SOVIET AGRICULTURE IN THE 1980S (SOV 84-10154)

Created: 9/1/1984

OCR scan of the original document, errors are possible

Soviet Agriculture in

CIA HISTORICAL REVIEW PROGRAM RELEASE AS9

Office ofSovici Analysis, -ah contribution] fiorr SOVA. Comments ind queries

are welcome and may be directedOVA

Sevricl Agrieultutc in

As the new Soviet regime surveys the USSR's food "production piospecis for the balance of, the legacy of poor performance and increasing resource burden ol thendust weigh heavily in policy discussions and resource allocation planning. Speeches by Soviet leaders indicate their awareness that the slowine growth in (arm output5 is not entirely due lo less favorable weather. They know that ag-riculturally related activiiy is beset by inefficiency and annually requires about one-third of total investment, one-fourth of hard currency earnings, and growing subsidies to maintain stable retail food ptiocs. Although Moscow plans lo change ils approach to food production,ee little chance of itsontinued rise in the resource burden in the next few years

General Secretary Chernenko. and Andropov before him, have supported Breihncv's Food Program for. The program reorganites rood production, revises incentives, reorders investment priorities, and promises more industrial goods to enterprises and conizations involved in food production. The Soviets arc also improving feed rations for livestock, increasing use of summer fallow, and improving crop varieties and animal breeds to raise the Quantity and quality of farm output. Using this blueprint for increasing domestic food produclion. the leadership hopes to simultaneouslyteady improvement in diel for the Soviet consumer and tcduceSSR's dependence on imports of Western grain and other foodstuffs

Development of the Soviei farm sector inill depend strongly on weather trendi and how the leadership implements Ihe Food Program. Our three illustrative farm output scenarios iricofporatc different assumptions about weather, support from industry, and implementation of the Food Program. Our baseline projection of average annual erowtfi in net farm outputercent inssumes weather conditions approximatingverage and some implementation of proposed changes. Production growth could be as lowercent per year if support (torn industrynd the much less favorable weather experienced8 arc repeated. At best, with ahovc-average weather and more-than-likcly success in implementing the Food Procram.growth mightercent per year in

'

i capita consumption gains provided by our baseline projection of growth in farm output, probably would be considered adequate by the regime, especially if Chernenkoadopts Andropov's view that major improvements in consumption are not an urgent necessity. Massive imports of grain and other food products front the West probably "would not occur in years of average weather as long as tbe regime maintains what we consider to be its present belief that minimizing dependence on food imports from the West is more important than rapid growth io per capita food consumption. If. however, the priority of improving the diet rises, the leadership probably would be willing to increase imports of grain from the Wot as well as meat and vegetables from oihcr Communist countries to the extent (hat the latter countries could supply them

Regardless of which of the three farm output scenarios is close to the mark. Soviet agriculture will continue to experience difficulty in realizing potential benefits from planned improvements in management and new technologies. New programs do not substantially improve incentives for farms to carry out agricultural operationsimely, efficient basis. Lack of these incentives probably will continue to be the most important cause of tow product quality and high levels of waste in harvesting, transportation, storage, and processing of farm products.umber of factors, individually troublesome, combine to sap the productivity of the farm sector's increasing stock of plant and equipment.

First, farm production will be plagued by high costs and low productivity until the leadership:

Eliminates centrally determined quotas for output of farm productsor goods and services used in production.

Stops interference by party officials 3nd bureaucrats in day-to-day farm operations.

Sufficiently overhauls the inappropriate price structure, both for goods and services sold to farms and for farm products.

Replaces gross farm production as the most important determinant of success with an indicator lhat takes into account product quality and production cost

Second, unless planners give the Food Program very high and continuing priority, the slow pace of industrial ecowth that we project forill hold down growth in industrial support to producers of farmlo farms, and to food-processing enterprises. Although Soviet trade Olficials have recently expressed interestide range of Western equipment and technology for food production, suchtheylikely to playinor role in food produclion in. Many of the genera) problems the Soviets face with assimilation of foreign technology would be especially severe for the widely disposed farm sector.

Third, because ofc incentives and poo* support (torn industry, technical progress in food production will occur slowly. Thus, is will be difficult to substantially improve returns to new investment andther important inputs, such a* livestock feed-and fi-rtilizer, in

Finally, shortages of younger, skilled worken will persist in many regions until there are major improvements in rural living conditions and there is an upturn in annual increments to the general labor force

If (be weather is poor or if Soviet leaders decide (hat under current resource programs and decisionmaking arrangements the cost of likely gains is too high, additional changes in the management of food produclion might be considered. We do ool believe, however, that inoviet leaders will move very far toward decentralizing management ofas was done in Hungary and China. In these countries:

determined procurement plans have been reduced or abolished.Farm managers and private producers appropriately make produclion

decisions.

government controls the mix of farm products indirectly byprocurement prices

In debating the advantages of less centralized management. Soviet writers have noted undesirable side effects of the Chinese reforms, such as ruraland often have rejected Hungarian and other East European experiments on tbc justifiable notion that solutions appropriate for the small countries of Eastern Europe are not suitableountry the site of Ihe USSR.

More important, however, Jovict leadersirm belief in their own system. Movement toward market-oriented systems appears to beon ideological grounds. The leadership perhaps considers raising efficiency and lowering costs less important than avoiding the political risks of weakening central control over economic activity in the important farm sector. Furthermore. Soviet officials for the most part do not share the confidence of Chinese and Hungarian leaders in tbc ability of local farm managers and private producers to make the "correct" production decisions. For example, local Soviet party officials continue to interfere in day-to-day farm operations despite the fact that Khrushchev, Brezhnev. Andropov, and current agriculture secretary Mikhail Gorbachev all have, condemned this practice, recognizing that it reduces farm efficiency.

BLANK PA!

Con (en IS

Judgments

Record of

of the Recenl Slowdown

Deliveries of Goods and Service* to Farms

Efficiency in the Use of Available Resources

Complexify or Producing and Marketing Farm Products

To Adjust Investment Policy Appropriately

for Investment in

Current Plan

Options

With Demand for Other Industrial Goods

and Food-Proccssiio Industries

Agriculluial OrganiMMc-ii and Incentives

Food Program

in Implementing the Food Program

Incentives on Farms

Pereepiions of Reform

and Services Used in Farm Produclion

Efficiency in the Use of Resources

of Growth in Net Farm Output for

on Per Capita Consumption

BLANK PAGE

Soviet Agricull tn"

Tin Soviet farm letiti absoila aboutercentlabot forceeiecnl ol tticockcapital (cadacbag booting aod aernocaV bmibeen unable to provide ibe population *iib[arable to that inJtdaitrialired counm-iof cjuabty aadbibv-r.belicd heavily on import*agrieultajal producU juii to maintainof food cocxuiar-Me. laOt.are corjuc"led to steady dielarywith fewn food imports, esperiillybe Wen To achieve (Jus coal, the retime moltit'iiicgy tbal will promote (I) more rapid growthof Ik aieduction in Uielosses thai no- occur ia tbeand diitribultuo of farm products, andeftaneni uieia food pro

Thit refaMi anilvira lhc came* ol (hen grawttl of farm prodaxUori. icwn it';'. Ukca by 'he regime to speed growth, and aiMsies the options openoviet leaders for inveslmenl in and managementthe food prodoetkmiDwe assess tbc likely ouIconic of there Opt ioci

The

Duringnnual ratesh in Soviet farm outpui fell below rates iehie*ed in th' (Jailed Sulcs. Canada, and ar all of (he In Hciar* anreversal of (lie si tuition in (he, wlien growth of Soviet agricultural production cicxded that of the Uaited Staiea. Canada, and

' IhU ram t'Siaa laoj pvtiOMa" laWliatt all twoeti(aaMBajtagi aad mliuc rut aad inrfaoa*Mfc a> tuba iMht Icaai alaeu<nillii

'i. aad It* addurxi ufuna. aiai Muiimawbaaqy Satlia; la Sana Mm imuh!laduiinil woiplu.'

Figure I

USSR; Avenge Annual RmUs of fJro.rj, In Farm Onipui, Selected Periods*

Kit iiiln

I'd tew

( "1tpfodurti

Mel aviirni

Laiicia Eacopc- Ahbough.byovei firmer* hid made impressive gains in crop yield* and in output of livestock products (table I] and nei farm cMipcioatterceai above thaiearly afl of (hi* increase had occurredesult, since the, growth in farm output has filledatch the rapid growth in den-iid (or food, cspeoaliy liveatoek prodoets (figure I) rVMafMIP II"

TaNc I

USSR: Output Indicators of Majorrodueu

TMad

. Start Ol Presort uh'twi

p< id.

(jrcrapa rtmori)

if.

11

3

i'

Ji

%j.

' .

