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HISTORICAL REVIEW PROGRAM RELEASE IN?
DIRECTORATE OF INTELLIGENCE
Intelligence Memorandum
Soviet Grain8
Secret
1*B
CENTRAL INTELLIGENCE AGENCY Directorate of intelligence8
INTELLIGENCE MEMORANDUM
Soviet Grain1
Summary
Por the third yeaxow the USSR has harvested an excellent grain crop, which willit to meet current domestic needs, to fulfill current export commitments, and to add to thegrain stocks. The total grain cropstimatedillionillion metric tons, is the second largest grain crop in Soviet history. It falls between the record cropillion tons6 and the next best cropillion tons obtained Production of bread grains (wheat and rye) 8 is also the second largest on record. The totals of both grain and bread grains produced8 are one-fourth above the respective average annual levels attained.
With respect to grain imports, the USSR hasthe purchase from Canada (its principalofillion tons of grain remaining to be bought in the final yearhree-yearrunning fromo Despite the good Soviet crop, this commitment probably will be honored, although the terms may be renegotiated.
The total demand of Soviet client states* for
' The term client statesloee bilateral politiaal relationship. Client etatee of the USSR include the following: the Eastern Europeanincluding Albania and Yugoslavia* Cuba; North Vietnam; North Korea; the United Arab Republicnd Algeria.
Bote: This memorandum was produced solely by CIA. It was prepared by the Office of Economic Research.
grain imports from all sources inrade yearune) has been projected to aboutillion'tons, slightly aboveevel. The Soviet Union is already committed to provideillionillion tons of this amount. Given the improved Soviet supply position for bread grains, the international political environment, and the desire of the client states to conserve hard currency, the client states undoubtedly will press the USSR toarger share of their import requirements. The USSR, on the other hand, may wish to increase earnings of hard currency through sales of grain to Free World countries (excluding the UAR) moreillion tonsnd also to augment its grain stocks.
If net exports inrade year are held to about the level stipulated in outstanding agreementsapproximatelyillionillion tonsthe USSR will be able to makeadditions to reserve stocks of grain. ough estimate, the additional supply minusdomestic and export requirements could bring the total accumulated grain reserves toillion toillion tons by the end of the. Grain stocks of this magnitude will enable the USSR to weather apoor crop year without the need for largeemergency grain imports.
.SECRET
8 the USSR harvested the secondgrain crop in its history. The total productionillionillion tons ranks between the record cropillion tons harvested6 and the third best cropillion tons obtained Production of bread grains8 is also the second largest onillion toillion tons compared withillion tons produced6 andillion tonssee Table The totals of both grain and bread grains produced8 are one-fourth above the respective average annual levels.
Weather conditions for8 grain crop were not altogether favorable. Although fall-sown grain crops in much of the European USSR ware seeded under subnormal moisture conditions, timelyin the fallermitted adequate development of seedlings over most of the winter grain area. Also, the accumulation of soil moisture from an above-normal snow cover during the winter months somewhat mitigated the adverse effects of unusually dry weather in April and May in tho principal winter wheat areasthe Ukraine,and the North Caucasus.
In spring grain areas, with the exception of major parts of the new lands, April and May moisture conditions were generally adequate at the time of sowing. Then in late, June and early July timely rains bolstered crop prospects in the new lands spring wheat regions of Kazakhstan and West Siberia. An average level of grain production in those areas and an outstanding harvest in the Volga, Urals, and central black-soil zones of European USSR more than compensated for the fact that grain output in the Ukraine, Moldavia, and parts of the North Caucasus fell to below the level7 because of the spring and summer droughts there.
As in past years, the Soviet official claim of gross grain production5 million tons) must be reduced to obtain an estimate of net usable grain. Because of inclement weather during the harvest in the new lands areashortage of trucks and railroad cars for transporting grain, above-average harvest losses probably occurred. There was more than normal shortage of truck and rail capacity for moving the harvest to storage
USSR: Production of Total Grains and Broad Grains Official Claims and CIAnnual Average
Million Metric Tons
Grain ProductionProduction w
Claim
Estimate d/
Claim
Estimate d/
average
a"! Including pulses. fe* Wheat and rye.
a. Bunker weight (gross of excess moisture and foreign matter)*
de CIA estimate of usable grain, Net usable grain is estimated ae the gross output minus excess moisture, unripe and broken kernels* weed seeds, andosses incurred in loading and unloading of grain between the combine and etorage CIA estimates of net production of grainavee* duction cf between) and) in the official claims for gross output of grain.
facilities, largelyesult of the partial mobilization of the armed forces during the Czechoslovak crisis, which apparently resulted in the temporary requisitioningizable number of trucks by the military. In addition, the areas with exceptionally high grain yields8elatively low density of rail networks and grain storage facilities. Therefore, the estimateillionillion tons8 is below the official claim byoercent. arger than normal proportion of this year's bread grain crop ofillion toillion tons may be below milling quality and therefore may be usable only for feeding of livestock.
Internal Supply Position
Government purchases of grain from producers of8 crop will exceedillion tons, an amount at least one-fifth above the average annual level of procurement. esult, supplies of grain will be ample to meet domestic needs for high-quality bread supplies In addition, the USSR will beosition to meet export commitments and possibly also to enhance its earnings of hard currency by renewing grain sales to Free World customers. Finally, if total net exports inrade year are held toillionillion tons, the USSR will be able to make significant additions to its reserve stocks of grain.*
Little information is published on the utilization of grain in the Soviet Union, andon stocks are closely guarded secrets. Relative stagnation in grain production in the years prior
to the crop failure3 probably caused adown of grain reservesow level, but the good grain cropsermitted substantial replenishment of grain reserves. Althoughough estimate is possible, comparison of supplies
It ahould be noted, however, that these additions could be smaller if additional grain must be used for food in place of potatoes- The harvest of potatoes, the other starchy staple in the Soviet diet, may be significantly below the near record level of last year.
with projected requirements for current domestic needs (food, feed for livestock, soed for9 crop, and industrial uses) plus current export' commitments suggests an accumulation of graintoillion toillion tons at the end of the current consumption.
