Created: 4/12/1954

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CENTRAL INTELLIGENCE AGENCY Office of Research and Reports



The Hew Course" in economic policy recently announced by each of the European Satellite governments reflects more or less the pattern developed in the USSR insofar as agriculture is concerned. The ultimate goal of all the Satellites in the developmentood and raw material base is the complete collectivization of agriculture, but the Satellite governments, currently In need of food for their nonfarm populations and raw materials for their industries, have mode gestures or offering incentives to their independent farmers so as to increase the availability of agricultural products.

This memorandum deals with the probable effectiveness of the attempt of the Satellite governments to increase availabilities of agricultural products without giving up their goal of complete




Announcements of Revised Agricultural Policies

3- Reasons for Changes in Agricultural Policies

Agricultural Policies

Quotas, Taxes, and Debts



of the "Hew Course"

Success or Failure of thev Course" In



The "Nov Course" in economic policy adopted by tbe Europeanuring the last half3 involves inecreased emphasis on heavy industrial production snd capital investment and an Increased emphasis on production and investment in agriculture and in the consumer goods industries. The "New Course, "which involves relatively short-term plans as it affects agriculture, cuts across established long-range plans, and it attempts to atop the downward trend in agricultural production, to consolidate and strengthen gains made in the socialized sector, to obtain more agricultural products from peasants throughto increase tbe agricultural machinery bace, and to bolster peasant morale.

This course, taken by all thc European Satellites, was precipitated by the adverse cumulative effects of overemphasis in heavy industry and in certain other sectors of tbe economy and the increasing apathy of collective ond independent farmers. Ihc timing of the announcements of the Satellites' "Hew Course" closelythe announcement of new agricultural and consumer goods programs in the USSR.

Thc successive announcements of thc Satellite governments, made between June ondrogressive limitation on the scope of the "New Course"in concessions to peasants, in shifts in investment from heavy industry to agriculture and lightand in thc relaxation of collectivization. Thc scope of thc changes in agricultural policy introduced in the "New Course" was perhaps greatest in significance in Hungary and least in Poland.

The estimates and conclusions contained in this memorandumthe best judgment of the responsible analyst as of* Albania, Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and Rumania.

issued to implenent tlio "Hew Course"c-les of government-sponsored programs dealing with various aspects of collectivisation,elivery quotas, taxes, sundry debts of peasants. Investments, credit, peasants' income, price policy,machinery, agrotechnlquec, technical training and guidance In agricultural production, and other matters affecting the oral lability of agricultural and consumer goods.

To date, benefits to peasants hnvc been limited to some adjustment! In collect iv lent ion and ccerpuloory delivery quotas, cancellations of arrears in taxes, price reductions In manufactured consumer goods, and general concessions on some minor items. In actuality there has not been any perceptible significant increase of material benefits to the peasant. The new agricultural policieshole appear to amount to the adoption of more realistic goals in agricultural productionhange In tacticseans of accomplishing thc original long-term goal of complete socialisation of agriculture.

Given the pattern of Implementation now under way and the time necessary rdr Investments in agriculture to becomet does not appear likely that the agricultural production goals cau be reached during the estimated life of the present. esult, the European Satellite governments will continue to face the problem or Inadequate agricultural production to support the desired increase In living standards and light Industrial production. The passive resistance of the peasants will continue to plaguend winepressive efrect upon the economic capabilities of thc European Satellites as long as the Communistactively pursue their goal of socialising agriculture.

1. Introduction.

Changes in the agricultural policy of the European Satellites3 were introduced as part of the so-called "Mew Course" in economic policy. The "New Course" laignificant departure from the basic agricultural policy of the Satellites outhange In methods to reach tbe goals of that policy. The object of Soviet policy In the European Satellites has been thc complete Sovleticatlon or socialization of each country. Each Satellite in3 ua? at a

otagc of socialization, depending on the degree of synthesis of the various and numerous economic, social, and political factors which are combined in the socialization process. By the endulgaria and Czechoslovakia hod completed their first Five Year Plans. The greatest degree of collectivization had also been accomplished ln these countries.

