Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 1 -' _Confidentia ---J I I -- --- ----- 25X1 _ l - - The Brezhnev Food Program L- i 25X1 An Intelligence Assessment iState Dept review completed -'1 OEPT OF AGRICULTURE I DECLASSIFICATION AND I RELEASE INSIRL JCTIONS ON FILEj Confidential sov 82-10130 September 982 Copy 487 -- - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Unclassified Errata Notice to recipients of CIA Intelligence Assessment The Brezhnev Food Program SOV 82-1013Q September 1982 i ---------- ' The final sentence of the second paragraph on page 7 should read This new investment strategy addresses many of the complaints long made by critics of the agricultural lobby and therefore probably commands stronger support within the leadership than the previous investment policy Unclassified 25X1 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Directorate of Intelligence 25X1 The Brezhnev Food Program 25X1 An Intelligence Assessment 25X1 This assessment was prepared byl _ oviet Economy Division -a_n_d--- - - - - ' Policy Analysis Division Office of Soviet Analysis Comments and queries are welcome and may be directed the Chief Soviet Economv SOY A I D1v1s1on 1 25X1 25X1 25X1 to I 25X1 Confidential sov 82- 0 30 September 982 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 J oJI_folential __ 25X1 25X1 The Brezhnev Food Programl ----------' Key Judgments Information available as of l August 1982 was used in this report President Brezhnev has unveiled an agriculture-related program for the 1980s that I reorganizes the management of food production from the soil to the seller's counter 2 redirects investment resources between the farm sector and its supporting industries 3 revises incentives for farm workers and managers and 4 lists new targets for output of key agricultural commodities and for allocations of inputs The program reflects the leadership's concern over lagging farm output and represents a renewed political commitment to improve the Soviet diet A key goal of the program is to reduce dependence on imported farm products __ 25X 1 Except for its organizational aspects the program is essentially a continuation of past policies Soviet leaders are relying on • A reorganization whose effectiveness is likely to be undermined by bureaucratic confusion and conflict • An investment program that will require large allocations of resources and substantial leadtime • An increase in monetary incentives and price support subsidies that will raise the cost of and demand for food products but will do little or nothing to stimulate production • Large increases in factor productivity to meet output targets for agricultural products L___ ____ 25X 1 We think the production goals of the Food Program are untenable both because of the political and bureaucratic conflicts inherent in the program and because of its failure to come to grips with more fundamental x 25 1 problems These include linking rewards to performance giving farms more freedom to make production decisions and instituting a price system that would elicit the right mix and volume of farm output and inputs I ____ The most promising aspect of the Food Program as currently designed is the increased investment in transportation and storage facilities which could reduce losses substantially However this is a long-term feature that cannot bear results ·until the late 1980s and then only if the political commitment to the program is sustained-a doubtful prospect Already there are signs of controversy in the Soviet press over the organizational aspect of the Food Program and its implementation appears to be encountering difficulties The marked difference in the way Soviet leaders including leading succession candidates have treated organizational matters since iii Confidential sov 82-10130 September 1982 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 C tnfidenJiaJ ---···-·-- _ 25X1 the Program's unveiling suggests that support for the reorganization is thin and that it may become both a vehicle for and a victim of succession maneuvering _ _ _ __ 25X1 We believe that Soviet economic growth will continue to decline and that the Food Program will fail to provide material relief from shortages The regime probably will be forced to continue to import food-how much depends on the size of food production shortfalls the degree to which waste and losses of farm products can be reduced the availability of hard currency port and transportation capacity and the magnitude of per --capita consumption gains the regime feels obligated to support - - - 25X1 Failure of the Food Program could also heighten Soviet interest in buying Western agricultural equipment and technology Recent statements by Soviet diplomats indicating interest in Western agricultural technology suggest that at least some Soviet policymakers are anticipating very slow improvements in agricultural technology from domestic sources Despite any benefits that may accrue from the Food Program we expect that supporting the nation's need for farm products will continue to be an extremely high cost operation absorbing very large shares of the country's labor force investment resources and foreign exchange r--I 25X1 Confidential iv Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 Contents Page Key Judgments 111 Preface vii Introduction Key Features of the Food Program Reorganizing the Agro-Industrial Complex 2 Redirecting Investment Resources 6 Increasing Financial Incentives Will the Food Program Work 8 8 Potential for Jurisdictional Conflict Production Goals Will Not Be Met 9 10 12 Price System Inhibits Success Implications for the 1980s 13 Political Impact Economic Impact 13 I USSR Organizational Structure of the Agro-Industrial Complex as Outlined in the Food Program 4 2 3 Administration of the Talsinskiy RAPO in Latvia 6 USSR State Outlays for Procurement and Processing of Selected Livestock Products 13 Annual Average Production of Selected Agricultural Commodities Output Inputs and Combined Factor Productivity in Agriculture 3 14 -------------------------------------------- Figures ----------- Tables I 2 V Confidential IO Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 Preface Because food constitutes nearly half of the outlays of Soviet households on consumer goods and services the quality of the diet has always been a criterion by which the Soviet population judges its well-being Accordingly upgrading the Soviet diet has been a centerpiece of Brezhnev's consumer welfare policy And indeed much progress was made in the 1960s and early 1970s Since the late 1970s however little improvement has occurred and even this small gain has depended on massive imports of farm products costing $26 billion in hard currency in the period 1979-81 Despite these outlays the per capita availability of meat has stagnated and that of dairy products has declined To stave off a possible rising tide of discontent and falling productivity among the work force Moscow has launched a major new program for the 1980s to improve the production processing and marketing of food products In past campaigns to boost food availability the focus has been on production at the farm level The inclusion of stages in the food chain beyond the farm gate reflects official concern over the prodigious losses of perishable foods as well as the low quality of much of the food that finally reaches the consumer The new campaign to upgrade the entire food production and distribution process is referred to in the Soviet press as the Food Program This intelligence assessment details the key elements of that program and assesses its viability and political and economic implications in the coming decade 25X1 vii Confidential Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential - ----- 25X1 25X1 The Brezhnev Food Prograrni I -- -------------- Introduction President Brezhnev's longstanding commitment to improving the Soviet diet received new impetus with the inauguration of a major agricultural program for the 1980s at the Central Committee plenum on 24 