CIA HISTORICAL REVIEW PROGRAM RELEASE IN?
Economic Intelligence Report
THE STAGNATION OF SOVIET
R ER1
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
Economic Intelligence Report
THE STAGNATION OF SOVIET
CIA/RR ER8
WARNING
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espionage. Uu txtas-minner by law.
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
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FCRKUORD
Inarty-State Control Committees were established at all administrative levels of the Soviet economy to "re-establish Leninist principles of organizational control." These committees, which collectively resemble the organization of the old Stalinist State Control Ministry,harter to pry Into every aspect of economic activity ond the power to punish those guilty of "bureaucratic" fraud, bribery, and violation of party-government Although these committees ore not confined to agricultural organizations, the need for their establishment may hove arisen out of the agricultural situation. The stagnation of Soviet agriculture during theears has limited the Incentives of both agricultural and industrial workers, and the regime may have been forced tothis elaborate control mechanism as an alternative means ofproductivity.
Thie report discusses the lack of progress inhe impact of this stagnation on the availability offeed supplies2nd current efforts toagriculture and Improve the food supply. It alsoon the agricultural situation through details on Soviet agriculture, see CIA/RRn Soviet Agriculture,2, Current Problems of Soviet Agriculture. July
- iiilliTi
il*"
Summary and
I.
and Livestock,
of Food and
11.
of
Reorganization
IH. Outlook for
Tables
of Net Agricultural Production ln the USSR,
Sova Area In thel, and
Production of Major Crops in tbe0
Production of Major Livestock Products ln the USSR,
nd
Chart
USSR: Administrative Structure of Agriculture (as of
1Unclassified) following page
THE STAGNATION' OF SOVIET
Summary and Conclusions
Investment In Soviet agriculture increasedercenthe largest annual increase In addition, prices for livestock and livestock products purchased by the state vere Increased to spur the lagging animal husbandry sector, which bad been operating at huge losses on most farms. In the main, however, the Soviet leadership pinned its hopes2topgap program to reduce the fallow area, to plow up sown grassland, and shift both of these acreages to more productive crops. Unfavorable weather reduced crop yields in many important agricultural areas, and the expected benefits of the program to plow-up fallow land and grassland were not realized Into the higher priceshortage of feed, production of meatwhich declined0ecovered2evel There wasmall increase ln output of milk as the net result of larger dairy herds but lower yields of milk per cow.
Agricultural production increased rapidly4nd the Soviet consumer, long neglected under the Stalin regime,arked improvement in his diet. During this period, Khrushchev's extravagant promises probably conditioned the consumer to expectimprovement in bis lot. There has been little change In net agricultural productionowever, and the per capitaof most of the basic foods has declined or failed to increase from the annual average- Reports of local food shortages appearednd dissatisfaction of the consumer with foodwas on element that touched off civil disturbances elements that fostered discontent inonsumption yearhortage of potatoes and vegetables in the entire countryeneral shortage of food, feedstuffs, and Beed in the densely populated northern European USSR. Evidence of shortages, particularly of feed, also appeared in parts of the Ukraine snd Kazakhstan. High quotas for state procurement left meager supplies of farm products in many rural areas during the winter.
* The estimates and conclusions in this report represent the best Judgment of this Office as
As4 the Soviet leaders have been confronted with the problem of reviving agriculture. The big difference is that investment funds
now axe more difficult to come by than they wereears ago, and the provision of additional financial support to agriculture, pledged by Khrushchev inl, developed as an indecisive, piecemeal process. During the past year, however, this program has gained momentumthere hasefinite shift of Investment funds to agriculture,igher priority has been placed on production of fertilizers and agricultural equipment. On the negative side, strong controls continue to take the place of adequate incentives, and the bureaucratic apparatus continues to stifle initiative at the farm level.