In the field of agricultural policy the European Satellites have attempted to reconcile an Increasingly firm stand on the goal of socialization vith the early decision to collectivize agriculture gradually rather than to follow the Soviet example of forced This attempt has resulted in an apparent Inconsistency ln their policy pronouncements and Implementations as they have attempted to bridge tho gap between party policy and peasant acceptance. Tho party doctrinethat only through socialized large-scale production con agriculture successfully produce Its share of the nationalpresupposes ff completely socialized agriculture and furtherthat any policy whicheviation from this goal Isenporory expedient which ln time con be turned to the benefit of thc regime's long-range policy.

Tha accumulation of succeeding events and conditions, bothand economic, prior to androught into clearer focus the rebelliousness of the peasants and thc recognition by the Satellite governments that their programs hadritical Imbalance ln their economies. In their determination to maintain the Initiative ln directing their own predetermined programs of socialization and in accordance with Soviet policy, all the governments of the European Satellites between June and November announced shifts in emphasis on investment from heavy industry to agriculture and light industry, varying in degree from country to country according to local interpretation and needs. Beginning with the East German and Hungarian announcements ln June and July, respectively, each succeeding policy announcement has tended toward relaxing the pressure on collectives vith an accompanying promiseise in living standards by Increasing agricultural Each country as it fell Into line has been more guarded in its promincfl.

2. Announcements of Revised Agricultural Policies.

A review of policy announcements by the Europeanimilarity of purpose and intention in announcing their changes ln agricultural policy. East Germany was the first to announcehange in agricultural policy. East Germany, which mode

its announcementune, was followed by Hungaryuly, Rumania onugust, Bulgariaeptember, and Czechoslovakia Albania has not, la so many words,New Course" but did announce new agricultural policieseries of four statements betweenune Poland announced at the ninth Plenumrevised agricultural program However, Premier Boleslsw Blerut had outlined essentially tho come program on Poland did not go oo far as the other Satellites. Its program isownward revision ofear planned goals ratherew policy.

To date, all announcements of the new programs, particularly for those countriesigher level of induntrlallzationthat is, Czechoslovakia, East Germany, and Hungaryhaveodest reduction of Investments in heavy Industry. At the same time, there has been an Increase ln Investments in the agricultural sector,with other adjustments designed to increase the availability of consumer goods, to Improve housing, and ln general to increase the living standards of both worker and peaaant.

3- Reasons for Changes in Agricultural Policies.

Tho European Satellites, in announcing their new emphasis onthe level of agricultural production, stated two major reasons:

(a) to raise the standard of living of the people and (b) to overcome the adverse effects upon industrial production end expansion caused by low agricultural productivity. Low standards of living and lowproductivity were causing serious repercussions on the economic

stability and capabilities of the European Satellites.

Agricultural production after World War II wanatisfactory recovery throughout Eastern Europe untilhen Communist policy begadore dominant role In tbe countryside. Long-range planning for agricultureIncluding socialisationas Introduced ln varying forms ln all thc Sutellitcs. At the same time, government plans called for tremendous gains ln thc field of heavyproduction. These gains were made at the expense ofin agriculture and light Industry. The net effect of the attempt made to carry out these plans hasetardation In agricultural development, which has in turn reduced tbe ability of the European Satellites to obtain adequate foreign exchange, establish foodand supply an expanding Industrial labor force.

The greatest single factor (other than weather) which has adversely affected agricultural production in the European Satellites la tho Communist policy of collectivization. Although the rate end intensity of collectivization have varied throughout the Satellites, leaders of all the Satellites have announced9 their goal of eventually bringing all farmers Into collectives. Tne expressed intentions of tho governments to collectivize, together with the Implementation of policies aimed at forcing the peasantollective by economic or other pressures, haveefinite depressive effect upon production, especially in the livestock sector.