;

(aiUtoo)

i

!

ciitpbaiiud lhc need to increase output of livestock prcducu and imported record Quantities c( graii lo boost feed tdpplics. naeat prodoctioa0

eiM II5 lewafjl--

lion declined steadily

At tbe lame lime, proJucttoo costs on Soviet faiuu rose sharply because of iocreasei ia wate* and ruing prieea of machinery.ei. and other goods and Kiricasa. Prices paid by ibe stale for axrioillural pioducts did not keep pace, and profitabilityeatccially for livestock products. As profits declined, farms relied increasingly on back loans to cover current cau Acnvdtnc tosSovielet It come of collective funis from the sale of farm ihoitnets ciceoded production cutis byercent during Useompared -libercenindercentn state (arms,ere half of those

tariffarge, amain tied demand for IWcitock pioducts anTJ appaicnt. the atnicturc ol exiiijrig piocuremeiit priced encouraged

;i- so divert resource* into crop productionompares produciioo casts and profits during tbeepresentative period in

Moscow responded to (he deteriorating performance in agriculture by increaung bard cwrrcDcy outlays on farm prodocts. la thead, the USSR hadet eaporler of grain and meal, fly crop. grain impoiti reachedillion tons, and, wilh meal irnports ofillion tons,

' la tlxat sua vmawra eraliia aa* niaaiwal daeuiwial'mow mfmhai,Vm ofrof* ralta la tun prodwiia. farina data nnli vert ruriiiul ihilu li rails hi arprodoavnlft ifc*

ann rale al dtrauiinn.oat manna <idad< mania lo lariul aad oaotfaa natwilaw iv Inr uiauralarMfbnaaaiaia anocauraa la laad. eoala tl Qw> aaocwaaail.imji toon, utaa itaar atraoduflt

USSR: I'cr Capita Availability ol Farm Products

output Olu< Imf-OUt

OomntH turn Mpul

r

/

i . . . . 1 . .

)*

1)

(lirtn o( tbe Rreenl Slo"do-n

TW neat iiaeaJtion of fann output ia lb* last bah* ofOs andi iclaiedcliac ol weather coodiuooi. Climate data tumttit that unusually.ajor soaicc of irowth in output of farm ptodoeti4Thetalker opcrxncod iarriod was on averacc ooch leaa favorable than thatnd was also leu favorable than lont-term average wr-Jlhei conditions Nevertheless, ill

Imumm A-am. XSaau mm*iana,"ItlO.

t'^Umj ami fViHwt.tninailin.tat'a.. lOD.nv (osi/i

US and

Yields for most major crops in ihe USSK ore below those It cllnwlicolly simitar areas of ihe United Slates The following tabulation compares average annual Soviet yields In tons per hectareor selected crops with yields In rerioms of ihe Urtted States with similar soil and cUmate condition"

00/

ft

(lECUklQIU

PUaoOUn)

Slat,,

tmutkioo

robwiaml

Perm*

of timet

Siaira

tn mt-to

"

JO

It

ii

these companions Soviet wheat yields have been discounted by II perceni to eliminate the excess moisture ami cutaneous material that ii Included in official yield statistics. The comparison of hay yields tntiudes all hay foe the United States and hav from annual and pe'ennial grasies for ihe USSI

Western scholars, furthermore, have estimated lhat the combined productivity of land, other productive assets, and labor In Soviet agriculture Ii about one-half lo two thlrdi of that In companible areas of North America* While productivity of goods and services used In farm production in the USSR de-dined tn. productlrtlv Ittrrtaies were being achieved In the United States

* P. Cml,ant Kannoti. fYaapoUria AckuIiw la la. IttCk.I.

recent Speeches. Soviet leaders have indicated that yields should have been higher despite the weather. Indeed, (he experience of countries with aimilarconditions su((csts that the USSR his the potential for bither and more stable yields lhan ate being lealir.ed (see inset)

'eiTKKncr. poo* buiuicwiiI. and caber factor* un-ciatcd todirruie bt>eovr.liil*itiJ to thein production growth lo rtcml. thesean be lurtim.irizod u:

failureaintain p'evious met of growth in1 goods and acrnoea used ia farm procaeiioi

A dnlioc ia the prodactmt* in in which (hoc inputs are used

ng dependence at agriculture on tbe real of ibe economy for inputsistribution of its pfodoctioe io to efficient manner

Failure to adjust invrsiment policy arOTopruitiy.

Lagging Delitetie* of Cooda and Service* to fa ran

Growth in all major inputs la farm pn.5aa.in -labor, land, filed capital, energy, fertiliser,otal combinedgrew at an average annual raleercent, cccrtparoderccaieaneries of Uucki. iractoia. and fertilizer, as well as grins adci lions of Irrigated and drained land were fuither below plan UigcUun. Al tbe lame kmc. ihe number of tractors aad grain combioct gre-faurr than the mimbei of tjiulir.nl operators,to downtime ol larm machinery' (figure *)

Dccbaiaga the Us* of Available Reaoaa-ce* The slowdown ia ihe giowih oftad services used by farms could have been manly offsei if available resources had been uullred as efficiently as they were inomparison of trends in Output and Inputi shows ihat overall factorncreased ca averageercent per year fotollowedeclineerceni per year inT the productivity increase*ofad been maintained, the average annual rale of growth ia output inK would have beenel Cent Instead ofercent realiied.

umporarityu, lml

cWc,

r^lu .utl ofoiu.Mn

nrhMw

iuuUaB aaiaoaoaw

aod .njibu,^

of onxmvul i.

figure d

USSR: Slacks of Tractors and Graio Combines and Number of

Hunterrtirgai.iJ cetobliK Aatil

The type of problems ihai caused lhc decline Id mcaluctivity include

An increase in downtime of agricultural machinery, which, according to Soviet aouices. was not allnum able to weather conditions. At the be (in aim of the present five-year plan, foceiample,o IS percent of available tractom were not being used in production

12

USSR and UnJlrdSlnrra: Oianijlnit I'roduWtitity In Aitikullurr

i/rn-il

5

USSR: 1'ioduriintrlivestock Feed. No.lnliied Sector

IMl-40 I.1C Mll.JJ

Figure 6

oll.boiAi'iiklivr

USSR: Sources ol Goods ando Agricultural97

Kigurc 7

USSR: Alloealion of Output ol97

cro*ini shaft ol tbe fross value of larra products. The share of farm production touu> to industry for processing also inc'easedee increases ia ihese shares tadkatc thai ihe vebof

* SoW".oa taiulndwti) liwaom.bar* ofiwipni

itailiea li> in-lmlii OHWnall mm" In* SO pairM laa<nlilSn-inikI' mu4 ilui iuod-nd SO taunt0 [Acoordiue lo UI iiUniaiaifnnduurSO v

trMar1 caluo IJ

k< mntiBn.itifc.ni) at rut>

IM ISS* buamuM I.l IIIWJ iraaMIwa uimiil In

viniHUiMIn hit mn!huiiuiaialr iwi Ibu tiari ixiW'1 m

interdependence between if iKuliuie and Other sec* lort cipandcd in. Synehronijang tbese transactions lo ensure timely delivery to farmserials such as IcriiUur and feed ingredients and piompt processing of farmbecame incrcas iBgly difficult Untilf tbe Food Piofrataon to coordinate acarvilVe* of (arms. iadaiUulvioranaged by different em.VSlries and depailrocnU'

* Srr pageout mil- of Ibi birl'KjMiOl tb< fax!lb aoocul im|>ln"> and

esult of increasing liiciion aod) delay ia ooofGi-riimc food-related produe tier, ox* wiih ihe rile lo "off-farm" proriiioo of inputs, (armt hare aDoeaicel an increasing share of (heir own resource* for iaio-ties lhat are aupraoied to be provided bylervicc organizations over which the farina have no directhe ruble value of industrial, con-iiruction, and Iraaiportatlon operation* carried out directly by farms doubled0artly because service org anrat ions charge high prices and provide inadequate rcapoiisc to fannoviet writers complain that this "deapecialiratioo- isunneeesiaiy duplication of facilities, thusfarm leaourcea, including labor, firun crop raising and animal husbandry, as well as*

Another related pi obi cm involves transportation

leases, which hive ii'.- largely beouse of:

rossly inadoaua't farm-to-market road network.

Lack of modemion equipment.

A rate strvctarc that acts prices for transportbelow costs.

A gradual irwtease In the average length of haul for farm prod act i

Inadequate incentive* fee proeurcocoa agencies and transportation organitataoos to prevent damage and spoilage in transportation "

ia*au> .uvU.anUM Socvty mlheSckotuV rWprtwn Aaaoriauoa.Savior Hiandofimii." uTo*Savin bt MinUuy olaaa noor Shell

paean rraauutn aad tula

" la lb* RS1XH. I* ouoipta,11 the prior, eharr-l

M I i. -

tUaOo lk< .amimnl repair of UiCUn and (rati oooiUoa In>Wla -rot op by IT punai andm.nl. mpprdvd'

-b. valor, of wiuKlieo. transportation, .ad

rom JO toeroral of total

tanail.iln aa lb. Heal valve aloprralana art rarely pubtUbo* I. proparfni ibr anaualty poUiiaed foro. oo Uxl UnaoVd

iatHiatepw ubka. Sovwri thr -I- of raw cowu. tanWi mmx by Itm la Mauary. eoa-

aadank. Ai UH aaaac Uc laj Haltvt by lU-Vnlo. tbo- aolwaawry fan* U

I la offkul ruiMkaibtfl-

tn law

.

i aad i

i OfMil^ lu'inxli bra I

ci.lt. accor-ding IO Soviei sources, iransporla-lion crganiuiMru have not kepi pace with the grow-iatg requirement* for delivering indnttrial goods to farms ic! for shipping farm producii lo i

Failure To Adjustolley Appropriately Since tbe, investment In agriculture and it* (uppeeting industries (here termed food production) has ne-lhird of total investmcnis in tbe Sovietumulative in veal menu in food production inrewJ percent over cumulative levels of, compared with an increase ofercent for the balance of the economy. Despite this generous lupporl, growth ia agricultural production diminished rapidly Ineveral invesiment decisions are partly responsible for tbe present slow growth in food production.