May I 982 First announced by Brezhnev in October I 980 the new Food Program seeks to improve the integration of the entire chain of food productionfrom farm through factory to distribution Brezhnev emphasized that the entire agro-industrial complex must be planned financed and managed as a single whole ---- ----- --_J have been a source of growing political embarrassment for Brezhnev and in the end he may have pushed to have the program unveiled even though many unresolved questions remain i Key Features of the Food Program 25X1 25X1 The Brezhnev Food Program includes three key measures aimed at improving food production and distribution • A reorganization of the administrative structure to promote unified management of farms foodprocessing enterprises transport organizations and the trade network • An investment program to improve the system for handling storing and processing food and to improve housing and living conditions in the countryside • An increase in financial incentives in the form of higher wages bonuses and farm incomes to foster higher output and retention of younger ---- better educated workers on farms I 25X1 Although controversy over this program abounds as indicated by the year and a half of bureaucratic wrangling over its preparation its appearance at this time reflects the growing pressure on Moscow to do something in the face of three consecutive years of harvest shortfalls worsening food shortages disgruntled consumers and rising food import bills Accordingly the stated purpose of the Food Program is to reduce the USSR 's dependence on imports of farm products and to close the growing gap between domestic supply and demand for food ' I These three elements are designed to combat what Brezhnev listed as the major problems with Soviet Debate over the organizational form of the program food supplies 25X1 and general foot-dragging by the ministries involved prevented its unveiling in March 1981 when the 11th • Although the population receives enough calories Five-Year Plan 1981-85 was presented At that time the Soviet diet is inferior to that of other industrialBrezhnev acknowledged that work had only just ized societies including Eastern Europe in terms of begun The program drafters reportedly missed severquality variety and nutritional balance al completion deadlines in the summer and fall of 1981 because of continued unresolved differences • Growth in the population's disposable money inEven in the final weeks before the Central Committee come together with the official policy of maintainwas due to consider the program in late May Soviet ing stable retail prices has caused demand for food officials were saying privately that the organizational to run well ahead of supply Expansion of the urban aspects of the program were still being debated The population and increasing reliance of the rural repeated delays in launching the program could only population on state-provided food have put further pressure on the socialized farm sector ' The contribution of imports to the supply of farm products has more than doubled since 1978-rising from 5 percent to over 12 percent in 198 l _ Purchases during this period have included over 100 million tons of grain and about 2 5 million tons of meat and have cost the USSR about $26 billion in hard currency alone C----- J 25X1 Confidential Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential • Very large losses of farm produce between the field and the retail outlet reflect the lack of incentives and poor coordination among the various organizations involved in food production According to Soviet press reports crop waste and losses during and after harvest amount to 20 percent of total output annually • Low rural living standards make it difficult to attract and keep young workers on farms Increasingly the Soviet agricultural labor force is made up of older less productive workers as young better educated adults migrate to the cities and material inputs will be well below earlier rates Our estimates indicate that growth in combined inputs will average less than l percent per year during the 1980s Although this represents some improvement over recent very low rates of growth it is well below growth posted in the 1970s as a whole The output targets therefore imply a substantial growth in productivity Reorganizing the Agro-Industrial Complex Traditionally in Soviet usage the agro-industrial complex consists of the Ministry of Agriculture ministries providing goods and services to agriculture --------' such as fertilizer pesticides machinery mixed feed In addition to endorsing the measures outlined above repair services roads storage and transportation the Central Committee plenum in May approved a facilities the Ministry of Procurement and ministries series of ambitious production targets for the Food managing the food-processing industries For purposes Program in the 1981-90 period The production goals of the reorganization however Soviet officials have imply that average annual growth in farm output defined the agro-industrial complex more narrowly during the 1980s would have to return to the longto exclude ministries producing fertilizer and machinterm rate achieved during 1951-70-about 4 percent ery for farms food-processing enterprises and mixed per year Growth in the 1970s averaged less than _feed plants 4 -------__ I percent per year 2 1 As the centerpiece of the Food Program the plenum The largest planned increases in output during the approved the creation of agricultural-industrial coorl 980s are those for fruits vegetables meat and dinating bodies at the national and regional levels see eggs-most of which were cited by Brezhnev as being figure 1 Although severely watered down from earliespecially needed to improve the quality of the coner proposals the decision reflects a move in the sumer diet The grain goal is also relatively ambitiou·s direction of interbranch program management long as it must support large increases planned in livestock urged by leading Soviet economists and by Brezhnev inventories and products Table l summarizes the The reorganization brings some components of the goals for the two five-year plan periods in the 1980s as agro-industrial complex together under a single presented in various Food Program documents 3 administrative hierarchy that is responsible for coordinating the entire food production process from farm Although growth in output during the 1980s is slated to retail outlet ----------' to return to the levels of the 19 51-70 period annual increases in plant and equipment and growth in labor • Soviet ministries producing machinery for food production and the C J 2 Avera2e annual rates of growth were derived by incorporating Soviet plan data for agricultural commodities into the CIA index of Soviet agricultural production Growth rates planned for the 1980s are high by world standards According to US Department of Agriculture statistics net farm output in the United States increased by I percent per year during the I 960s and by 1 9 percent per year during the l 970s Indexes prepared by the Food and A2riculture Organization of the United Nations show that world net farm output grew at an average annual rate of 2 4 percent in the 1971-79 period '--7---c-- - _J ' Documents published thus far explaining the Food Program include Brezhnev's report to the 24 May plenum a Summary of the Food Program as approved by· the plenum and six partygovernment decrees ___ -- -- Confidential 25X1 f- 25X1 25X1 25X1 25X1 25X1 USSR Ministry or-Production of Mineral Fertilizers are not represented on the new commission even though proponents of the agro-industrial complex concept had urged that they be represented According to the first deputy chairman of Gosplan industries producing machinery and equipment for agriculture and food processing are included in the Administration for the Complex Planning of Machine Building Producers of chemical inputs to agricultur-e are in the Administration for the Complex Planning of the Raw Materials Branches of Industry and