foreign
countries in Russian agribusiness attractive once more. Again, I think
that will probably come only after there's a certain degree of
financial stability. But it should happen sooner or later.
MR. BERTEL: I am pleased to welcome to the program now TV station Ural
Inform. Thank you for joining us, and go ahead with your questions.
Ural Inform, TV Ural Inform, we would like to welcome you to the
program, and please go ahead with your first question.
Q: Yes, please tell me in the regions themselves how will this food be
distributed? Russia is a very vast land, and is there a possibility
that this assistance will be limited only to the Moscow region and St.
Petersburg and other major cities?
MR. GOLDTHWAIT: The Russian plan has provided us with a distribution
plan, which is an integral part of the government-to-government
agreements that we have signed, one for the donated wheat and one for
the other commodities sold on the concessional loan terms.
The distribution plan includes oblasts throughout the country, and is
oriented actually towards the population in the Far East, the north,
some of the regions that are not agriculturally productive themselves
within Russia.
At the local level the commodities will be handled two different ways.
First of all, we will track all the commodities down to the oblast or
municipal level within Russia. There they will be either sold in the
existing concessional channels, providing a net increase in the
quantity of food that is available to Russian consumers at the time
they are distributed. Alternatively, direct distribution to
institutions, orphanages, homes for the elderly, as well as to some of
the pensioners who cannot get out of their apartments to shop, will be
undertaken both by the government and by the private voluntary
organizations that are participating in the program.
MR. BERTEL: TV Ural Inform, go ahead with another question.
Q: Yes, tell me please for the American farmers, is this program a
commercial action? In other words, is this something to support the
growers, the farmers in the United States? Is this so?
MR. GOLDTHWAIT: There will be a positive impact by the program on farm
prices within the United States. The commodities that are provided
will be purchased from the domestic U.S. market, either directly
purchased in the case of the wheat, or purchased through a competitive
tender in the case of the other commodities that are involved. And so
there should be some net positive impact for domestic farm prices.
Farm prices within the United States have been very, very low for most
of the past year, which means again that the commodities are available
at very reasonable cost for the portion of the program which is a loan
to Russia.
MR. BERTEL: Ural Inform, I think you have one more question. Go ahead.
Q: Yes, this is something out of the realm of fantasy. Astrologists
are promising all sorts of hardships for Europe and for the United
States. Tell me if something like that happens, indeed, are you also
going to be expecting food assistance from Russia? (Laughter.)
MR. BERTEL: That is truly hypothetical.
MR. GOLDTHWAIT: Yes. We think that the goodwill and generosity goes
both ways. Indeed if we saw a situation where the tables were turned,
where it was the U.S. farmers who were not able to produce, where it
was the U.S. economy that was in some difficulty and the Russian
economy that was strong and Russian production that was in surplus, we
would certainly hope that the generosity would run the other way as
well. And while, yes, if we look at this in the context of 1999, this
seems to be perhaps a fantasy question. I would recall that if we go
back to 1899, Russia was a grain-exporting country. So it's not
impossible certainly that with some time Russia would be
self-sufficient, or perhaps even find itself in a net export
situation. There were some small grain exports from Russia last year,
some of which continued into the fall months, because Russia had a
very, very fine harvest in 1997.
MR. BERTEL: We are going to return to TV Babank (sp) in just a moment.
But first I'm curious about another program that has been put into
place. An agreement has been reached between Russia and the European
Union for additional food assistance. Will there be any coordination
between the United States and Europe in transporting and distributing
all of this food aid throughout Russia?
MR. GOLDTHWAIT: Yes, there will in fact be close coordination. We have
been exchanging information with the Europeans during the process of
developing the agreements that we have with Russia, and the Europeans
again have been providing us with information as they have developed
it. When we get to the actual process of shipping and distributing the
commodities, we will be providing full information to the European
Union and they to us so that we don't overload ports with arrivals
that conflict, so that we don't overload the internal distribution
channels. We very much want all the commodities to reach the people
most in need, and we think that careful coordination with the European
initiative is going to be necessary for us to maintain that kind of
internal control.
MR. BERTEL: Let's go back now to TV Babank (sp). Go ahead with your
next comment.