First, planners reduced the share of investment goingndustries supporting agriculture. Itceaute of insuf-ffCienl investment in machine producing plant and equipment, for eiample, much of (be agricultural exjuipment currently produced ia (be USSR is obao-lete aad of to- quality. Only half of the specified tvpes of machinery needed byre, to dale, ia series producuon Even whale in aerie* production, there frequently i* aa iitniTtcteni lupply. Forthe new. larger tractor* are being uiiliied ai onlyoercent of capacity because only half of the necessary attachment! are being produced. The ihoel-agc of specitliied equipment to carry out technically advanced farm operations, such as tbe application of liquid fertilizer, isritical. Moreover, theret machinery adapted lo lpecifie farming condition! in various regions of Ihe country

add-lB. lo eUioJtitcyaery.eoruUuetMo. UWiiirwtl.nl Iimional" In. dvdea .DocaUonaaad torvioea ta

auehIcvUUier. potaoMn.

iiraii arrrtora. toaeU. .ionicb*1 t.ua. mtumtlmt Wllant

proaaain* eaaraprUca.

I-loi oac laoparaUoaalb" dnobM.of Qwp. mmi bowl tvwloouby Iwa rbaa 10

(bucd oa ibrae-yiai tarialookl mmkmnw aa iieulmmrO, ml Ian.pea mmk alMi vevea Van aboa. of IiM abaaanMa tboa. -

Second, encess emphasis -pUccd onfacilities. The milplaccd priority giver

livestock facilities, together with increasing conttruc-lioo comtheetirenvea; rile* foe farm machinery, hit resulted tnier cue in ibe share of buildings and structuiea on state aad collectivr larmt fromercent of capital stock5 toeieeiitne Soviet witter claims that plant and equipment for animal husbandry is now Htc limes0 level, and livestock output has increased byimes Production of livestock product! has not increasedly. because new capacity has been allowed to stand idle and because the quantity and quality of feed supplies have been insufficient."

Finally,he share of investment going to rural housing and infrastructure was cut.lo Soviei press reports, primitive living conditions in rural areas contribute heavily io out migration and to the present shortage of younger, skilled workers

Oplloni (nr lntcttmcnt In

r

The Current Man

Investment policy fors largely intended iu eomprniatc (or perceived misaUocatioris of the pait Although growth in investment alkcationi will be skv> in the IfSOs. compared with, food production will continue to receive aboutard of investment resources. Daringarger shate of farm-sector investmento be allocated to improving tural infrastructure and to increasing capacity in focd-processing and in farm machinery production. Investment in large livestock complete! ii being reduced. Soviet policymaker! be lievc that higher priority for storage, processing, and distribution facilities will em losses and increase the quality and quantity of farm products delivered to the ceeiiumcr

According lo Soviet plan documents, tnvei'mentto food productionill be onlyercenievels. However,both in agriculture and elsewhere in Ihe

aterial aid Ike nooaiaiv

line coniiiliblad lotoed ihoitiin economy grew at above-plan rates.nvestment growth it planned to pick up slightly but is lo remain below ratei ofiable J)

rXrtomrcrProdmti't *md Food-Frptettlag laiatiriti. To build up thelinks" in the food produclion chain, resource-producing and (ood process;ngwillarger share of total investment in food production, invesiment in Ihe farm machinery induilrics is slated to rite SO percentevels, comparedpeicent increase for industryhole. Soviet plaaneri reinforced the priority bypecial decree in3 calling for an additional boost in production ofmachinery.csull, presi reports and commentsoviet official suggest lhat further increases in investment in the relevantwill be made in the last half of. Despite this generous support, substantia!in the quality and assortment of machinery available to farms probably will not occur untilecause the process of designing,nd producing new machinery in tbe USSR is atill very

Slow

Accordingoviet planhe mainin investment in the food-procemng industry will not occur. We believe that present increases in such allocations are being spent on food-prcicessinf facilities to red nee poslbarvest lourssupport for the feed-proceinigo come from imports We estimate lhatmports of food-processing equipment, mainly from Eastern Euiope, could be as much as double those

The Faem Stent. Investment in ttate and collective farms and agricultural service organirations willby aboutercentver tie6he machinery portion of investment is to rise by aboutercent, comparedercent fc total consttuclion, including rural housing andGrowth in both components ofo accelerate slightly. Major Investment priorities for farms areIf tailed below

ajua I

Table 3

USSR: Agiictdluratly-Relaied In.esimeni

Rural Imjftitrwt'ure. Ibe rr-ni apparent shift in investment ini lo iciuli fiom growth in allocations for iural bousing, schools, tedhese annus! allocations are lo Ineiease (ailer inhannd ate to amount lo more thanercent of total investment in food product too. Although Soriei policymakers considei improving rural livingcry irrtportaiu element in reducing oxi-imgration ol tbe betterworkers, major improvement* will not occur quickly Moreover, we believe Ihat this program would be one of the fhtle cut it Moscow ii forced to raise Ibe priority of other lavestmeai protect* 'Mhei on farms or in other sectors of ibe ccotiom>

in paved roads nbadiy lo reduceanton coits and reduce lotses inof farm product* '* Soviet source* claim that only

"Gnu of Ir4niinn*(ian rot. b. on, feonb in lb* It'OiindaMuna. rWI

* araumt ol ,Uw>

ercent of the farm roads used io move workers toeed to livestock, and machinco'ieldi aie paved. More paved farm roads would increase the productivity of farm machinery, reduce fuelen ibc need lor farm machinery repair, andIbc attractiveaeas of living in rural areas. The inadequate network of iitierfarm and market roads, luithcrrnorc, limits marketing of farm products as wall as delivcrsea of goods used in farm production One Soviet writer claims that the lack of roads is rnpooiible for losses ofercent of farm pruduc-lica Eveo if plans for loadarc ova. pa ted roads will be available to loss lhan two fifths of firmsithout adequateome of the benefit* of planned ioritascsaciiy foi perishable product would be losl

Oa-Fu'r* Coaifrnefroir. Motl of the inereaie inlor eooiiruction go loruing tollocations build infi((met -its il

evels. Consiruction olitorage facilities lot vegetables, (mils, pouioes. foragend induslri-ally produced commoditiess ferliliur arce Ibe hif heal prioriiy conttniCtron prciects. Al the bcciTinin( oflk Five-Year Plan, on-farm ator age wal sufficient for onlyerceni of ibe polalo barveti. JO perceni of the fruti harvest,erceni of ihe vegetableess thanerceni ol hay and feed Tirol ciopa arc adequately stored. In addition to more storage capacity, belter incentives (or workers and manager* throughout the prodact-on process and subtiaMial iocicaaea ia ma-chinery. equipmeel. and transportation and handling facilities ate needed to reduce losses and maintain product quality

During, ihe costs of increased capacity for livestock prediction will fall ai renovatici atvd etpan-sioa of rlining facilities replace new construction as Ibe primary form of new investment. On slate and collective farms of ihe RSFSR, foi eiample.in animal husbandry.luding .feed production, is to fall from one-half to one-third of productive invesiment. caxapsrrd6 SO

farm Markinery. Soviet policy toward invesiment in farm machinery cmphsstiri opanding the assort riven; and improving the quality and reliability of farm machinery stock* Planners are counting on increased stocks o( farm nuehirieiy to edict the effects of (be continuing decline in the agricultural labor force. Growth in stock* of basic machinery such as tractor* and grain combines is to be accomplished by holding deliveries at or slightly above those targeted6nd. at the same lime, (educing retirement (ales. Even If plan* for (he delivery of agriculturalare lulfilled.5 goals for stock* of tractor* and grain combines will not be met by the end of ihe decade If retirement rates remainevels.

Io reduce retirement rates Moscow must

I nruovc usccntivei on (arms to use aed maintain

machinery properly.Increase (he number of trained machinery operators

relative to tbe number of Uactois, grain combines.

and other harvesting oufcfcin'i

Make repair org antral too, responsive to farm needs.