Construction Materials -------------- --- 25X1 25X1 25X1 2 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential Table 1 Annual Average Production of Selected Agricultural Commodities 1971-75 Actual Million metric tons except where noted 1976-80 1981-85 Plan a 1986-90 Plan a 252 5 Plan Actual 181 6 217 5 205 0 240 5 89 8 102 0 82 6 88 0 91 0 76 0 6 0 96 5 7 6 88 7 101 5 0 4 NA 5 3 0 5 6 7 1 4 102 5 7 4 23 0 28 1 32 0 38 0 12 4 7 7 16 9 26 3 15 2 8 9 19 2 9 2 25 0 8 5 14 0 87 4 15 3 95 0 14 8 92 7 17 2 20 2 98 0 105 0 51 4 -0 4 59 5 63 1 72 0 78 5 3 4 1 2 5 3 Crops Grain Potatoes Sugar beets Sunflower seed Soybeans Vegetables Fruits berries and grapes Cotton 2 2 NA Livestock products Meat Milk Eggs billion Net farm output b average annual rate of growth in percent Midpoints of ranges given in plan documents In calculating growth rates midpoints of given ranges were used Net domestic farm output is the sum of net output of crops and livestock valued in 1970 average realized prices a b 25X1 -- -------------- - -------- ' At the national level the Presidium of the USSR Council of Ministers will have a Commission for Questions of the Agro- Industrial Complex made up of the heads of the various organizations included Z N Nuriyev the deputy chairman of the USSR Council of Ministers who has supervised the agroindustrial sector for years with little distinction will head the commission This group does not seem to be a supraministerial organization that the ministries need fear It appears to have no management functions nor will it encroach on Gosplan's planning functions Nuriyev for example will have no control over the budgets of the ministries involved in the Food Program The commission will coordinate the activity of the organizations monitor plan fulfillment for state purchases of farm products deliveries of industrially produced inputs and the output of processed food and conduct preliminary examinations 3 of plans prepared by Gosplan The power to carry out even these functions is still undefined The ultimate power of the commission will depend on the extent to which its decisions are binding on the ministries and whether it is able to mediate disputes between thempowers that have made a similar interbranch coordinating body the Military-Industrial Commission truly effective L___________ 25X1 Union republics will have corresponding commissions The failure of the plenum to specify the powers of these commissions indicates that their functions have yet to be agreed upon ___ _ _ _ _ 25X1 At the oblast kray and autonomous republic level there will be councils of agro-industrial associations They will monitor plan fulfillment and have the Confidential Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential Figure 1 Organizational Structure of the Agro-Industrial Complex as Outlined in the Food Program All-Union Level Commission Presidrum of the USSR Council of Ministers USSR Minister of Agriculture Commission for Questions of the Agro-Industrial Complex USSR Minister of Fruit and Vegetable Farming USSR Minister of Procurement USSR Minister of the Meat and Dairy Industry USSR Minister of the Food Industry USSR Minister of Land Reclamation and Water Resources USSR Minister of Rural Construction Chairman USSR State Committee for the Supply of Production Equipment for Agriculture Chairman USSR State Committee for Forestry Chief USSR Council of Ministers Main Administration of the Microbiological Industry First deputy chairman USSR State Committee for Material-Technical Supply First deputy chairman State Planning Committee Union Republic Level 15 Commissions Presidiums of Union Republic Councils of Ministers Union Republic Commissions - - Union republic counterparts of all-union ministries and for Questions of the committees Agro-Industrial Complex Oblast Kray Autonomous Republic Le 'el 157 Councils a Oblast Kray Autonomous Republic Councils of Agro-Industrial Associations Rayon Le•cl Rayon Agro-Industrial Associations 3 118 RAPOs - - Local organizations belonging to the ministries and state committees included in the ''agro-industrial complex Farms 1 Agricultural research organizations Food-processing plants Storage and transportation facilities Mixed feed plants Construction organizations a Autonomous oblasts within krays are not counted separately in this total - - 25X1 --------- nrr-- Confidential 4 • Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 25X1 authority to pool resources and redistribute them among members of the agro-industrial complex as long as union republic ministries and departments agree Councils at this level can also create interfarm enterprises to produce mixed feed construction materials production equipment and consumer goods -1 Latvia and Georgia have been successful in allocating and organizing existing resources in the rayon and in resolving local-level conflicts and problems Judging by the plenum resolutions the RAPOs to be established nationwide are to function much as the experimental ones have RAPOs will be able to allocate - credit investment and other inputs among farms The Special Position of the RAPO The reorganizawork out plans for farm output based on specified tion carried out at the district rayon level is the most control figures establish intra-association prices for significant and controversial aspect of the structural services and intermediate products develop long-term changes The rayon agro-industrial association plans for specialization and distribution of agricultur RAPO -an innovative form of administration that al output and processing and create centralized funds has been operating for a number of years on an for a broad spectrum of purposes -J experimental basis in Estonia Latvia and Georgia25X1 is now to be adopted nationwide 5 RAPOs are selfSuch a wide-ranging mandate in our view will financing associations that include as members all inevitably produce conflict between the RAPOs and farms agricultural service agencies and processing ministries to whom the individual farms and enterenterprises in a given district As such they cut across prises within the RAPO will also be subordinate We ministerial lines concentrating authority at the local believe that this dual subordination will prove to be level figure 2 6 the most serious obstacle facing the RAPOs and is the lever that factions opposed to the reorganizationThe most striking characteristic of the RAPOs is that notably the Council of Ministers- ould use to scuttle 1 they are organized on a local territorial basis and the whole program I 25X1 theoretically have authority to distribute and redisPolitical Underpinnings Approval of the RAPO tribute resources within their regions-potentially modifying decisions made at higher levels According concept seems primarily due to the lobbying efforts of to press reports the experimental RAPOs in Estonia Georgian party boss Eduard Shevardnadze and to the backing of key party officials in Moscow-agriculture ' The first experimental rayon agro-industrial association was Secretary Mikhail Gorbachev party Secretary Konformed in Vilyandiy Rayon in Estonia in late 1975 The reorganizastantin Chernenko and Brezhnev himself In the tion converted the existing rayon agricultural administration the summer of 1980 Shevardnadze publicly thanked Gorlocal branch of the Ministry of Agriculture into a self-financing association with management authority over the entire food produc- bachev for his interest in the RAPO experiment tion activity in the district The Vilyandiy Rayon association Chernenko however has taken the most active public includes all 12 sovkhozes and 16 kolkhozes in the district with a total of 357 600 hectares as well as the district branch of the state role in promoting the reorganization He probably committee for the supply of equipment to agriculture the kolkhoz seized on the issue as a way of increasing his support construction association a dairy combine a meat-packing combine and a grain milling enterprise A similar association with a broader among regional party officials who generally