Reserves of this size would provide the Sovietsedge against future shortfalls in grain production and additional leverage in foreign trade. The estimated grain stocks represent about one-half of the annual consumption of grain for food.
Thus, the Soviets areelatively good position tooderate decline in grain production in the coming yearfor example,evelillionillion tonswithout having to import much grain and without deterioration in the quality of the daily dietesult of the available grain being used for bread instead of feed for livestock to produce meat and milk.
Outlook for Trade
8 grain harvest willthe USSR to continue for the second yearits traditional roleetgrain. , annual exports of7 million tons and Imports wereof the poor harvests3imported unusually large quantitiesn order to meet domesticajor part of export commitmentsstates. Exportseclined toannual level of lossillionaverage annual imports increased to more than
7 million tons (see
Soviet Grain Imports
10. , nearly all Soviet grain imports (largely wheat and wheat flour) were from Free World countries and wore paid for in hard currency. Canada has been by far the largest, most consistent supplier (see Tablend is now the only country with an agreement to sell grain to the USSR.
Exports, Imports, and Net Trade in Total Grain andnnual Average
Thousand Metric Tons
Annual Average 7
Total grain a/ Of which: Wheat imports
Total grain a/ Of which: Wheat Net trade b/ Total grain a/ Of which: Wheat
312
266
7 5 8 2
1 2 8 6
exaluding rioe and flour. the quantitiee shown iniffer from the amounts ehown above to the extent that rioe and flour are included in table. lus sign denotes netinus sign, net exports.
USSR: Imports of wheat, a/ by Country
Thousand Metric Tons
Country of Origin
Trade
b/
States
3 average
_
37
c/
c/
3
al moiuaing itneat flour tn wheat equtvalents.
i. Inoluding exports to Cuba fron Canada on Soviet account.
Exoluding exports to Eastern Europe on Soviet account.
Soviets are expected to purchase infuture atortion ofilliongrain remaininghree-year agreement Under the original terms of thethe Soviet union was obligated tomillion tons before The USSR boughttonsillion tons in The fact that none has been purchasedrade year has led tothe Soviets may renege on their commitment.
The consensus in international grain trade circles, however, is that the Soviets will honor theeither precisely or by renegotiating the terms. For example, theeadline might be extended for one or two years, with most of the grain going to Cuba (on Soviet account) or to Soviet Far East ports.
Soviet Grain Exports
principal recipients ofere Czechoslovakia,Poland, and Cuba. Exports to Freefor hard currency were negligible. beginning ofrade year throughtrade year, exports to client states(North Vietnam and North Korea) andUAR and Algeria) have increased rapidly. of exports to individual countriesareas, however, has been irregular. of wheat to Asia and Africaons inillion tons annually inrade years. Exports of grain7illion tons (see Table
ut declinedons North Koreaons duringrade year. Shipments of flour to North Vietnamons in calendar7 and will probablyons
grain imports of these clientall countries in9 trade2 million tons, somewhat abovelevel. Soviet exports of grain toare expected to range6 million tons, or fromoercentimport requirements. Given the greatlySoviet supply position for bread grains,political environment, and thethe client states to conserve hard currency, these
USSR: Exports of Grain, a/ by Country ofnnual Average
Thousand Metric Tona
*
*
3
* *
total
m
- m7 s
?10
Genoany
w r
.
py
Vietnam
Korea
-
*
China
j
_
'al including flour (converted into grain equivalents by2 percent traction rate) and groats* 6. preliminary estimates,
e. Tht total tnoludes albania and yugoslavia.
d. including imports of grain and flour from canada and mexico on soviet account.
states no doubt will try to get the USSR toarger share of their total requirements.
Eastern EuropG
total demand of the Easterncountries for imported grain in thetrade year is projectedillion tons,aboveevel. Tha overallin import requirements ofreflects the need to compensate for lowerin East Germany, Hungary, and Bulgaria;harvests in Czechoslovakia and Poland havetheir import needs belowevel.
The USSRurrent commitment to supply slightly moreillion tons of the estimated required importsillion tons. About one-half of the remainder has been purchased or contracted from Free World countries. In view of the need-to conserve hard currency, Poland, Hungary, and Bulgaria may seek additional grain from the Soviets above the present commitments.
Other Client States
Duringrade year, client states outside of Eastern Europe will require total grain imports ofillion tons. The USSR probably will supply as muchillion tons and possibly more to the five countries involvedCuba, North Vietnam, North Korea, (JAR, and Algeria. Given the uncertainty of alternative supply arrangements, the USSR may be asked during the balance of the trade year toonsiderably larger share of the total.
Por the present, however, the outlook calls for the Soviet Union to provide grain imports to the five countries at about the same levels as in the past year, the amounts beingillion tons forillion tons for Northillion tons for North Korea, andillion tons for the UAR and Algeria combined.
The Free World
the desire to expand earningscurrency, the Soviets have not indicatedto significantly increase grain salesFree World. The new Internationalubscribed to by major Free World traders
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SECRET
(but not by the Soviethould not restrain the USSR from attempting to regain the previous level of exports in Free World markets, whichillion tons. Although IGA memberare obligated to buy stipulated portions of their total requirements from XGA memberizable potential market in hard currency areas still remains. The Soviet Union could, for example, attempt to sell grain to its major trading partners among the developed countries (the United Kingdom, West Germany, Japan, Italy).
Original document.
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