Agricultural production had not attained prewar levels3 and showed* signs of weakeningownward trend. The animal husbandry industry probably has suffered the most. ivestock numbers were approaching prewar levels end ln some categories, notably hogs, had attained prewar levels. Becausehort fodder base and forced deliveries,nimals have been slaughtered at lighter woights> causing the production of meat, animal fats, and dairy products to be considerably below prewar levels. The average per capita consumption of meat ln Eastern Europe even in the best postwar years has been onlyercent of prewar consumption, and consumption of animal fats has been lower yet.

From the point of view of agriculture. Satellite policies seem to be morehort-term propositionears) rather than long-termr more years). The short-term objectives may be Bummed up as follows: (a) to stop the apparent downward trend In agriculturaland show slight increases; (b) to consolidate and strengthen gains made in the socialized farming sector to make it economically self-supporting; (c) to induce the peasant, by means of incentives, toreater shore of his production; (d) to increase significantly the agricultural machinery base; and (e) to improve peasant morale.

The long-term objectives of the Satellites have not changedesult of the "New Course." The slight shifts which have been made In the short-term plans may, in the long run, help the Communist regimes to attain their original objectives ln the field of agriculture. These goals are as follows: (a) to isolate and eventually to eliminate the kulak, (b) to stabilize and strengthen the agricultural economy so as totronger base upon which to socialize agricultural production facilities completely, and (c) to increase agricultural production over prewar levels to meet more adequately thc requirements of theend light industry.

4. Hew Agricultural Policies.

Moot of the new economic policies of the European Satellitesomewhat similar course with regard to shifting emphasis to theand consumer goods sectors at the expense of capital goods. The greatest shift3 occurred in Hungary; the smallest shift, in Poland. All the Satellites plan to increase agricultural production, with thc main emphasis on animal Industry. Premier Nagy of Hungary, Just before the Berlin riots,irm stand on thc continued collectivization of agriculture.The "Hewnnounced lessonth later, however,omplete reversal of this policy In that it provided for voluntary withdrawal from cooperatives, reduction of compulsory delivery quotas, cancellation of taxes snd quotas in arrears,hift of Investments from heavy Industry to agriculture and light industry. On the other hand, Poland, the laot European Satellite to announce its "Newore limited program, calling for economic adjustment but not sohift of funds to thesector of the economy at tbe expense of heavy Industry. Poland,omewhat less well-developed Industrial sector and withercent of Its agricultural area collectivized, haslan which represents Inhift of emphasis during theears ofear plan. Unlike other Satellites, Poland has not given concessions to the peasants in the form of reduced compulsory delivery quotas, right of withdrawal from collectives (as in East Germany andigher prices paid by tho state for .agricultural commodities, snd revision In land tax rates. Paradoxically,lvlzatloc is to continue, while at the same time. Increased."benefits" are to accrue to independent farmers in an effort to stimulate greater production.

Thc agricultural policies of tbe other European Satellites falltho extremes of the above two "New Courses." In general, all follow the Bomo pattern with variations to meet social and economic conditions. Except as. already noted, tbe main characteristics of the several versions of thc "New Course" in agricultural policy fall under several general headingo.

a. Collectivization.

The "New Course" provideselaxation of thc drive tonew members for the formation of collectives. Bulgaria, the leader in collectivization,3 percent of the farms5 pc cent of the arable land in addition to State farms under state control

relaxed collectivization2 but plans to increase agricultural production mainly through its collective system, which it consolidated Czechoslovakia, second to Bulgaria in collectivization, with U. percent of the arable land collectivized, has announced plans to organize new cooperatives only upon the stated willingness of formers andate consistent with increased availability ofmachinery, particularly tractors and combines. The East Gorman farmers who fled to Vest Germany and the formers who hod moved to the city were allowed to return and reclaim thoir-holdlngs. Tho right of members to withdrew from collectives was announced in Hungary, Czechoslovakia, end East Germanycons of strengthening tbe ties between the collectives and the government. This change has resulted in small losses of collective membership ln Czechoslovakia and East Germany, while Hungary suffered more significant looses, some 50 However, at the saicc that thc governments were announcing the relaxation of the collectivization program, they were strongly affirming that total socialization of agriculture is still their ultimate goal.

