USSR: LONG TERM OUTLOOK FOR GRAIN IMPORTS (ER 79-10057)

Created: 1/1/1979

OCR scan of the original document, errors are possible

USSR: Long-Term Outlook for Grain Imports

A Research Piper

CIA HISTORICAL REVIEW PROGRAM RELEASE IN

National KorriB"

4sstssmenl Center

USSR: Long-Term Outlook For Grain Imports

A Research Paper

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Contents

Key MpjMtt

Back

The lOihFive^earPlan

rVclimtii^Goibofh Ftvc-Ycar"

Outlook for Grain Production in

Te<bJiototical

The Role of3

Eatimahng

Oullooirref Unitization

Consumer Demand Tor

Ijvcatook

Ihe USSR As an Importer of Western

Hard Currency Availabilityonstraint to Gram

Future Demand (or US

Vppead.xr.

SiiHutical Table.

Feed Projections5

Reducing the Internal Demand for Grain

luvBticCcetnraiaU

1. Per Capita Meal Cotiwiimption ia Selected?

2. USSR: Per Capita Meat Comumpuon

3. USSR Grain Imports

4 USSR: Value of Livestock in Privaicly Owned Herds

USSR: Long-Termain Imports

Judgment*

The long-tern: Soviel quest for self-sufficiency in grain output is incompatible with the leadershipscommit-rnent to expand supplies of meat rapidly. Because the meatcenterpiece of Soviet consumer welfarebeen taking precedence mi the self-sufficiency goal, the USSR has perforce continued to import sizable quantities of Western grain. Over the next several years Soviet requirements forand especiallywill likely range fromillion toillion ions annually. But tbe tailing off of Soviet oil production will sericassly restrict tbe USSR's hard currency import capacityresenting the Politburo with some particularlydecisions.

Last July. President Leonid Brezhnev announced targets for meat and grain production inih live-Yearhe goals themselves are roughly consilient with self-sufficiency in grain and include fa) an5 targetillion tons for grain.illion tons more than annual average production; and5 goal5 million tons of meat, nearlyercent more than8 output2 million ions.

To achieve the largeted grain output, the Soviet leadership is counting onontinuation of the relatively favorable weather conditions of the pavi decadeore rapid growth tn yields based especially on accelerated growih in ate of fertilizer. We believe, however, lhat weather conditions are likely lo be leu favorable than they have been and that grain yields are not going to advanceace faster than thai which recent trends indicate Wc tbe re/ore estimate that grain output5 will be more thanilium tons below target

In lurn. the official goal for meal production already too low to satisfy the suppressed demand for meal products al prevailing prices- cannot be met without sizable gram imports. If pet capita meal production grew al the planned annual rate icrceni per capita Ingap between the amount of

meat demanded and Ihe amount supplied would widen, nol narrow, because of (a) the high Soviel income elasticity of demand for meat, (b) Moscow'sto hold retail meal prices constani. and (c) shortages of other consumer goods, winch will lead to an even higher pileup of unspent ruble*.

Laying aside tbe wide variations above and below tbe tread of individual Soviet grain harvests, wc believe that the USSR will need to import al leastillion tons of grain annually3 to rapport the meat target ofh Five-Year Plan. If meat production were to grow at the same rate at the anticipated growth of real consumer money income, annual importfor grain would be considerably higher, perhapsillion tons.

Through ihe ncxi two years at least, the USSR should he able to finance lhe purchase of the up loillion tons of grain that could be required annually even with average harvests Whether it would be willing io spend the hard currency to buy more titan this amount iTthe harvests turnout badly is doubtful.oviet foreign exchange earnings will shrink as theof oil for exporthortages of hard currency will become an increasing constraint, forcing the leadership lo nuke hard choices between keeping consumerolerable range, maintaining othermachinery andlevels rwecssary to reach industrial roars, and importing oil to meet Fast European needs.rain imports of IS million tons would use up5ollars) in scarce foreign exchange earnings; imports ofillion ions could costillion. Accordingly, the conservative nature of the meat goal announced in July may have been the resulteliberate Politburo decision to trade off consumer aspirations for what was perceived as necessary restraint in future grain purchases

The Uniled Stales probably will continue io supply about one-half of ibe grain bought by the Soviet Union. Other suppliers almost certainly will not be able to increase their exports substantially in response to growing Soviet demand, cspeciall) for feed grain, such as corn. Nonetheless, the L'SSR will retain iu advantagearge buyerree market, jbfc and willing to disguise its requirements and intentions regarding grain imports. The Unitedikely lo be treated asa residual supplier (after the commitment underS-USSR long-term agreement isnd by contracting with US traders for oplinnal origin grain, the USSR should -as in the past- be able to buy large amounts of grainhort time at advantageous prices

Pic face

This memorandum svsckscs likely future Sovielfor Western grain5 and lhe US role in merlin; this demand The analysis focuses onends in Soviel grain production andl! draws heavily upon earlier detailed stadies on grain production and other aspects of Sovietwhich are cited as appropriate It docs not ireal variations in Soviet demand for Western grain caused by annual fluctuations in weather conditionsostulated trend. Soviet policies regarding grain stocks, which can also affect purchase levels in any given year, are similarly nol incorporated.

'Grain tutiuki inititi rtporl. unlet* Marram Doled, irelUndiidircd irrnu. and iir <onipai*hteew rallyuinuict ThedaCtioa On abaM. ifeal it. at It* (rate oamea Iroa- ike combinec-nm inoml Mintnrrta: buctaceartnlactadetuata. eVt. aeeS urtv tad araial ofwa<eeeoiai sMaSeraa itttafet froaifanBean! b> ewmaaiee* We ajgfj anfor -aste tad kaatsaxlaaai an etlanitadnaedlini tad ta oii-uitdfrom lac busier

>eathl meuuiencai.Mcaoof enirraledditcounit Oawdu.otfx-.il) reported dm

.ti

USSR: Lonft-Term Outlook For Grain Imports

The current leadershipong and well-documcmcd commitment both io agricultural self-sufficiency and to an improvement of consumer welfare, in particular by upgrading the diet. The three five-year plans embracing theeflect these commitments. New fixed investment induringlan period grew at an average annual rateercent, faster than the rate achieved; by the, il accounted forercent of total investment and was more than five times the share of US investment for agriculture Quantities of fertilizer applied to crops increased rapidly, rising7 million tons (standard units)' Reclamation mostly irrigationubstantial portion ofhighlighted by Ihe development ofarcas in European Russia where adequate precipitation can be counted on to minimize the variance in production.

These and other programs indicate lhat, while growth in investment and in lhe flow of industrially produced materials such as fertilizer had not always reached planned targets, the resources allocated to agriculture have been impressive. The farm sector has responded with major increases in production of grain, meal, and other commodities.