favor any move toward decentralization of authority In a membership was launched in the Talsinskiy Rayon in Latvia the following year and in the Georgian Abashskiy Rayon in 1977 combative speech at a party gathering in Siberia Fourteen more rayons in Georgia were converted to the new system following the plenum Chernenko lauded the reorganiin early 1981 By the end of the year most of the districts in all zation as a way of overcoming ministerial departmenthree republics had gone over to the system and their leaders had begun to press hard for approval from Moscow for the next stage- talism j 1 1 the establishment of comparable republic-level coordinating bodies Georgia was given the go-ahead in January Also in early 1982 a few RAPOs were beginning to operate in some regions of the Russian Republic • The governing body of the RAPO known as the Rayon Association Council is made up of a chairman who also is the first deputy chairman of the rayon executive committee and as members the local collective farm chairmen state farm directors representatives of the local party organizations and leaders of other enterprises in the RAPO as determined by the rayon Soviet of Peoples Deputies 1 the local legislative body 5 25X1 L _ __ _ _ _ _ _ __ President Brezhnev appears to have pushed for the RAPO concept rather late in the game His speech to the Central Committee plenum in November 1981 contained the first intimation that he viewed the 25X1 25X1 Confidential Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential Figure 2 Administration of the Talsinskiy RAPO in Latvia Rayon Agro-Industrial Association Collective farmsa State farms Interfarm enterprisesb f Agricultural R Dc Service enterprises and organizations Construction of irrigation and drainage facilities 1 General farm construction Supply and repair of agricultural equipment Processing enterprises Meat Starch alcohol Fruit vegetable Milk Mixed feed a Some farms specialize in producing seed b These are organized for a variety of purposes such as production of building materials construction•installation work processing of agricultural output breeding livestock and operating rest homes and sanatoriums c Includes seed breeding experimental f rms and so forth 25X1 587482 9-82 RAPO as the bottom layer of a tiered organizational package-the local counterpart of a national-level interagency body The RAPO was given a big boost in March 1982 when the Presidium of the Supreme Soviet heard a report from the heads of two experimental RAPOs in Georgia and Latvia and endorsed their experiments as a promising form of local management This approval by Brezhnev's legislative apparatus had the effect of preempting any critical review by the USSR Council of Ministers-where opposition to the RAPOs was greatest-and strongly indicated that the RAPOs would be part of the Food Program when it finally appeared I Redirecting lm·estment Resources As in 1970 and 1978 Brezhnev has succeeded in gaining Central Committee approval of agriculture's share of total investments well in advance of the next plan period leaving other civilian claimants to fight over the remaining pieces of the investment pie The 1981-85 Plan allocates 33 to 35 percent of new fixed investment to the agro-industrial complex and the Brezhnev Food Program claims the same share of investment for 1986-90 For purposes of allocating Confidential 6 25X1 ------- Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 25X1 investment resources Soviet planners have adopted the broad definition of the agro-industrial complex Investment totals appear to include allocations for those industries excluded from the definition used for the reorganization - - - - - - - - - - - i The policy over the past 15 years of pouring money into agriculture has been a controversial one It has depended on Brezhnev's strong political backing and thus may be one of the first policies to come under review after his departure During the 1980s however investment resources are to be distributed somewhat differently than in the past to build up what Moscow considers the weak links in the food production chain This new investment strategy addresses many of the complaints long made by the agricultural lobby and therefore probably commands stronger support within the leadership than the previous investment policy i I Industries Producing Inputs for Food-Related Acitivities According to party Secretary Gorbachev investment in sectors producing machinery and equipment for agriculture and food processing will have high priority 7 While capital investment in the entire agro-industrial complex will increase by 30 percent during the l 980s investment in facilities to produce tractors animal husbandry equipment and other agricultural machinery will more than double Investment in industries producing machinery for food processing will triple In addition expanded investments in the chemical industry are targeted to improve the quality of fertilizer delivered to agriculture Agriculture Average annual investment in farm equipment buildings and land reclamation projects in 1981-85 will increase by only 5 percent over I 976-80 This small boost appears inconsistent with the goal of doubling investments in production facilities Apparently this reflects the lag between construction of new plant and equipment for production of farm-related machinery and actual expansion of shipments of new machinery from these new facilities ' M Gorbachev The Food Program and Tasks in Its Implementa- tion Kommunist No 10 1982 pp 6-21 J J Outlays on social overhead projects such as housing and roads for farm communities however will rise by 40 percent I I 25X1 A larger proportion of productive investment than in the past is to be devoted to on-farm food-processing and storage facilities to reduce losses of perishable products Other top-priority investments include outlays for machinery for providing livestock feed and labor-saving machinery Many of the planned projects appear to have little potential for raising crop yields 25X1 The heavy emphasis on investment in rural infrastructure reflects Moscow's desire to improve farm-tomarket transportation and stem the flow of younger workers to urban areas Accordingly 176 million square meters of rural housing are scheduled to be built in 1981-85 and 205 million in 1986-90 compared with 149 million actually built in I 976-80 This large increase comes at the expense of urban housing as total housing construction is not slated to increase As in the past large increases are planned in the provision of consumer services and in health care facilities I 25X1 In our judgment the chief benefit from enhanced rural investment will come from expanding the rural road system which is essential to reducing very large losses in transportation Although performance in 25X 1 fulfilling plans for roadbuilding is poor Moscow intends in 1981-85 to commission 54 000 kilometers of general purpose roads linking farm centers with rayon centers and 57 000 kilometers of hard-surfaced on-farm roads 8 The 1986-90 targets are to be 40 to 60 1 percent higher 25X1 Funds for other farm-sector investments are to remain at current levels or be reduced to support investment in priority areas Soviet plan documents indicate that new starts in land reclamation projects irrigation and drainage will be fewer in number in the 1980s They 'A total of 57 000 kilometers of new on-farm roads is an average of only 1 2 kilometers for each of the 47 000 state and collective farms ----- 25X1 25X1 7 Confidential Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential will however continue to claim about one quarter of total investment as the campaign continues to bring on stream the large expensive projects started in the I 970s 1 _ _ _ _ _ _ _J kind in order to encourage livestock raising by private producers and to reduce demand in state retail food stores Moscow apparently recognizes that payments in the form of scarce or expensive food products often provide greater incentives than money payments that cannot be spent on