Q: Certainly the U.S. food program is required by Russia, and this is
what Anatoly Sudigen (sp) thinks about this. I have been thinking very
carefully and listening carefully to all the questions posed, and I
would say, yes, the assistance that the American people are providing
for the Russian people, that is all very fine and good, but that's
just one side of the question. It would be very difficult for me to
speak with complete authority, but I believe that food products are
available in stores currently, but the most important issue for us
today, and you know, is the employment issue, the delays in salary
payments. And of course if we have sufficient food stuffs, our people
today simply cannot acquire it. We talked about these drumsticks we
used to import from you. When we get products from the United States,
from overseas, in so doing we are really casting aside our own
capabilities, our own agriculture. So today in our region we are
taking every effort in order to reestablish our domestic production
and to be less dependent on the products that are being imported from
overseas. I've already said that this is very fine that we are
receiving this assistance now, but what we would really like is that
we would participate in a joint project for production, for the
processing of our agricultural goods, and then that team which I
represent -- that is, the joint stock company -- we are prepared to
work with American entrepreneurs. We have a turnaround of 200 million
a year. We would like to find American farmers who could work more
efficiently here with us. This is what we are indeed interested in.
MR. GOLDTHWAIT: Let me make several comments if I may. First of all, I
would agree that right now at this moment in time in most parts of
Russia there are well-stocked shelves in the supermarkets. It is our
expectation that the time when the imported commodities that we are
providing are going to be the most needed is late in the winter
through the spring months and early summer -- i.e., just before the
next Russian harvest comes in. Our forecast is that is when you will
see real shortfalls in availability of products in Russia. Part of the
difficulty is, as you say, that people have not been paid and do not
have money to buy the products that are available. That is one of the
reasons why some of the commodities that we are providing will be
distributed directly without cost to people in the greatest need. We
have also specified and agreed with the Russian government that for
those commodities that will be sold within local markets the rubles
from those sales will go into the pension fund enabling pensioners
whose pensions have also been delayed, who have not received payment
of what is due to them, so that they will in fact have some money in
their pockets once more and again be able to participate in the local
market.
And, yes, I agree certainly that we want to see Russia's agriculture
itself develop. As I indicated we do have some mechanisms for
exchanging information and ideas about investment prospects, and I
would encourage you once more to contact our agriculture office at the
Embassy in Moscow to become informed on what the possibilities are for
cooperation in the area of investment.
MR. BERTEL: We're discussing the U.S.-Russia food procurement program
with Christopher Goldthwait. Let's return now to TV Enten (sp) for
another comment.
Q: Yes. I would like to find out in greater detail how will the
commercial organizations participate in the distribution. If these
products will be sold, then in what way are the prices going to be
formed, by who also?
MR. GOLDTHWAIT: The commodities will enter commercial distribution at
either the wholesale or retail level, depending on the situation in a
particular oblast. We will be receiving from the Russian side detailed
information on exactly how that will take place in each locality where
the commodities are to be delivered. So at a certain point in time
commercial organizations locally will have the opportunity to purchase
the commodities and then to resale them. The only requirement as far
as pricing is concerned is that the commodities not be sold at a
discount to prevailing local prices. We don't want the commodities to
be sold at a discount, because we don't want the prices that are being
received by Russian farmers for commodities that they are continuing
to sell at the local level in the marketplace. We think the positive
benefit from providing the commodities to the commercial system is
that as we get out into those months of shortage more commodities in
the market will tend to keep prices from increasing as sharply as
otherwise would be the case. In other words, the products will
continue to be more affordable to the Russian consumers when they are
sold through those commercial channels.
MR. BERTEL: And we'll return now to TV Slaviya (sp) for our next
question.
Q: I have a comment. Recently we had some information that in --
(inaudible) -- the salesmen there cannot find anywhere to sell the
grain that we have -- we have a lot of grain. So it looks like the
American program will be solving the problem of the poor organization
of our leadership, and will at the same time be helping the American
farmers. I listened also about what you said about the prices, and I
am unfortunately convinced that our local businessmen will take
advantage of this. So once again this program will benefit some of the
sellers that we have in our country -- I can state that with great
sorrow.
