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. Last Updated: 07/27/2016

Russia to Abolish Grain Requisitioning

The Russian government will abandon the old command system of compulsory state grain orders and switch to voluntary contracts at market prices in a step toward establishing a free market, Interfax reported Monday.

President Boris Yeltsin is expected to sign the decree this week, in time for farmers to plan for this year's harvest.

Yury Voichishin, a grain trader for the international agricultural company, Cargill Enterprises Inc. , said although the new decree would encourage a free market, there were still problems.

He said the government would still play a big role in setting domestic prices. Licensing and quota restrictions on exports mean farmers would still have to sell on the local market at a tiny fraction of world prices, he said.

Despite a better-than-expected harvest of 106. 8 million tons in 1992, 20 percent more than in 1991, Russia still suffered a grain shortage and was forced to import 25 million tons.

State and collective farms, still required to sell over half their grain to state orders, refused to deliver much of their quotas, preferring to hoard the grain or sell it on private markets where prices were higher.

The compulsory sale of grain, opposed by Russian peasants for the last 75 years, was a key plank of the Communist regime and led to massive famine in the 1930s.

Although compulsory state orders will be abolished, Interfax reported that the decree will create federal and regional food reserves at voluntary negotiated prices.

Interfax said the federal reserves will purchase 12. 5 million tons of grain to be sent to areas that cannot grow enough food to meet their needs. In 1992 the Federal government purchased 25. 8 million tons of grain.

The government will encourage producers to sell to the reserve by offering to pay for 50 percent of production in advance and providing a 50 percent subsidy oh the purchase of agricultural parts and equipment.

According to Interfax, Oleg Klimov, president of Exportkhleb, the Russian state grain-buying company, said Russia would be able to import about 3 million tons of grain in the first quarter of 1993, about half what was needed.

He said Russia had agreements and financing for the import of 5-6 million tons of grain, mostly wheat, out of the total of 16 million tons it wanted to buy this year.

The United States, Canada and Australia stopped shipping grain to Russia last years after it defaulted on debt repayments.

Russia will get 2. 6 million tons of French grain within the next six weeks as part of a European Community credit line and has access to another bilateral credit line from France to purchase 2-3 million tons of grain. Australia is also negotiating with Russia but will not restart deliveries until agreement is reached on back payments.