Despite the leadership's continuing commitment to agriculture and the ensuing sizable increases in output, the rate of progress achieved by the farm sector has noi kepi up with demand. Moreover, instituted schemes have not substantially reduced the farm sector's vulnerability to weather.esult, the effort to maintain momentum in improving the quality of lhe Soviet diet ha; necessitated large imports of grain and other farm products in recent years.

* No dttncuiablc tiMii'.ici on fcriitiur wed <xi ill train foi Ihemailable Weeiiimiie.however, ihueal lhe USSR currce-liy uwSiMCul three-four Un ihe iinaniiiy ai nulitcnii per hecUre used Ir. ihe Uniled Stilesiieussioe. of (omnarivint ni imeenailocaI ui.ige nf fenUiicr ice CIA CRST. iKf Imw nf f'tnill/fftl Grain Output.

The Directives ofh Five-Year Plan laid down specific goals for Soviet agricultureo changes in the basic agricultural policies of ihc past decade are apparent.

The Directives include:

A sharp slowdown in lhe growth of aggregate investments into agriculture in keepingutback in growth of overall investment

Continued rapid gains in fertilizer production and use.

Strong growth in output uf grains and several other

major crops.

hut relatively modest, output targets for lives lock products.

Although agriculture is planned lo coniinuc io take roughly one-fourth of new fixed investment. yearly growth in the amount of funds channeled to agriculture will be cut substantially In keepingeneral lightening of investment funds throughout Ihc economy, investment in agriculture is to grow at an average annual rate ofercent. down sharply from the 9percent recorded. Growth in stock of plant and equipmeni on farms will slow frompercent yearly rateercentrtilizcr deliveries arc the only inputs scheduled to continue to increase at past laics.illion metric tons will be sent lo farms, lhat is, three-li ft he mote than the amount delivered

The value of net agricultural production in tinted to grow al an annual average rateercentercent if average productions substituted for thehisraiefar ciceeds Ike growth achievedis in large part predicated on plansrain production toillion tow.0 outputillion torts Actual output for the Tintillion torn (bunker weight)6 followedillion tons7ewillion loosas been nonetheless slightly below Ihe plan for average annual output, fcven if0 target is achieved, production9 would have toillion tons in order to fulfill the five-year plan

Output targets for livestock products, particularly meat, were reduced in the wake of lhe distress slaughtering Hemming from the5 grain harvest. Despiteercent drop in meat output registeredc believe the USSR will both reach Ihe planned annua! average production for the five-ye;ir period as well as0 target3 million tons

ak ofhear Plan: IMI-tS

rcvdem Brezhnevlc::nkd report on agriculturehe USSR's (Party Central Committee. He oiled for continu-.if the priority of agriculture and outlined some general obicciivcs farlh Five-Year. He stated lhat targe; figures would "be lather high" and ih.it top priority will beeat induction

eo's (ran target5oal of roughlymtllKm toMlbanker weight)5 meat production target5 million inns was

BrirtMct ia!for to jnnualightlIHliliuminnvnillion wasivin ourrrulvilKin InlnUrUBfillion torn."niilic in jftnual

ilso announced.0 plans for meat output are achieved,5 meat production targetcrcenl annual growth in per capita meat outputIS.

5 graia and meal targets are comistcm with Ibe lone-avowed Soviet goal of self-sufficiency idhe Brezhnev targets, however, appearon two counts

pa'* goal it high. To achieve the targeted grain output, the USSR is either counting onontinuation of favorable weather conditions of the past decadeore rapid growth in technicalspecially in Ihc use of mineralthan wc consider likely. As discussed helow,n our estimate thai weather will return toa long-term average, wc estimate lhat average grain outputith no reduction in area sown to grim, will be roughlyillion ions (bunkerb>

.illionthe announced Mrgei

meat ptodvciiom loifl it /ow. Assurrin^es grow by it lean one-half of past rates aad ite regime continues in meet iueiphcii commtrnere to hold meal prices comtinl. plained growth rales for meatill rcsali ir angap between suppiy ardegrowih ir. thrs gap raises the ra>'eni:al for iKrcasin^ consume: discontent, an outcome that Ihe leadership is most jnsious to avo.rt

Outlook forK5

The amount of gran (he USSR will be able io produce

ds onril factors thai,reat exicnl. arc interactive- In the Soviet Union -eatrer ha*the most import .ml variable affecting outputariablei include ihc amount offer iu rural ion and the tilcntri.n lura. influenced by irrigation, fcftili. ved varieties. mccha million, .ind otic: farminggioemployed In futureuijui. wc hjvecaamiBcd the likclv pace tcchMneic.il -m

provcmenis and derived poinl estimates for production based on Iwo scenarios regarding fulurr weathei conditions

. iii Improvements

Ii appears that little or no change will be made in area sown to grainrea sown lo all crops5 is planned to be only fractionally higher than il wasllow land has beei reducedinimum, and there is. in fact, little potential for bringing new land into produclion Moscow probably will not shifl cxisfng pasture and fodder-producing acreage into graineduction in pasture, for ciample. would force the USSR to aller current livestock-raising practices signifiesimilarly,nlikelv lhat lard used to prodecc industrial crops, such as cotton and sugar beets, would be shifted into grain production.

Soviet planners are count rig on increased leriilirer applications to provide roughly one-half the planned boost in grain output during ibe current pur.n balance, we expec: planned fertilizer applications lo grain will be achieved by aboutercent' New production capacity needed lo mcc! outpuls slow in coming on stream liven if production targets0 are meJ, plaanedio grata cat not be made uctess transportation andoercentreduced, and prospects for reduction are dim. Il is unlikely that planners will attempt to make up for this expected shorlfall by shifting available fertilizer lo gram al lhe expense of othereduction ia ailocatioru to noegraia feed crops woold reduce lhe supply of other important feedstuffs. amiajor fertilizer user,ard currency earner.

Moscow also plans to boost grain produclion by means of other "technological" advances such as improved mechanization, expansion of irrigated areas sown to grain, and the development of better varieties, which

1 The historical lutltrnof plrnim* lodicatra thil ibt Sonet* tomiikr just lire anil ladder-producinco be a* important to (he Irvesiocl (Viiuat art in-prodwanc areas Ihu uend htl aad it ctpeetrd toijirtioae.dof-ic the 'eel uUian email art lain nr feed wiiuuaM MfromUnfljai frwnetd cropa(attar dtaaG't* pcU* acirti raw* the nimbcf cV lew!i pera> pertanial lia> in run/ otiuo ofKM

' Addiuoniil rtllontk fnr ihixilimalr is prnenlri Inpp VII.

would increase yield aril reduce variation rcsulling from flucluating weather conditions. However, in the past Ihe Soviets have generally underlulfillcd plans fo* gains in yields via such means. Even if new seed varieties now being tested prove out. for example, no major improvement in overall yield would occur for several years' Construction bottlenecks and theenergy shortage imply an inability to meet present targets for improving mechanization. Overall, wc have assumed that the Soviets attain one-half lhe planned gains from iethnological improvement'- oi her than