Imptove incentive* (or industry lo respond to firm need) and toider assortment of better quality machinery

Solar ialan period, leiaremcat rale* for melon, grata combines, and for several types of harvesting and irrigation machinery have beensomewhat.. however, del verie* of ibiswere below plan and, in scene eases, evencell

Land oscow plans la increasein irrigated ind drained land inespite recent cniioim by Gorbachev and other* of the poor maintenance and low payoff ol many reela-mation projects. We etpect land reclamation toto absorb aboulercent of investmem in state aod collective farms inl is possible.thai ia the future these lands will be conccniiated on improving aod making better use o( land already reclaimed instead of making laigelo stocks of reclaimed land. Although tbeil ci pensive and is moving slowly, it baa ihe potential lo help stab.lire crop yields and improve regional self-sutTrcicncy in crop production."

vdorr*

Ira vie- of (be intense cocnpctiiioa (or investment gooda among the various sector* of the eeonomj. Moscow may decide, under certaino trim tbe sbarc going to food production in theeturn* to aggregate iavesirr.eni would be larger if investment were sbiftod away from ftrrra. because fa rent requite larger additions lo capital io obtain

Ridudra reiralr-iecior ptoduaioa of pwitoo. vceiuola.oa imillaoemm thin

adom"ta.ia mawmr In ihr USSR, ihelyiirtB to- ptoevremow and proccuinc 'rquira thit

tB.fatx.ubabl* .ropi be pM tn

vftTTiilL

additional pieeluciion than most othct sectors ofWr believe (hat invest mcni culaare rtwe likely if the weather Ulhc neat few yean and faim output

t 'ales iudced' the leadership With poot wraUier and stagnating production. Mot' co* ii unlikely to (educe investment tn afltculluie. despite demand in othct sectors aad urtcultwrcelTrCieatl use of capilal

If investment in food production no- planneds trimmed, we expect selective cuts lo come in the traditional low-priority areas of rural housing and food processing. Farm ptoduciion is likely to maintain its priority as is the production oi Bgrtcultui-at machines)

Soviet planners may also consider increasing imports of Western lend production eCjuietrnent lo relieve pressure on dciiTiestic machinery srtduitriea. Indeed. Soviet trade officials bare recently csprcasedinterestide range of Western equipment and technology for food. orders of Western machinery and equipment fot food production and processing increased slightlyhare of lOtal orders of machinery and equipment from the Weil. Wiibio tbe category of ordersfood production, recent emphasis lias been on equipment foe food processinge espeel

Figure 8

USSR: Structure of Imports of Western

Equipment and Technology for

Food ['reduction . .

l^'l fori rap i

WBt AnJmfcf nutbateity in* tt<4

I I

ttitl-elr biib ear-ul recMewnu an paiili the result of put mildirocilca erf isvntmml rctourera io Mlievln'e

, lo arcnase ibe valve ol piaduaioauble, tSo

machine-buiUiaa indmlry required oaty IJ rabies' "Mb of

capital noti. conpattd an lb Hi tibia for Sofia farm Coracan-

Wc capital rojwWanenu foe eaher aoctonei Oat eaeoucal

or toed laDoaiini.a loels aad SD-tr. Ct pi' *1

stockomplement as welttaiiiute for labor sotvKea.

l-iuvi at tbe i, a tabor aup&ei daaiaf tbc IVSOi. Ikattata) reliuorobif.eat be Ibo only criWrtoaor cuduMb, incrctxd Capital is nptniin tail of paniaitai bcn.-fii so acrioaJiiiR, >hni anportunilia let labrv-aivtoa iavtrlawl arend pUBacrs artoeaj-aciD dcalioe ia Ibc nmbcr of workers aad ae inucaic ia tbrce of Ibe

remaimnr labor

" la it- past,1 v. o* Wcaloa tMbncaOo for fend production

bad law priomf Of lb* tit billion In oucbtncey

lociincdoay ordered from UK Wealomed so ailicwlliifc and food Prussia* Theae ordeiV. fanbn-motc were very imilt.0 buSVw Dtunaknl iAvotcd by tbc USSR ia Ibc (iiin ansaood.preeeniM laduilricaS-I0 (tlarsfcased4 dotUN Sories irnutmrm la robin UtodolUn una| the tfontclrk man ol US aod SoAtr mi|htedpanliri forand lordprOiuiaa malbiiory

ibis emphasis to continue, although orders ofmachinery and equipment probably will noterceni of all order* of machinery and equipment fiom the West. Soviet irade officials have indicated (hat foreign tcchriology will supplcincct domestic development of Inrm machinery. The Sonets intend to impart technology and complete factories for producing machinery father lhan importing large numbers of individual machines. Many of the general problems the Soviets face with Weslcm technology

(inchnadequate rnaintcr.ioec aod ipaic parts, shortage* of skilled libcs. aod end crate of capacity! however, would be esprxtally severe for tbe widely diipertcd farta sector.oce*iing pl.nu ind machineryhich Ki-ci larger payoff (haa farms. inigh( nuke betier use of imported icebnoloty. provided Ibil taw-rtiaierislt shortage* did not inter-'ere

Copiuf WM Demiod foe Otter ladoaliiil Coodl

Soviet pis in indicate that farm-sector purchases of industrial good* (fealilixer, energy, feed ingredients, spare parts, aad so forth) are to increase on average aterceew per year inI J, lamte deliveries fiew at ibe ibore-ptaB rateercent per year. We estimate, however, that average industrial gtowth inay be too itowuitain coircnt or even planned growthdeliveriesarm* unlet* planner* give very high, continuing priorilyupporiing the Food Program. During, purchases by agrkulluie from induiiry giew (aster than industrial production, but tbe gap between the growth rate* was much smaller lhan thai projected fornduury -ill be rurther burdened by plans forhat call for increases in industrial goods to food-processing planu and to produeeis of fertilirer and machinery. Many branches of induiiry probably will be under pressurer-oitonitre on raw materials aod energy and art likely to face failure of tbeif own sappber* to deliver bigh-quably input*

Rtsvawce^ Producing aadladairrir. Tbe payoff from new cod action facitiiici in the industries that produce machinery and processwill be imat) without stipport from other braoche* ol induiiry. Machinery rarcducer* need more reliable, higher quality deliveries ofubber, plaitic components, and rolled metal, io addition to new produclion facilities. Producer* of agricultural chemical*ore regular supply of higb-qualiiymater tali .nd packaging for herlyicadei,eed-treatmentnd livestock feedood rsrocesting ba* long been eonorained

aaaaaaaaaliJby*The

*a.inaa.iiin

by thoriages of packaging and food preservative*eliveries continue lo fall (ar short of plan, returns lo new iavestment will be low

w

Maseowitrategy ror dealing wiih these abort-age* has been to saddle producer! with new plan task, and inirructions to raise tbe priority of deliveriesnterprise* involved in food production, lo someuch at the paper industry, order*trp up deliveries of packaging material have beca accompanied by comniissioning* of new production capacity, enbanc tng ihe chances of success

Farms

oaaaay AJ ibe i

prcT.iiktaar atre i

CkimUtl ftnUiter. Soviet agriculture need* an ad ditiortalillwfr*^liier nutrieoti annually to increase apcakalioo* tolevel* for aUlans,call for an increment in delivcrte* of2 million tornhich will bring (be total torreenl more thanlmost the entire increase in fenilirer deli-erics will be needed lor grain and forage crop* {annual and perennial grasses, pasture, and corn forhe Soviets plan to double applications of feitilirer on (tain. Given ihe current return* lo fertiliiei. this incteate would raise grain yieldsorn per hectare0 over annual average yields oferiod' "

ir .pptaatMou Mai lam of is*

rrat. ia tfca

ta.

>am a* ia* mmt >

rouiaa.

iiiSwuiinoaoMiHOi Acoardini laarnw.traia raopa .ret*,, Mllaal. o)

luiikia Hh air. town lo annual aad prnaavJ ri.aul&oBlooi.ira.tiualai,Uaaa.ain. iirtilii'-(oruccnuaaouM beaVm ton.thetn af

n.trienu oiuflpra.ira.ul, la. rriarw, abtataal lo thei Grain yiddjilited to rkaarUn iaSMJ I1 IBM perm.oocaaek* half al tb. ioaaeaa: W.

batia prwiora dirt-ok. la ranM iWlb-

j^niiiiittT

estimate thai, once goals foi application! lo grain have been met and other nonf mage Crops have been brought up to teeomfneftdedaiimumillion toot of fertiliser would be available lo increase application! an forage crops Thesehowever, will not be sufficient to provide growth ia produclion of forage cross it latea needed to meet plant for feeJ production

We believe that production problems in (be Soviet fcrtiluei irvduttry will keep deliveries fiom reaching planhe shortfall, however, is not likely lo be as targe as thaturthermore, we aniici* pale limiled growth in output of phosphorousrelative to nitrogen and potassium inhortfall in the availability of phosphoroui fertilircr will bold down the payoff from plant lo iitcreasc fertilitcf use in ihe dry regions of ihe RSFSR and in Kjukhsun. where the need foe pbnphorous fertilizer isvese important grain tegiom currently use little fertiliser but are io account forincreasing share of allocations to grain in

The most pressing problem related io ferliluer inill be to Weep marginal returns lo faitilirer applied to grain from falling off rapidly and lo raise ihe very Vow returns rsow* being obtained fromio potatoes, vegetables, and other crops (figureoviet farmers have the poseemal tocrop response lo fertiliKt by using il more effiCteody. To improve returns to fertilizer requires fewer losses of fertilitci: more limely iransponstion from factory to farm; more and belle' application equipmeni on farms; seed varieties more responsive lo fertilircr; more efficient application practices, and greater use of lime, gypsum, aod pesticides."

