USSR: IMPLICATIONS OF A FOURTH CONSECUTIVE POOR GRAIN CROP (SOV 82-10128X)

Created: 8/1/1982

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USSR: Implicationsourth Consecutive Poor Grain Crop

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CIA HISTORICAL REVIEWELEP.SE AS SANITIZED

USSR: Implicationsourth Consecutive Poor Grain Crop

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USSX: IV. Capitan.uo.piU. Kcal UispuviMr I

forifoccd>. -oh meat at ibc ccnicrptcc

Wjth bcitc.-ihan.average weather condition* and successful giain crops, ihc commitment io improve thc diet was metn ihcid

-hc mid- IWCi Ihc weather was less favorable, and dram ptoductwn suffered,i. Wcalhcr conditions have been persistently unfavorable during the lasi three crop >eur>iven -ilh record gram nnd meat imports, per Capita meal consumption has languished* at around SO Kilogramss rouchlsercenie US level andercent of lhe Polish ecord-level gram and mcai imports, welight drop in per capita ava.iabiluv of meat this yearhe poo- weather thai redussd

grain ouipui rs affecting productionother crops On ihc basi* ofreliminary estimates. Ihc value ofceied to be upi rear, depressed le-el andemainctccni

below lhc- record output achievedhis rules oul anyin supplies of oilier qualits foods. pirlicularly fruits and vecciiiblcv

Stmti consumer*are very ulcn iochanges ill ihc nvjihbiliiy ol men. Demand for meal has eonsrslcnlly outstripped supply,iorUges arc chronic. Sonet economists indicate thai ihc demand for livestock product* in reccm sens ha. been increasingimes ;is rapidly moneywhich have also been on lhc rise. Tlii* rapid growth in demand is encouraged by Soviet policies thai have iiliiinmincd retail prices of meat at artificially low levels nnd have limited ihc availability ol other gouds thitl could ;ibsorb execs* rubles. The tap between iiieui demand und domestic production widenedillion tonsecnd figure 2)

In his speech in2 ui,veiling ihe long-promised, highly lomcd "agroind us trialimriiuin Brerhnev reiterated his com-miimcnt to the food program and promised) lhal food supplies would improve this year. In addition to the embarrassment und political risk thai wouldubstantial fall in quulity food supply during the first year of the programs implementation, the regime must worry aboutin Other sectors of the economy. It is well aware thai shortages (of quality foods und other desired consumer goods) undermine worker morale and inhibit lhc gains in productivity that the regime is counting on to stimulate economic grow,!'.

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Iinpnct of thc Hurvcsi The2 harvest willtttjer impact on the Sovieis' use ofI. ihe USSR speni moreillion on furm

but withoui such imports, per capita availability of livestock

products wouldecreased markedly (sec figure Jl Wc expect hard currency outlays for agricultural product? toeeurd high of over SI2 billionbsorbing more thanercent of all hard currency expenditures. Wc believe live lenders will continue to feel thai the political cost of allowing food supplies to dwindle would exceed lhc Civioniic cust of importing food products.

Massive farm produci imporis have reduced thc Soviets'ability to mHimain other types of imports at the levels necessary to alleviate the current strain on industrial output; and continued massive imports will prolong that effect. The types of goods affected include machinery and equipment, as well as basic industrial materials.

iilldiivittiunarihiiwhlctiM, C, SOV HM00I? CSci.rif J.n ihe

The Ci'ittumer Paradox, Swiet Style

otKUHKrs haw more money tu Jpentl thangauds undservices tn jpend it on Soviei planners are tvncerned about ihr situation,el' obilityhange it is limited. Chronic shortage*ncreasctl worker frustration, contributingulling rotes of growih in labor pnulm Hniy. Which in turn contribute ui further shortages

The eonseuuciices nf chronic shonuges af goods rind servicesbe seen in consumer b, hnvior. Time spent sturchtngfor scarce products and waning in lines it an enduring, constant problem and. according to current reporting, seems to beoviet estimate is that ihe average familyay shopping Shortage' ore such afrci/nem sub/eit of itisentfion thui an adjective- hai been coinede products of-fectyd: iitmnayy

S'ovict planners have mode tome aitemptt io absorb excess pun basing poK-er Tfici ciinuoi mtreose rem or /lie prices of basic foods and otheronsumert oni is politically unaccepmhic They have raised ihe prices of luxury goods" fsuch as gasoline, earpeis. ant/ iO/feel/Onehe lati fiveut excess purchasing pCIWrlroblem

Planners could alio absorb purchasing po<ver bv inert-asms; ihcoj' consumer ttoo.it. bin their ways of doing so are limited Production of marc consumerould mtuire tfi version Oj Scarce resources Irom areas thai have traditionally bad higher priority; defense and investment. Thev could import more Western manufactured consumer goods 'shoes and clothing, for example)e sold domestically ul high prices, hut Soviet earnings of hard currency Ore already being stretched it- import gram oilier farm pnycimti. machinery, and criticalmaterials jor industry

The shortages, hove eul imn labor productivity. Worker* alien dn their Searching ami queuing during warning hours, nut in iheir leisure lime Incentive* to work ond com are decreased when the wages cannot buy what ihe consumers want

Recent Taiorabli Ttrmt of Tiade Cuming loan /Tn.(

Ihe rule ofoviet economicoi always negative. H'liil,-wcalheroeUu leading lo large footl imporis. price movements in international marketi -another phenomenon Ivioml Soviet control -have "sovetf'lhv USSR0 billion over the post Hirer yews. That h.BI the Soi-iets garneredillion limply because ike prices of the products they It'll luereastd much more rapidlyne-third fanrrj lhan ihe wees uf products ihey ftwj'.

