Approved For Release 20 ' ' Ao ifMf i r Hooo100160001-7 ED EYES 0 _ Copy No SC No 01034 63 CENTRAL INTELLIGENCE AGENCY Directora e of Intelligence 26 December 1963 CURRENT INTELLIGENCE MEMORANDUM SUBJECT Soviet Grain Imports Apparently Dictated by Depletion of State Reserves SUMMARY X1 NSA iX6 · Information ges s a ov e s a e gra n reserve -- e ocks held for use as a buffer against any eventuality-may have dropped as low as 7 to 11 million tons With wheat production down some 15 million tons from 1963's mediocre harvest a reserve of this size is clearly inadequate for possible emergencies The Kremlin leadership apparently did not become aware of the extent and implications of the grain crisis until mid-August some months after the Soviets had - ' begun hinting that they would like to tone down the r _ cold war a bit If these earlier hints were prompted--· as we had assumed--by economic difficulties then realization that the grain shortage was really acute may have made this new tack in Soviet policy even more urgent 1 There are several pieces of evidence which indicate that the Soviet leaders did not realize until mid-August how serious the grain situation had become During the visit of Secretary of Agriculture Freeman to the Soviet Union in late July Soviet officials showed no signs at deep concern over the 1963 crop nor did they give any hint that huge imports of wheat WllJl d be 5 August Khrushchev called the harvest not a goo one uen m ifJed his remarks to say that it might be slightly more or slightly less than in 1962u which we believe was a mediocre but not a bad harvest Sometime after the middle of August r i d• vf ·l- 25XE • - Approved For Release 2 _ o s0_ 0 · 8M f7£jf 8fj_f000100160001-7 L n EYES ON '-' the USSR conclu ed an agreement with Canada for the purchase of 300 000 tons of wheat an amount consistent with earlier sa les under a three-year agreement Then around the end of August the Soviets quite unexpectedly reopened these discus sions __and bought more than 6 million tons These 0 --c ievelopments aµd the fact that Khrushchev would 9 _i-Y · surely have participated in making a decision of Jt this importance suggests that the decision was v« made between 17 and 20 August the period Khrushchev spent in Moscow between his Black Sea vacation and his trip to Yugoslavia A deputy chairman of the State Committee for Peaceful Uses of Atomic Energy has described a ucentral co111mittee 11 session presided over by Khrushchev which could only have taken place during this period I ----- 25X6 I 25X6 2 During a visit to Iran in November of this year L Brezhnev the Soviet president stated that a decision had been made to buy wheat abroad rather than to lower reserves He described these reserves as being ample for one or two years In making this statement it is likely that Brezhnev put the best face possible on the situation in which case we might estimate these stocks as equivalent to no more than 18 months' reserve Using this basis and applying what information we have on i llBUil - Y 9 - t ties we judge that Soviet 11 ' ke-1 J grain reserves are probably no more than between » ·- s·· t- k J 1 - · 7 and 11 mil 1 ion tons In fact Mikoyan in t' r t-- J c •s - -·· Washington for President Kennedy's funeral stated p'l J there was almost no grain in stock and that it was 4 1 • 0• « necessary to buy 4-5 million tons from the US pto- vided -p rt pe1r u hip9ing rattes could ·be arranged I r 3 The Soviet leaders probably seriously considered withdrawals from state grain reserves as one solution to their problem However when they finally realized the full eJ tent of the gra tn crtsis they knew provided the foregoing calculations are approximately correct that even by wiping out reserves completely they might not be able to provide adequate supplies -2- EYE TOP y DINi'tR 4 This realization presumably sparked the unprecedented purchases this fall of nearly 10 million tons of wheat and flour and the request to Rumania for a loan of 400 000 tons of wheat The total amount bought and borrowed to date is approximately equal to and may exceed Soviet state grain reserves as estimated from the limited information above -3- R T T a DINAR