Is Taiwan the Next Hong Kong?
China Tests the Limits of Impunity
Moscow again is buying American grain, in spite of the resentment which undoubtedly has remained after the partial embargo of January 1980. Moscow simply cannot help but continue buying great quantities of grain, while the United States remains the biggest producer and exporter of grain, and in addition a less expensive supplier than most others. About 20 years ago such a situation was unthinkable. It was only in 1963-64 that the Soviet Union for the first time after World War II contracted for big grain purchases in the United States, and only in 1972 that it became a regular buyer of increasing quantities. It is a fact that by now the Soviet Union produces 69 percent more grain than it did at that time (five-year average of 1976-80 compared to 1956-60), while its population in 1980 was only 23 percent more than in 1960.1 And yet it has turned from a net exporter of grain into a net importer.
What has changed during these two decades? How is it possible that the Soviet Union has almost exactly the same area of arable and permanent crop land per head of the population as has the United States, namely 0.89 hectares (2.2 acres), and cannot feed its population adequately, whereas U.S. agriculture not only supplies the population with one of the richest diets in the world but in addition supplies more food for export than any other country?
To attribute this contrast exclusively to the inefficiencies of the Soviet system would be as much a misleading simplification as to say that disadvantages of climate and soil are the sole explanation; there can hardly be doubt that neither the sociopolitical system nor nature alone can be held responsible. Simply, it is futile to try to quantify neatly one or the other kind of factor, if only because they are interrelated and often enhance each other.
More meaningful is the question: What can be expected from Soviet agriculture under the given circumstances for the foreseeable future of, say, the next five or more years? A closer look at the specific difficulties of the present helps us to arrive at a balanced evaluation from this point of view and-of special interest to the United States-to assess the likelihood of Moscow's remaining one of the biggest customers for American grain.
First of all, one has to abandon a possible misconception that the Soviet consumer goes hungry. If there are regions or social groups in the U.S.S.R. whose people eat less than a fully adequate diet, their proportion nowadays-as distinct from the 1950s-surely is not greater than in most other countries of a comparable size and stage of development. In terms of calories, the average Soviet citizen consumes as much per head and per year as the average West European, and only very slightly less than the North American. He gets significantly fewer calories of animal origin than his West European counterpart, it is true, not to speak of the North American, but the share of animal products in total caloric consumption-27 percent according to Food and Agriculture Organization (FAO) data for 1975-77-still is up to almost all physiological needs, although the supply of proteins of animal origin is deficient in supplying certain essential amino acids. (That share was only 22 percent during 1961-65.) It is not the physiological needs which remain unfulfilled, but the increased demand mainly for animal products and also for other more refined food.
For the most part, this demand is generated by rising income as a consequence of industrialization, urbanization and an economic and social policy which has been forced, for a number of reasons, to take into account the population's aspirations for a better remuneration of their toil. People's needs and aspirations are not the same, but sometimes the latter may be more compelling for the politician. And the aspirations have risen much faster than population numbers. The rise is enhanced by the fact that the part of Soviet industry producing consumer goods does not meet the demand for such goods in assortment and quality, although partly in quantities (some of which remain unsold), and that the services sector equally is not up to the increasing and more refined demand.
For these reasons, and because in absolute terms Soviet average incomes are still low compared to those of Western countries, the income elasticity of demand for the better food is unusually high in the U.S.S.R. Although a reliable calculation is not possible in a "market" with limited choices for the consumer, some put this elasticity at a coefficient of 0.8-that is, for every additional one percent of income, the Soviet citizen wishes to increase his expenditure for the better kinds of food by 0.8 percent.2 According to the official Soviet statistics, total monetary wage incomes per head of the population (including the collective farmers) had risen by 207 percent (i.e., more than threefold) by 1980 as compared to 1960, and the population number by 24 percent. Even after the income increase is adjusted for hidden inflation, these figures suggest that the overall demand for better food must have risen close to threefold since 1960.
Meat being in higher demand than food in general, the demand for the former must have more than trebled. During 1961-80, meat output has risen 73 percent (milk output 47 percent, eggs 147 percent). This expansion is far less than that of demand, even if it is admitted that the latter's calculation is rather crude. Total feed supplies have increased by 43 percent since 1965 (for that year a figure is available), and by a roughly estimated 60 to 70 percent since 1960.3 This includes feedstuff imports, without which the increase of feed supplies would have been some ten percentage points less. Taking into account the population increase on the one hand, and the declining direct human consumption of grain per head on the other hand, one finds that the growing grain output was practically all used for feed.
The underlying data are too crude to reach more precise conclusions, but they demonstrate clearly enough why the demand/supply situation for meat and other animal products has deteriorated so much since 1960, when the situation was already tight. There was appreciable improvement after Stalin's death. The stagnation applies to the later part of the period since then.
It is a striking fact that the above figures do not reveal a marked improvement in feed conversion ratios. The change is even less if one uses the separately published COMECON (or CMEA) statistical annual, covering the whole Soviet economic bloc; this shows, for the Soviet Union, gross total production in 1980 in the "livestock sector" only 60 percent more than in 1960, instead of the 73 percent increase reflected in Soviet meat statistics.4 (As livestock production was down three percent in 1980, one arrives at a slightly better picture for 1965-79.) In other words, Soviet livestock seems to need almost as much feed per unit of output as it needed 20 years ago. This is in striking contrast to what can be observed in Western agriculture, where American hogs in 1960 ate 4.2 pounds of feed units for gaining one pound in live weight, while by 1980, due to improved feeding methods, they needed only 3.85 pounds; for beef cattle, the figures (roughage included) were 9.1 pounds and 7.1 pounds respectively. For poultry these figures were even more spectacular: 4 pounds in 1960, 2 pounds in 1980. The improvement was similar in all Western countries.