MR. GOLDTHWAIT: I would hope that some of the mechanisms that we are
going to be putting into place, again to be sure that the prices are
not undercutting local production, will in fact be somewhat helpful in
that regard. It is true that the market in some parts of Russia is
imperfect and that there have been difficulties in the movement of
commodities around the country. Again, we don't want to interfere with
the domestic marketing of -- by Russia's own farmers of their
products. We also think that the delivery schedule will be helpful in
that regard, because as we get another month or two along, most of
Russia's harvest from last fall should in fact have already been
marketed.
MR. BERTEL: I'm going to follow up on that last question while we
determine the next broadcaster who will be joining us. Obviously
keeping prices steady on the donated food, that's simple enough. But
when there's a loan to pay and the ruble keeps dropping in value, what
sort of precautions have been built into that loan to keep the price
of the food at the retail point from going up?
MR. GOLDTHWAIT: The -- we do not have perfect control of the pricing
at the retail level. Our concern is that there be a minimum price
which is not undercut, because what we are trying to do there is
prevent our commodities from discouraging production locally. Over
time, yes, the Russian government will be responsible for repaying the
loan portion of the package, and that in view of the depreciation of
the ruble could create some problems. What we have done there is to
introduce a very, very low interest rate for the loan. It is only two
percent. And so we would think that with an interest rate that low
over time the Russian government will in fact without too much
hardship be able to meet the payment schedule. There is also a
five-year grace period involved. So the first repayments will not
occur for an additional five years. And certainly within that time
frame the financial situation in Russia should be somewhat better.
MR. BERTEL: I would imagine at this time when the economic crisis is
so dire in Russia granting a loan of this type is actually a good sign
to businesses that the U.S. government is betting on the Russian
economy to improve, so could have additional benefits beyond just
simply the food procurement program.
MR. GOLDTHWAIT: Well, it should help, at least a little bit to build
some sense of eventual confidence in the Russian financial recovery.
It will not play a particularly large role. In that regard in some of
the arrangements with other financial institutions, the IMF and so
forth, the private banks that have made loans in the past to Russia
will be much, much more important. But in a small way it should be a
positive indicator. I would say that a stronger indicator would be the
restoration of our commercial credit program for Russia, and we look
forward to being able to restore that program as the financial
situation begins to stabilize.
MR. BERTEL: Let's continue our discussion by returning to TV Esta (sp)
now for another question.
Q: You already mentioned the fact that the Russian side requested this
and that you agreed. But did you advance any conditions to the Russian
side?
MR. GOLDTHWAIT: We did in fact set conditions in two important areas.
We required, first, that all of the commodities that are provided
would be free of import duties and taxation. Again, we did not want
the prices for the commodities to be increased for the consumer
because of duties and taxation, and that would be incompatible with
the nature of the assistance that is being provided.
The second area of concern was with the distribution and handling of
the commodities internally. As I've already indicated, we are going to
be undertaking a lot more scrutiny of the distribution within Russia
than is normally the case in our food assistance programs. And again
the intent there is to be sure that the commodities actually do get to
the neediest portions of the population and are not diverted in the
distribution system somewhere.
MR. BERTEL: We are pleased to return now to TV Bars (sp). Go ahead
with your next comment.
Q: What sort of factors could influence future work after this program
concludes? And what sort of factors could influence to such an extent
that this program would be halted before it is completely implemented?
Could you please answer that?
MR. GOLDTHWAIT: In terms of future work, again I tend to think more in
the commercial direction when I think of the future relationship that
we will have with Russian agriculture. So I think that the condition
that would be the most beneficial there would be improvement of the
financial situation.
In terms of halting the current program, the thing that comes most
readily to mind would be if we found that the commodities were not
reaching the intended recipients but were somehow being diverted or
going astray before they reached the intended destination. If we saw
that kind of thing happening we would have to give serious
consideration to halting the program, either at the local level if the
problem is a local problem or more generally if it seems to be an
endemic problem for the program. That would be a serious concern to
us.
MR. BERTEL: We're discussing the U.S.-Russia food procurement program
with Christopher Goldthwait. Let's return now to TV ASV (sp).