The area seeded to winter grains was increased last fall, but this increase was offset by heavy winterkill ln the northeastern Ukraine ond adjacent areas of the RSFSR. In the remainder of the winter grain areas, however, moisture reserves ot the end of April were reasonably good, ond the condition of the crop at mid-Kay was satisfactory. Although aarea was seeded this spring, the net increase in the total area sown for harvest3 vas minor because of the heavy loss of winter groin. The planned extension of the "plow up" program did notbecause of shortages of seed ond equipmentery late spring in the European USSR. Although seeding was delayed by the late spring in the Europeanavorable warm trend developed afterpril, and most of the delays were overcome by mid-May. The quality of spring fieldwork has suffered from this speeding-up of seeding. Reserves of Boil moisture were low in most of the "new lands" at the end of June, presenting the possibility of another poor harvest from these areas. The severe winter and late spring also complicated the task of stretching inadequate supplies of feed to cover record numbers of These conditions reduced yields of milk and raised output of meat through distress slaughtering during theonths
I. Shortfalls
A. Crops and2
Although the area seeded to crops in the USSR8et crop production2 wasoercent below the levelffsetting the gains made in the livestock sector during the period. In view ofercent Increasehe lack of growth in Soviet agriculture reachesproportions in terms of consumer expectations (see.
The sown area in the USSRecord highillion hectares4 million hectares more than Most of thisillion hectares) was realized by the seeding of fallow land, andillion hectares sown were net "news indicated in* the expansion was accompanied byshift in the cropping pattern. The area seeded to corn, barley, pulses, and sugar beets increased sharply, but the area devoted to oats and grasses declined. This trend was accelerated2 by Khrushchev's "plow-up" program, which was designed to shiftillion hectares of fallow land and land sown to grasses and oats to corn, pulses, and sugar beets. 2 the fallow area and that sown to grasses and oats declined byillion hectares from the levelore than three times the decline registered in theears.
In contrasthich was an unusually favorable year for crops, poor weather in many important agricultural areas reduced yields The northern half of the European USSR was abnormally cool and wet, the southern half warm and dry. Drought prevailed over much of the "new lands." The middle Volga, the southern Urals,art of the central black soil zone were the only areas in the USSR that enjoyed average or above-average conditions for crop development.
The USSRecord grain harvest2igure that appears toross exaggeration.+ The US estimatebased on detailed analysis of data on acreage, weather, crop conditions, progress in seeding and harvesting, and procurementsis that Soviet production2 was about equal to the mediocre croptt
* ollows on p.* ollows on p. Tonnages throughout this report are given ln metric tons.
t Western agricultural specialists have discounted Soviet claims for the grain harvest for they an average of aboutercent, tt Text continued on p. 6.
Indexes of Net Agricultural Production in the USSR a/
ypar
Agricultural Production
Per Capita 5/
agricultural productioneasure of agriculturalfor consumption and industrial use. It Is the sum ofquantities of the major crops and animal products,changes in inventories of livestock, with deductions forof potatoes, grain, and milk fed to livestock (toand with deductions of potatoes and grain used
The indexes are not precise for several reasons: oviet statistics are of questionablerrors in theof the amounts of potatoes, grain, and milk fed to livestock may be quitehanges in inventories of livestock are estimated by means of changes in the number of livestock and ignore changes in weight and value;he choiceystem of weights for aggregating the commodities is arbitrary. Therefore, thc indexes are presented as indicators of the direction of change and are not intended to be used as measures of the precise amount of change.
on midyear population.
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Sown Area in the
HectareB
8 1 g Total Change
he USSR estimated that corn would be harvested as dry grain on an areaillion hectares. Actually, fully mature corn was harvested on an area ofillion hectares. The spring wheat areas of Siberia and Kazakhstan also were plagued with drought ond another serious infestation of weeds.
The major shortfall In agriculture2 occurred inof potatoes. Inhrushchev announced that production of potatoes amounted toillion tons. Two months later, inhe Central Statistical Administration raised this figure8 million tons.* Tho revised figure is the lowest for the, the only postwar years for which statistics on potatoes are available. The Soviet figureU million tons of vegetables produced2 is the lowestata on acreage and weather coupled with official concern over shortages of vegetables, however, suggest that actual production of vegetables may have been less than reported. The quantity of factory sugar beets produced2 amounted to onlyercent of the cropn spitepercent increase in acreage. The harvest of sunflower seeds2 was slightly larger than8 and was equal to the harvestn unusually coldhortage of irrigation water, and damage from wind and hall reduced the cotton crop to the level Yields of cotton have declined each year
* Analysis of adjustments by republic made duringonth period casts doubt on the reliability of the national figuros for production of potatoes Although the upward adjustment of the national figure amounted toillion tons, or less thanercent, the official figure for the production of potatoes in Belorussia was ad-Justed upward6 million tons, orercent. It is difficult to believe that there wouldpercent error in the preliminary estimate for this republic, where potatoesajor source of food and feed.