the goods and services that the population wants According to a Soviet periodical capital investment in new facilities for raising livestock and poultry in I 981-85 will be only 80 percent of the 1976-80 level To save money outlays for reequipping and reconNew graduates in the fields of agronomy and animal structing existing enterprises are being increased CJ husbandry will receive three years of free housing upon accepting a farm job In addition 50 percent of Food-Processing and Transportation Facilities A the passenger cars and 30 percent of the motorcycles major investment goal of the Food Program is to designated for sale in rural areas are to be earmarked upgrade capital stock in food processing long a lowfor priority sale to young professionals with agriculpriority claimant on resources According to Gorbatural training I chev the number of processing enterprises including well-equipped storage facilities will be increased and To raise farm income and production higher procurelocated near farms to minimize transportation costs ment prices for cattle hogs milk grain sugar beets To reduce shipping losses supplies of refrigerator potatoes vegetables and other products will go into trucks milk tankers cattle trailers and other special- effect on I January 1983 At the same time prices ized transportation equipment are to be increased paid by farms for equipment fertilizer and fuel will be lowered The financial position of farms will also Increasing Financial Incentives be improved by grants from the state budget to In addition to larger investment in rural housing and finance investment projects and by writeoffs and other facilities the Food Program contains other deferments of farm debt In July V Garbuzov the measures to keep the agricultural labor force in place Minister of Finance wrote that approximately 10 and to attract well-trained technicians to farm jobs percent of the 112 billion rubles of farm debt will be To this end the program calls for a further reduction written off and another 10 percent will be deferred 10 in urban-rural income differences Farm wages will Some additional cash grants will be earmarked for continue to increase faster than those of other workbailing out farms now operating at a loss 1 ers 9 Managers professionals semiprofessionals and --- livestock workers are to receive additional pay raises and bonuses -Will the Food Program Work • The Food Program stipulates that agricultural workers will receive a larger share of their wages in products primarily grain fruit and vegetables We believe that Moscow is reemphasizing payments in 'According to our estimates average agricultural incomes including income in kind in 1950 were roughly half of average nonagricultural incomes By 1977 this share had risen to over 80 percent This implied closing of the income gap to a point comparable to the rural-urban differential existing in developed societies in the West is somewhat misleading Compared with urban centers rural areas have poor transportation and housing inadequate health education and entertainment facilities and a skimpy supply of consumer goods Therefore a quality of life index that reflected both household incomes and the availability of goods and services would show a spread of much more than 20 percent between farm and nonfarm residents In addition this difference would be much larger than those that exist in the developed West Confidential 25X1 25X1 25X1 25X1 25X1 25X1 25X1 Although Soviet officials have said that Moscow expects positive results from the Food Program within two or three years we judge this expectation as highly unrealistic Too much planning remains to be done before the program gets off the ground let alone shows results The detailed instructions and regulations needed to reorganize the agro-industrial complex have not yet been formulated Moreover the structure and authority of key organizational bodies at the regional and republic level have not been clarified •• Finansy No 7 1982 p 11 A debt of 112 billio·n rubles is over three times the current annual investment in agriculture 25X1 25X1 8 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 There is continuing disagreement over what their functions should be The investment program will take time to implement-especially because the original plans for 1981-85 have already been set in motion-and even more time to add substantially to the stock of plant and equipment Financial incentives will have little impact without a concomitant increase in consumer goods and services which in turn will be slow to materialize In short the Food Program is a long-term bet- me for the late 1980s and early I 990s-rather than a quick fix for the next few years ------- ---- Even in the long run however the Food Program stands small chance of achieving its central goals a to reduce the USSR's dependence on imports of foodstuffs and b to close the widening gap between domestic supply and demand for food First of all the reorganization is likely to be plagued by political and bureaucratic conflict that will inhibit its effectiveness Second the goals for output of farm products are inconsistent with the targets for resource inputs implying inordinately heavy reliance on gains in productivity Finally the program fails to come to grips with one of the major shortcomings of the economic system-administratively set prices that bear no resemblance to resource costs-a shortcoming that will tend to erode the potential gains from higher wages bonuses or investment resources i Potential for Jurisdictional Conflict Competition between the central ministries and the territorial organizations for authority over food production may lead in many places to a reorganization in name only and will almost certainly weaken the effectiveness of RAPOs in operation They will not work equally well everywhere Success depends heavily on the ability of management at the local level We think that the experimental RAPOs have succeeded largely because of the enthusiastic backing of republic officials talented management and favorable economic conditions--characteristics that are not widespread in the USSR I ------- The ministries have strongly opposed the territorial approach to agro-industrial integration Since Brezhnev scrapped the regional economic councils sovnarkhozy in 1964 and restored the central ministries the latter have jealously guarded their rights to plan and 9 administer capital investment and to distribute material supplies against the claims of regional authorities The influence of the ministries is reflected in the diluted nature of the authority of the RAPOs as described in the plenum resolutions For example while RAPOs were given full authority over plans for farms they can only examine the plans of other member enterprises and organizations that play a crucial role in providing the RAPO with inputs and services RAPOs have wide discretion in allocating inputs among farms but can reallocate only IO to 15 percent of the resources of other member enterprises and then only with the latter's consent We believe that these restrictions will limit the effectiveness of the RAPOs in coordinating all phases of the food production process RAPOs will have particular difficulty in extracting emergency supplies from or remedying late deliveries by ministerial-level organizations Because of dual subordination to the ministries and to the RAPOs individual farms and enterprises within the RAPO will have to carry out directions from their parent ministries that may well conflict with RAPO plans Restraints on RAPO authority are shown below 25X1 Authority Limitation To determine plans for output on the basis of specified control figures with their consent To redistribute 10 to 15 percent of material resources between RAPO enterprises To establish prices on the basis of standard norms To redistribute capital investment within the RAPO by agreement with higher departmental organs To create centralized funds and determine their use on the basis of the relevant normative documents 25X1 We expect