This fortuitous trend in prices appears lo have turnediny even Ihe prospeci thai grain prices will be lower this yea'umpir Crops in ihe Weill will /lo little lo sofleti lhc blow it) Moscow of the poor

arvest.

InietnailcDil Price

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Mil* CaiMmmrtUn*

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Impactfourth comccuiiw harvcil shortfall probably fill hare significant

epercussions. Ii undoubtedly will sharpen debate and conflict*

within the leadership, especially in thc current succession environinciii. The slowing of economic growth rate* hat already called into Question lhc efficacy of Brezhnevtrategy for maintaining consumer quiescence and worker motivationtrategy predicated on theability to provide incremental improvements in Ilie standard of living. Even it lhc regime net* to mil inm in current dietary levels, as weill, success in ma ine .talus quo will lull short of rising consumernd ihc potential for unrest among group* already discontented -workers and minority nationalitieswill increase. ,

Consumer frustration in the USSR manifests itself in low laborand in alcoholism and other social ills more frequently than in active unrest. Protests over inadequate food supplies, however, have been reported in some JO -Soviet cities over tlic pun yearalf (sec figure 4)

There arc indications that Sonet leaders ure becoming incioasinu.lv worried about lhc mood of lhc population. In May. Tor example. Andropov told fast European officials he was seriously concerned about public morale in the USSR. Willi meatt hi this year, ilic leadership will feel increased pressure cither to devise alternative policies for satisfying consumer desire* or loopulation Ihut has become more demanding, less believing, and less pliable during Brezhnev's tenure.

Oik focal point of leadership debate will be Brezhnevs much ball; lioocd food program, which is still in its infancy after months of prcparmioii. Reorganizations that would be required by thc program have apparently already sparked controversy within the Politburo. Chernenko.and Gorbachev have evidently lobbied in favor of someof management, while othernot yet endorsed theublicly

The harvest shortfall might leadearch for scapegoats, as agricultural debacles and policy controversies have done in ihc past. After2 horvest shortfall the First Deputy Premier responsible for agriculture. Polyansky. was demoted to Agriculture Minister, and the incumbent Agriculture Minister was fired. Another Politburo member. Voronov. lost his job2 after unsuccessfullylan fcr reorganizing

A non detsiktSdiscuiswo of ihis upK -ill be foued in DOi ImeHuweetKnrv Food Prat'em. whiea is cuncntly in preturaiic"

agricultural labor. Aflcr5 harvest failure. Polyjiisky was again demoted, ihi* timen ambassadorial position The lasi iliree riatvcsi shortfalls, however, have not led io leadership changes

Ii is by no means cerium which leaders stand lo gain politically from ihc current agricultural problems. Advocates of greater investment in heavy industry, such .is Kirilenko. may argue that the run of bad hxivcsts has demonstrated the bankiuplCy of Brerhnevs massive invesimeni inLeaders closely associated with agriculture, such asay counter lhal difficulties in agriculture maken mote esscniial ihai: before lo aid this distressed seclei

The USSR continuesold bail,nlceraiiion on officwi train mvUwiionesfcrai Soviei Kouimc teciuroiut tMIJ*million ions( iiraet. Tlxhandbookl etonenueubtiiheO In

lit Ileali published, but did noliodvciion Mlilsiirt. Tne nen.tiion iteeedenied. .nihool. belurc Mousseotid.

ihcirtuliiof Uf) aiimalio -iihhtvs

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.pncndix B

inn.

Shortfall

ropinn Wilhjjmin er^of JG> million ion* leaves ihc USSI. aiill

short of llic ounmily needed (or seed. food. industriald livestocknwts will be unable io fill the can because ol su.istiaim. in thedistribution system lor purposes of our ea leu la Hons, wc assume imports in calendar2 of -IS million tons. diShtlv above the record

net led imported in calendaro

hc adjustment, will be greater as Ihc leadership erne* wiih ihe shonfjll

*

1 he planners Could case lhe shortfall slijjiily by reducine. thc ciu.tntitj. uf gniin used for food and industrialthe li.esioek sector wilt bear theas in the past. Moscow wll be forced tu .ccsamine il. IsmuiMiidinc policy ofinere-smuat leasthem.

avmdinu disi.cssin the lace oframhift

of thu policy is assumed in our model-bused estimates ofuf

2 harvest

Maintaining herds al Current near-record le-els will, reduced feed suppho menus further declines in mcaiach animal Throughum the first halflaughter .veighi. of caltle and hogs (on >taic midforms, .vhich accounio-ihirds ofduotionl registered ihe lowesi levels sincelirsi ycur foi which monthly data are available Milk yields per cow were ia perccnl below7 peak If there rs riodistress slaughter. wC estimate thai totalduCl.on m

ill be6 million ions (essmporcd3 million ionsi)

Slaughtering animals at abovt-normallachcuruided sinceincrease me.ti suppl.eslso would slov. or stop lhen animal productivity as ii stabilized per head feededuClion iness ihaa thenw.-jld result innroducnnn of0 million ionserd rebuilding (increases in numbers and inerca*v. in average -ci-hi to irend levcll would Isold domestic meal markcHoev io aboulillion ions; thisons less thanould be ifihere -ere noven ifin.iop returns to trend .nother irend

a long promised resumption in growth of meatiOor method foi

estimating meat pioduciinn is outlined in

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