** ollows on p. 8.
The livestock sector of Soviet agriculture2 with record numbers of meat-producing animals. The combinationharp increase ln purchase price for livestock and Inadequate supplies of feed resulted In increased slaughtering, and production of meat, which badecline0ecovered2ercent above that The Soviet dairy industry continued to growlow pacethe increase in production of milk9 has amounted to lessercent (see This slow growth bos resulted from annual increases in the size of the dairy herds but decreased yields of milk per cow.
are official Soviet statistics.
addition to being of questionable reliability, statisticsproduction of meat and milk are not comparable with US dataproducts, because of differences in definition or concept. production of meat represent slaughter weight, includingfats, and edible offal.
boundaries.
B. Supplies of Pood and
The growth of net agricultural production in the USSR0U merely kept pace with the growth in population. The output of most agricultural products during this period remained at the level0 (Bee Tablesand It). Agricultural production increased rapidly during the, and the Soviet consumer, long neglected by Stalin,arked improvement in his diet. The "newrogram, the corn program, Increased investment in agriculture, higher prices for farm products, and better than normal weather conditions all contributed to this growth. During this period the Soviet consumer was conditioned to expect continued improvement in his lot. or example, Khrushchev boasted that the USSR would catch up with the US
* P.bove.
Production of Major Livestock Products in the USSR0
Million Mrt.rlr TYwwt
y
c/
67
In the per capita production of milk8 and In per capita production of meat0* Although these promises were completelythereignificant gain in production of meat and milk during the.
The quality of the Soviet dieteak* Unusually favorable weather throughout the USSR8ecord harvest of grain, an excellent harvest of sugar beets andseeds, ond good crops of potatoes and vegetables. The harvest8 provided relatively abundant supplies of food and of feed for livestock during the latter half8 ond the first halfhe relative abundance of feed was reflected in the increosed output of meat and milk
There hao been little change in net agricultural productionad the per capita availability of many food products has either declined or failed to increase. It is estimated that the per capita availability of grain for food, feed, ond stocks2 wasoercent below that. The per capita availability of potatoes for food and feed during this period declined aboutercent. (Per capita consumption of potatoes in the USSR1 was nearly four times that in the US.) The per capita availability of vegetables, which had increased0eclined to the' levelnd local shortages were reported.
The per capita production of meat and milk bos remained unchanged. Shortages of livestock products and lack of profitability in the livestock sector prompted the regime to raise the state purchase prices for some livestock products in This markup was passed on to the consumera move that proved to be unpopular, particularly with the lower Income group, which undoubtedly was forced to reduce its purchases of livestock products.
inor conce&Bion to the consumer, retail prices for sugar and rayon goods were reduced slightly in June. Although the per capita consumption of sugar increasedhe reduction in price was not sufficient to lower significantly the large stocks of sugar, stocks swollen by imports from Cuba. The per capita consumption of sugar has risen sharply and2 was estimated to be almostercent above the level- Sugar, however, istaple dietary Item,
Horry Schwartz of the Hew York Times has pointed out that2 Soviet reprint of Khrushchev's "catch-up" speech7 has been altered. Khrushchev's promise to catch-up with the US in per capita production of meat0or example, has been reworded to eliminate the specific target dates.
n this and the followingefers to the estimated annual average8
and the resentment of the consumer toward the shipment of Soviet butter and other foods to shore up the ailing Cuban economy probablyhis appreciationajor increase in the supply of sugar.
The Soviet fish catch also has increased sharply in recent years, and the per capita catch2 was aboutercent larger than. In spite of this large increase, fish remains much lessthan meat and milkource ofi2 fish supplied only aboutercent of the animal protein in the Soviet diet.