o prfiwu af Sonii wu riTloiai

liii. tbaosducrbwwnuar bar baaaH imc tie Milaf |lluUkiar nUlrn laard bbuimiii TVs Sai limine |ua

i oducad cro* Qua Illy aaat <Im elfeoi-tmai ofIrrsilim

much eta tin. fat lumplc, Iba) lunini ef acid wl liKiiuaa fendinr irapoaat ralesance*.ra apdr lUax Ian baa*iltrlilTiiliIasvaai. araaaaalitwaawawaatta fat aa-Hart tad tarn, are iwteimt WraOi. comneiihi lor owiKau. air a

ma)o> latsoi in the Is* icijmsc of fin. suf Hivn and

ieciaMa rroo* to failJIlMi. la IvStl. Itti ihia ktl? ot eitia. tircb

acun imnia hnharukhaVaf trittv'.iwi'iiad WiWdol atMaSt aataaWabeby

1VI1r ial"rMil it- wai

MM

IniuffWtenl quaalilica of lertitiur. together wilh problems ia delivery (ad appl-nt-Xi. wili bold0 yields uf hay. silage, aad other forageelow rieesent yields in ILasiero Europe and below those in analogous regions of ihe United Stale* and Canada in. Cains from using addilional fcrtiliier on grain are likely to compare unfavorably with those in climatically similar areas of Noriba at (endue/ use and grain yields reach plan level*

Liwriioc* ftti. Soviet farms largely depend onto supply complete, nutritionally balanced, miaed feeds, laduitry also supplies protein supplement*meals, boec aod fish meal, and singk-crllad patraite* ihat include needed vitamins,nd pratern thai enable farms to produce then own balancedlthough nearly hall of the giain used for feed is pcoccsscd Into miied feed, much of ihe pioductubilandard. Roughly half of miied feed is produced without protein enrichment because the needed raw material is not availableesult, the rruaed-feed industry adds lo lhc cos; of producing livestock product* without proportionstrly increasing tlie elficiency of production Achieving0 target of feocetting all grain that is fed into miied feed ii improbable because il places loourden on industries that produce Ihe neededsuch as sugar, vegetable oil. and meat and dairy processing, as well as those thai produceand microbiological feed additives These indus-tne* would have to increase deliveries to tbe miied

feed industry by, on average.ercent over0 level

Sovietiocs lack balance because.verage, they areercent short of the quantity of protein required to achieve Ihe maiimum output of

Three louriba of miied feat ta tba USSR iicmdHcd by li<

Mnuiiii aT ProeuieaKni. aainiurchased Inm Camsi-ain Tbe balantu la modaicd on iiaic aadiii-i .rAcaurUtncu Smiavhalaacnd aaiacd bad caa aadwiW farbv*mtt it avHtai Canf nlad hathbaad aillard rtaah. nib

raa|bly II amcni

Figure 9

USSR; Fcrlilizci Applications and Crop Yield*eo mm coded

in Ftruli;

Uil>4i>iI'm iw "i- irin

productsiveo quantity ofne Soviet writer claims ibai the piotcin deficit exceedsercent if losses of protein during harvesting and storage are couiiied. PUni lo reduce the deficit rely on the traditional and thus far unsuccessful strategy of increasing production of protein-net pulse crops and forage crops sueh as alfalfa, lucerne, clover, aod pulses" We believe ihat protein from these :

luoe, (ontnoi.

thoruie la oxrill quantities olcKtiyails lbs) rt it a

ce is to, (maufcud ton-cubi in ibc USSRihcHkiicd Suu>

oiof pulta. foro!M* BlIllinB1 Si0 avtMiit Ulf *-

. ivir> so

will be well shod of plan, creating additional demand for industrially produced proteinWith large increases in investment forj-percenl increase scheduled for the microbiological industry, which produces single-cell

lod,.ir, iHoauotdaQto loot oford cmnpooeMipredwu) us lylO. Torotaio totuonl Oford nucn So lie lUndirt kit. wouldtcqiirtd lb' oauw-lc" jrl io.ithi, tt addituoalillion ions of aovtaan iw

proteinumber of other important feed(be capability to produce these importantshouldhe flow to farms is likely to increase slowly, bowever. because producers of feed additive* rxobably will continue to have difficulty in getting raw materials from their own suppliers

J AM tire, and Vetetimery Smppliet. Soviet technical writers have statedlhat onlyercent or the need for antibiotic* for livestock feed and for veterinaryeingumber of other feed additives, such as elements or theomplex and vitamin A, are also in shortroduction of important feed additives such as lysine, methionine, and various enzyme preparations needed to improve digestion arc far abort of demand, even though production has grown substantially since tbe. Although production of lysine, fornearly tripled during6 no period,ons produced0 covered onlyercent of demand

Putting animal husbandry on an industrial basis, which involves concentrating large numbers ofin relatively small areas, has sharply increased tbe need for veterinary services to prevent large losses. The extensive shortage of such basic supplies as soaps and disinfectant* means sanitary sundards arcto maintain. Veterinary supplies that are not readily available include vaccines, drugs, syringes, needles, rubber gloves, and laboratory equipment. Industry's ability and planners' williogoeu to supply tbese goods has been limited in theituation not likely to change substantially.

Energy. Increasing mechanization on farms will push up agriculture's demand for energy, especiallyand diescl fuel. There are few prospects for

* Siaak-cdl protnia inOUdu oikico.iiM.ioiint. yean.

rnoldi. ane Other fund |im either oa byprodacu Ot oil or oo

v.uic. from .rnevliw. and Indium

"Aatiuiotka an arowth aimoUiori thairod

Moreom, iM aodiuon of proper eoamitk..oua-otfe.ood

Uvaioot drub nlea lutxiantufty. Soviet tmbonfea repon

that up toofcalfrn <aehIn

tU.dytxe.UKOl

ooneei leaf

P. iwtluppaedor Ihecnndnnini of niiedind prooilica.

substituting other fuels for gasoline and dicsel fuel in operation agriculturale expectof petroleum products in agriculturea to be at least ope-thbd above that" Without adequate eiparrsiou of secooda ryWesatngeapacity at oil refineries, however, deliveries of light petroleum productsajorand ag-rvculturc--cc*ild fall ihoil of needs. *

Chanting AjricoJluial Ofganliatioo and loceolires

Soviet leaders rcaliie that, unless transactions arc more efficiently syivchroniicd between tbe farms and organLutions that supply machinery, fertilizer, and other industrial goods and the organizations that fans port and process agricultural rawew investment planned forill do link to increase farm output and reduce waste throughout the production process. Better coordination betweenin tbe food production process requites less cumbersome decisionmaking and more effectivefor workers to use resources efficieoily. In contrast to the situation in China and Hungary, where agricultural organization and management underwent substantial decentralization in, Soviet lead-ers have opted to continue centralized planning and management (see inset)

Tbe Food Program

In keeping with concerns related to growingand rising cost, in2 the Brezhnev regime unveiled an agriculture-related program forhateorganized the management of roodedirected investment resources between the farm lector and Its supportingevised incentive* for farm workers and managers,isted new targets for production of key agricultural commodities and for allocation of goods and services

" Soul ineremoMi In ntlunl iu and primary tbtaricMy ibooM be

available U> aabalnsU for odinropdiyint aod

la Ibe bcaiinc of noanMdewtUI iimwo

" Coal cuntwly aoooonu for aboutceccflt of loud ikii-

utodroaru-

ea. bat IU Dure of tout fad we i. onlyawn'

Agricultural Reformsotary and China

Food Program contrasts markedly with changes made In managr/ntM of food production in China Ond Hungary. The net effect of changes in these countries has been ta Increase output, rolst prodond lower production costs

In both countries, procurement plans have beenor abolished, giving farmnd private producers more opportunity to make productionAlthough the RAPO concept fsee text) offers the possibility of decentralising management to the local level. Soviet farm managers will continue to hove no real autonomy to make decisions that ihauld be made at the foem level, such as whatroduce, when to plant, or whot machinery to buy. Thtit Hungarian counterparts do not fulfill cent rally dtitr-mined procurement plans, but plan output according to petrolling pei/ei and ihe emovnl of revenue nrtdtd io corer labor and material eosti Hungarian farms engage in relatively free trade to acquire machinery, fertiliser, ond other goods from Industry. Thtie farms art also free la undtriekt other kinds of production such as smcll-icalt manufacturing and rtpaie that"provide off-peak employment, addue. and increase the supply of services and equtp-mem to smalt farms '

The Chinesesystem" itarodmted8 replaced strict acreage and production quotas wilh contracts between ihe tiattroduction teamgroup or family within the ttam These teams consist of If oeouseewhoipeoplt Therea/oi rariaiioni of ihe new system, ranging from ihose where planning and management Ore Itill high-ly collti ,: to others thai rtstmble individual farming Western analysts mgrtt ihat these reforms, logtihtr with good wtalher ond inertased ust of fetiilnti and equipmeni. are respontible for Impm stve growth in output and productivity. Additional

reforms announced by China4 go further toward decentralisation These includedismantling of commune I. reducing theof farm products flawing through statechannels. Increasing flows of commodities through free markets, and permitting peasants to employ hired labor and lubeonttaet land

SdottOrer. Hungary and China support ihe private sector actively. Although the Soviet regime7 ordtetd greater state assistance for piirate far men. support and Ideological acceptance of private ageicul-turt falls far short of that in mast East European counseits. Hungarian cooperative farms, for example, supply their mtmbt's with seed. feed, young lire-Stock, and transportation ond marktting services. Output of private plots is counted In production totals of the farm Tht USSR has tmhenmall Hep in this direction-ecree was issued ihat allowed state and collective farms to contract with individuals fot railing livestock. The farms provide young animals, fled, and veterinary services, and buy back lome of ihe mature livestock. Slate andforms are allowed to count product' obie.neJ under coniroci in ihtir output total.