Ibr ii. i, of

Weather will continue toie key determinant of Soviet agriculturalecent detailed review ol the evidence underlying changes in grain output over theo decades led to the finding lhat more lhan one-half the increase in grain production?4 was the result of improvedomparison of ibe climate0ong-term average shows that the stable period of increased moisture in Ihendn the grain-growing steppes and near desert regions was unusual. I: also indicatesteady improvement in the climate of ma)or grain-growing tcgiom occurred0ontinued improvement is unlikely because ihe amount of moisture the airno-spnerc can transport from the Notlh Atlantic to tbe Soviet grata belt is limited, la fact, the dryness associated with the sharp downturn inrop combined wilh olher global climate changes could have signaled lhe enderiod of dependable moisture in Ihcic areascturn to the more "normal" conditions of taehai is. years of nearly normal wealhcr interspersed wild years ofnd subnormal wealhcr The first twoalf yearv of the current five-year plan period

wici wlieat tjrieii development,Wkm

' Plins for (aim inbom impreatd impfani prtcKes. .DirnchxiunM hiahrrnnetaw, ute ia" pntiiioet *rd SefboJa. (ifaruoa of Mwatiea irrif tloi land, ind olbtrt*hm ceeeolli Meai Uwt-tM-i) teewithe enact of

n (riiai* rcmeataV

arbitrary lor in tifjimfVd tfmunmaof ihewice CIA.

Eft ' I

1 SeeU. WW: Tht Imfml nf Kfnt. I*

luctuating weather pattern. Favorable wealher6 resultedecord crop ofillion tons (bunkerhile ouipul7 was doseur long-term average, indicating neat I. normal weather.8 again,ew exceptions, crop conditions were unusually favorableew record grain crop was attained.

Estimating Output

Given Ihc csiimated Soviel ability lo boost output via technological improvements, annual average grain production is likely io rangeillionillion tons0 andill illion tons5 'The range in the estimates it weather determined. Under favorable weatheroutput will tend toward Ihc upper end of lhe projected range However, should weather conditions revertonger term average, which we believe likely, production will tend toward the lower end of Ihe range

ll will be difficult for the USSR lo increase grain production above Ihe5 level ofillionillion ton% Raising yields above trend would necessitate accelerating growth ofskilled labor, rertitocr. pesticides, and-to the agricultural sector. In faci. competing needs for ever-scarcer resources may constrain the amounts that can be allocated to the agricultural scum below ihc levelsur ouipul prn)cclinns .*

bor back to agriculture in order to boost output is unlikely. Instead, the sharp drop in ihc rate of growth of the overall la hoi force in the I'tKtK will increase pressures to continue lu transfer labor from farms to norugiiciiltural kecion

Increasing >horligcs of steel and the need In eorscrvc energy will limn the growth in mechanization.

IbSdoci tyiniiitIJ"

kj betZ'Ia.

:ulkoai UM

For annattnw! nr.

cvnanntitwc'onereu. hunt ttonanbcOimmmet -Voilrr t'rtmomlr frnHimr ami fmntun, Ave HI

Thece ted decline in oil production will make it difficult to incicasc. if not maintain, fuel allocations to agriculture is well as allocations of natural gas lo production of nitrogen fertilizer

Increased pressure on more slowly growingfunds makes it unlikely lhat Moscow will step up bnd improvement programs

Outlook fur rtiliration

Grain demand for domestic uses, excluding feed, is relatively stable and is estimated lo remain nt roughly current levels over the not severalhe analysis assumes thai the USSR does not plan lo cr.ar.ee the level of grain slocks ia9eriod Annual seed requirements and industrial uses are expected to remain at aboutillionillion torn,ood uses will require roughlyil'.ian loos annually5 The steadyer capita consumption of grain product* is being offset by lower extraction rates avsociatcd with quajt> improvements In particular, more high-quality white bread is becoming available, and Ihe trend ii expected to continue 11

If as seenu likely. Moscow continues ibe pmcm pattern andof exports, annual grain shipmcr.isclient slates will averageillion lorn Since, I'.tiMcm Europe, Cuba, and Die Avian Communist countries have relied on Ihe USSK for various proporiions of grim import rcguircmrni* Amounts werennually tegonatcd Irad;hich we estimate io have averagedillionillion ions per year

"iliwi.it,e* of iht nulh-nlirt'H mtd. we CIAepicnMi ll'Vpn 'IS Scr <nKadii II hi MR tuaiiaiftaf I'SSR U'V*(he

toe teed dun not ill*Siaaiuit| Ti'feroetauter ihta mtfjfi Accord'!So"iniekili iwnpnt ineui SmilUm

henear.

prontuiinn of flnui milfanln:n

jv-"iiiv atk-tlirmJ4 ^nctw inV* JI rvtlH*!at -rtctX

9crectfwa tba' -MM it* .ttnz,*ed r. lae i MA aaifc- lom -oaid km vera rtxrwrto.

' lie USSK.j -. ..

pynmiiirrfftiund moi: lout cm rem doncWic rvi|airvmrnitlanlvrn fjjrope rmilitulir .have been iflciftti'jRwroilifroniSR v. miier>

Inor the firsi lime, Moscow suspended the remaining deliveries of grain to client states because of the very low domestic harvest. Trade protocols for grain6 were not reported and possibly not even signed.

Grain for feed currently accounts for slightly more than one-half of total Soviet grain use; the future level of Soviet grain utilization will thus strongly depend on the rate of growth of the livestockutput of livestock products will, in turn, depend on several factors. Official concern with mitigating consumer discontent over meat shortages and providingconsumer goods to spur productivity arguesapid boost in livestock product output. Yet Soviet desire for agricultural self-sufficiency limits the sizeivestock sector thai can be supported without relying on Western grain. Moscow will probably be forced toiddle ground; importing substantial amounts of grain loate of growth in meal output lhat will be tolerated by the public without expending an inordinate share of foreign exchange for grain. In the final analysis hard currencyexpected inecauseecline inoillimit funds available for grainand thus may dictate the size of Ihe livestock sector Moscow can maintain.

Conmmer Demand for Meal

Meat production is recovering rapidly from Iheof the5 crop shortfall.current supplies remain inadequate, and reports of unusual shortages at the retail level continue despite record meal imports" Moscow may reach0 meat production target3 million tons, bul achieving thai goal will not reduce consumerOver meat shortages as long as current personal income and retail price policies continue.

The evidenceovjei income elasticity of

demand for unprocessed meat on Ihe order.