A few published Soviet data on feed conversion reveal an amazingly unfavorable ratio. There was a definite improvement during the first years after Nikita Khrushchev's removal (October 1964), but since then the ratios have deteriorated again, except for slow improvement in pig feeding.
FEED CONVERSION RATIOS OF SOVIET LIVESTOCK ON COLLECTIVE AND
(Oat units consumed per unit of output or gain in live weight)
average 1962-65 average 1966-70 1979*
Milk (output) 1.6 1.4 1.5
Cattle 12.2 11.4 13.1
Pigs 11.9 9.4 9.1
* 1979 data include interfarm enterprises.
SOURCES: Sel'skoe khoziaistvo SSSR, Moscow 1971, p. 344, and Vestnik Statistiki, no. 9, 1980, p. 79.
These data require some adjustment in order to arrive at realistic comparisons with U.S. or Western data.5 After such an adjustment, the above 1 to 9.1 ratio that obtained for pigs in the Soviet Union in 1979 may come close to a 1 to 7 corn ratio under the statistical methods used in the West, and with some proteinic feedstuffs being added to the ratio. Even so, the feed conversion ratio for pigs is almost double those of farms in the Western highly industrialized countries. In other words, for producing an additional 100 pounds of pork (live weight), Moscow has to produce or import not 350 or 400 pounds of corn, as Japan or West Germany have to, but up to 700 pounds and some protein feed in addition. With Western feed conversion ratios, Soviet grain imports could be roughly halved! True, the U.S.S.R. also imports great quantities of wheat, but essentially it imports feed grains, as the imported wheat merely substitutes for low-grade Soviet wheat used for feed.
There are several reasons for this poor Soviet conversion ratio. First of all, the Soviet Union lacks protein feed. With slowly improving herds, it becomes more necessary than before to supply adequate quantities of proteinic feedstuff for bringing the biological potential of the animals to bear. Moreover, the availability of protein-rich forage and dry roughage has stagnated since 1965 (and very likely also before, but there are no earlier data), while the share of grain in total feed supplies (in oat units) has risen from 22 percent in 1965 to 30 to 31 percent during 1978-80. In absolute terms, the quantity of grain fed has more than doubled during the same 15 years.
To compensate for the declining percentage of forage and dry roughage and increased quantities of grain fed, protein additives should be more than doubled. It is therefore not surprising that Soviet exports of oilseed, meal and cakes have practically ceased altogether, and imports of these commodities have greatly expanded, especially so as fish meal has become a rare commodity. Soviet oilseed imports jumped from an annual average of 50,000 metric tons in 1966-69 to 768,000 metric tons in 1973 and 1.3 million metric tons by 1979.6
Second, among other factors pressing on the feed conversion ratio, the state of the premises for livestock on collective and state farms has to be mentioned. Many do not really protect from the winter cold that prevails in most of the country. So during part of the year the animals utilize feed for keeping up their body temperature rather than for gaining in weight.
Third, feed supplies on farms vary in quantity and quality, depending on irregular supplies from the state-owned mixed feed industry and transport system and on the frequent shortage of on-farm resources. Thus, Soviet animals receive less feed, and of lower quality, per head and per year than their Western counterparts, but consume more per unit of output.
Fourth, many of the animals are of mediocre or inferior breed, i.e., have a low productivity potential. Under these circumstances, a Soviet hog takes eight to ten months, in some cases more than a year, to get finished for slaughter, and not five to six months as on a good Western farm. In 1980 Soviet cattle were delivered for slaughter at an average weight of 350 kg (772 pounds)-361 kg for the best year, 1978-as compared to 1,000 to 1,100 pounds for an American beef steer. Soviet cows yield 2,200 to 2,300 kg (4,850 to 5,070 pounds) of milk per year, as compared to an average of 5,386 kg (11,875 pounds) for American cows.
One has also to mention the fact that Soviet animal production still needs much manual labor, so that the number of working hours expended directly on the collective farm production of 100 kg (220.5 pounds) of gain in weight is 55 hours for cattle and 39 hours for hogs (42 and 20 hours, respectively, on state farms). The comparable figures in the United States would be 3.1 hours for cattle and 1.3 hours for hogs. In other words, on the Soviet large-scale collective farms two fully employed workers (not to speak of overhead labor expenditures) are needed to produce some 100 hogs for slaughter. This labor force consists to a great extent, especially in dairy farming, of elderly people, who are paid low wages and tend to be more interested in the well-being of their own livestock at home than in that of the public farm. Frequent breakdowns of energy supply, which on the more mechanized farms can create sizable losses, are another specific feature of Soviet livestock farms.
OUTPUT OF BASIC AGRICULTURAL PRODUCTS IN THE USSR, 1961-80
(million metric tons, five-year averages)
1961-65 1966-70 1971-75 1976-80 1981-85 1981
planned actual guidelines
Grain and legumes ("bunker 130.3 167.6 181.6 215-220 205 239 approx. 165*
Potatoes 81.6 94.8 89.8 102 82.6 89.1 72.0
Sugar beet 59.2 81.1 76.0 95-98 88.4 100.0 60.6
Sunflower seed 5.1 6.4 6.0 7.6 5.3 6.7 4.6
Seed Cotton 5.0 6.1 7.7 8.5 8.9 9.2 9.6
Meat (including fats and offal, 9.3 11.6 14.0 17.3 14.8 17.1 15.2
Milk (fresh milk in 64.7 80.6 87.4 94-96 92.6 98.1 88.5
Wool (unwashed, accounting 0.36 0.40 0.44 0.47 0.46 0.47 0.45
Eggs (billion piece) 28.7 35.8 51.4 58-61 63.1 72.1 70.9
* Author's estimate; no Soviet figure published.
