SOVIET GRAIN SUPPLY, 1968

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001600010105-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 22, 2016
• Document Release Date: October 1, 2009
• Sequence Number: 105
• Publication Date: December 1, 1968
• Content Type: IM

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~/ ? ' / yr / .Ys'/'/ GJ I / r~
Secret
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Soviet Grain Supply, 1968
Secret
ER IM 68-155
December 1968
Copy No.If1
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning cf Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
GROUP I
Excluded (ro n oalon,oik
downgrading and
dsda,sifitalion
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
December 1968
INTELLIGENCE MEMORANDUM
Soviet Grain Supply
1968
Summary
For the third year in a row the USSR has
harvested an excellent grain crop, which will per-
mit it to meet current domestic needs, to fulfill
current export commitments, and to add to the siz-
able grain stocks. The total grain crop in 1968,
estimated at 130 million to 135 million metric tons,
is the second largest grain crop in Soviet history.
It falls between the record crop of 140 million tons
in 1966 and the next best crop of 122 million tons
obtained in 1967. Production of bread grains (wheat
and rye) in 1968 is also the second largest on
record. The totals of both grain and bread grains
produced in 1968 are one-fourth above the respective
average annual levels attained in 1958-65.
With respect to grain imports, the USSR has de-
layed the purchase from Canada (its principal sup-
plier) of the 4 million tons of grain remaining to
be bought in the final year of a three-year agree-
ment running from mid-1966 to mid-1969. Despite
the good Soviet crop, this commitment probably will
be honored, although the terms may be renegotiated.
The total demand of Soviet client states* for
The term client states denotes a close bilateral
political relationship. CZiant states of the USSR
include the following: the Eastern European coun-
tries, including Albania and Yugos Zavia,j Cuba; North
Vietnam; North Korea; the United Arab Republic (UAR);
and Algeria.
Note: This memorandum was produced solely by CIA.
It was prepare"" by the Office of Economic Research.
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grain imports from all sources in the 1968/69 trade
year (1 July-30 June) has been projected to about
11 million tons, slightly above the 196 7/6 8 level.
The Soviet Union is already committed to provide some
5-1/2 million to 6-1/2 million tons of this amount.
Given the inproved Soviet a::iply position for bread
grains, the international political environment,
and the desire of the client states to conserve hard
currency, the client states undoubtedly will press
the USSR to provide a larger share of their import
requirements. The USSR, on the other hand, may wish
to increase earnings of hard currency through sales
of grain to Free World countries (excluding the
UAR) -- more than 0.7 million tons in 1967 -- and
also to augment its grain stocks.
If net exports in the 1968/69 trade year are
held to about the level stipulated in outstanding
agreements -- approximately to 6-1/2 million or 7
million tons -- the USSR will be able to make sig-
nificant additions to reserve stocks of grain. As
a rough estimate, the additional supply minus pro-
jected domestic and export requirements could bring
the total accumulated grain reserves to 20 million
to 25 million tons by the end of the current con-
sumption year (31 July 1969). Grain stocks of this
magnitude will enable the USSR to weather a moder-
-ately poor crop year without the need for lc.rge
emergency grain imports.
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Production in 1968
1. In 1968 the USSR harvested the second larg-
est grain crop in its history. The total production
of 130 million to 135 million tons ranks between
the record crop of 140 million tons harvested in
1.966 and the third best crop of 122 million tons
obtained in 1967. Production of bread grains in
1968 is also the second largest on record - 80
mil.lion to 85 million tons compared with 92 million
tons produced in 1966 and 74 million tons in 1967
(see Table 1). The totals of both grain and bread
grains produced in 1968 are one-fourth above the
respective average annual levels of 1958-65.
2. Weather conditions for the 1968 grain crop
were not altogether favorable. Although fall-sown
grain crops in much of the European USSR were seeded
under subnormal moisture conditions, timely pre-
cipitation in the fall of 1967 permitted adequate
development of seedlings over most of the winter
grain area. Also, the accumulation of soil moisture
from an above-normal snow cover during the winter
months somewhat mitigated the adverse effects of
unusually dry weather in April and May in the
principal winter wheat areas -- the Ukraine, Mol-
davia, and the North Caucasus.
3. In spring grain areas, with the exception
of major parts of the new lands, April and May
moisture- conditions were generally adequate at the
time of sowing. Then in late June and early July
timely rains bolstered crop prospects in the new
lands spring wheat regions of Kazakhstan and West
Siberia. An average level of grain production in
those areas and an outstanding harvest in the Volga,
Urals, and central black-soil zones of European
USSR more than compensated for the fact that grain
output in the Ukraine, Moldavia, and parts of the
North Caucasus fell to below the level of 1967
because of the spring and summer droughts there.
