September 29, 1999
Web posted at: 2:31 a.m. EDT (0631 GMT)

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WASHINGTON -- A year after suffering its worst harvest in nearly half a century, Russia is once again turning to the Unites States for help, in the form of food aid.

The United States is still shipping $1 billion of U.S. corn, wheat, rice, pork, beef and dry milk to Russia under a food aid agreement negotiated late last year.

Now, a second request has been made for food aid after another disappointing harvest, says U.S. Agriculture Secretary Dan Glickman.

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Glickman did not say how much additional assistance Moscow requested, only that Washington was assessing Russia's food needs.

"I have received an official request from the government of the Russian Federation for additional food assistance," Glickman said in a statement. "The United States is now in the process of reviewing this request."

Russia's latest request is likely to face more scrutiny because of allegations that Russian officials were linked to an intricate money-laundering scheme with U.S. banks.

Glickman said the Russia food aid program has escaped corruption and that proceeds from the sale of the U.S. food are landing in the Russian pension fund as planned.

"We have followed most commodities from the time they arrive in Russia to the point of distribution," Glickman said.

The United States and Russia negotiated a massive food aid package last winter after Russia suffered its worst harvest in 40 years. The country's food supply was also hurt after Moscow devalued the ruble in August 1998, making food imports extremely expensive.

The package negotiated by Washington included some direct donations as well as low-interest, long-term loans for Russia to buy U.S. grain and meat.

American farmers were more than willing to sell grain and meat to Russia to help boost sagging U.S. commodity prices. Prices for most grain and livestock plummeted last year as huge worldwide supplies and declining export demand from Asia weighed on U.S. farm prices.

"We will also consult closely with other major food producers, such as the European Union, and we will be careful to avoid any steps that would disrupt international agricultural markets or reduce incentives for Russian farmers," Glickman said.

Some experts have questioned if Russia really needs more food aid.

The European Union negotiated a separate food package for Moscow last year but EU Farm Commissioner Franz Fischler Monday ruled out any new EU food aid for Russia, saying Moscow did not face a serious grain shortage in the near future.

"Our conclusion at this stage is that we can't see any reason for starting a second Russian food aid program," Fischler said.

U.S. commodity prices have risen slightly since Washington and Moscow agreed to the food aid program last year and prices are not expected to rebound for at least another year. Prices paid to farmers for their corn and soybeans were forecast to be the lowest since the farm recession of the mid-1980s, when many U.S. farmers went out of business.

U.S. hog farmers said they saw a spike in hog prices of up to $10 per 100 pounds when pork for the Russia food aid program was bought earlier this year.

"We're certainly hopeful this will be an additional opportunity for pork shipments to Russia during the fall and winter," National Pork Producer Council spokesman Steven Cohen said. "This would be a tremendous shot to the arm to the market during a time when we expect to have ample supplies."

Russia is expected to harvest 60 million tons of grain this year, up from last year's disastrous 47.8 million. But it is still well below average and last year's dismal crop means there is almost no grain waiting in the bins.

And, the ruble is now worth around a quarter of its pre-devaluation level, so Russia can ill afford imports.

Reuters contributed to this report.