The growth of Soviet gross agricultural production during the past decade was quite respectable by international standards, but not spectacular. FAO indices in constant prices put it at 120 for 1977-79 (1969-71 = 100), which is more than for Western Europe (115), but less than for the United States (123). However, one has also to take into account that West European agricultural policy has not primarily been directed at increasing output, whereas American policy received a new growth impetus with the expansion of foreign markets since 1972-73, not least by Soviet purchases. In contrast, Soviet policy has for decades been aiming at output growth, almost irrespective of cost. Therefore, what is surprising is not that growth was achieved in Soviet agriculture, but that it was not faster. In this overall setting, Soviet animal production has grown more than crop production, but its share in total gross production of agriculture is still very low-55.2 percent of total value on the average for 1976-80, as compared to 52.6 percent during 1966-70.7
Table 2, opposite, demonstrates the development for a few basic products. As to the most important of these, grain, it has to be borne in mind that the data are in "bunker weight," to which a discount factor of 15 to 16 percent has to be applied in order to make it comparable to Western grain statistics.8
Cotton and eggs represent the two "success stories" in Soviet agriculture, and sugar (up to 1979) also comes out fairly well. Two qualifications have to be added, however. The growth in Soviet cotton output, which is produced exclusively on irrigated land in Transcaucasia and Central Asia, has been attained by tapping the river water resources to such a degree that without redirecting Siberian water to Central Asia at astronomic cost, the future ecological consequences seem rather alarming. As to sugar beets, it has repeatedly been explained in the Soviet specialized press that their average sugar content is declining. In fact, Soviet industrial beet sugar production (excluding imported sugar) was only 7.3 million metric tons in 1979, and has been more or less stagnating since 1965.
For meat, it has to be added that the standstill occurred after 1975, whereas before that year the output growth was impressive. Without the broiler industry, which together with egg production has rapidly expanded, meat output would be more than two million tons less at present.
The picture has become gloomy during 1979-81, with three very disappointing harvests in a row. Not only grain, which used to receive most of the attention, but also other crop output, instead of increasing, showed a decline against the 1976-80 average. It may be inferred that non-grain feed, for which no output statistics are published, fared no better. As a consequence, meat and wool production continued stagnating, while milk output went down (in spite of rising cow numbers, i.e., with yield per cow deteriorating still more). Only egg and broiler production continued to grow-on imported feed. On the whole, the aggregate output of Soviet agriculture (in constant prices) declined by two percent in 1981, and by an overall 7.5 percent since 1978, while population increased by 2.5 percent during those three years.
Soviet crop production is known for its great annual fluctuations. As it accounts for almost half of overall agricultural output, and as the feed it supplies greatly influences animal production, the annual fluctuations of agriculture as a whole are also greater than is usual in other countries. Although parts of the Soviet Union are located in regions of subtropical, often irrigated farming, and others suffer from a cold continental climate, most of Soviet crop farming is conducted in moderate northern zones. To a great extent these may be compared not to U.S. but to Canadian conditions, also in that large stretches have a dry climate with considerable temperature contrasts between summer and winter.
The predominance of grains is clearly visible from Table 3 below on sown areas in the Soviet Union, especially if one takes into account that most of the summer fallow is located in grain areas. Fodder crops (annual and perennial grass, silage and green corn, and fodder beets) come next in sown area occupied, while the third important group is that of the industrial crops, among which sugar beets and oilseeds account for more than half the area. The question of summer fallow, which is of great importance in the very large areas of steppe grain dry farming, has been much disputed in the Soviet Union. Its area has varied greatly up to most recent times, not to speak of the anti-fallow campaign during the last years of Khrushchev's reign (1960-63).
SOWN AREAS OF THE SOVIET UNION
1960 1965 1970 1975 1980
All grains and 115.6 128.0 119.3 127.9 126.6*
winter wheat (12.1) (19.8) (18.5) (19.6) (22.6)
spring wheat (48.3) (50.4) (46.7) (42.4) (38.9)
barley (11.0) (19.7) (21.3) (30.9) (30.1)
Industrial crops 13.1 15.3 14.5 14.1 14.6
Potatoes and 11.2 10.6 10.1 10.1 9.2
Fodder crops 63.1 55.2 62.8 65.6 66.9
Summer fallow 17.4 14.7 18.4 11.2 13.8
* An estimated 126-127 million hectares in 1981.
Among the grains, wheat occupies the leading position, with the spring wheat area dominant for climatic reasons (but with actual output at present divided almost equally between spring and winter wheat). The sheer size of the wheat area-its output accounts for roughly half of the Soviet grain harvest-testifies to much of it being used for feed. The spectacular expansion of the area under barley is unmistakably due to the rising demand for feed grain. It is similar for oats, which came under a near-ban in Khrushchev's time but from their 1964 low of 5.7 million hectares have regained a respectable position with 11.8 million hectares by 1980.
Most but not all of the fluctuation in the grain area is due to contraction or expansion of summer fallow. While in recent times fallow in dry regions has been considered reasonable again (which it is), expansion of the grain sown area in more humid parts of the country has been advocated, though so far apparently not much applied. At any rate, the grain area sown in 1980 and 1981 was the smallest since 1972, apparently not only because of cold spells in spring sowing time.
When one puts these data alongside recent grain harvests in the Soviet Union-which were low in 1979, 1980 and 1981-one must raise the question whether Soviet planners have adequately weighed the possibility of increasing feed output and reducing the fluctuations in grain harvests by expanding the area of summer fallow and significantly reducing the amount of land sown in grain.
