Statement by Press Secretary Fitzwater on Food Assistance to the Soviet Union

The President decided today to make available an additional $1.5 billion in food assistance to help the Soviet Union, the Republics, and their people cope with immediate food shortages and aid in the longer-term restructuring of the country's food distribution system. With this announcement, total U.S. food assistance for the Union and Republics since January 1991 is $4 billion.

The President made this decision after having sent four separate experts' missions on food to the U.S.S.R. since May 1991, including the early October Presidential mission led by Secretary of Agriculture Edward Madigan.

The President is proud that America's abundance can help alleviate food shortages this winter. Extension of agricultural credit guarantees to the Union and Republics will not only assist them during this critical period, but will provide a needed boost to the U.S. food and agriculture community. Sales of this magnitude will stimulate economic activity through the entire chain, from fertilizer companies, to farmers, to transporters. Further, as increased demand raises the average price for grain, significantly lower deficiency payments will result in substantial budget savings. These credit guarantees will stimulate the U.S. economy and save near-term dollars in budget outlays for commodity programs.

The agreement was worked out in Moscow in meetings with representatives of Republics and the Inter-Republic Food Committee. The Union and the Republics agreed as part of the negotiations to share responsibility for the debt, and they agreed on both the value of U.S. food commodities to be purchased and the method of distribution. Continued responsibility for payments on existing CCC credit guarantees is also necessary for the disbursement of new credit guarantees.

The $1.5 billion will be provided in three different channels:

Credit Assistance: An additional $1.25 billion in credit guarantees under the Commodity Credit Corporation's GSM - 102 program will be made available to the Union and Republics in tranches over the next 6 months for the purchase of critical food and feed commodities. The initial tranche of $500 million will be immediately available with tranches of $250 million each made available on February 1, March 1, and April 1 of 1992. These credit guarantees will provide a flow of critical supplies during the winter and spring months when Soviet food supplies will be lowest.

Humanitarian Assistance: Up to $165 million in food aid will be provided to particularly hard-hit food deficit regions in the U.S.S.R. where shortages are likely to be most severe this winter. Initial discussions have been held with Union and Republic officials in an attempt to identify regions most in need. We intend to deliver food shipments first to Armenia and the Urals region of the Russian Republic and will then target additional areas over the course of the winter. To the degree practicable this assistance will be provided through American and indigenous private voluntary organizations.

Technical Assistance: The President has decided to go forward with a package of five projects aimed at improving Soviet food production and, importantly, distribution. These are: (1) a model demonstration farm in the St. Petersburg region targeted toward new private farmers; (2) assistance in developing wholesale markets in Moscow and Kiev; (3) extension service projects in the Armenian, Kazak, and Uzbek Republics; and (4) a public/private sector initiative to have U.S. private sector executives work in processing plants and at distribution centers to improve the efficiency of key Soviet food distribution enterprises. Planning is underway on each of these projects and implementation will begin in January 1992; (5) credit guarantees for U.S./Soviet food processing and distribution on development projects.