The per capita consumption of edible vegetable oil and eggs has increased by aboutercent andercent, respectively,.owever, production of eggs amounted to only6 per capita. (US production of eggs amounted to about hOO eggs per capita.)
On balance, the quality of the Soviet diet has failed to improve- Furthermore, food and feed have been in short supplyumber of Important regions in the USSR. Shortages have bad the greatest Impact In the northern European USSR.* This area accounts for about UO percent of the total acreage sown to potatoes in the USSR, and in normal years, k$ percent of the crop. Last year, however, because of abnormally cool, wet weather, the proportional decline in production of potatoes in this area was much greater than in the USSRhole. All other cropsvegetables, rye, hay, corn for silage, and sugar beets for feedared poorly, and there was little opportunity for substituting other locally produced food and feedstuffs for potatoes. The crops gathered from plowed up grassland in this area apparently provided less livestock feed than the hay and pasture normally grown. High procurement quotas left meager supplies of food, feed, and seed on the farms of the northern European USSR. Shortages of feed also reduced the yields of milk and caused distress slaughtering ofin this area.
Food and feed also vere ln short supply during the past winter in portions of the Ukraine. Hikolay Podgorny, Party chief of this republic, stated in3 that production of milk had declined in several oblasts in the Ukraine and that increases in production of meat were achieved by slaughtering underfed livestock. Hethe winter condition of livestock on many farms as alarming.
* Belorusolaj the Baltic republics; and the Central, Volga-Vyatsk, and Northwest regions of the RSFSR.
The shortage of feed in Kazakhstan during the past winter was reflected in the high incidence of mortality and barrenness and in the low productivity of livestock. In the entire republic of Kazakhstan,
heep were lost during2 throughnd official inspections disclosed large numbers of emaciated sheep in the republic that also vould perish if not supplied with supplementary feed.
II. Remedies
AsU the Soviet leaders have been confronted again with the need to provide Investment and incentive funds to revive the rural economy and to Improve the food supply. Increased costs of programs for space, defense, and industrial construction have placed other demands on these funds, however, and the provision of additionalsupport to agriculture, pledged by Khrushchev inI, has developed as an indecisive, piecemeal process. During the past year, however, this program has gained momentum. There hasefinite shift of investment funds to agricultureigherhaa been placed on production of fertilizers and agricultural equipment. On the negative side, strong controls continue to take the place of adequate Incentives, and the bureaucratic apparatus continues to stifle Initiative at the farm level.
A. Priority of Agriculture
Recently published Soviet Investment figures indicatein the priority position of agriculture. Investment in agriculture increasedercenthe largest increase in any year Investment ln agriculture2 represented nearlyercent of the total investment in the economythe largest share allocated to agriculture Agriculturearger share of the output of tractors and trucks2 and the first half3 than in theears, although the allocation of trucks to agriculture remained below the annual level that prevailed. The value of agricultural machinery (excluding tractors andhich had declined,ecord high2 and continued to growigh rate in theonths Production of mineralwhich increasedercentoseercent In the first half3 over the comparable period In3 the Party and government took steps to improve storage and distribution facilities for fertilizeriew to curbing the huge losses of nutrients that had been permitted in the past. Guidelines for the economic plannnounced by the Soviet government inive priority to the development of the chemical industry,in support of the consumer and agricultural sectors, as veil as in the production of strategic commodities.
In3 the state purchase price for cotton vas raisedercent for collective farms andercent for state farms. The
measure is intended to restore incentives on the farms that grow cotton and shouldavorable effect on yields of cotton. ages on the collectives that grow cotton have failed to increase, and on some farms have fallen. Yields of cotton per hectare have declined steadily
Aside fron this increase in the purchase price for cotton, the current trend bas been toward the substitution of exhortations and administrative reorganizations for an adequate program of incentives. This trend ls illustrated by the response of the leadership to the two major setbacks suffered by agriculturehe shortage ofin the entire countryeneral shortage of food and feedstuffs in the northern European USSR. Inhrushchev addressedto these problems in the form of separate memoranda to the Presidium of the Communist Party of the Soviet Union. Els recommendations for increasing output of meat and milk in the northern European USSR,by Pravda asrofound analysisost pressingre summarized in the following quotation from one of his memoranda:
Furthermore,arm [in the northern European USSR]igh density of livestock then there will be more manure on the farm. When there is manure, there willarvest, there will be feed. Such are the ABC's of agriculture.