The prewar grain area (110.7 million hectares in 1940 on the almost identical territory) was regained and surpassed, after a 1945 low of 85.3 million, only through the great virgin lands campaign of 1954-56, when in the regions concerned the sown areas expanded by 36 million hectares. The subsequent setbacks and the expansion of the silage and green maize area under Khrushchev made it again decline to 128 million hectares in 1965. Up to 1971 there seems to have been a deliberate further reduction of the grain area, which is only in part to be explained by the expansion of summer fallow. Strikingly, during 1966-71 the grain output increased more and fluctuated less than ever before or after. Since then the area sown in grain expanded again to an all-time high in 1977 (130.4 million hectares). Obliquely, Leonid Brezhnev at the July 1978 Plenum of the Central Committee admitted a possible reduction up to 1985,9 which came true faster than expected with the decline during 1979-81 (see Table 3).
It has been the present writer's contention for a number of years that a further reduction to 115 to 120 million hectares-in part by introducing a 25 to 30 percent share of clean summer fallow in the dry steppe regions-would do nothing but good to Soviet grain production and its cost. More soil moisture would be accumulated in dry areas, weeds would be fought more successfully, and with less of the marginal land being sown each year, the annual fluctuations would be smaller. Moreover, those inputs which notoriously are in short supply in Soviet agriculture-fertilizer, herbicides, combine harvesters and transport capacities-would be concentrated and thereby used more effectively on the remaining grain areas. For these reasons, the absolute output quantity would not necessarily be less, as such concentration would increase the hectare yields and diminish the harvesting losses.
As the sown area reduction would occur mainly in the dry regions, it would affect low-yielding land. Thus, in Western Siberia the average hectare yield of grains during 1976-79 was 1.22 metric tons;10 what is worse, this was a decline in comparison to 1971-75, when the average grain yield there stood at 1.31 tons. The corresponding figures for Eastern Siberia are 1.01 (1976-79) and 1.18 (1971-75) tons.11 It may be assumed that the figures are similar for some grain areas between the Ural mountains and the lower Volga. Kazakhstan witnessed a rise of hectare yields, it is true, but in absolute terms they are low: 1.08 tons in 1976-79, and 0.99 tons for the preceding quinquennium. Introducing within the Siberia and Kazakhstan total areas of 43 million hectares (as of 1975) some seven million more hectares of summer fallow would reduce the total grain output of those regions by about eight million tons. Yet, on the other hand, this would very likely increase the yields and reduce the post-harvest losses on the remaining 36 million hectares by four to six million tons. Even if a certain shortfall of two to four million tons remains, it should be compensated for by greater steadiness of yields and lower capital and labor cost per unit of output.
Moreover, some of the land might fully return to perennial grasses and be used for pasture or hay. After all, raising the hay yield, which in Western Siberia is no more than 0.56 tons per hectare and in Eastern Siberia 0.45 tons per hectare (or 0.28 and 0.2 tons of oats units),12 may well be more rewarding. Improvement and better utilization of the ten million hectares of hay meadows in Siberia and raising the hay yield by 0.2 tons per hectare (0.1 tons of oats units) would yield one million tons of oats equivalents, not to speak of better utilization of the immense stretches of low-yielding meadows in Kazakhstan.
The idea of increasing the feed output by reducing the grain area makes sense because the grain area has been over-expanded, and following and roughage production neglected, in the recent past.
The next question to consider is the problem of capital and labor inputs in Soviet agriculture, including comparisons with Western practices. Nearly all capital and about three-fifths of the labor is expended on the large collective and state farms, and therefore should-in theory-work under great economies of scale.
It is generally known that most of Soviet agriculture is conducted on very large farms, of which those in the dry grain farming regions have up to 100,000 acres, and in some cases even more. Besides the collective farms and the state farms proper (sovkhozes), which together produce more than two-thirds of the agricultural gross product, there are institutional and other state farms, which as a rule are smaller and constitute a negligible sector, and the private plots (discussed below). Average Soviet farm sizes have often been dealt with, therefore only a few basic data on that subject are given in Table 4 below.
AVERAGE FARM SIZES, 1965 AND 1979
Collective farms State (sovkhoz) farms
1965 1979 1965 1979
Total number of farms 36,300 26,000 11,700 20,800
sown area (hectares) 2,900 3,700 7,630 5,360
average annual number 512 527 637 472
socialized fixed assets 1,166 4,140 n.a. n.a.
and turnover capital (more than in
(thousand rubles) collective farms)
The guidelines for the 1981-85 plan and the speeches at the February 1981 Party Congress, which approved those guidelines, were not quite unambiguous as to what share of total investment of the Soviet economy is to go to agriculture.13 Yet as a share it is unlikely to change much against previous years, either in the negative, because agricultural output is badly needed, or in the positive, because the Soviet economy hardly can afford more. Agriculture "in the whole complex of work" (i.e., including some of its backward and forward linkages, a category often used in Soviet plans and statistics) received 26 percent of total Soviet economic investment during 1971-75, 27 percent during 1976-80, and is planned to get the same share during 1981-85. This seems incredibly high, yet one has to bear in mind that the overall production-and thereby investment-capacity of the Soviet economy is much below that of Western industrial countries. Moreover, Brezhnev at the November 1981 plenary session of the Central Committee pointed out that the forward and backward linkages will get an increasing share, as compared to agriculture proper.
Recalculated per hectare, capital equipment and current capital supply for agriculture are still lower than in U.S. agriculture, but not excessively so. Yet the high share in investment is a necessity because of previous neglect and the planned growth rates. During 1981-85, however, the rate of increase of investment in the economy at large, and thereby also in agriculture, will be less than before. While the total increase was 31 percent during 1971-75 (over the 1966-70 average) it now is planned at only 10 percent, and may turn out still less during 1981-85. Most of this will be needed for reinvestment necessitated by the expanding capital stock, so that not much will be left for net investment.