"hijiFic in (lie feedingcir-ploycd will change lhe relationship bciwecn thei!aiiori *ud gram utilization. Soviet ability lo effectchange* dun he thr period underimned, for adctaiS;dditcu**ioflc>nibi* iu.uc .ce ifOtftdi* C. "Redwing lheemand forong lily nOO.OOO lorn of mca: *crc iapo'tcdiannual average unpad* af nearly lOO.fltiOtanri.

considerably above the income elasticity of demand estimated for other countries with comparable levels of economic development. Italy and Spain West European countries considered to be at levels of development comparable to theincome elasticities of demand17 respectively. The estimated income elasticity offor meal innd) -is also below that for the USSR. In the United States, income elasticity of demand for meal is estimated"

The high income elasticity of demand for meat in the USSR is due to several factors. Meat consumption is well below levels of consumption for countries with comparable levels of economic development (seche consumer has few alternative outlets for his rising discretionary income: quality consumer goods such as consumer durables, clothing, and shoes are in short Supply, and housing Space i$ rationed at heavily subsidized prices. An additional reason for the continuation of the large difference between supply and demand for meat is the official policy ofretail prices al relatively low levels in state retail outlets."

esult of (his policy, some excess demand finds expression in collective farm marketshere prices are relatively free to respond to supply and demand. For example, in Moscow CFMs. average meat prices have risen byercent in the past five years and now arc about twoalf times the state retail level. Allhough CFMs account for lessercent of all food sold, Ihey arc an important source of perishable foods for urban residents.

" Food and Agriculture Organization of ihe I. ruledi'tfultwalCommodity. Volumell.bltore recentDcjurTmtiHof Agriculture; Pratrakind* Service. Alitr-monrr h'umrttfor World Food in ffcHJ. ForeignEconomic Report.al I. p. 88 presents income elasiicitic* of demand for meal by type for Severalojunines. The elasiicuitt arewuh idof Ihe earlier FAQ uudy.

" Became of the firm commitment uo:iACt onM.ii. i- preler* inort .on ufpewtuilion iwi) lo Ihe Male budget During the present Tin-year plan, for ciample. the mu budgclilkc- rubiv tii io>cr the difference between Mate purcoiscpriCo lor meat and null and lhe retail price* fixed by the *uie Thl* it roifhly equivalent lo four lime* the total agriculturalrneniune* agriculture'* current crinirilxiiionrndwt

Per Capita Meat Consumption1

Selected5

USSR

zocnoalo va kla

Wast Germany

Stales

III

Livestock Program

Under these conditions it is highly improbable that the USSR will be able to produce meal in sufficient quantities to satisfy consumer demand during the period under consideration. If the originalrowth in personal disposable income and meat production is met, for example, lhe implied gap between supply and demand for domestically produced meat0 wouldercent (roughly onealf million tons) greater lhan that* The cap could be even larger: Soviet plans for income growth arc consistently overfulfilled, and Moscow's ability to meet production goals is limited. Moreover, as overall economic growth slows, alternative outlets forincome, such as automobiles, furniture* and other consumer durables, arc not likely to be expanded as rapidly. The recently announced goal5 meat production Suggests the leadership is. in fact, aimingrowth rale that, at best, will keep consumer frustration at tolerable levels;5 million ton output target translates to an average annual per capita growthercent. significantly belowcrcenl planned annual per capita growth. We believe this rate will leaduther widening of the gap between supply and demand and ihus to increased consumer discontent

" The projected demand lorumct an eUu icily ot demand wilh rctpect to) and sunl (nun lion of Ihe current puliiy of mil in la nine liable prices in tint retail tiorct.

It is unlikely lhat Moscow will renege on its frequently reiterated promise to maintain meat prices in slate retail outlets at current levels. At best, such action would reflect poorly on the ability of the Soviet system lo provide for consumer welfare; at worst. Moscow would run the risk of engenderingesult Moscow probably will be forced io expand meat production more rapidly. Two cases regarding future meat consumption are examined below (sec"

Our first case assumes that the USSR meets05 largets for meatmillion tons5 million Ions, respectively.5 production level would resuli in widening the gap between meal supply and demand by more than onealf millionver the Current sizable gap.

This pattern of planned growth would requireillion ions of grain for feed0illion tons" Total domestic requirements for grain05 would riseillion tonsillion tons,sec tabic).

I, Niiiu KhruifKhv".chine, the need totlimu'xlc output of liieitock products increited retail prices nf nveai hiragcercent. Thu aciinn provoked eivli disluitaneet tn seveie Dial Soviel Army omit had io be uted IoqucII Ihe riolen. Similarly. Moscow ii not likely to attempt in till ihe gap with nteai imalthough imporu. pn&iibly even at7 iccoid level, may continue, tvtn it hard currency availabilities permitted,ill ion ioni nr more would drive wotld piicct lo urt-ea'tiiic highs nt Ihe Short run,

" In examining Ihe impicl of ahrrnjiiie livestock programs onrail So'irt demand for pin.t attained that ihe mix ofliablednet not change aid :Miiun>hip between feed inpiit ind product remain!constant Rcccnl statistics indicateIhr snare grain in tc*al fecdslutti did no change appreciablye first half of.eding efficiencies have not inipmiol noticcabiv.

" Assuming income clasl icily of demandnd averageuwihof per cipila disposable Incomeercent (See

"Seeethodological note on deriving grain- for-feed estimaia foiJ.

" Sianoirdlred basis. In bunker ueigtu. ni ginti -rtilti. rajuirc-menij for6 million ions0illion tonsS: mtal teo.ii:icmeri*be M4 millioniiivii ton"iy

USSR: Per Capita Meat Consumption'

4ft Kilogiai* a

Qrowtti 3%

f No Growih

A. /

i

72

76 78 BO 85

io tv*t> .

iitniaiineiMn lor

hus j Bf >MI null*

ovated .

Our second caw assume!0 planned oulp.il is achieved, but growth in per capita meat outputl be bm-led in percent per >car in ttdtl to mamuin ihc per cpua gar between .apply and demand atdei tlus scenario, livestock demaraa foe 4raia *oud risediror

IVJS*.:

I'

*2

i* " .rcrl-*Mi.,hvaiol lhes ClA ftl.irmtWiwUrvavrrfXhrimj, beHi-wniHi. diHVAiblc nttvmu Han crownH>he Mllo-mc 'thulaiiea*a..|

frrur.uIjM' Pir ur-ii enrvvMc

Million Metric Tom

USSR:

I'rojrctci) Grain Balance

2J6

m

Bio -2

-J

A".- Oaiptn '

UliliHIiOn <

212

MltalM

I*

2'

Ota

Autumn* lone.ir'rn-Output UMiuuo-Oaa

So^ta^^gat,,.

'i< Mather-eahJbe JW miNna

e*iPiror,*heeijsrutaillion'trtl

Include*anillnn ton.oln tipo-i.auern ttvice"rile, cixnl Mate* See tilt.anae< (or utili/euoai

ton* with total utili/auon retirements reacting 2JS million0 million torn moreder our first scenario."

A* explained in appendix It.cstimaican uai ion of reoeai pattern* in the supply of grain jod Mflgnifl fecoV.uffs lo the extent that Soviet Plans for expansion off Mescossceniratext feed* tsibje. hay. and soon) arc not achroed. grainother Loncentrates may risehare of total feed unit* In th.it event, we have underestimated the required quantities of grain for product OMpOl, and, hence, lhe cxpccied level of import*

1SK a* an Imp-rirr of Wcstrra Grain

lapca thai, as in recent years. Moscow'sIn minimise cortMinier dWconlen! will nccessit.iii-sub>lanimllnip.im of Western grain. This cUuuie is prciliealcd. in large measure, on theuiiipiions.