In China, one variant of the "responsibilitycollective land and other otitis amongond moirei no collective accounting madApprotimatrlyercent of householdiin this system The household contractso given quantity of farm pioducts ondthe production process The

koviehald may sell obove-conteact peoduction

any marketing channel it thoosei and may-use land not needed to meet cnniiatt obligations as it sees ft

PsSSti t I'll'l"*

^ssaaWetStTiT-

he , im reflect* tlx leader

ihip's concern about lagging faim poduciicjn andenewed political commitmentrnprov ing the Sovietentral teal or* Ihe program it to reduce dependence on impeded firm products

The Food Program eilli (or creation of agncutiuial-tnduttrial coordinating bodiea at the all union, uruon republic, ototau. and rayon (dntriei) levcli These bodies will being farms, acrntccod some other coo-poocou of the "agifriftestntrUI com. pfaa" togetheringle adrtMaruiitivc hierarchy that t* respwmbte for eoocd.nai.ng the entire food pn-iiKlioat process from fatm to retail outlet

Theody, the nations! Commissionof the Agro-lnduitnalothe activities ol memberplan fulfillment for lute purchiseiproducts, deltvervea of Ingoods, and the production of uroccssed.of plans

prepared by Caspian. Theto, out even these functions is still undefined Sincehe national commnuoo hasegular raecuagi but has been able to do little io speed the leorganiutvon or lo emure delivery or promised goud> and service* to farms

Council! at (he oblast, kray, and autonomousarc to monitor plan fulfillment and haveto pool resources and ledisiribulemembers of iheomple*.as union republic mimsinei andThese councils car. also createto Produce rru.ed feed.ad consomer joodiabut ion of decisxaraiking lo ihn level coulderrant

use ofoven the food ptoduciion proeeis

The reorganiraiioit earned out ai ihe rayon level is Ihe most significant and controversial aipeci of the

6 "yCm ciationt (RAPOsI include as members allgricultural

service agencies, and processing enterprise*iven

district As Such. Ihey cutt

hortiy at the local tor

HAPO authorrtyedo.mder.ble degree, ho-ever. and potential effect.veness is limited

The ciisliug system of central Meterminat.on.of-quo. -las for state purchase* of agricultural products andof investment goods and Other input* is not to change. KAPOs can redisinbute production target* among farms bul cansnii-m" andm.ne" Pl*ns for service orgons, which are subord.naie both to the HAPO and io lhc parent miiustry or ,ute commrttee. Although RAPOs oonu.iaUy can icdas-inbuieS percent of allocaier] resources, mem ber org* muttons must agree

Problem. Inibe Food Program

The Andiopo. regime publicly .upponed the reorga-mutton but appeared io recognire ihat. if it were to work, it would require more lime and strongsupport. Even if Andropov's successor* cancurrent delays in implementation, benefit* from ihe reorg.mration will not appear in lime lo aid inS goal* Full implementaiion hat noi vet taken place forreasons

First, ihe scheme hai bee-

and state commitiees ihat stand lo lose auihexit,eg.onally onenied system is fully established Alter ihe2 plenum, one Sovki writer observed thai oWan service organizations were advising tbeii tayort subdivisions to parlieipate in RAPOs without giving up traditional prerogative*esult, lack of control over .erviee organizations (hat supply equipmeni, repair services, agricultural chemicals, and consiruc-tion lervices severely limited Ihe crfeciivenesi ol ihe RAPOs. In) ihe Andropov regime tee* acMiiionat steps lo merge ihe micreti* of farms and service orgaoiutitka* byecree thai tic* rewarrl* for serviceto growth in Oalpui and productivity on farms they serve Although Mo* cowcorrotlly recogniien ihit farmsesponsive service sector, to far the leaderahip has been unwillinglimmaie Ibe dual subordination of service organ*-ration, Ai long as the conflict bet-een RAPOs and the parent mlniiirlmanagementwill remain

i^Jidi mill" '

republic coin in it nam have not been fully rsiiblithcl. contributing io the li'k of effective nest of both Ihrommission andlthough republic eommiuionsee- larmcd. rcgnUtrant Specifyings ande not ycl been published. The deliy in drawing up regulation! sug* gatsroning oul differences between central miniiirlea and rcf ional autboniica ai ihit level ii proving especially difTxuli

Revising IneiWiies on Finns

Improving incentive* for farms to carry out agricul-tursl operationsimely and efficient basis is probably tbc most important factor in raising product quality and reducing vatic ia harvesting,ion, and proeessinc of agricultural products.incentive* aie also needed lo supplement and reinforce the rcorganiiJlioo of agricultural adminu-tntior. aod provide more efficient use of new invest mcnts Cuncrstxi. involve few imagini live, new sirsiegift for improving inccntrves

financial t'ctntlui. rhe cornerstone of current in centive policy is an increase ia money irscotsvc* of rural workers and higher profit* for farms The regime will continue lo raise farm wages faster than those inothei secto motivate farmworkers and to make farm jobs mote attractive to younger workers who might Otherwise migrate tolthough the linkprofits and ihe Quality of manageriali* weak, higher profits aie intendedncrease the funds thai farms have available to invest in new production facilities, build housing and culturaland pay money bonuses to workers

Although Moscow will ooniiriuc to redocc the gap between urban and ruial incomes, plannersrecognize thai more money income in rural areas will be of little value as an incentive for workers because of the inadequate supply of both corrsumer goods and producer goods to be used in supporting ptoduciion on ihe private plots ofherefore, added incentives are to be provided both

We Milam ibit "cultural incomes perbota nx.rdrote fromtircni of Bonienculixil oveerm0 to VOpttcrnt iniimlnof Me" Badci ihat rertoetcd Uxh houuhoU sma andof locdl sad loiiies. lo-tvii. voaSJprod rrmm, UnacitcMfarm and noo'irra leiidtni*

for farmworhers andof servicei ia ibc form of wage and in kuwl payments us products, primarily grain, sugai. and vegetable oil. We believe thai Moscow it reempbasiriitg. pa> mem, in kind to cocourago livestock raising by private producers Paynsenu in ihe form of scarce food products arc likely lo provide greater incentive than money payments thai cannot be spent on ihe goods and service* that the population warns *"

To boost farm profits, prerruums (up to SO peicent of Ibc procurement puce) formerly paid only foe above-plan deliveries are now to be paid to farms ifeliveries to the slate over those of average levelsdditional bonuses will be given so managers and specialist*m product sales and profits esceed tbcevel. Thii new policy may increase intervention in farm affairs if farm managers attempt to reap larger bonuses by avoiding production targets levied by piaaaeii forr*ofit* Uc producii

Higher procurement Prices. The concern of Soviet leaders over the low profitability of farms led lo the introduction of higher procurement prices for most products)csult of price increases, the subsidy bill will rise appreciably The regime plans to spend an additionalillion lublr* per year for direct pike increase* and for special price supplements for unprofitablelthough prices for all farm products were aUected.ercent of theillion ruble* was to be used to raise procurement price* on livestock products. Scllcri of potatoes andn the olbcr hand, were lo receive only iJ peicent of the funds form case* Dei pit' the large allocation to prices of Imstock product*,Scariet data indicate that1 cropremained more profitable lhan livestockalthough ihe gap between the Iwo profit lates narrowed somewhathere appears to be no

-byeaden ladataw thai la*ptrawil,MuaiM ol nlilna rai.il roodla in-er thelaereasc.atnidicj lotabaf II billion luBt'iaa canoe lhc ditltruc* brtvtca nud pnwut fWYnr Plaai -Itor

I ' t* ml SO bOUaa illn aa INS Taaahill al aatraaalneinatinjaptnasart

fa Ml

fen irseentrve lotctintoJjrih- of feedsli I'll oca products, tad pro-curerne.it plans Ihat" Uv-,owlis Ic* dclirery ol farm product! will ror-niu: lossential to achieve the desired mis of output -

Soviet planners apparently ereognire thai costs of industrial BOOdt and service* fill continue lo fin innd could eiode ne- profii levtli in agricul-lure. According io So-ieiio preserve promuiure increaic* in procurement prices will be cloiely tied lo increase* in price* of good, and .etvtce* sold iolthough this policy will notelTicienl uie ofl recognise* thai inflation is substantial and beyond farm control

Soviet procurement prvee policy is muchffective Ibsn that in Hungary, .here procurement price* are used a* an indirect influence on the farm decision nuking process. In Hungary, planner* annually* lot of countrywide rurxuicanerat prices ipeofi-cally gearedenerating the product nui the retime waal* Input pncei are vubsidircd but gcalod to ertcoorage rational oie

Although China is trying to use procurement prrcctimilar wty. (be policy ii not yet completelyep.nj price reform was undertaken8 lo raise rural income* and to diversify prod net wo by raising the profitability of industrial cropsesult, incentives to produce [rain have luflered to the eueni that planners arc concerned that ihere may not be enough grain ilher hit* In addition, inflation hatroblem in some rural areas as giowth in supplies of coniumer goods has not matched income growth Derause of ihe internal politicalBeijing hat been unwilling to make another

ilable dlla anraal, ho ike

ia.Monad-Ji,

aatat, pMaior*.eaaiaa, ,ml,Mldi.daia fa*n ihr eflxu at iK.ihai

it* num.-a* sarawml.