the implementation of the RAPO concept to be delayed considerably and the concept may be further watered down if not scrapped altogether A special commission which was established to draft legislation further defining the powers of the regional agro-industrial bodies as well as the coordinating commission at the national level has completed its work according to a longtime Yugoslav correspondent in Moscow But the various ministries affected are Confidential 25X1 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 reportedly irate over the results and are arguing that the proposed legislation gives regional organs excessive powers at their expense The draft legislation is to be approved by the USSR Supreme Soviet and continued debate on the question may account for the failure to hold the usual summer session of the Supreme Soviet this year Table 2 Output Inputs and Combined Factor Productivity in Agriculture average annual rates of growth Percent Net Farm Output• Combined Inputs b 1951-60 4 6 2 6 Many Soviet economists who originally supported the 1961-70 3 0 2 0 l 0 RAPO experiment as a mechanism for introducing 1971-75 l 6 2 l -0 5 ------ economic reforms into Soviet agriculture are also beginning to have second thoughts Although they once believed the RAPOs would force a relaxation in centrally set prices and planned procurements in recent newspaper and journal articles they have begun to warn that unless the RAPOs and republic-level bodies are given wide discretion in making investment decisions they will become just additional bureaucratic layers Already Embassy conversations with local officials indicate that the scheme is being met with bewilderment apathy or outright hostility in some places In communities where there is little commitment to making the system work local officials when faced with conflicts or problems almost certainly will revert to old ways of administration Factor Productivity b 2 0 1976-80 0 2 0 6 -0 4 l 981 85 plan 1986-90 plan 4 7 0 9 3 8 C 3 1 0 7 2 4 C In order to dampen the effect of wide cyclical swings in year-toyear output average annual rates of growth were computed by relating the three-year average for the terminal year to the threeyear average for the initial year except for the plan periods Data are from the CIA index of net agricultural production b Includes labor fixed capital buildings structures and machinery and equipment land materials purchased from outside agriculture fuels and lubricants electric power fertilizer some processed feeds and current repair of machinery and buildings and livestock herds The several inputs are aggregated into a geometric production function of the Cobb-Douglas type in which each input is weighted by its relative contribution to total output as estimated by its share of the value of agricultural output c Growth of factor productivity r zquired to meet output goals given planned allocation of inputs a 25X1 Production Goals Will Not Be Met Our estimates shown in table 2 indicate that output targets are overly ambitious given planned growth of inputs and past trends in productivity growth To achieve production goals for the 1980s would require productivity gains well above those posted in the 1950s · · i ___________________ __j The productivity gains implied by the Food Program goals will not materialize in our judgment in part because the actual benefits from key measures in the program will fall far short of potential For example the RAPOs theoretically could reduce losses through a more rational distribution of machinery fertilizer seed and the like among farms By trying to appease territorial interest groups without offending central ministerial organizations however the organizational ··---·-------·-·---- - - - - - - - - - - - - - - --- - - - - - - - - - - - - - - - - 25X1 features of the food program are likely to result in much bureaucratic infighting with few gains for agricu ture j ------ 25X1 25X1 In addition incentives to boost worker productivity are simply too little and too late More money chasing the same quantity and quality of goods and services is no incentive for better performance Although some of the wage and bonus increases are to be in the form of farm products the amounts involved are relatively small and dependent on overfulfillment of ambitious plans If the past is any guide routine boosting of wages will not provide the incentives necessary to achieve the called-for productivity gains Despite a 50-percent increase in the income of farm workers between 1970 and 1981 for example rates of growth of labor productivity continued to decline The key to --- ·--------- -- - - - - 25X1 Confidential 10 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 25X1 example only 22 percent of the rural state housing was connected with sewer lines and only 26 percent had central heat In addition the very poor system of rural roads makes timely marketing of farm produce '-------- both difficult and expensive Less than 20 percent of Finally the investment program for the agro-industri- farms have hard-surfaced roads 13 Most rural roads al complex may not be funded fully compounding the furthermore are impassable for much of the year '- --_ problem of too few inputs to meet output goals In addition to the uncertainties in the Food Program's Annual increments to the country's total investment specific measures we believe that planned production resources are declining at the same time that needs for new investment are rising throughout the econoincrements will not be forthcoming in part because improvements in farm-related technology are occurmy Thus the Food Program's claim on investment may be whittled down later in the decade when ring too slowly lmprovement in on-farm technology is problems in other sectors of the economy become needed not only to raise yields but also to soften the more pressing At a minimum squabbles among the impact of weather fluctuations-a primary factor whole range of economic ministries as well as the determining year-to-year crop sizes in the USSR But conflicts we expect between the branch ministries and the Soviets lag behind the West across the board in the territorial agro-industrial organs are likely to the use of modern crop varieties in the effectiveness result in lengthy delays and fragmentation of investof pest control and in the application of efficient 25X1 ment projects i I tillage irrigation and harvesting techniques The Food Program explicitly calls for a I 2- to 15-percent We believe that industries supporting agriculture with increase in crop output per unit of chemical input machinery and equipment probably stand the best In the case of grain for example each ton of fertilizer chance of receiving their planned investment allocayields I to 1 2 tons of grain With present technology this response rate will drop as additional fertilizer is tions because they are part of the heavy industrial used To meet plans for raising response rates diminsector Less certain are the investment plans for development of the rural areas Past initiatives to ishing returns to additional fertilizer use must be increase investment in rural infrastructure have tend- more than offset by technical improvements such as ed to peter out when planners have had to turn to better quality fertilizer and more sophisticated fertilmore immediate problems caused by production izer application equipment and techniques We estishortfalls Rural-urban disparities in living conditions mate that past rates of technological improvement are therefore are unlikely to narrow quickly suggesting likely to continue with the result that Soviet farmers that the outmigration of younger more able rural will find it difficult even to maintain response rates at workers will continue 12 i present levels In addition targets set by the Food ----- Program for increasing returns to livestock feed are Nonetheless the state of Soviet rural communities is not likely to be met 1 l L__---- · 25X1 so backward that almost any increased investment in this area will have some positive