The productive fixed assets (osnovnye fondy, including livestock, but excluding land) employed in Soviet agriculture at the end of 1979 were valued at 223 billion rubles, of which no more than 20.7 percent were in machinery, comparable equipment and means of transportation. Per hectare of arable and permanent crop land (disregarding other agricultural land such as pasture, range, etc.) this share amounted to 965 rubles (equivalent, on a per acre basis, to 594 U.S. dollars at the official exchange rate of September 23, 1981). Productive gross investment in agriculture alone (not using "the whole complex" concept) in 1980 amounted to 32.6 billion rubles, or 13.7 percent of the 1979 (end of year) assets-not an unusual proportion by American standards. But it made agriculture's fixed assets grow by 15 billion rubles during 1980, which is a surprisingly high net effect and points to a low renewal rate.
It is impossible to compare these highly aggregated data internationally, not only because of exchange rate and price structure problems but mainly because of those of categorization and definition. Thus U.S. data on assets include the land value, whereas the Soviet statistics attribute no value to land. However, it is feasible (disregarding price and exchange rate problems) roughly to compare the total of machinery, equipment, motor vehicles, livestock and poultry assets in both countries. In 1978, they amounted to 300 rubles per hectare in the U.S.S.R. (equivalent to 185 U.S. dollars per acre) as compared to 230 U.S. dollars per acre in the United States. It seems that buildings and similar assets were slightly less per acre in the Soviet Union than in the United States.
Per worker, the picture is entirely different. As the number of workers per land unit in U.S. agriculture (however defined) is about ten times less than in Soviet agriculture, assets per worker correspondingly are more than ten times greater.
Lack of data prevents a comparison of the turnover, or working, capital available to Soviet and American agriculture. The author's very rough estimate puts it at nearly 115 billion rubles for Soviet agriculture during 1979, of which about 44 billion were formed by the wage fund.14 Various Soviet and also East European authors complain that turnover capital is too small in proportion to fixed capital, although they imply a proportion of 4 or 5 to 10, which would seem fully satisfactory. However, its potential productive effect is impaired by its slow rate of turnover. Such inputs as fertilizer, plant protection chemicals, spare parts, etc., generally are in short supply and therefore need to be bought for reserve before they are really needed. Or else the farms do not buy exactly what they need, but what is to be had at a given moment, although it cannot be put to optimal use. Such behavior freezes part of the financial means. In addition, collective farms often use short-term credits for financing mid- or long-term investment, and assign a growing share of their net income to fixed capital stock.15
Even in view of the short capital supply, Soviet agriculture seems overmanned. The number of annual average workers in purely agricultural employment (including the private sector, and therefore coming close to full-time equivalents) was officially estimated at 27 million in 1979, as against 32 million in 1960. On average, each of these workers produced 4,574 rubles worth of gross product in 1979 (6,415 U.S. dollars at the official exchange rate), of which he/she received about 60 percent (roughly 3,000 rubles per year, or 4,200 U.S. dollars) as wage or other labor remuneration. This includes net income from the private plot!16 The Soviet agricultural work force was tantamount to 5.6 workers per 100 acres of arable and perennial crop land, about as many as on the small farms of Western Europe, and about ten times more (in full-time equivalents) than in the United States. And this man/land ratio has only moderately dropped since 1960. It has to be added, though, that more than one-third-nobody knows the exact figure, not even Soviet statisticians-of this labor is devoted to the mini-plots and livestock holdings of the population. Still, the remaining public work force is obviously employed inefficiently. Only every fifth or sixth worker is technically skilled (a mekhanizator) or a truck driver.
In the specialized Soviet literature, complaints about labor shortages and excessive labor outflow from agriculture are frequent. Apart from inefficient use of machinery, especially during labor peak times, this also has to be seen against great regional disparities. In some parts of northwestern and central Russia, the outflow and shortage of agricultural labor has far exceeded the national average, whereas in the Central Asian areas the rural population and labor numbers still rise in absolute although not in relative terms. There, agricultural labor is clearly abundant and underemployed, except for the cotton harvesting time, when 47 percent of the cotton is still picked by hand.17 Similar discrepancies, though less excessive, prevail all over the country, so that shortages of labor exist simultaneously with surpluses.
Private production under Soviet conditions is carried out not only by collective farm members on their household plots, but also by other (state-employed) agricultural workers and rural people and by a certain segment (suburban and small town) of the urban population. An average collective farm household has usage rights on 0.5 hectares (1.3 acres) of agricultural land, in some cases more, but the actual average for the Soviet Union by now is 0.25 hectares of arable and garden land. The same applies for many state farm workers' families, as most state farms developed out of previous collective farms. Other population segments are usually allowed 0.15 hectares in rural and less in urban areas. For livestock in private ownership the legal upper limits vary by regions-one cow plus calves, two hogs for fattening or one breeding sow, and five to ten sheep or goats per household being the most commonly applied restrictions on collective and state farms.
It is obviously the precarious food and especially meat supply situation which has made the Soviet leaders take a more or less benevolent attitude toward the private sector of agriculture, although never without ambiguity, especially on the medium and lower administrative level. Under Stalin and Khrushchev this residual sector suffered from neglect to enmity, and nevertheless did not cease to exist. At the time when the rural population formed the majority in the U.S.S.R. (61 percent in 1950, and still 51 percent in 1961), this majority largely lived on private food output, except for its grain, sugar, and vegetable oil supply, and even urban people had to rely on it to some extent. By now the share of both the rural population (37 percent in 1981) and of private agricultural production has decreased. Yet the sector still is big enough for the leadership to hope that it will contribute to alleviating the country's supply situation, especially with meat and milk. The important question is whether such hopes can come true.