Quotas, Taxes, and Debts.

European Satellites except Poland made concessions to collective membership and independent farmers by revising compulsory delivery quotas. Poland promised no change in future compulsoryquotas Rumania gave no concessions for crop deliver--ies during the current year but did reduce quotas on seat, vool, anddeliveries, la many of the countries, substitutes of certain c'ommodltleu were acceptable, such as other grains for wheat, grains for meat nnd vice versa, poultry for meat, and dairy products for meat. In all Instances of relaxing delivery quotas, Independent farmers did not fare so well as those ln the collectives, whereas collectives' quotas may liave been reducedercent. Independent fanaero' quotas wereonly uboutercent. Arrears In quota deliveries for past years were to be wiped out, and fines imposed for nondelivery in past periods were to be cancelled for peasants who met their full delivery quotas ol the end of3 harvest season.

Land taxes for the3 were to be reduced for both collective and independent farmers, with promised cancellations of back taxes upon receipt of current tax payments. In some countries, especially Albania, Bulgaria, and Hungary, back debts were to bewhereas in Poland the time of repayment Tor small farmers war. extendedear period, and lnoratorium ofears woe granted to members of newly organized collectives.

c- Investments and Credit.

The European Satellite governments announced Increases inin thc agricultural sector over previous years. In Czecho- Slovakia, investments in agriculture tend to favor the expansion of agriculture through more and better equipped and better managed machine tractor stations, which are to act as the base for furthering The "Kew Course" does not make nearly soretense here as in some of the other countries (Poland, for example) ofasic change in the allocation of resources between Investment andor between heavy industry on the one hand and light industry and agriculture on the other. ontinuation and increase of exporting industrial goods is also expected to provide more imports of rawand foodstuffs.

The increased investments in agriculture throughoutSatellites arc to be channelled Into the collectives andtractor stations. The aims arc to make available moremachinery and implements to both collectives andto provide seed and fertilizer, to carry out researchprovide credit to both collectives and independent'farmers, anda firmer base on which to increase the livestock numbers. countries, community stores ore envisioned for easierconsumer goods and food to the ruralural housingbe improved and

d. Peasant Income.

ariety of programs the peasants' income was to be increased. Thc reduction of compulsory quotas in most countries was to give the peasants more commodities to sell on thc free market at higher prices, and it was to be accompanied by on increase in governmentprices. In most of the European Satellites, retail prices uere lowered In the government stores. Free veterinary services to tbe peasants in several countries were Intended to lessen livestockand provide more incentive to increase livestock numbers. In those countries (Hungary and Rumania) that witnessed an increase in "reserveesult of peasant abandonment, independent farmers were promised longer leases (upears) when renting this land.

e. Technical Training.

It Is evident that the several European Satellite governments recognized as one of the weaknesses of agricultural production the lack of adequately trained technical personnel to direct theprogram in its technological, organizational, andaspects. The Communists now indicate by their own actions their need for properly trained and indoctrinated personnel to load, not drive, the rural population.* The "New Course" calls forand supervisors who not only arc experienced but also have the proper ideological background to fill the scientific gap Inproduction. The training programs as announced appear to be of greater benefit to the socialized sector than to the private sector.

5- Implementation of the "mew Course."