long-run impact For lndeed adverse weather conditions have already jeopexample urban housing generally comes equipped ardized the farm output targets for I 981-85 Because with electricity indoor plumbing hot water and of the poor crop year in l 98 l growth in net farm central heat while in rural areas the typical privately output would have to average over 6 percent per year owned one-story wooden home has electricity but in 1982-85 to meet plan goals The Soviet agricultural lacks indoor plumbing and central heat According to sector has not been able to sustain a growth rate this Soviet statistics in the Russian Republic in 1980 for high since the late 1950s when growth in output was meaningful wage increases is to link them to performance but according to the Food Program relatively few agricultural workers will be covered by wage systems of this kind I Between 1970 and 1980 the rural population declined by 7 4 million Soviet census data show moreover that young adults compose the major group of outmigrants L__ _ _ _ _ Planirovaniye i uchet v sel'skokhozyaystvennykh predpriyatiyakh No I I 982 p 5 11 Confidential 25X1 25X1 25X1 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential spurred by a 20-percent increase in sown area Another poor year in 1982 as now seems likely would push the growth rate required to meet 1985 targets even higher Price System Inhibits Success Perhaps the greatest impediment to success of the Food Program is the Soviet price system which encourages the wrong mix and volume of both farm output and inputs Prices paid for agricultural inputs and farm output do not reflect relative resource costs and therefore cannot provide adequate signals and incentives for efficient use of the resources committed to agriculture and the sectors supporting it 1' The Food Program docs not come to grips with this problem Although some decentralization such as the RAPO concept is needed to relate rewards to performance giving greater decisionmaking autonomy to the farms or the RAPOs will be ineffective until the USSR finds a way of establishing and changing prices that will reflect relative resource costs and elicit the production responses that satisfy the goals of the Soviet leadership ______ I _____ Procurement Prices Average production costs and the procurement prices based on them do not include returns to land or to capital Farms find crop production which uses more land than does livestock production to be relatively more profitable than production of meat milk and eggs Although Soviet planners are trying to raise the share of livestock products in the consumer diet pricing policy throughout the 1970s has conflicted with this goal Grain procurement prices between 1970 and 1980 for example increased more than twice as fast as procurement prices for meat while the cost of producing meat rose about 20 percent faster than the cost of producing grain Meanwhile price bonuses paid for procurements above specified levels increase the instability of farm income n a good crop year farm income benefits from larger quantities sold and from procurement price bonuses In bad years income falls sharply because of smaller quantities sold and the absence of price bonuses ------ - Reducing income inequality through differentiated procurement prices subsidies and debt forgiveness as stipulated in the Food Program also leads to inefficient use of inputs High-cost producers in poorer areas who receive higher procurement prices tend to be allocated more inputs such as fertilizer even though crop response to fertilizer would be higher elsewhere As a result of inappropriate output and input prices and the lack of appropriate success indicators the regime must maintain central control of agriculture and hand down procurement plans in order to achieve the desired product mix Growth in livestock production during the I 970s for example has been chiefly the result of output plans passed down to farms along with incentives to fulfill them If farms made production decisions according to existing prices output of some important commodity such as potatoes might decline drastically or inputs such as agricultural chemicals would be used mainly close to factories -producing them to minimize transportation costs ______ _ Retail Prices One of the hallmarks of the Soviet system has been stability in retail prices for food A loaf of bread for example costs the same today as it did in the mid- I 950s Continued stability of retail prices in the face of increased prices paid to farms however means that more budget revenue must be - raised to cover the difference figure 3 Under the The system of cost-plus pricing with its regional Brezhnev regime state subsidies for agricultural comdifferentiation also pays the highest prices to produc- modities have been growing rapidly The original ers whose costs are highest As a result regional 1981-85 plan called for a 30-percent increase in specialization along least-cost lines is not carried out subsidies and the new Food Program piles additional to the degree it would be if prices were set differently increases of IO to 15 percent on top of that Beginning in 1983 16 billion rubles will be added to the See for example D Gale Johnson Agricultural Organization originally planned subsidy bill because of increased and Management in the Soviet Union Change and Constancy The Soviet Economy 10 the Year 2000 National Council for Soviet procurement prices and additional price differentials 25X1 25X1 L 25X1 25X1 25X1 25X1 and East European Research November I 981 ' 25X1 Confidential 12 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential Figure 3 USSR State Outlays for Procurement and Processing of Selected Livestock Products Rubles per kilogram 10 8 markets high levels of waste and consumer dissatisfaction Low retail prices also allow the population to accumulate funds that are saved or used to support the second economy thus reducing regime control over resources Moreover the longer retail prices for food remain relatively low the harder it will be to raise them without negative popular reaction Soviet planners are thus caught between their unwillingness to raise retail prices and the impact of rising procurement prices and subsidies L___--- 25X1 Implications for the 1980s 6 4 s 1980 3 83 Beef D D Because of the conflicts and inconsistencies inherent in the Food Program as currently outlined we judge that it will have little positive impact on the economic well-being of the population in the near term and will provide only marginal returns in the late 1980s if it survives that long Of more immediate concern may be its impact on the political rivalries that are emerging in Moscow's succession sweepstakes __ _ 80 83 80 Mutton 83 Pork 80 83 Butter Subsidy Retail price • Retail prices covered less than half of state ruble outlay per kiloaram for procurement markctini and proccsaini of beef and mutton in 1980 Source FIM11 1y SSSR Number 7 1982 projections pQiC 10 FiiUres for 1983 are official Soviet 587483 9-82 for farms operating at a loss We estimate that by 1985 agricultural subsidies will be almost 60 billion rubles compared with 33 billion rubles in 1981 Revenues could be raised to cover price differences by increasing taxes for example or by reducing funds for nonagricultural activities Whatever means are chosen there is likely to be some impact on nonagricultural sectors of the economy Retail prices set so that it is cheaper to feed bread to livestock than to feed grain for example tend to distort decisionmaking and create disequilibrium in many consumer goods ma·rkets causing lines black 13 25X1 Political Impact The marked difference in the way Soviet leaders have treated the organizational aspects of the Food Program in their speeches since the plenum suggests that battle lines are forming over its implementation Of the handful of leading officials who have spoken out on the issue so far only those who are closely associated with the reorganization-such as Cher- 25X1 nenko Georgian Party boss Shevardnadze and the new