an riala lirma. -rin-ai iSa farha.

twadiKUm,k, ,

iiM XtaVu*ow aad raaua aaaiau Humtar CM*pal

aarinnalar had**aj mmorajoaT

IIW nt ib.i,

'raaaia, IttlJUae'lniaan latainalaihaaam.a*

wii.Ii

swexoaftg pr.ee reform but isprate*rop- by-ciop basiselp control the product Batl

, Stktttt.i shortage* of skiOed tabor, highnd irvcfiicacncy would lessenage scheme could be intpkmcnirdcwardl farmworker, according lo their esxiti ibutions ioThe Food Program moves in thu diiection by calling forb contract plui bonui" tystem ol wages to be used throughout agiiculture. Under this system, which ha* been used in some areas sinceeam of workers contract* with Ihe farm toiven quantity ol lirtn productspecific allocation of machinery and oilier goodshe farm supplies the equipment,nd cbemi cats, and agree* io guarantee prompt harveii and itorage of the crop. The team* are to be given latitude to manage the production procet* a> Ihey tec fit. During the growing-orken receive monthly cash advance* After the harvest, total wage* are iraaeased if crop yieldi and/or livestock product!.ity have improved The sum paid out as moathly ad-vsaccs is deducted frees* lhc new wage local, and iiserasber* of ibe learn share the remaiarder. which, according te* Soviet offmalt. is cipccied to accessni lor st least half of total cash paymrnu to worken

According to Soviet writers, this scheme has been successful in linking wages to lhc "final reaullIl ii an improvement on (he piecework or hourly system* of pay that encourage (arm macliinery operators, for example, lo plow. row. or harvcal a* many hectares as possible without regard io the quality ol work done. The job contract system, used onerceni of Soviei farms, has rescued in higher yields and loweihe following pioblemi. however, luggeit that it would be difficult lo implement ,he lystcmide scale:

Many of Ihe team* have disbanded because, in recent yean when crop* were poor, workers who received pirxewort; or hourly wage* earned more than workers belonging ioE conn act*

- UwSn tx

IVad sheA^,

-artaavan

- Turrit have not hidreliable supply ofbecause farms (ail lo limply themachinery and equipmeni, choosing to vieother needs Team* are dependenteet prodoeiion targets btil havelupplreii and no

force films tr^hnnor their pan of the contract We believe lhat inadequate supplies of machinery,nd other inpuii win be one of the mayor faciori li-niling the success of the yobe teherrte.

According to the deputy editoroviet agricul Ural newspaper, contract teams have nor been more widely irjroduced. bee*use-many worker* lack the ncceiury mining to assume ronomibtliiy for all phase* of ihe crop production cycle and forind proper use of machinery and equipment.

So'Ul Perceptions of Krform

Because of inherent shortcomings and slowannounced organiinoonzl changes probably "ill make ooly Itrmleel contribution* to improvements in loud production As it irieTtcatcd by one possible scenario for the rest of Ihe decade, average wrathcr over (he neit few yean,o-plan deliveries of industrial goods, to 'aires, and price increases for farm pcoducu, however, probably will provide enough gains in (ami output and productivity, compared with, (or (he regime to consider the Food Piogram tocccasfwl. Under thesehere probably would be few modifications to tbe Foodhe weaiher is poor or if Soviet leaders decide (hatiti of likelyoo high, additional change* in (he management of food production might be ctmsid-ereri

in Proc'i*vm Of aaiian'oai. If hnaes of farm product* io transportation and storage and in protesting are lo be reduced, procurementons need belter incentives to maintain productandynchronirc iheir operation* with (hoar ol (arms and food-processing enterprises The Foodhowever, offers no new incentive* ic procurc-meni workers to maintain product quality. Resent reforms require iiate piocuiemeni organiiailoni to pick up produce at (he farm gate inde responsible (or transportation and delivery to tbe food-processingFormerly, firms were required to deliver then produce* to erocvietneiit points) Managers nod ipe-Cialnti in piocuiemeni oegaouationi will be icwirdedey procure planned quantities of crops andproducts The only quality control in (be pro-ca tenant preeea* it to be done by teams of inspectors, who will "monitor- tbe quality of agricultural raw materials and processed food product* Their effort* probably will have Utile effect on waste in uansporla-lion. storage, and processing Any improvement will come through the program to provide enhancedfacilities, betternd modern uaitiportaivon equ iprncr.i

" In tbe Cbk of* il pevnt ni pi Jdjtmc

l inioooutt made, loo tew xbUSu liti,hilhai mil do nor tevci cotu. and bocaw. BAPO. Hillbr.e.ot.

iir,aM ,h, Mm.ili, nlcAi

Although (he Soviet press in (he pan several years lias debated (he advantages of less Ceatraltredwe do not believe lhat inonet leader* will move very far toward the Hungarian or Chineselthough little has been written in the Soviei press about China. one writer expressed the opinion thai Use benefit* of improved food supcait* had been outweighed by growth ol inflation and increased social differentia lion within (be country. Although Soviei planner) have investigated the Hun garun model fena pa tion in tbe USSR, they (eject Ibis and other liast European caperimenu because ihey feel that solutions appropriate for (he small countries of Eastern Europe are not suitableountry the sire of the USSR "

Mote important, however. Soviet leadersirm belief in their own system Movement toward marketyitcms appear* lo bengrounds. The leadership perhaps consider* railing elTiciency and lowering costs lest important than providing an ideologically acceptable oamplc of mirugement for other centrally planned ccxasomies

Smxl -ilun hive noted thai, it finallo bateii.niiilt ut national invinrai pram web aif rtaanul anacillilltBa la-aSndap iU<bardaa taa uiaao aim..naaaaal wmta*i

iadinrti of pnadncbaa lo.Kni-maiion rorvHtmcauX .tiUi tbaa iipuail uacialiiaimri

Fuiiheunorc. Soviei officials foe iht most pin do not share (he confidence of Chinese and Hungarian lead-en in (he abiliiy of local farm managers and private producersate the "correct- production decutotu Local Soviei party olfacaahaieifcxe in day-to-day Tarm opcraiioni descale ibe faci lhai Khrushchev, lirendropov, andulture secretary Mikhail Gorbachev alt haveractice, (ccognii-ng lhat it reduce* farm efricieocy. Even wiih authority, howevei. Soviei larm manager* wouldore rational price aynem io improve decisionmaking substantially

4

USSR: Average Annual Rates of Growth in Input* ti> Agriculture

Average annual Growth in net farm output for the balance ofepends oiu

Giowth in ore of goods and services on faims

The degree to which new programs increase effi-neney in Ihe aac of resoaicea

Weather Gains in efficiency would be reflected, lor eiample, in accelerated giowth in ihe overall crop yield indea and in reduction of feed requirement* per unit of livestock output Good weather would enhance the beneficial effects of Soviet attempts lo increase productivity, and poor weather would of liet tbe benefits froen (bear program:

Coodt and Services Used Tn Farm Piodaction

Present Soviet plans are to hold growth in inputs used

in farm production6eveli (uWend

io derive output gains primarily from gaina in produc-livily

During I- 'SIowever, inputs grew at rates well above plan Although much ol ihe eatcaecause anticipated decline* in farm lalvnr did not nuterialiic. deliveries of industrial goods were alio aboveespite officiallanners

a TV.af Mlm iwelayia at itiainil wart aa iuiiuai darllaia- aWi IiIH< ivl1

imrraird iietiU? Suamiimvi.

ihitt lorn, vwlwl ntt ininuyx Vii kiumlhn .in nnmtei u( uaianilly cmnloix) nen>|iH*huiil -orttr*oi. ln.il uoikid on eti-.tr (toll biti ireiciia'af thr iro-th In anviu limiml inmimu unci It"

appear to realize that ai least lor iht present--output gains will require above-plan growth in inputs and thai productivity gain* are not likely to reach planWe eapec* two mayor factors to influence growth in inputs for the balance of ihe decade

First, maintenance of above-plan growth in invest-nscnU and other industrial good* vied by laima would require that the regime give very high, continuing priority to the Food Program, lite slow pace of induitrial growth lhat we profcci fortl.ji adjustment* in other program* might have to be made if the food Program is lo be supported io this eitenl

Second, agricultuie will continue to face manpower shortage! in many regions. Pail policies to lure young peoplendustrial centers, together with neglect of rural regions, has left agriculture with an older, rclaiively unskilled labor force Although laceet increase an the total number of agricultural wothers2orker* adequately trained to cope with modem farming techniques and equip ment are still in eipecially ihorl supply. The speed with whtcb major improvement* in rural Iwing eoadi-Uorts are provided will determine whether laboileinaint high, and retention of newly mined skilled -inkeii continues to be dtlficuli.