W cathc: floraswg-lerm average

v Ja^riMaarcenm iWOamli.enxr I. iheilium tmu anil UI milhcw torn

Moscow0 follow current policiesmeat prices and ihe growth of disposable inc-ime

Consumer unrest will rise should ihe USSRcut bach the growth of per capita meat supplies.

While the volume of import demandarticular year is likely lo vary widely depending on world prices and the domestic harvest, given the assumptions stated above, the long-term average seems clear On average, ibe need for Soviet annual gram imports could rise to as much asilbon ionsnd may nay close to ihis levelnly in the unlikely event lhat ihc government is successful in holding to its current plan lo slow the annual rates of growth in per capita meat production markedlyould grain imporu fall much belowillion Ions {see.

Much of the increased grain demand will probably be in the form of fredgrains. primarily corn We do notaior increase in soybeans as feed enrichment, soybean imports will likely continue to vary with domestic oilseed production

Hard Currency Availabilityonstraint lo Grain Imports "

Thus far Moscow has not been deterred b> hard currency problems, for trample, large amounts of rram were purchasedy selling gold and borrowing heavily on tbe Eurodollar market Soviet demand for grain imports has been highly price inelastic, reflecting the higa priority Moscow has attached to meeting domestic demand Purchasing forays scent largelyhe progress ul winter .ind spring gram crops

Cram imports have accounted for roughlycrcenl of total nonvil hard currency imports over the lau five years On an anneal basis, imporu2 have rangedigh ofillion6 (more thanercent of total rmnvil hard currency imports) to aof SHOO millionercent of total nonoil

ton ii or .incapacity would no" went ioomtialni on grainiti I'oi additional details kd

USSR: Grain Imports'

3

Million Mulne Ton

Growth'

3*

/

/

No Growth

1 Srcecl-O* 1

79 74 76 76

'uly ol O" nwa year

2nt pfranirain

'o

'V r* trmQ+rm mmtwft

hard currentsoviet pbins for meatassumingrevertsong-term average and allowing foi exports lo fca'lern Furore and u'.hcr client slatesillion Ions annually,eed to import up toillion in grainlthough the use ir cramomeure when oil cspoitsaiecKpcclcd to be on tac decline (tfcllthe grouih in overall impoftrain impurli of thi. magnitude appear plausiblelthiNild Motfuaigher priori t) to

itS livestock 1

vv.iitdo 'i hi inj pcrcenl annu.ill>K! bate puce tor (tain of iter ten wnt" liuair l> ..in? price, ot US wkeal andxorn

Limitations on ihc availability of hard currencyowever, could force the leadership to make hard cbotccs with reaped to the need for continuing to upgrade tbe cowsomcr diet relative lo industry'* requirements for Western equipment, technology, and semimanufactured goods such as steel. The growing hard currency crunch will result from the expected decline in Soviel oil production beginning7 oil exports for hard currency amounted5 billion, accounting for roughly one-half of total hard currency exportcn allowing for anestimate of crude oil production and for domestic conservation measures,he USSR -in order to meet anticipated oil export obligations to bastcrn Europe andexpected toubstantial net importer on the hard currency account. Given estimates for lhe likely growth in nonoil exports and borrowing capabilities in tbe West, nonoil import capacity in IWS will be reduced to well below current level*

Such cuts will conicime when Soviet need for imports from the West, both grain and nongrain, will be on the rise. Moscow thus will find it very difficult deciding which vectors have first claim on available hard currency and which to nil substantially.

Based on our estimate of Soviet grain output, Moscow will be hard pressed toonstant gap between meat production and meat demand. Todosothe USSR would have to increase per capita meat outputercent annuallyeading5 import requirement of roughlyillion tons (costing roughly SJOhould the regime hold to its plan5 meat output, roughlyillion tons of grain imports would berequiredhile theillion cost implied by this lower end of llie import range5 would be still difficult lo bear, it is similarly difficult lo conceive that the USSR, alter accclciating Ihc growth of meal consumptionoercent annually and thus building up consumer expectations, can cul back the growth of per capita meal consumption below the

" Fte aa eaiaado*m rfcc tgaw-tua) Mice* fork:e

" ' oM prenotuty

recently announced plan levels. Should Moscow decide to hold per capita meat consumption5 at the0 levels, substantial imports illionstill be needed

Future Demand for US Grain

Wehat (he United States will continue to supply ai least one-half of Soviet requirements for foreign grain. The actual snare will depend on the composition of grain import demands, relative prices, and the willingness and ability of other countries to increase gram exports to the USSR.

The ability and willingness of non-US exporters to supply the USSR with graia is probably limited to aboutillion tons annually, mostly wheal, aa annual averageillion tons was supplied duringur cslimate assumes that these exporters would want to maintain their current share of commercial sales to other traditional markets, which urcexpected tocxpandhile the European Communityotential forwheat output. it could use any increase to meet clomesik requirements for feedgrain Because of high produclionC grain can only compete in world markets if subsidized. We believe subsidizing wheat or barley exports to the USSRong-term agreement would be politically unacceptable to the EC.

Both Canada and Australia have only limited potential for expanding grain output because of unfavorable climatic factors Recent OFCD studies indicate that ihese two counirici5 couldillion-ton total increase in wheat exportsrofitable commercial marketarge share of this increase could be available to the USSR under long-term agreements Some expansion of barley is also possible, bul nothingarge scale

See OCCD. Si mJ, afJ, mii-wMftnej Pan*.IILIV. iadi.Wive a>

We believe lliat Soviet grain import demand will continue the trend toward an increasing share of feedgrain* While the US could lose tome share of iu wheat market tootherandlong-lerm agree men Is. the same does not hold true for feed (coarse)xpanding fcedgrain exportstorage and grain export handling facilitiesbe slow among important non-US exporters such as Argentina, Brazil, and Thailand. Weather-induced fluctuations Inare relatively large, and there is no system of reserve* lo level out export availability.esult these countries are not reliable suppliers of large quantities. For political as well as economic reasons,SK ii not expected to bay substantial quantities of South African corn. Tbe United Slates should, therefore, be able to maintain its share of Ibe Soviet coarse grain import market, particularly corn,5 so long as total grain imports do not full below IJ million tons.

Information about domestic production developments, intentions, and import needs. This was illustrated by the bargain prices negotiated with US traders in the large grain purchasesT3.

Wc have no reason to expect thai in the future the SovieU will be more forthcoming in providing the market with advance information on their import intentions They will use Ihe United Slatesesidual supplier of grain (after meeting the LTA commitment) and contract wilh US traders fororigin grains. This permits international traders lo offer thoetter price as well as allowing Moscow to buy large quantitieselatively short lime for prompt delivery.