Indisputably, the general economic and demographic parameters of private plot and animal farming have deteriorated since the 1950s. Therefore, the decrees and authoritative statements in its favor have been reiterated from time to time, recently in a decree of January 1981. This provides, among other things, for wider limits on private land use and animal raising than up to then, but on condition that the additional quantities so produced go at fixed prices to a collective or state farm, or to a public procurement agency-that is, not into free market outlets (the so-called kolkhoz market).
According to a recent Soviet estimate, the private sector in 1976-77 produced 25.2 percent of total agricultural output; its share in animal production was an important 31 percent, while in crop production it accounted for only 18.5 percent.18 In relative terms, its share had declined since 1966-70 (and earlier), but the absolute volume of its output (valued in constant 1973 prices) remained practically the same: 30.7 billion rubles per year during 1976-77 as against 30.8 during 1966-70, of which 10.5 and 10.4 billion, respectively, were in crop production. By 1979, it had increased to 32.4 billion rubles, but declined to the 1976-77 level again in 1980. As a share of overall agricultural output, however, it has slightly grown during 1979-80 because of the social sector's disappointing performance.19
For 1981, the statistical report is ambiguous. It states in general terms that the "personal subsidiary plots" increased their output (to an unspecified degree); on the other hand, indirect evidence points to the sector's decline. Very likely, private production on a contractual basis binding it to social production increased, whereas the truly private animal holdings and plot production shrank. For the first time since Stalin's era the numbers of privately owned livestock were not given in the report for 1981.
The private sector in 1980 occupied only 2.6 percent of totalarable land, but owned 30 percent of all cows and roughly one-fifth of other livestock. These animals cannot, of course, be fed from the small private plots. Agricultural labor remuneration in kind (grain for the most part), haying and grazing permits on public land unsuitable for machinery work, and-to a limited but recently increasing extent-feed sales from public stocks form most of the feed basis of private animal production. This fact and concentration on high-value, labor-intensive crops (potatoes, the finer vegetables, fruit, spices, etc.) are the reason for the still amazingly great contribution of the private sector to the population's food supplies.
Only 15 to 20 percent of private output is sold, in part on the free markets; the rest is consumed by the producers themselves. In most rural areas such self-supplying is less a question of prices and incomes than of sheer physical availability, as the retail network in the villages is only rudimentary. (Even in cities it leaves much to be desired.) Therefore, the monetary income-generating effect is of secondary importance for most private producers. The often-made comparison of farm wages and income per hour from the private plot is beside the point. Moreover, in the regions with agricultural underemployment it is beside the point also because there the comparative marginal value of labor in the collective sector just does not exist.
During the 1950s there was abundant, or at least enough, labor in most of Soviet agriculture, whereas today a shortage exists in parts of the country. As everywhere in the world, it is mainly the younger generation which has been leaving the countryside. The remaining population is aged and soon will undergo a disproportionate natural decrease. In order to keep people on the farms, agricultural wages and other remuneration have been raised substantially since the early 1960s, and the retail supplies for the villages, although still inadequate, are improving. Few Soviet people today bake their own bread, as most of them did in rural areas 25 years ago. Thus private production and receiving grain from the social farm have become less of a vital necessity. Moreover, it seems doubtful that the limited incentives offered lately for selling private produce to the public sector (see above) will make many people perform the necessary additional work.
All this results in very dim prospects for a growing contribution of the private sector to the country's food supplies, in spite of the more tolerant policy. Significantly, the numbers of animals held privately per collective farm household have remained stable or even increased slightly, yet the number of such households themselves went down from 17.1 million in 1960 to 12.8 million in 1979. They now account for less than half of total private output, whereas in the 1950s they supplied roughly two-thirds. Barring a fundamental change in the official attitude, the private sector will at best maintain its present production level, if more liberal marketing rules are applied, combined with a more generous supply of means of production suited to such small-scale operations (small machines, chemicals, transport facilities, building materials, breeding stock, feedstuffs, etc.). But it will not sizably contribute to an overall output increase. In this regard, the present policy is 25 years too late.
Does it follow from Soviet agriculture's recent poor performance that Moscow will for the foreseeable future continue to have to buy grain abroad in the present great quantities? Not quite. Successive harvest failures like those of 1979, 1980 and 1981 are not likely to continue, although they hardly were wholly accidental. Because of severe shortfalls in the Soviet chemical industry, agriculture during those years received much less fertilizer than planned. Its application on grain (excluding corn), which was practically zero in 1965, increased to 6.6 million metric tons of effective nutrient in 1977, but since then has declined again to 6.3 million metric tons in 1980.20 (In 1981, the total quantity of fertilizer supplied to agriculture grew by only two percent.21) Thus, there is ample room for improvement in fertilizer application. Apart from such man-made inputs, climatic change and soil depletion, in part as a result of over-utilization of land and water resources, come to mind as possible causes of recent harvest failure. Be that as it may, one should not exclude the possibility of better harvests in 1982 and 1983.
A number of other factors are also likely to improve somewhat (though within limits), such as the percentage of dockage and waste of grain, the production of non-grain feed, the feed conversion ratio, etc. All these may contribute to a reduction in the present volume of grain imports (30 to 40 million tons in both 1980 and 1981). A ten-percent improvement of the feed conversion ratio alone would save more than ten million tons of oats units.