The farmers of the northern European USSR, who probably were compelled to reduce the number of livestock becausehortage of potatoes and other livestock feed, could not be expected to greet theserecommendations with enthusiasm. Khrushchev's analysis of the potato problem, which was equally superficial, was followed inby an appeal by the Party and government to increase production of potatoes. The appeal gave no hint of additional material support for the potato grower.
B. Adalaistrativc Reorganization
1 the Ministry of Agriculture was divested of theof state and collective farms, control over state purchases of agricultural products, and responsibility for the repair ofmachinery. These functions were scattered among several government organizations, leaving no clear delineation of primaryresponsibility.
The reorganization1 weakened the position of thebureaucracy or managerial class and enhanced the position of the
Party in agricultural administration. Tbe Party Plenum inhich endorsed another reorganization of agriculture, clarifiedand formalized the dominant position of the Party in the administration of Soviet agriculture. Although the March plenumnion Agricultural Committee as tbe top coordinating body, the Party presidium continued to decide agricultural policy. This policy was administered through the Party first secretaries of the various republics and oblasts who, for the first time,ormal part of the state administrative machinery for agriculture. These first secretaries chaired government agricultural committees at the republic and oblast level. Ministries and Directorates ofProduction and Procurement at the republic and oblast level were subordinate to these committees. At the local level, party organizerssubordinate to tbe Oblast Party Committees and vested with wide responsibilities and powerswere installed in theioterrayon production directorates for state and collective farms. Many of the responsibilities of rayon organizations were transferred to these directorates.
The Party Plenum of November altered these arraugmentsas shown in the accompanying chart.* Party bureaus forwere established at the national and republic levels, and Oblast Party Committees and Oblast Executive Committees for agriculture were established at the oblast level. At the local level, the weakened rayon organizations were abolished, with the production directorates for state and collective farms absorbing the remaining personnel snd duties of these organizations. The party organizer was elevated to the status of chief of the Party committee of the directorate.
* Following
Within the Party presidium, Dmitry Polyansky apparently has been vested with primary responsibility for agriculture, aided by Leonid Yefremov and Vaslly Polyakov. ull member of the Presidium of the Communist Party of the Soviet Unionas replaced by Gennady Voronov as Chairman of the Council of Ministers of the RSFSR In2 and was appointedeputy Chairman of the Council of Ministers of the USSR. Polyansky addressed aof directors of state farms snd chairmen of collective farms in Tselinograd in3 and, with Yefremov and Polyakov, took partonference on mechanization of the livestock Industry in Moscow in Inolyansky returned to Kazakhstan foray farm tour to determine the progress of spring fieldwork. Yefremov, whoajor speech In3 at an agricultural meeting for the RSFSR held in Moscow, wasandidate member of the Party presidium in2 and was transferred from his post of first secretary of the Party Committee of Cor'kovskaya Oblast to replace
Voronovirst deputy chairman of tlie Party Bureau for the RSFSR In Inefremov took part ln an agricultural plenum in Krasnodar. Formerly chief editor of the party agricultural newspaper Sel'skaya zhlzn' and chief of the agricultural section of the Party for union-republics, Polyakov joined the Central Party Secretariat and became chief of the new Party Bureau for Agriculture in He delivered major speeches at the Uzbek Party plenum on cotton growing held in3 and at regional agricultural meetings ln the Baltic republics during March and Inolyakov took partonference on problems of soil erosion at the LeninAcademy.