Ihe USSR will retain its advantagearge buyerree market. The Soviets have shown little interest in multiyear grain import agreements wilh Fiec World exporters. The US-USSR Ung-Term Agrecmeni (LTA) was initialled and pushed by the USther than io foster political relations, there arc no strong economic advantages for the USSR to enter into such agreements.an agreement would guarantee supplies ia limes of scarcity, bul in practice politics and production shortfalls could negate theot being locked into muliiyear contracts permits Moscow lo use the element of secrecy advantageously. The USSR, operatingrain buyerree market, has continually made effective use of its monopoly on

"In* USD* toady. Ahmailvt Fitfurei lar World Food1 nd Stale

of oaarta M aicreate vader all lata aimread knaaIII tiSeaH Hianrtn* trade

potion ol oV flaped eoxxneit

ferfdfunri oa World Bar*

"The) beencement

mniniumr.il'un Iwlt of corn Ind

annually Iron- Ihe United Soviet for livectober I'tie

* Ifte USA. lor rumple,rut monalio* Ihr United States io reduce talet IFduineiOc grainilltillion lont.

tatistical Tables

i bouiard Meiric Tons

Volume ot Grain und Soybean Imporls

Grain1

0

B

J

I'i'.l

_

6

0 1

1'

faviBiwyai rorgovlMe and tubteooenl

Ti'

Including flour in grain equivalentiiimaki)

' Western trade Maiisnt* -ereio fill gaa* indata

Milton US 1

USSR:

Value of Grain and Soybean Imports

Grain1

Produclion of Major Crops and Livestock Products

Average

6

7J

Artnmthaise

Crops1

Ltveitocl product*'

hlillion Meirie Tons

Grain1

n

8

j

s

been

teed

0

(daughter weight)

J 1

4.IS

'-I

on average priori rcalired by all sellersft nci o* teed and ettimaied wane.

'inge* in inveolories ofeatured in "bunkerhat it. giott output from the combine, -hich include* rteets moalure. unripe and damaged VerreB. andteedt and other tilth- In order IO compare Soiel grain output "ith lhat at otherowratd adjasimeoiof

ercent I* in order.

' Including flour in grain equivalent and nee.

ndiv It

I'rojections05

Thequantilies of grain required05 are obtained byerived index or quantities of grain and other concentrates required with thereported scries of grain fed. calculated from the term of concentrates fed

Grain required for feed05 is obtained by:

Multiplying officially reported concentrate units required per unit of meat output (byilk, and eggs, applied to quantities of product shown in. appendix A.

Adding quantities of grain required toincreases in inventories of the major types ofhogs, and sheep.

Adding quantities of grain required to maintain horses as draft animals. The results are set forth inelow.

An average ol ihe officially indicated quantities of grain fed in the July-June periodsas used as the bawc point The amount of grain fed in each of these two crop years was strongly inflBeoced by the very poor crop5 followed b> the record high grain harvestence,ssumed that an average of the Iwo years providesase point of "normalcy '*

Although the computed scries, expressed in tonnage was consistently higher than Ihc officially repotted series of quantities of grain and other concentrates fedrcaighlyercent. for example -the trends are comparable. Thus, theindex series of required grain fed derived> lhe above method is ia general agreement with the official scries index of actual grain and other concentrates fed (seehe methodology assumes grainonstant share of total feed units ingcsicd by ihc various categories ofe

divergence between ihe computed index (based on requirements) and the actually reported scriesan be ai least partly explained by the rise of concentrates in the share of feed units consumed (nee) For rairposo of projecting0c have assumed that tbe share of grain and other concentrates in total feed rations will be maintained at roughly one-third of total feed units. If Soviet plans for expansion of production of nonconccntrated feeds (silage> hay. coarse feeds, rodder roots, pasture, and other minor feedsluffs) arc not fulfilled, grain and other concentrates may risehare of toial feed units. In thai event, we have underestimated the required concentrates and, hence, Ihe expected level of imports of grain.

la

USSR: Comparison ol Official

And Computed Indexes

Of Grain and Oilier Concenlrales Fed

- -

on Ihrf conceniritn ideally led

O ind earlierlie official ttiiet ii lacgcd b> oac-ih.rd.ilriiy tdjuitinent in ilkn* lor ihc intervalar feeding and nrodacim final eailpul Thai ii. one-ihirdof the officially indicated quaniuy fedJ ii assumed Mix-iih (rain lequnimtnli for ihe pmduci produced inHence, ihegu.nlity fad mn comprucd of OaolhirdotTieiilly1hlrdiof tfce4

* Boot on reedcei owfaii.erd amatory, aad BJgtanaal rf kotialteeiiWeB-f)

13

TableHead

USSR: Livestock Herds

Inventory

I Jinuryto JI

and Goad

6

S

7

!

4

1

s *

1.9

t

'

--:

68

C

0.7

1

11

1 7

4

to

6.0

>.S

Dalarc from NatodmytftVTf.p.

nd earlier rajiuoni Data for IHO are bawd one linear rxrapulalion ingrowthof kcrdt Btceusry IOmeel Tcalh lire-Year PlanlorinrMial herdhe in-rmnr, cbaricc for ibtated oa average annual iawaaUry. erci-niied ii>b(i iMi

m,

1 Horse numbersiaui)tuicrd tSal ifler lac relaimly rapid declineavetiieeror.teecoril luw will level off anh only minor annual decieaicsjturjkd

TableMetrrc Tow

USSR:

Inventory Oranges Expressed in Live weight'

and Goats

1

5

1.1

2

0 1

Herd changes Iromre multiplied by ihe average liveuclebt of animals purchucd by Stale9 lsiloc.:jmi sheep sndata ore from Naradneye

E* lima led.

TableMetric Tons

USSR:

Concentrates Consumed by Changes In Inventory of Livestock anil by All Horses 1

* Goals

Total

1

73

ia__

9*

4

5

_

1

f 6

Feed uniliol concor.lnlti required tunes uniltof livenig hi equivalent ol imm>r> in herd irntnioiici pluiateslo maintain tht lolal "rauny of horsei. Onlyangei in herd*'t <ainii*d:rr alreid)icd for iafoOuct aatpuL

r Feed regardedUN aswsake*.

oa

' Fecdimri regained per anil ofi(fci VHptaap

aintenancettimated on the dim of mforvstienffi/yktin roiviitytt IlaimislukfmyaSSSH..

TableMetric Tom

USSR:

Total Concentrate

Feed Units Required

1 men lory Change'

_

I2M

'*

4

Tl

1

1

IMS' III" HI)

1'

Product oulpuurilibk AS. apf-endu A. multiplied lymw iiH'.ti (Cijuircd per ur,ii firmiyi iln> calcutatic*.units required lo produce motion. Kfcer meat arc iturned cuuolnn" rrwuiredo;ucr beef 'Grjm tor miinif ninis of horws jsdrafl animals iilus (rain reijuircdtOiicomiii-Uie mveniiiry increases of other lixslOCk Set Khlc Ml.

