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Talks Aimed at New Soviet Grain Deal Start Next Week

March 4, 1988

WASHINGTON (AP) _ American and Soviet negotiators meet next week to start work on a new, long-term grain agreement to replace the current pact that guarantees sales of 9 million metric tons a year.

″We look forward to our discussions with the Soviets on a new U.S.-Soviet long-term grain agreement,″ said a joint statement Thursday from Agriculture Secretary Richard E. Lyng and U.S. Trade Representative Clayton K. Yeutter.

The two officials said they expected the talks that start March 11 in Vienna to be only ″the first step in the negotiating process″ aimed at fashioning an agreement to replace the current one, which expires Sept. 30.

Any agreement produced by the talks would be the third such deal between the United States and the Soviet Union since 1975.

The two officials said the earlier ones ″have been important in stabilizing grain trade between our two countries, and we are optimistic we will be able to achieve another mutually beneficial agreement.″

Under the current five-year agreement, the Soviets agreed to purchase 9 million metric tons of wheat and corn annually. Four million tons must be wheat and four million corn.

The Soviets may satisfy the rest of their commitment through purchases of wheat, corn, soybeans, soybean meal or any combination of those commodities, with every ton of soybeans or soybean meal counting as two tons of grain.

Earlier this week, the Agriculture Department announced the sale of 500,000 metric tons of subsidized U.S. wheat to the Soviet Union by private exporters. It would be worth about $50 million at recent prices.

The sale came under the Export Enhancement Program, a subsidy established under the 1985 farm bill to provide exporters with surplus government commodities as an incentive to sell U.S. farm goods.

The Soviet Union was a grain exporting nation through most of the 1960s but began large-scale imports in the early 1970s. The first long-term pact with the United States was signed in 1975 and another followed in 1983.

Friction arose in 1986 when American producers were still recoiling from five years of weak performance in the farm economy and the Soviets fell 3.8 million tons short of the minimum wheat purchase under the agreement, complaining that the United States failed to meet world market prices.

The Soviets left untouched a last-minute offer by the United States under which 4 million tons of wheat were made eligible for bonuses under the Export Enhancement Act. But the Agriculture Department made a similar offer again in early 1987 and the Soviets resumed purchases.

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