INTERNATIONAL AGRICULTURE AND TRADE (Newly Indepent States and Baltics
Update)--SUMMARY                                                March 28, 1997
            Approved by the World Agricultural Outlook Board
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This SUMMARY is published by the Economic Research Service, U.S. Department 
of Agriculture, Washington, DC 20005-4788.  The complete text of this report
(WRS-97-S1) will be available 2-3 working days following release of this
summary.
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Since price liberalization in 1992 Russian households have adapted their
pattern of food consumption to higher prices and decreased real income.  But
personal income may increase for the first time in several years in 1997, and
future growth in food demand will begin to focus on quality, rather than return
to the pre-reform levels of consumption of poor quality foodstuffs. These
developments have implications for future U.S. exports to Russia, and for
investment to restructure the Russian food and agricultural sector.

Household Budget Surveys covering Russia's rural areas and cities, including
Moscow, show that as a share of diet expressed in total calories, consumption
of eggs, meat, and animal fats declined between 1990 and 1995, while
consumption of vegetables, vegetable oils, and starches increased.  
Pre-reform patterns of meat and dairy consumption reflected state policies that
subsidized these products, but also discouraged high quality and year-round
availability. Yet, except for the very poor, most Russians are able to eat
adequately.  As inflation has declined from triple-digit levels, households
increasingly find goods available in stores at stable prices and hold fewer
speculative stocks of staples. The pattern of purchases differs between rural
and urban households, reflecting relative price differences.  The price
differences stem from poorly developed market infrastructure. 

Despite rising real incomes among a portion of the population, a significant
part of Russia's population is below the poverty line level of income
established in 1992.  Nutritional stress is growing among families who have
trouble stretching limited income over higher-priced food.  At the same time
Russian families appear to lack information on nutrition that could help them
with their choices.  This is because previous state planning emphasized food
consumption norms rather than giving information to consumers.

Other state functions in the area of consumption and nutrition normally found
in western countries also are underdeveloped.  Surveys of consumption habits
need a better scientific basis, and economic analysis of consumption based on
household surveys is just beginning.  A proper state role in food assistance
targeted to the poor can forestall pressures to return Russia to failed
programs of the past.  The legacy of those programs (price controls, rationing,
subsidies) still lingers, although the tapering off of inflation is being
accompanied by signs of renewed private agribusiness investment that will
follow market signals. 

Printed copies of the Newly Independent States and the Baltics Update will be
available in about a week.  For more information, contact Kenneth Gray 
(202)-219-0639.  Text of the full report also will be available electronically.
For details call ERS Customer Service (202) 219-0515.
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