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. Last Updated: 07/27/2016

Firing Underscores Grain Jitters

The sacking of Russia's farm minister after a disastrous grain harvest signals Moscow is jittery over how it will feed millions in far-flung regions, industry analysts said Monday.


But President Boris Yeltsin's dismissal of Alexander Nazarchuk, who supported subsidies to struggling farmers and called state wheat imports unnecessary, did not mean Russia was gearing up to hit world markets with big orders, they added.


Yeltsin's press service said Friday that Nazarchuk would be transferred to another job and that Deputy Prime Minister Alexander Zaveryukha would be acting agriculture minister.


Like Nazarchuk, Zaveryukha has said in the past that Russia will not import any wheat in 1996 and that any isolated shortfalls will be made up with small purchases by the private sector.


Russia's 1995 net grain harvest was 63.5 million tons -- far below 1994's mediocre 81.3 million tons and enough to spur private grain-trading outfits to talk of import deals.


"Nazarchuk's plan for the farming sector was and is full of harmful elements and has no real mechanism for getting domestic grain into federal reserves," said Arkady Zlochevsky, director of Russia's big OGO grain trading company. "But there will be no state buying, because the private sector is filling this gap."


"Nazarchuk was very strongly attached to no reform in the farming sector. He had a position, and the results were very bad," said a Western analyst.


Andrei Sizov of SovEcon Ltd., which specializes in agricultural production and trade, said Nazarchuk's dismissal was connected to the failure of the Federal Food Corporation.


This was set up by Nazarchuk last year to put enough domestic grain in reserves. The organization has bought about 10 percent of the more than 8 million tons it had planned to buy from Russian farmers.


Zaveryukha met U.S. and Canadian agriculture officials last year and is responsible for food distribution, procurement and farm financing.


Junior officials in other ministries have said Russia faces shortages of high-quality wheat and may have to import 3 million to 3.5 million tons this year.


Like Nazarchuk, Zaveryukha is a staunch ally of the Agrarian Party, whose campaign in last month's parliamentary poll failed, and is opposed to changes to Russia's heavily subsidized and vastly inefficient farms. "We were actually waiting for Zaveryukha's dismissal," said the Western analyst.


Both men oppose a reform program being carried out by the Land Privatization Unit of the International Finance Corporation, the private sector arm of the World Bank.


Nazarchuk's dismissal could lead the communists, whom the former minister supports and who have a strong presence in the new parliament, to call for an even more conservative replacement and further retard reform to the farming sector.


Russian farmers work with serious shortages of tractors, fertilizer, fuel and quality seeds but still want even more massive, inflationary budget handouts.


"The agriculture minister in Russia is not a strong enough figure to decide the question of imports -- but he does have to answer for the complete disintegration of the farming sector," Sizov said.