Paradoxically, the inevitable shortfall of meat production, for reasons inherent in Soviet livestock raising and herd quality, will also help to reduce grain imports. Meat output is planned to attain 18.2 million metric tons by 1985, but will hardly exceed 16.5 to 17.0 million. This means that, in all likelihood, due to the extremely poor feed conversion ratio, as much as 10 to 15 million metric tons of oats units (part of them consisting of non-grain feed) will be "saved" and thereby about 5 to 8 million tons of grain and protein feed will not have to be imported. The Soviet consumer will perhaps get increasing quantities of imported meat as a part-compensation, and to that extent will take advantage of the better feed conversion ratios in Western exporting countries.
The Soviet balance of foreign payments forms a compelling reason to buy less grain in Western surplus countries. At the time of the great Soviet harvest failures of 1972 and 1975, rising energy and gold prices made Moscow able to pay the food import bill, which rose from $5.1 billion (of which $0.7 billion was for grain) in 1974 to $13.3 billion (of which $3.4 billion was for grain) in 1979,22 and probably to more than $15 billion in 1980. By 1981, the situation had changed: the prices of Soviet energy and gold exports stopped rising and the physical volume of these exports fell. Yet grain imports reached an unprecedented maximum; even if they are reduced by the mid-1980s, they might then for a while stay around an average quantity similar to the 1977-78 two-year level (16.5 million tons), which, of course, does not exclude heavy annual fluctuations depending on the weather. Meat imports may yet surpass their all-time high of 1980, and other food imports are likely to stay at a high level. The outlook for the balance of payments has turned worse during recent years. At the same time, there are growing economic burdens arising from political factors such as Poland, Afghanistan and Vietnam-not to speak of Moscow's armament effort.
Under these circumstances, Moscow will do everything feasible to cut down on food imports. It may succeed to a certain degree, although it will be forced for some years to import still very great, though possibly decreasing, quantities of food, especially grain. It is imaginable that Moscow will try to cut back on U.S. sales, first by keeping the absolute quantities bought from Argentina and Canada at the present level. As a residual supplier, the American farmer might thus be hit within a few years by the outlined partial reduction of Soviet grain purchases.
Most of the output goals set for 1981-85 will not be achieved by Soviet agriculture, including the most important ones. If in 1980. when the new plan guidelines were adopted, such a prediction was reasonable because of the limits on land, labor and investment, it has become a certainty in view of the results of 1981. As to grain, even a new bumper harvest, equalling or exceeding that of 1978 (237.4 million metric tons) would not mean plan fulfillment, as the guidelines for 1981-85 demand 239 million tons as the 1981-85 average and not just for one year or two. It is only beyond the end of the quinquennium that such an average-disregarding shortfalls or surpluses in individual years-may be achieved.23
Under the impact of Soviet agriculture's failures, Brezhnev announced in a speech of October 1980, and reiterated on several occasions (most recently at the November 1981 plenary session of the Central Committee), that the Politburo had decided to have a "complex food program" worked out; he implied its promulgation at an impending Central Committee session. His remarks were in very general terms: all efforts of agriculture proper and of its forward and backward linkages are to be combined and directed at the goal of "supplying the country's needs in food." (What else should a food sector aim at?)
In the Soviet Union, achievement of this goal seems still far away in view of the rising consumer demand. To the contrary, investment growth will slow down greatly (even if the current plan is achieved in this respect), current inputs will grow less than previously, agricultural labor numbers will continue to shrink, and the agricultural land area will expand only slowly and at high cost. Still, an annual one to three percent rate of net investment may remain, and agricultural output will continue to grow, but at decelerating rates. The policy measures taken so far, such as increases of producers' prices, tolerance toward the private sector, the emphasis on producing more leguminous grain and non-grain feed, and the first results of the continuing 1975-1990 plan to develop the Russian "Non-Blackearth zone" are not of a kind essentially to change this prospect. These steps make sense but so far have been much less successful than expected.24
A sizable reduction in food imports cannot be effected in the short run by any rapid increase in agricultural production; the odds are simply against it. In order not to let imports grow, in the short run, domestic consumer demand will have to be cut back. The price increases of September 1981 on some industrially produced consumer goods and on gasoline were just one such step, but inevitably meat supplies will have to be curtailed, whether through prices or-as is happening already-by local rationing or unorganized non-supply. The example of Poland has shown that this can be dangerous, although those of Hungary and Bulgaria have demonstrated the possibility of price increases without major popular unrest. However, there is so much pent-up demand (cash) in the U.S.S.R. that price measures would have to be of an extremely drastic kind if they were to have a real effect.
In short, Soviet agriculture remains in serious difficulty, with the requirement for substantial imports only a part of the overall problems of demand, organization, incentive and pricing. It is impossible to predict how the Soviet leaders may react to these problems or how they may deal with the urgent necessities and severe constraints they face. In late January 1982, one day before publication of the annual economic report, Pravda printed an unusual account of a session of the U.S.S.R. Council of Ministers, at which the economic results for 1981 were discussed "and measures to ensure fulfillment of the plan and budget for 1982 were planned." Although the performance of agriculture and the food industry was not singled out for criticism, as other sectors were, the report specifically noted that Mikhail Gorbachev, the Central Committee Secretary responsible for agriculture, had taken part in the session.
This account suggests that important measures in the agriculture and food sector may be imminent. In light of the serious situation, the shortage of resources, and the rigidity of the system, however, it is difficult to imagine what these might be.
1 Numerical data in the present article are from the official Soviet statistics (Narodnoe khoziaistvo SSSR and SSSR v tsifrakh) if not otherwise indicated or easily accessible for the general reader.
