Former Soviet Union

Since the breakup of the Soviet Union in late 1991, the newly independent successor states have been trying to transform their communist-style command economies into more-efficient market-based ones. As part of this effort, the states are trying to change their agricultural sectors, including the privatization of food production, processing, and distribution. If successful, these agricultural reforms should reduce the states' dependence on food imports, and, in particular, their reliance on export credit guarantees from the United States and other countries. This report identifies (1) the status of agricultural reforms in the newly independent states; (2) the relationship, if any, between U.S. credit-guaranteed food exports to the states and agricultural reform in these countries; (3) the amount of U.S. credit guarantees provided to the former Soviet Union and whether food provided under the guarantees was distributed equitably among its republics; and (4) the food situation in the newly independent states.

GAO found that: (1) implementation of agricultural reforms has been slow, and some reforms have been partially rescinded; (2) guarantee-assisted food imports from the United States and other countries may hinder agricultural reform in the newly independent states by prolonging the existence of state-owned enterprises that process and distribute the food; (3) guarantee-assisted food imports may hinder agricultural production by keeping prices down for domestically-produced food; (4) some state officials believe that credit-assisted food imports benefit the economic reform process by preventing food shortages in their countries; (5) the United States does not place conditions on credit guarantees related to implementation of agricultural reforms, but some state and other officials believe that placing conditions on these credit guarantees is necessary to move the reform process forward while meeting food needs; (6) the U.S. Department of Agriculture (USDA) made $3.75 billion in GSM-102 export credit guarantees available to the Soviet Union before it was dissolved; (7) the distribution of credit guarantee-assisted food imports among the former Soviet republics has been generally equitable; (8) USDA is not required to monitor the distribution of food imports under GSM-102 program guidelines; (9) food supplies were generally adequate during 1991 through 1992, but there were shortages for some items; and (10) food affordability became a serious concern for many citizens during 1992 and remains a problem in 1993.