The reorganizations2 have not solved the basic problem of giving more flexibility to decision-making at the farm level, which is so necessary in agriculture. Stifling of initiative at the farm levelajor factor contributing to the unsatisfactory food andsituation.
in. Outlook3
Water-logged fields impeded fall plowing and seeding in the northern European USSR, and the farmers of this areaorkload in the spring3 that was heavier than usual with inadequate supplies of equipment and seed. In many other regions, dry weather favored the early completion of fall fieldwork, however, and the area seeded to winter grain (primarily wheat) increased. All of this Increase was negated by unusually dry conditions in thc fall that prevented germination in some areas and by harsh winter conditions that resulted in some winterkill, especially in the Northeastern Ukraine and in parts of the central black soil zone, the North Caucasus, and the Volga Valley. In general moisture reserves at the end of April in most of the winter grain areas were reasonably good, and the condition of the crop at mid-May was satisfactory.
A record area was seeded to crops this spring. Because of losses of winter groin, however, the net increase in the total Bown areafall and spring sowings) amounted toillion hectares compared with an increase of more thanillion hectaresecause of shortages of seed and equipmentery late spring in the European USSR, the planned extension of the "plow up" campaign did not materialize. The area devoted to crops currently in disfavor, sown grasses and oats, was reduced byillion hectares3 in contrasteductionillion hectareB the area seeded to pulseB increased, this increase wae largely offsetecline in the area sown to the other favored crops, corn ond sugar beets for feed. Shortages of seed, particularly in the Northern European USSR, apparently caused some reduction in the area devoted to potatoes, vegetables, and fiber flax.
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, USSR
ADMINISTRATIVE STRUCTURE OF AGRICULTURE
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Control CommrflM CPSU
REPUBLIC
OBLAST
of Ministaf* USSR
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CholnMB of Ih* SUM
for Agricultural Procurarpant
Mlntory for AartcuHural ProducWon
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'Obll.poftom tor AorttJturo
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Primary Porfy Oroa-Vno-ion
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Soviet Proii tun mad*ureau for AfrKvHUro of Unulot mere tnia bureauM Mmanatiaim alrueture.
Spring bowing was delayedeeks in parts of the European USSR because of unusually cold weather,avorable warm trendafter SO April, and moat of tbe delays in the spring planting of grain crops were overcome by mid-May. May wae warmer and drier than normal throughout the European USSR, but there was some increase in the amount of rainfall ln June, particularly in southern Ukraine, the Central Region, and the Volga Valley.
In contrast to the late spring in the European USSR, much of the "new lands" area of western Siberia and northern Kazakhstanan early spring, and fieldwork began earlier than usual. evere cold spell developed in mid-April, however, and temperatures fell to as low asF, slowing the progress of spring seeding in this ares. Cool weather continued in some regions of the "new lands" with night frosts recorded at the end of May. ry spring, moisture reserves at the end of June were low in most of the "newresenting the possibility of another poor harvest from these areas.
Although the planting of cotton wae practically complete by mid-May, heavy rains in parte of Uzbek and Tadzhik SSR's, the two moet Important cotton-growing republics, destroyed some early plantings and will require some replanting. The development of sugar beets and sunflowers, the sowing of which is generally completed by mid-May, is well behind ecbedulein some areas by as mucheeks. The severe winter also willegative effect on the fruit crop Some vineyards and fruit trees were destroyed by thelow temperatures in the southern regions of European USSR, especially in Moldavia where, for the first time inears, winter temperatures dropped0 F.
At the presentarvest forecast for spring-sown crops is premature because weather subsequent to spring planting will largely determine the fate of theee crops. It should be pointed outanner year for Soviet agriculture, likewise had anbeginning. It appears unlikely, however, that the conditions8 will be duplicated The late springombined with the exceptionally large quantity of fieldwork to be donehorter period, placed considerable pressure on Soviet farmers, and there have been numerous reports in the press concerning the poor quality of spring fieldwork.
The long and severe winter, combined with inadequate supplies of feed to maintain the record herds of livestock, resulted In someslaughtering of animalseduction in yields of milk in theonths From2 through3 the number of swine in the USSR declined because of distress slaughtering.
Slaughtering of swine probably was heaviest la the principal potato-growing areas, particularly in the European USSR. If normal weather conditions prevail for the remainder of the year, supplies of feed should be improved above thosend some increases inof meat and milk can be expected
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Original document.
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