Im-msed Efficiency in lb* Use of Resource* Growih in lhc combined, productivity at land,productive iiicii. and labor will depend on ihe rilnl" change* id agricultural management poii-ciu and in their imrJemenuiioo Akbough ibetc Die several policies ihai willositive impact on productivity, their bene fill mayduced by poor wralhci in by Ibe ctTocri of oiganiulional andpolicies Ihat lend to inhibit the growth of efficiency ' "

fctitit tmflwtmtts. There are indications ol several Tcngicrm ihiftt in acrtcultural policies thai could improve growth in the overall crop-yield mde* and increase elTicicncy of livestock production

nrtft. livestock feed cation* *re likely to improve In lorne client, although they will not reachncreased supplies of grain, foragend industrially pioducod (eedogether with higher pasture yields,e the cuantity of feed per animal and improve nutritional balance, especially if Ibc regimeolicy of slow heldrowth in roughage produclion will be more crucial for growth in tbe livestock sector than grain prcdirctioo throughout ibc balance of the tJecaTdc. Assuming current feeding practices, milindicate that the need forrow byercent per year during iheof the decade if meat output grows atrend rate. The need for giain will grow by slightlyercent annually II the regime continues lo raise the priority of forages in terms of machinery support, seed production. Icitiliier and labor use. and siorage and handling capacity, faints could sustain

"Carroll lucwk laUtm imii:or* ol lied *Mi pri yrat for iatft isindird animal vail flout tuadird aalmalair 4'iivtd by atifhliafof ault. hots,aU. marrimi ta lardmom lor ad irat ol aaiaait) Soavai BtHandaiiaUahM fad auuSeasir ma^arC inn! aa.un haw baauaortat. mat watai. if al ihr coal mlaiual faooVai-Sir "Saw.aihiliuii. iarr brin* Criuciird tm taetraaa. aunniadviiiTV wib entitle a* t* oouaitd Iranuir,

giowth met in longe produclion higher ihtn Ihose al present

a

Sccoatd. the increase ir> use ol summer fallow ihat hat occurred} thooM help [tabilirc gra yields and increase iheir Quantity and Quality.

Third. Soviet seed breeders have introduced several new vsiiciirs of wheat and rye that could coniribuie to giam quantity and quality More efforts arc also being made to supply farstns with crop seed* that art adapted to ihe area* of ihe country in which they will be grows

Fourth, in addition lo imploring livestock feedinghe USSR hat indicated iniereil in procssr-ing North American-type entile to improve thepotential of ihe dairy herd

Finally, import* from thef technology for machinery production, pesticides, and to forth, wouldositive effect on efficiency

neti. Two facioes win make ii fliffi-cull for Soviet agriculture lo rratine the benefits from agiolcchnicnl improve menu

First, we believe thai new organisational measuie* tsda Hep ia tbe right directarc being implemented loo slowly. They probably will haveimned impact inn the willingness and ability ol faimt to carry out more

II ram do ana produce. iitnicS.nl ituffcaac, ihay prooahlrini ditelu by Iwtaaln train.bisSu.wa'ka Iraala at at ir.hieuafliCKas IcuVra. aad hut labor aaawaiaariri.frvan It-ittadIrani irila. wbich hn tnwyfdiwaairalloniioa TV lint of cela ia lout fwdfrom an aacrapr ofterininIn aotnt araat wl ai EiSooia. ihei bin ii.i u be atad(rtin. u

Llaaitad aawnitataiwulariv lolaw aad -aainUna. iarlit at unahtT and aatiaui

" tMn ii* taraetkc at tSean fatwwUa. lhc land iaplaaird and iaonlj ai nooM lo nte-mifrom tro*iaf lta pnel-vtiml'i atumiulairan ofnd ailrucra

illlir.

ll:ii-1lending, cultivating, (erlilitci application, pen conirol, and Ini vesting The problem ol aynchronitng activities of ftiins. focd-pioceuini enterprises, tram-ponalion orga mentions, and soikelyemain for the balance of ihe decade because ceniial ministries almosi certainly will cooiinue to ream ihe transfer of control of food production io icgional bodiea

ill be difficult to reduce coats and increase efficiency ai long ai ihe leadership ii unwilling io:

Eliminate centrally determinedor output ol farm products and goods and scivices used in production.

Slop intcrfcience by party officiab and bureaucrats in day-to day farm operations.

- Sufficiently overhaul ibe inappropriate price sirue-lure both for goods and services sold io farms and for farm products X

gross (arm prcduetieo as ihe mow impor-lani deictmmani of soccer.*

Proieelloni ol Giomb in Nelutput for

Bccnuie the dtvelopme.ni of the Soviet farm leeioe inill depend strongly on weaiher and how the leadership implement! the food Program, single value forecasts of average annual growth in net farm output are inadequate to analyze ibe potential effects of ihe iclcvaat variables TSeiefoec. we present three scenarios for growth in net farm output inach scenario incorporates different assumptions aboul weather,utu des toward supplying agriculture with inputs, and degree of (uccess ofi lo increase efficicnc

Bairli'4 Cair. Our baseline projection iitumet lhat:

Weather approiimatesverage for (he balance of theeather would Ihus be better than lhai eirxrseraced. on average,ail not as good as thai esperienced from (heo ihe.

With uetiet weather, plannets become more opii-mistic aboul programs io increase produciiviiy and reduce Ibe eunent rale of growth of inputieicenlerceni. a( or slightly below ihe ling tettii nvetage annual growih rale for lift! is

nieaiurrsncrease produciiviiy aredoes no( decline aa

, buterceni perlightly below average annual growth do. Under ihese cum mala aces, nerfarm output duringould grow> an average annual raleercent. This ii approimimately the same rule of growth lhat would occur if output of major farm products grew aliend rate for (he balance of

iVoril Cue. At worst, farm output growih would not improve over ibe poor performance*nd would increaseerceni per year. This asm met

No improvement from the less favorable growing andeiling weaiher experienced on average8

to improve feedeed varieties, and io forth, fall tbori. Crop yields stagnate and no imp* eweccurs in feeding efficiency. Lack of

and bureaucratic inertia keep eosis high and produciiviiy low.

attempts to maintain growih In inputs ai presentJ perceni per year| lo compensate for much less favorable weaiher are not successful, and growth in inputs remains at average annual levelsnder these ebeumitaocea, net farm output would growerceni. inputs would grow7 percent, and rn-oduetrviiv would declineerceni per yeai

it Thb projection aiiumca that:

b better than average.

progress is made In livestock feeding efficiency and in improving cropping priciKei Crop yictdi grow al an accelerated pace and outputl of feed inputs increasesus-iainedTorts lo imprerve or garu ration and management, enhanced by good weaiher. provide giowth inolercent.

i

loi IvSOS)i

ImT*

Soviet leaders perceive less need to supply in pun it above-plan rates and cut back growihihe plan -raiteeee nt. 'fluting resourceser proftrams. Under these circumstances, fie: fs.'m oulpul would (id*erceni per yearaboui ihe same annual raie atIO. when productivity gains accountedigh share ofiowih

1 en pad on Per Capita Corn urn plion If produclion increases ai rates set forth in our baseline case, growih in net faim output inill be higher than inOs and will provide some gains in per capita consumption o' quality foods. Bccauie consumer incomes are (luted lo rise si about the same raie as our baseline case predictions for net farm output, demand lor qualityivestock products. Iruits. and vegetables} would keep pace wiih growth inany of the0 goals for pc capita consumption, however, will be out of reach. The following tabulation shows the degree to which our baseline projection of growih in net farm output inould0 targets for per capita eons urn-it ion "

NmlKi-il.il SSofll.Bo* IS Shonlall (Haiti pciaaiw Iru ihi* IS prrrrni

VriaiMtj

VcKUblc Al

calCulariOnt assume 'hat outpeit of major farm products grows atrend rate for the balance of the decade, waste Jtctou remain un. il'ingeO. and ihere is nn net trade other than Sugar impons fturr. Cuba _

The per capita consumption gains foe most pioductt provided by (his growih in faim oiilput probably would be considered adequate by the regime,if Chernenko continues the consumer policies ol Andropov. The meal shortfall is likely lobe smaller lhan thai shown above because ihe USSR probably will continue Io import giain to boost livestockGram imports, .'lowcer. are not likely to reach levels necessary lo meet plan goals for meat production "

Soviet policy toward food imports for ibe remainder of the decade win depend on which productionfarm output follows and leadership atiiiudes toward food imports from the Wesi Under baseline or opli-mislic case coitdilions. imporii of grain and other food products are likely to beihe record level* of icccnt years. If farm oulpul follows cur worst case proieciions. the regime is likely to maintain levels of imports high enough lo keep per capita consumption of quality foods from declining

Inn his Food Program speech. Sreilmev noted (he "neededuce imports of foodstuffs fromttoviei leaders apparently believe lhat minimizing dependence on imports from ihe West is more important lhan rapid growih in per capita food consumption. As long as the regime maintains (his belief, large imports of grain and other food nroducu from the Wcsi probably will not occur.

Ihi.e>n< tliii-nty ofo-

Ibeximl to I. In Ibii iw.tgainri -ouM iman

s. UMw prodB-uUibe lasi fvoronlon wine wo cawIneoaot. tl laroowm'-" 'lo dcntim)

will bethou rt

IWO po capitaoi mm an rippmal

eiilt'r aouil loSOixrceel ol US pu capita cuniurnptwif SI Pc dfi'iai (mil (ar ot&ft rmi'tat *tib.ic of US pet eae*ta ctotiirnpiio*S^rtlibk--point,ID priuii. ind

XX)

' Outv-ntri itim miwoii. tSt USSR

iibl

or- niltor urn predi-cti-n

Original document.

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