I-iH

14

MtihKj Metric Tom

Grain Balance 1

IW/74

?6

CIA AIUJOhtStwtft Gritoeeccrnbcr'Uitii the awuiiuction ol OFIt'intf ittd Wf Fortb ihe' *ytin fere added vtinx iMuatandand taKOfpofaijftf *e-tecm amiable Th* Of Rbalm il i* ntml iinrvKAittaitpittinccri of Afrnlitrtxcept rOra fint. oar rtiattittyana rco-mred iorfer (Sec CIA AffQ.v^amfrMccaaart to

htctf ft lanne

.he bataocfta ta CIA AtCK'VW, Ifc* reav Vll) Jtattt oforaijtiao

raminn ncxcSkUtciJ a*

revitfotif* taiduatrialaermata for thevlyO Jvoc

R^nfctr LSec ih* pfffacc for dcfintri**

1 HHWct. illcR)g

Mt.it 0

64

- UK}

4

* S"

27

12* 60

1cuartity fed reduced byercent for tomtu rabbity

< 7

iifiijfiLi ai food ti re iaiivdy liable and ti mimaicccrtju* ii rouf M> currenter the itcii severalhrrci Head in per capij ciMi^umphon of Flour bi*hey the lower cti:jc:tn.vi talc* AwxtaxcduAlil>end* *rc pipoctodoemain at roeffhiy Ihcence %cci1 re^'jtnr^fAispoc:cd tnmed C'inO"!

h! Atmncd rati! o: corr mii.Tic.its for supplying STiititt

l:4TA|tr*ti joiI -uaie& l* NA-vjJ^bJc

Appendix C

RcdurinK Ihe Internal Demandruin

All hough the quantities of grain required for seed, food, and industrial use are relatively rued, the USSR potentially has substantial latitude for reducing grain demand by- improving livestock feeding efficiencies The current ratio between grain use and livestock, output could be unproved in several areas, including better feed quality, increased use of nongrain fcedstuffs, increased emphasis on Ihe "livestockprogram" and lhe private sector, and improved breeding. Soviel planners have long been aware of the potential for improvement in these areas

Feed Quality

The average Soviet livestock feed ration is short on both "energy" feeds, thoseighof carbohydrate such as grain, and protein feeds. Overall quantities of feed remainercent below annourced standards, and Soviet researchers currently report that the protein deficit ranges fromercent toy feeding more high-protein supcac-rnenu, the USSR could increase the use efficient of both roughage and concentrated feeds For example, meat production could be increased substantially with no increase in lota) feedgrain use if rations comparable in protein content to Ihose used in the US were available.

Soybeans are considered the most desirable protein feed supplement, but the Soviet growing environment probably restricts the output of soybeans to lessillion tons per year Since self-sufficiency in protein feed supplies is an avowed aim of Ihc leadership,lan calh for expanded plantings of high-protein crops such as pulses, vetch, clover, and lucerne

bepeeee.-raukr raqaired ifmilto Mrius lac total okatc tMair afiiiiaadj.he raiwof catone auak> toprodaci aauBMmplm Wuoet are naceiiaa;onlyercent of Ihe aruuri icuuircd is minianrc uul feed mute per vail of output Fori ditctiuKtn otr; irnHiiir ol pnocin ir feed, teeXT> U'clii| Piper. "The Sovieti'otock flonmmrdinat onnd Tiade. Thii repori etlimaiet lhaiiolcinje "at equivalenthc rirolein -urevtifi! byi of toy beans

Nutrient Costs.8

ellow)

2

Hard

Winter)

% Protein)

Control '

Digcteiblc

6.7

content' Toial dieetiihle

nulricntt Net

fi

I

Ton

*

om

OieesliWe nutrients

141

Morrison I'rank B.d ed. Clinton, Iowa,

. Kansas City.

'Cil.Cfck-.io.

ecatur.

there has been litllc progress in this area. Brezhnev emphasized its imporiance once again al lhe8 plenum.

Western observers hive long urged imports of soybean meal or of soybeanssimple and quick"oybean mealuch less expensive source of protein than grain (see) and wouldincrease lhe efficiency of the grain now being used. Moscow, however, has stubbornly refused to pursue this course of action Soybean meal has never been imported, and the infrequent imporu of whole beans have been related to shortfalls ia domestic oilseed producUtn In other "crdi. the vegetable cal corneal (or fraciton) has been more important than the meal fraction.

' SeeOtle Joh^Hin.oviet Impaeio* Wo'lJI-ralM Trade. rJ-Hitfi-Norih Arnci.canA.',.

The Soviet reluctance lo impori soybean meal even at favorable prices may stemealization lhat the mixed feed industry, given its rudimentary levelack of adequate mixing facilities aod trainedwouM not be able to utilize the mealoscow may also feel lhat the need for energy feed outweighs the overall gain ia feeding efficiencywith soybean meal imports. Recently, thehas stressed the importance of the mixed Iced industry and it devoting substantial sums to its development. Progress is stow, however, aad ii is unlikely that large quantities of imported meal could be successfully incorporated soon. Hard currency stringencies may ultimately force Moscow away from its policy of importing ever-increasing quantities of costlier grain in favorore rapid improsement of feeding efficiencies through me of protein supplements andeed.

Subuiiuiion oj Olher feedniajs The quantities of grain required for feed could be reduced if the use of substitute feedstuff* such as silage, feed roots, bay. and hay 'age wereoost ia other concentratedilling byproducts, and alfalfa and grass meals -could also reduce the quantity of grainowcvcr, neither possibility is likely.

In recent sears the I'SSR has emphasized lite feeding of gram and other concert'.fa ted feeds.be share of concentrates (expressed in tonnage) in total feed has grownercent toercent (see) Within concent talcs, lhe share supplied by grain initially increased slightly but held roughly constant ateroen:5 The share of mtllirg byproductv has declined white thai of alfalfa and grass mca's has grown

"taunti 'or tae mi* femon. the USSR rices mi iity lianiricantly on uira.a- it hit ic urn rce of protein fur ruminanU. in fieri nitons Becsuie ui ii< nmiciuceeulul fctdtaguf urntiiull

enihS)(liced'""

"Tie feu* i'Ahiidnu!rom utmfUftt teed (abualfdiail iNoenxanc fctal SavSeaa *mjI<lb ii Ktie In" mirarii.il ioijcaolc oil min* B> Soviet (Ici'miUDO. fceth u' amtral and ty.ihciK iwigmnotMnccniiDte> fjuaniilitvitfIhese feeds ait jatreiiimg batnmvi-ir.gnifiMni sffect an feed ralkmi

Growth mother types offeed roots, hay, andbeen much slower primarily because these crops have been slighted in allocations of yield-enhancing fertilizer and pesticides. Indeed, supplies of both coarse and succulent feeds have grown by less than one-thirdnd feed supplied by pasture has been roughly constant.