Decrees have for the moBt part been formulated to put into forco or set up the machinery for Implementing the "New Course" as announced in the European Satellite's. The decrees apply primarily to so-called "concessions" given to peasants as listed aboveuch as reduction of compulsory delivery quotas, cancellation of arrears in taxes and quota deliveries (given certainnd price reduction. Implementation of the program, howevor, has not offered the peasants any material benefits (exceptmall grOup of peasants in Hungary and East Germany who were allowed to leave the collectives). They never had the taxes or produce to deliver, and the reduction indelivery quotas does not moan, therefore, an increase in their feel income.


Tho increase in consumer goods to rural areas, which la part of the "Newas not been significant. In the last quarteronsumer goods from reserve stocks were released, but the primary beneficiary was the urban worker. Additional increases will depend upon the ability of the Satellites to import raw materials for planned increases In light industrial production und Imports of finished goody.

* The Polish government, for example,ew need for

ollege-trainedocational trained agriculturists.

Sl B'T

There- is evidence that tbe Satellites have signed tradewhich posit increases over previous years in imports of both raw materials and finished consumer" goods - However, In view of the3 harvest and peasant noueooperation in fulfilling delivery quotas, some of tho governments'now find themselves faced with the problem of unplanned imports ofPfood- to supply the urban worker, which may be realized at the expense: of planned imports of row materials for light Industry. The discriminatory collective-minded policy against tbe private sector and the many devlces'to restrict rural consumption of consumer goods in favor of industrial, development caused alarmingly low agricultural deliveries. The Satellites' failure to realizegricultural deliveries, coupled with the lack of available consumer-goods, amplifies the seriousness of the shortages, since agricultureesser extent in East Germany end Czechoslovakia) was' counted on to supply much of the food and raw materials for consumer goodsby the governments. It is doubtful that the economies can support unplannedf food and large increases in consumer goods or raw materials. This situation threatens the implementation of the planned Increase In manufactured consumer goods availabilities.

It is too early to know to'what extent" the new plans forinvestment have been carried out. Shifts in Investmentto take placek. It should be pointed out, moreover,the past the planned investment for agriculture, although small,always-rr

The varying attitudes of'Communist Party official's, on both the upper and lower levels, with reference to thc private forming sector is causing and will continue to cause confusion in the agricultural pro-grans of the Satellites. The cooperation and unity of these officials is needed to carry out these programs in the countryside. To date, this confusion within the party is not helping the governments' efforts to gain thc confidence end cooperation of the peasants.

b. -

Although many decrees issued3 were aimed at providing immediate concessions to peasants and workers, thc interpretation and final execution of these decrees in most Instances will carry wellU, Many of the decrees issued in the latter part3 set up plans and policies extending. Little evidence is avail-able to indicate programs of the "HcwCoursc".


To implement fully the proposed programsarge Investments in the fields of agricultural equipment, ogrotechniquea, rural housing, livestock, crodit, and agricultural education are to bo made. Proposed investments, where announced, appear extremely large in comparison with recent agricultural Investments, but when compared with total investments, the increase ln agricultural Investments in most countries is not spectacular. Polandpercent Increase in agricultural investments3 for theThis increase represents an increaseercent of3 toercentndery slight Increase over the original plan goal9 percent. Agricultural investment under tbe "New Course" in Czechoslovakia, although showing- aIncrease over recent Investments, represents onlyercent of total investments, whereas tho original Five Year Plan had called for agricultural investmentsercent of the total This indicates that past investment plans had not been fulfilled and that the present rate of investment probably vould not be sufficient to raise production to original planned levelsssuming that theirplan was realistic.

The over-all production of nitrogenous and phosphateis not expected to increaseate greater than Its rate during theears. Plant capacities will limit theof fertilizers of both types, and the production of phosphates (primarily superphosphates) will be limited by the competition between industry and fertilizer for sulphuric acid. Therefore, the significant increases in availability of these chemical fertilizers announced by the European Satellites will have to be realized primarily by increased imports. Thereo indication that the European Satellites plan to increase imports of fertilizers during theears.