agro-industrial commission head Nuriyev-have dealt with it in strongly positive terms Even the party secretary for agriculture Gorbachev who evidently supported the Georgian RAPO experiment early on and presumably had a major hand in drafting the program only mentioned the reorganization briefly in his recent article and stressed the less controversial aspects of the Food Program ' 5 '25X1 L____ _ _ _ _ _ The debate over the Food Program appears moreover to involve more than the proper organizational structure for agriculture The emergence of the 25X1 RAPO concept-which holds out the potential for a significant decentralization of management authority '' Gorbachev op cit 25X1 - Confidential Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential to the local level-seems to have revived the old debate over Khrushchev's regional economic councils For instance in an article on the eve of the May plenum Shevardnadze hinted strongly that the territorial principle of economic organization should be expanded beyond agriculture to embrace other sectors of the economy Regional party officials many of whom are on the Central Committee were the most enthusiastic supporters of the sovnarkhozy and have been critical of the expansion of powers of the central state apparatus during the Brezhnev era Although Chernenko's endorsement of the RAPO experiment may have worked to his advantage in gaining the support of some regional leaders it places him in the center of a potentially burgeoning controversy and could prove a liability if growth in farm output fails to accelerate and if the implementation process proves as disruptive as now seems likely The entrance of Politburo member Yuriy Andropov into the succession race may further politicize the debate Andropov avoided any mention of Brezhnev's Food Program in a speech earlier this spring and there is some tentative evidence that Andropov supports an alternative approach that combines strong central planning and direction of the economy and greater managerial autonomy at the enterprise level Andropov's one-time aide Fedor Burlatskiy set out this view in a March 1982 Novy Mir article In an analysis ostensibly directed at China but relevant to the current Soviet scene Burlatskiy a longtime advocate of political and economic reform criticized those who would give the provinces greater freedom of action They do not realize he argued that this would leave the bureaucratic nature of the system unchanged The remark appeared to be a direct criticism of supporters of the RAPO and an indication that the two leading contenders to succeed Brezhnev may be on opposite sides of this issue Thus the Food Program may become both a vehicle for and a victim of succession maneuvering Economic Impact We believe that the Food Program will do little to raise agricultural output and to reduce waste Because the Food Program contains no provisions that are likely to increase the rate of on-farm technical progress or to improve the price system agricultural output in the 1980s will depend heavily on weather conditions which may be no better than the long-term climatic norm 16 Some production gains are likely but we consider output goals of the Food Program to be out of reach In our judgment storage and transportation of food products will improve somewhat as the result of the investment program and provide small gains in reducing waste Major reductions in waste will not occur because organizational aspects of the Food Program will not be implemented sufficiently to provide enough incentive throughout the food production chain to upgrade product quality The Food Program moreover will have no impact on the waste that very low retail food prices encourage The secondary effects of a Food Program that fails to provide more food may be highly significant during a decade of increasing shortages and rising tensions As Soviet economic growth continues to decline and the Food Program fails to provide material relief from shortages the regime will find it more difficult to cope with rising expectations especially among the younger and more restive elements of the population Today more than 60 percent of the Soviet population is under 40 years of age and these citizens having grown accustomed to the steady increases in living standards that prevailed for nearly three decades following World War II are less stoic and more vocal than their forebears about the system's shortcomings '' 25X1 25X1 25X1 25X1 Man-in-the-street interviews conducted by US Embassy officers in Moscow suggest that Soviet citizens are worried about higher food prices doubt Moscow's ability to increase productivity in agriculture and share the opinion that RAPOs are simply another layer of bureaucracy that would not raise output A review of climate trends since 1960 suggests that a major impetus to growth in farm output between the early I 960s and the mid-l 970s was the result of unusually favorable weather A return during the 1980s to more normal conditions which are taken to reflect average weather over a 30-year period would mean weather less favorable than that of the earlier period but somewhat better than the poor years of 1979-82 I l See for example Gail Lapidus Soviet Society in the 1980s paper prepared for the Georgetown Center for Strate g ic_a_nd'--------- International Studies Washington D C July 1982 _ _ _ 25X1 25X1 J 25X1 Confidential 14 Approved For Release 2008 09 02 CIA-RDP83T00853R000100140002-9 Confidential 25X1 25X1 ---------- --------------------------------- Embassy officers concluded that the skepticism with which Soviet citizens traditionally greet partygovernment decrees seemed particularly strong in this case reflecting public sensitivity over dismal food supplies -------- With the Solidarity episode fresh in their minds we believe present Soviet leaders will be even more I inclined to appease the beleaguered consumer The L_ quality of the diet remains the key element in this approach and if the Food Program founders the As presently outlined the Food Program guarantees regime will be forced to pursue more familiar strate- that Soviet agriculture will continue to be an extremegies to keep domestic food shortages manageable I I ly high cost operation absorbing very large shares of the country's labor force and investment resources For example sizable food imports probably will con- Other developed nations support and subsidize expentinue in the 1980s The exact size of Soviet food sive agricultural sectors but not nearly to the extent imports however and the share of per capita conthat the USSR does Soviet leaders moreover face sumption gains coming from imports will depend on the constraints of rising costs on every side-in energy the magnitude of food production the degree to which and industry as well as in agriculture Unlike other countries the Soviet Union has not been able to bring domestic farm waste and losses can be reduced and the magnitude of per capita consumption gains the about the technical progress that would offset the regime feels obligated to support Shortages of hard diminishing returns encountered in its capitalcurrency will be a continuing constraint forcing the intensive kind of development j' - - - - - - - - - 25X1 leadership to choose between keeping consumer grumbling in a tolerable range and maintaining nonagricul25X1 tural imports I Failure of the Food Program to produce the results promised could also heighten Soviet interest in purchases of Western agricultural equipment and technology Such purchases have been a very small share of hard currency trade in technology reflecting agriculture's low priority as a claimant on hard currency imports of machinery Recent signs of interest in Western agricultural technology suggest that at least some Soviet policymakers are anticipating only slow improvements in agricultural technology from domestic sources 25X1 25X1 25X1 I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __J · 15 Confidential Approved I entiat Confid Confidential For Release 2008 09 02 CIA-RDP83T00853R000100140002-9