2 To clarify the arithmetic significance of this, if a Soviet citizen originally had an income of 100 rubles over a given period and spent 40 rubles of this for food, an increase of income to 110 rubles would mean the spending of an additional 3.2 rubles for food (0.8 times 40). In most societies at the overall industrialization level of the Soviet Union, increased income directed to food (a basic essential, of course) would be significantly less.
3 For Soviet data on feed consumption since 1965, see Narodnoe khoziaistvo SSSR v 1980 g., p. 253, and Sel'skoe khoziaistvo SSSR, Moscow, 1971, p. 344.
4 Statisticheskii ezhegodnik stran-chlenov SEV 1980, Moscow, 1981, p. 191.
5 The "feed conversion ratio" is a numerical value which indicates the ratio of gain in live weight or output of specific animals when fed given quantities of certain feeds, whether measured in pounds of feed per pound of weight gain (or milk produced, etc.) as in the United States, or in kilograms per kilogram of weight gain as in the U.S.S.R. It is important, though, to note that in the U.S.S.R. the common denominator for all types of feed is the "oats unit," representing the nutritional energy of one kilogram of oats of average grade (approximately 1,400 calories). In the West, the calculation of feed units varies. In West Germany, it is often the starch content that has served as the basis for calculating the grain unit and, derived from it, the nutritional values of grains fed. Other countries use the barley unit or other measures for the same purpose. For example, hogs on average West German farms nowadays consume 3.5 to 4.0 kilograms of grain per kilogram of gain in weight. For the convenience of American readers, this article used ripe corn as the basic feed unit for comparison. An oats unit equals only 0.82 to 0.85 corn units in starch or energy content (or conversely, an oats/corn feed value ratio of 1 to 1.34) varying slightly depending on the evaluation method used. The U.S. Department of Agriculture in its Agricultural Statistics, 1980 (p. 57) also has the "equivalent feeding value of corn" as a measure, but applies it to total feed consumed per unit of production, i.e., includes raising piglets and breeding sows. A truly exact and, at the same time, generally accepted comparison is not possible. Reports on feed conversion data in American publications frequently omit to mention that the calculations in the United States are based on feed units containing certain additives or, more exactly, mixed feed.
It has also to be pointed out that the data on Soviet grain procured (as distinct from total output in "bunker weight," described in footnote 8 below) are controlled by the state procurement agencies as to net weight and quality, whereas the farms, which probably keep the lower quality grain as their farm-produced concentrate feed, are unlikely to account for these factors in their reports on grain fed, because otherwise their grain production and consumption reports would be contradictory, to the farm's disadvantage. Some theft on the farms, whose work force privately also raises livestock and needs feed, is likely to play a role in addition.
6 According to Agricultural Situation USSR, Review of 1980 and Outlook for 1981, supplement to World Agriculture Situation-24, U.S. Department of Agriculture, Economics and Statistics Service, Washington, D.C., 1981, p. 46.
7 Valued at 1973 constant prices, as an average of prices actually received. The Soviet data contain some double-counting of feed, seed, etc., but as the shares of the crop and the livestock sectors are roughly equal, the double-counting does not sizably affect the shares as such.
9 See the author's interpretation of Brezhnev's veiled forecast in Prospects for Soviet Agricultural Production, op. cit., p. 46.
10 One ton per hectare is 14.9 bushels of wheat per acre and 18.6 for barley, the two main grains in Western Siberia.
11 Although such regional data are no longer published in Soviet statistics, the above were communicated in an article in Ekonomika Sel'skogo Khoziaistva, no. 7, 1981, p. 45. Data for West and East Siberian sown areas are available only up to 1975.
13 See the discussion in Osteuropa, No. 9/10, 1981, p. 839.
15 Karl-Eugen Wädekin, Agrarian Policies in Communist Europe, Totowa, N.J./The Hague/London: Littlefield Adams, 1982, p. 152-53.
16 His/her counterpart in the highly capital-intensive American agriculture in 1979 generated $40,000, or-if fully employed-more than that, of gross farm income (which roughly corresponds to gross output under the Soviet definition). With an average wage of $3.39 per hour, full employment (Soviet definition) brought him/her $6,500 per year in 1979, excluding side income.
17 Ekonomika Sel'skogo Khoziaistva, no. 8, 1981, p. 17.
19 Derived from the official indices in Narodnoe khoziaistvo SSSR v 1980 g., p. 205.
20 Vestnik Statistiki, no. 3, 1978, p. 93-94; no. 3, 1980, p. 78-79; no. 3, 1981, p. 78-79 (derived from the data on quintals per hectare, which arithmetically apply to total sown area, although the area actually fertilized is also indicated).
21 Sel'skaia Zhizn', January 24, 1982.
22 Agricultural Situation USSR, op cit., p. 45.
23 The projection of Soviet grain and meat output is elaborated upon in some detail in a forthcoming study by the Giessen Center, with the author's participation, cited in footnote 8.
24 The continuing commitment of the Soviet leadership to the expensive program for the Non-Blackearth zone, as spelled out in a decree published on April 15, 1981, is noteworthy, because the results of the first six years, 1975-80, were utterly disappointing. Thus, on the five-year averages, 1976-80, as against 1971-75, grain production in the zone increased by only 10 percent, meat by 7.5 percent, milk by 1.1 percent. Only eggs, as everywhere in the Soviet Union, showed a big rise by 31 percent, and one may safely assume that the rise in meat output was due to broiler production, both being mainly based on feedstuffs imported through Leningrad and other Baltic ports. On the other hand, potato production decreased by 18.5 percent, and flax went down precipitously by 25 percent (see Sel'skoe Khoziaistvo Nechernozem'ia) no. 1, 1982, p. 3, and Narodnoe khoziaistvo SSSR v 1975 g.,, p. 340).