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'POINTS OF LIGHT' FOR POLAND -- SEED, TOOLS, FEED

A looming confrontation between farmers and city dwellers threatens Poland's brave plunge into market-oriented reform. Already, Lech Walesa is expending his political capital shuttling between restive workers, who demand affordable food, and angry farmers, who are withholding grain for higher prices. In a tense, televised meeting with rural legislators recently, Walesa went to the heart of the issue: No one in Poland, he said, has ever heard of a starving farmer.

One moral to be drawn is that first claim on food relief should go to city dwellers: to the pensioners who can now be seen breaking down in tears in grocery stores when they lack the zlotys to pay for meager purchases, to the many working parents who also now find themselves unable to put food on the family table.

But Walesa's quip has a dual and paradoxical edge. No one has ever heard of a starving farmer because the small private farmer, who normally accounts for 75 percent of Polish output, can feed his family and yet decline to produce a surplus for sale to the city dweller. The average farmer has food but little else from his 13.5 acre farm. Farm income is lower than that in the city. A third of the farm villages lack piped water.

Thus, though the urban areas deserve first call on food aid, first claim on development-oriented aid should go to the rural sector. Deny farmers the supplies and materials they need, and the incentive of a money profit, and the effect will be to starve the cities. It is precisely this leverage that has enabled the Polish peasantry to topple governments and to preserve private ownership of land to a degree not remotely matched in any other Communist country.

The starving-farmer paradox also carries a warning for American policymakers.

To date, U.S. policy has held that two forms of aid will suffice to bring about a market economy: long-term credits and restructuring coupled with short-term relief to ease the transition. While such a mix has worked in countries as diverse as Bolivia and Israel, Poland lacks crucial elements presupposed in Western economic theory: private credit, capital and land markets. There can be no "magic of the market" until such institutions emerge.

In a market economy, the prospect of higher producer prices leads farmers to borrow against next year's crop. But Communist Poland did not permit the growth of a credit system in which suppliers of spare parts, tools, machinery, feed, seed, fertilizers, crop protection chemicals, storage equipment, packaging and processing materials, veterinary pharmaceuticals and breeding stock might increase their inventories or extend credit eed, tools, feed
to private farmers.

Merely supplying food to city dwellers does nothing to address the larger problems of insufficient credit and supplies. The only way out is for Western nations to donate the necessary materials. To give needy Polish farmers a sense of self-help, and to prepare them for the coming of free markets, donated supplies should be provided at a minimal price.

The European Community has taken a bold step toward in-kind donation, with a $50 million pledge to provide agricultural chemicals specifically requested by the Poles, as part of a larger $90 million E C program of farm inputs. E C and American experts agree that this generous donation will meet less than 25 percent of the current need.

Washington, however, is better set up to give food than the means to produce it. It has no program for the purchase of fertilizers, feed additives, equipment and the like. But the U.S. does offer tax incentives that are lacking in Europe: Its corporations can qualify for a double tax deduction when they donate materials under the conditions of need now widespread among Poland's small farmers.

Will the chief executives of the huge, diversified and profitable U.S. agribusiness firms donate their products on a sufficient scale -- perhaps $1 million for every $1 billion in non-U.S. sales -- to make a difference? (IBM, for one, donates products worth $50 million a year.) Will smaller companies follow with the specialized farm items in which America excels?

It is well to remind Polish farmers, as Walesa did, that they have no monopoly on human misery. But the world's stake in their success this year is especially high. If Poland unravels, we shall all be the poorer. By contrast, a successful agricultural input program for Poland could, like long-standing U.S. food aid programs, attract popular support and be extended to other countries.

The Mazowiecki government is talking about moving the date of local elections forward from the late to the early spring, a sign that it wants to get ahead of bad news. And nature imposes non-negotiable deadlines. The unusually warm European winter bodes an earlier spring cropping cycle, as well as a more fragile winter grain crop.

The pessimism on Poland's farms will have to be reversed by mid-March if the Mazowiecki government is to survive the year. It is in the enlightened self-interest of American firms to lead in this effort, and in Washington's strategic interest to encourage them.

JOSIAH LEE AUSPITZ is secretary of the Sabre Foundation, which donates textbooks to Eastern Europe.

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