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Soviet and United States food interests establish international trade council.

Soviet and United States Food Interests Establish International Trade Council

Intent on restructuring a food distribution system that is synonymous with shortages and waste, the winds of Mikhail Gorbachev's perestroika policies were recently felt as far away as California. The National (U.S.) Food Processors Association Convention in Anaheim was the setting for formalization of a U.S.-U.S.S.R. international trade council to exchange information related to each nation's food processing industry.

The council, which will have offices in Moscow and Washington, is the result of two protocols signed in the Soviet capital by delegates of an American food processor mission last October. Other parties to the agreement were two Soviet agricultural production agencies: the All Union Gosagroprom U.S.S.R. and the State Agro-Industrial Committee (Gosagroprom Russ).

"We understand that this is just a starting point," said N. Kulinich, deputy chairman and head of the Gosagroprom U.S.S.R. food department. "We need to improve our food processing facilities so that less is lost between harvest and the marketplace...We have to update our equipment."

He said that "better political conditions" in the Soviet Union should foster modernization of the nation's agri-industries. "Many ministries are now involved in this program, including some which formerly were involved in defense."

A number of American businessmen have also expressed interest in getting with the program.

"High level Soviet officials have said that budgeted funds will be available for the direct purchase of food processing equipment," said George Melnykovich, president of the Alexandria, Va., U.S.A.-headquartered Food Processing Machinery & Supplies Association (FPM&SA). "A council such as this should facilitate those purchases, and is a direct benefit to those faced with the difficulty of dealing with all the information available in the Soviet Union."

A high priority on Moscow's agenda is building an efficient cold chain. "We're now introducing new facilities," advised Kulinich. "Refrigerated trucks, railway cars, boats -- we need refrigeration everywhere."

Another project on the Russian drawing board involves constructing 20 new factories for low-fat milk and margarine production. Noting that Soviets are generally partial to butter and fatty foods, the deputy chairman remarked: "We have to develop the consumer taste more toward vegetable products. In our society most people now treat it as a surrogate food."

In recent years the Soviets have imported large quantities of soy beans for cattle feed. To reduce over-reliance on foreign sources, self-sufficiency in vegetable oils has been targeted through the vast cultivation of rape seeds. Reportedly, the soil and weather conditions of up to 50% of the nation is suitable to raise the crop.

The Ruble Rub

There is no doubt that American equipment exporters welcome the opportunity to do business in the U.S.S.R. But numerous barriers to normalized trade remain on both sides. Among them is the non-convertibility of the ruble, which is now officially valued at about $1.40 but unofficially sells for about 20 cents on the black market.

Quick Frozen Foods International put the question of convertibility to Kulinich. "It is possible that we will survive and see it," he quipped, adding that finance was not his field.

It is, however, the domain of Abel G. Aganbegyan, an adviser to Mikhail Gorbachev and a spokesman on Soviet economic policy. He has predicted that the ruble will become fully convertible to hard currencies by the last half of the 1990s.

Such a change, considered unlikely by many economists in the West, would require drastic shifts in the economy, including the establishment of more free market mechanisms than the Kremlin has thus far suggested it was willing to permit.

In addition, it would require major alterations in the system of heavily subsidized prices, including hikes in the cost of food staples such as bread, butter and sugar. Soviet leadership is all too aware that such increases have in the past caused political instability when implemented in Eastern Europe.

Still, where there is a will to do business there is usually a way. European and Japanese banks are making millions of dollars of credit available for Soviet purchases of products from their home countries.

And then there's the cash on the barrelhead method of commerce preferred by the New England fisherman selling herring to Russian factory ships for about $95 a ton. It seems that certain state enterprises have a supply of dollars on hand as needed. "I don't accept rubles," said Spencer Fuller of Resource Trading Co., Portland, Maine.

PHOTO : Formalizing the creation of a U.S.-U.S.S.R. Food Processing International Trade Council

PHOTO : are (front, l-r) Fritz Friday, N. Kulinich and Bill Abendscheim.
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Title Annotation:News from Other Countries: Union of Soviet Socialist Republics
Publication:Quick Frozen Foods International
Date:Apr 1, 1989
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