Ambitious plans to increase output of nongrain feed crops have consistently fallen far short of target. The Nitnh Five-Yearor example, calledpcrccnt increase in output of succulent feeds butoost of only I? percent On the past record we do not anticipate any marked growth in ptoduction of these cropsonsequent change in the feeding pattern

Livestock Completes

The aclvert of large-scale livestock "complexes" has ied io an increase in fcediogor example, in recent years milk yields al dairy complexes averagedciccn: above those On state farms -mil feed use per unit of production wasercent less. Daily weight ga-.rt for cattle at the better complexes runs as men asercent higher with feed expenditures down byo .'0 percent Presumably, the improved results are due In :he balanced nature PI" lhe feed rations with respect to protein, viun'.ins, and trace elements as *cli as lo provision of adequate quantities of boih concentrates and roughages."

ueculent" iber conicalf I* percent and include hay.. and stover. Succulent feed" are those "iih water content ia eicesi of i'l percent. They lachidc ulage. green chop,ugar beeis. feed reals,i beet palp, and dmirkH' mashCompkscv are rargc.ighly automated facilities developed to concentrate the breeding, raising, and leading ol livcnock, including poultry. Hog comrrieies. for example, are designed to prodv.ee0ogs perorncoran include living qua ncrs and cultural facilities for worker)

" Animal- gainrate mr"dl> aad require tea feed per unit ot Caina bjUnctdsed. In othrrpure" ccventrnicH as advantageousolincwl ration and re-tills Inoncentrate relative lo product oaljiui

Stiueiure of Fred Supplier

un Tan rate

1

feedi

1

feed.

|

0

M

ue i

1

1

7

iced meal

and |im nr.lt

4

Ub_

H'-tdoii FredUnm

MM

4

_

N*

I9T6

I* I

NA

mi

M4

vi

from 'red lautt pa inn of far* ted on LoaKtrn andTOpa'tciftef IS* total Thefedaaliculturainooa(iKcllu>al cnterpiites andlectorthc-nit in aach uf lhe fourhat rcnuintd ihr tame at1

plans to increase beef anil rrilk production by these complexes io Id percent of ihc :olalork produciion toerceni. and egg production lo KD perccni are achieved, and if ibe complexes are fully operational and artequalelvh good quality feed, grain required for feed0 would drop by andliononiinuoimn of the Irend5 wouldteclinedlion lorncn these gallnlikcl) because of the USSR's pcrcnni.il difficulties in adapting to new methods of oier.nion andtechnology More important, lo Ihc ealent that the improved efficiency of these complexes i* due to belter balanced Iced rattans, there will be less protein and other desirable feed supplement* available lo regular collective and state farm livestockHence, the gross grain "savings"ising share of output accounted for by oompkxes would be partially offset bv reduced efficiency in the balance of the livestock economy.

" Ibese oaleuattUM *it bendItJaaaauj fuhatauwop.) OgS-

- thai a. leu than -Haltfc if tWf productionJemained ai ibe currtnl lo-er kveh

Prime .Sector

The icccnt swing to encouruging livcsioek production in the private scclnr couldubstantial boost lo meal and other livestock product outputnder relatively restricted ccndilions, the private sector producedercent of all meat and milk andercent of eggs Output of meal was up7 as private owners ctparded their livestock holdings: the value of pnva-.ely held livestock increasedercenthe firvi positive growth0 (sec

The socialized sector has been directed to provide individualsteady supply of feeds, including the crucial conccnttiiles Private farmers will most likely be sold grain rather lhan lhe better balinccd mixed feeds, in pan because complexes and Urge livestock-ipecialiring state and coUeciive farm* have priority for mixed feed supplies ;md in pari because of distribution piob'crm Complaints of the difficulties encountered by individuals in purchasing mixed feed has* been common.

19

USSR: Value of Livestock

Privately Owned Herds

vis

M

I i i i i i > i I I I I

2 64 66 6B 70 72 74 76

On balance, stimulation of ihc private sccior would appear lo reduce ihe iota) demand for train per unit of livestock output through more efficient use in the long run Again, however, prospects for substantiallymeal production in the private sector arc dim. There hasistinct downward trend in share of output- fromercent of lotal meat production0 toercent0 and aboutercent today. This trend will continue in keeping with the decline in rural population and possible increased demands on tbe individual worker's time a* the farm labor force declines. In addition, growing farm incomes and the increasing availability of processed farm products make work in the private sector less attractive

Bterdimt

Some efficiencies could be gained through breeding livestock for specific purposes (for example, caitle for mem or milk instead of the prevalent dual-purpose animals, leaner hogs, andlthoughofficial publicity and investment outlays have been accorded breeding programs since the, results have been drsappointing. Over tbe period under consider al ion. we do not expect substantial gains in this area.

If official slatisiic* arc lo be believed, the privatesecior historically has been able lo produce more than twice the value per unit of concentrate feed, such as grain, that state and collective farms produce VVe can only explain these drastic differences between ibe private and socialized sectors b> assuming that individual attention and careful feeding given privately held livestock results in greater feeding elTioeiKy."

ih* lacrraxdttatadMaeaTeeT aa in* penal* va&ier aa* aaaa aboa*iIran Ihe catcalatmaa art baled ca curat try lyre of cudaci aadaadiuatutei.itid noaeeneeairates fed aiy IN USSR Caniral Siatntical AdniuiiUra-uOa. The 'effiCKiK'ici" may bebeeaute th* italutiea on

rii, ruwd liirftiy on family budfel la'vey din

and ihiii ire tubieii lo error

Appcntlix I)

14iKi.sf.ic Constraints

Scrviel pori and storage capacity would no) teem toonstraint on grain imports. Sov:elcurrently can handleillion tons of grain imports spreadmonth period without serious problems All pons used for grain imports are connected lo lhe national rail network and some are also located near navigable rivers, providing inland access by barge. The Soviets have improved Iheir operationserious shortage of railcars occurred al some pons because of management and scheduling problems

Current grain storage capacity isillionajor elevatorgram is under way.h Five-Year Plan calls forof additional elevator capacity ofillion tons, bulillion tons were completed. Nevertheless, wc believe Ihal the growth in storage capacity will be adequate to handle the domestic crop plus imports ofillion toillion tons- AUboogh storage facilities at docksick are somewhat limited, this should no:estricling factor since Soviet methods for offloading grain can bypass the fixed grain storage facilities by direct loading into railcars, barges, or trucks for further movement inland

Tha Bimu wai ^aedetts rfTicial io US Seetcm> af AxricOarc Room gwiliml darin has1 ma tr ihc USSHS Detune* n<ueaU

ia)l flea re nayj upward"

bout millicc mmilume conutealearlier rerurted lupi-iliei and rates of retirementumttuctlo" Coannuini ihit meih<HhV"tv,tsiimate current capacity wuutd be about IS* million

21

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