Q: Yes, I would like to approach this issue from another aspect. Among
conditions that the U.S. side advanced for Russia, in addition to
economic ones, there is a political constraint, wasn't there? Perhaps
the current administration is trying to gain some sorts of dividends
for itself in the political realm by participating in this program?
MR. GOLDTHWAIT: Do you mean a political realm in terms of the
U.S.-Russian relationship generally? Yes, I believe it should be a
positive factor in that relationship. We certainly hope that it is
perceived not only by the Russian government but also by the Russian
public in that light. There is also, if you will, a dividend for the
U.S. farmer involved in the program. So there is a positive aspect to
the program in a U.S. domestic sense, and I think that's why there has
been broad support for the initiative within the executive branch,
within the U.S. Congress and publicly within the United States. So the
program does have those two sort of political aspects to it. But I
believe they are positive.
MR. BERTEL: And as we wind down in time here, let's go back to Ural
Inform for our next comment.
Q: Could you tell me please all of the commodities that will be
shipped from America -- will these commodities be checked or verified
by our Russian organizations? What I have in mind here is perhaps some
commodities could be made to look like counterfeit American goods.
MR. GOLDTHWAIT: The -- first of all, all of the products will enter
Russia subject to the normal terms and conditions that Russia sets for
imported commodities, or any changes in those will be carefully worked
out and mutually agreed upon. The commodities will be tracked very
carefully within Russia. We will -- so I don't believe that they could
in fact be counterfeited. We will have full reports of the arrival of
the commodities within 48 hours from the port where the commodities
are discharged within Russia. We will have in place a work place which
describes precisely how they will be handled, by whom, at what points
the handlers will change, at what point ultimately the commodities
will be either sold or distributed to needy people.
We will have a full team spot-checking that process as it occurs, and
I think we will learn very, very quickly if there are any significant
irregularities in the process.
MR. BERTEL: Let's go back now to TV Babank (sp).
Q: The elections in 1999 will be taking place for the Duma, so it's
very important here this factor, who the hungry people would be voting
for. And I would like to have my colleague Anatoly make a few comments
as well.
Q: Well, the questions that we put to you earlier, I would still like
to get a deeper answer to that. And, secondly, I would like to invite
you to come to Orlof (sp) to see how we are working. Like the Chinese
have a saying -- it's better to see it one time than to hear about it
a hundred times. Thank you.
MR. GOLDTHWAIT: I would certainly be pleased to have a chance to visit
Orlof (sp). I'm not quite sure when I might be able to work that in,
but I very, very much appreciate the invitation, and I would look
forward to learning more about the business of your company and
hearing about some of the things that you have been able to achieve.
MR. BERTEL: We have just a couple of minutes left. Let's squeeze in a
quick question from TV Enten (sp).
Q: Regarding the schedule of the deliveries, when are you planning to
begin these deliveries?
MR. GOLDTHWAIT: The deliveries should start to leave the United States
towards the end of this month in late January. As I said we are
waiting on some of the last information we need in order to schedule
the shipment of the commodities. The intention is that the deliveries
would be completed by the end of June. And so we are looking really at
a six-month delivery period for the commodities. And I would expect
that they would be staggered through -- the deliveries would be
staggered through that entire time period.
MR. BERTEL: We have time for a very brief question from TV Slaviya
(sp) and an equally brief answer.
Q: Very brief question then. Did you envisage some sort of customs
barriers? Will the issues be resolved easily at customs?
MR. GOLDTHWAIT: We have had problems in the past, and in our
negotiation that was a key point. We believe we have sufficient
assurances now so that should not be an issue as the commodities are
delivered.
MR. BERTEL: Well, I'm afraid we'll have to wrap up our discussion
there. Christopher Goldthwait, thank you so much for shedding light on
this complicated but important food procurement package.
MR. GOLDTHWAIT: Well, thank you very much for the opportunity, and I
hope it's been helpful to the viewers.
MR. BERTEL: I'd also like to remind all of our viewers that you can
get all the latest information on "Washington Window" in both English
and Russian by visiting our Web page. The address is
www.ibb.gov/worldnet.
Be sure to join us next week as we discuss the very latest on the
impeachment trial of President Bill Clinton. In Washington, I'm Jim
Bertel for "Washington Window."
(End transcript)