6. Probable Succcbb or Failure of the "Hew Course" In Agriculture.

The short- and long-term objectives as outlined above can be summed up into two major goals: (a) to increase agricultural produetion and (b) to strengthen and extend the socialized sector of agriculture. The probable success or failure of these tvo goals Is discussed as follows:


a. Production.

The buccobb of thc European Satellite governments in effecting, en increaseor at least in stopping the downward trendinof crops and livestock will depend upon their ability to convincethe private farming sector that thc "New Course" is long-range. Ac ofk, there wao no firm evidence of thisln fact, the governments have been hedging on original policy statements whenimplementing the policy have been published. In Hungary, forthe policy of the right to withdrawollective vas stated clearly in July by Premier Nagy, but vhen the formal low was written. It woo bo conditioned as to discourage peasant withdrawals.

Every Satellite government, lneduction inquotas and taxes. Increased credits, and allocation ofhas continued its discriminatory practice of favoring the socialized sector. ontinuation of such practices vould certainly raise doubts in the mind of the private farmer as to whether there has been any real change ln the government's Intentions. It Is notthat Independent formers will accept government credits, which vould obligate or compromise them lnay that thc government couldater date economically force them into collectives. Being conservative by nature, peasants willwait and sec" attitude.

The core liberal attitude of the Satellite governments under the "hew Course" toward tho private farming sector, and the forced return to the countryside of. peasants from the city may temporarily halt the Increase In fallow land and the shortage of farm labororo that were occurring in East Germany, Poland, Czechoslovakia, and Hungary. This result should tend to stabilise production and, if there Is aimprovement in the availability of farm labor and machinery should reduce harvcflting losses,esultant slight increase in the production of grain and root crops. Increases in livestock numbers raised for meat purposes (particularly hogs) will depend upou the increased production of fodder grains and potatoes.

In view of the difficulty the Satellites probably will experience in Increasing significantly the supply of industrial consumer goods to the rural are an, they nay be faced with the recurringof getting the peasant to sell his produce to tbe government. Unless the incentive consumer goodsvailable, moreover,farmers and even collective furaers will not hove reason to increase production orreater proportion of thoir production.

b. Collectivization.

The European Satellites may be more successful in their attempts to consolidate and strengthen the socialized sector during theears, assuming there is no large expansion in that sector. Despite statements by tbe Communist officials about the importance of the role played by small and middle class peasants in agricultural production, the officials have also claimed that completeof agriculture is still their goal. Therefore, it appears safe to assume that the greatest share of investments will be allocated to the collective sector.

Investments and credits for farm buildings, housing, machinery, livestock, and fertilizer should strengthen thc production base of collectives. Increases In fertilizer production will show up in the collective sector. Recent evidence in East Germany indicates that first priority on fertilizers is given to the collectives. This should improve the capabilities of the collectives to increase production, assuming average weather conditions. It will probablyinimumndears before the above production Inputs will show effective results.

The Communist regimes should be able to improve organizational structure and operations. People are to be trained to improve the bookkeeping and accounting systems. Also political cadres are tothorough training, which could have a* favorable effect upon the discipline of the collective members.


In conclusion, it is believed that in the short runears) or the long runoears) the Communist goal of increasing agricultural production over prevar levels will not be successful to any significant degree. This conclusion Is based upon the assumption that the recent policy, as announced, calls for continued emphasis on investment and credits in thc socialized sector,radual increase in the size of this sector. Information available indicates that the collectives in the past have not been able to equal crop yields of private farmers, despite the fact that the collectives had first priority on the available fertilizers, machinery, and Improved seed.


g S

On the basin of the foregoing, the Satellite governments will continue to face the problem of Inadequate agricultural productioneans of supporting an increase la living standards and lightunless aid is extended by the USSR. The passive resistance of the peasants vlll continue to plague the government programs and villepressive effect upon the economic capabilities of the European Satellites as long as the Comninist regimes actively pursue their goal of socializing agriculture.

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