4. As in past years, the Soviet official claim
of gross grain production in 1968 (165 million tons)
must be reduced to obtain an estimate of net usable
grain. Because of inclement weather during the
harvest in the new lands areas and a shortage of
trucks and railroad cars for transporting grain,
above-average harvest losses probably occurred.
There was more than normal shortage of truck and
rail capacity for moving the harvest to storage
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 USSR: Production of Total Grains and Bread Grains
Official Claims and CIA Estimates
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Tab le 1
1958-62 Annual Average and 1963-68
Million Metric Tons
Total
Grain Production a/
Bread
Grain Production b/
Year
Official,
Claim /
CIA
Estimate d/
Official.
Claim /
CIA
Estimate d/
1958-62
annual average
130
105
86
69
1963
108
92
62
51
1964
152
120
88
71
1965
121
100
76
62
1966
171
140
114
92
1967
148
122
90
74
1968
165
130-135
N.A.
80-85
a. Including pulses. C')
b. Wheat and rye.
C. Bunker weight (gross of excess moisture and foreign matter).
d. CIA estimate of usable grain. Net usable grain is estimated as the gross output
minus excess moisture, unripe and broken kernels, weed seeds, and postharvest losses
incurred in loading and unloading of grain between the combine and storage facili-
ties. CIA estimates of net production of grain during 1959-67 have reflected a re-
duction of between 14 percent (1963) and 26 percent (1960) in the official claims
for gross output of grain.
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facilities, largely as a result of the partial
mobilization of the armed forces during the
Czechoslovak crisis, which apparently resulted in
the temporary requisitioning of a sizable number
of trucks by the military. In addition, the areas
with exceptionally high grain yields in 1968 have a
relatively low density of rail networks and grain
storage facilities. Therefore, the estimate of
130 million to 135 million tons for 1968 is below
the official claim by 18 to 21 percent. Further-
more, a larger than normal proportion of this year's
bread grain crop of 80 million to 85 million tons
may be below milling quality and therefore may be
usable only for feeding of livestock.
Internal Supply Position
5. Government purchases of grain from producers
of the 1968 crop will exceed 68 million tons, an
amount at least one-fifth above the average annual
level of procurement in 1965-67. As a result,
supplies of grain will be ample to meet domestic
needs for high-quality bread supplies in 1969. In
addition, the USSR will be in a position to meet
export cormritments and possibly also to enhance its
earnings of hard currency by renewing grain sales to
Free World customers. Finally, if total net exports
in the 1968/69 trade year are held to approximately
6-1/2 million to 7 million tons, the USSR will
able to make significant additions to its reserve
stocks of grain.*
6. Little information is published on the
utilization of grain in the Soviet Union, and statis-
tics on stocks are closely guarded secrets. Relative
stagnation in grain production in the years prior
to the crop failure in 1963 probably caused a draw-
ing down of grain reserves to a low level, but the
good grain crops of 1966-67 permitted substantial
replenishment of grain reserves. Although only a
rough estimate is possible, comparison of supplies
It should he noted, however, that these additions
could be smaller if additional grain must be used
for food in place of potatoes. The harvest of
potatoes, the other starchy staple in the Soviet
diet, may be significantly below the near record
level of last year.
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with projected requirements for current domestic
needs (food, feed for livestock, seed for the 1969
crop, and industrial uses) plus current export
commitments suggests an accumulation of grain re-
serves to 20 million to 25 million tons at the end
of the current consumption year (31 July 1969).
7. Reserves of this size would provide the
Soviets with a hedge against future shortfalls in
grain production and additional leverage in foreign
trade. The estimated grain stocks represent about
one-half of the annual consumption of grain for
food.
8. Thus, the Soviets are in a relatively good
position to withstand a moderate decline in grain
production in the coming year -- for example, to a
level of 115 million or 120 million tons -- without
having to import much grain and without deterioration
in the quality of the daily diet as a result of the
available grain being used for bread instead of feed
for livestock to produce meat and milk.
Outlook for Trade
9. The excellent 1968 grain harvest will per-
mit the USSR to continue for the second year in
suc.ession its traditional role as a net exporter
of grain. During 1957-62, annual exports of grain
averaged 7 million tons and imports were negligible.
Because of the poor harvests in 1963 and 1965, the
Soviets imported unusually large quantities of grain
during 1963-66 in order to meet domestic needs and
at least a major part of export commitments to
client states. Exports in 1964-66 declined to an
average annual level of less than 4 million tons,
and average annual imports increased to more than
7 million tons (see Table 2).
Soviet Grain Imports
10. During 1964-66, nearly all Soviet grain
imports (largely wheat and wheat flour) were from
Free World countries and were paid for in hard
currency. Canada has been by far the largest, most
consistent supplier (see Table 3) and is now the
only country with an agreement to sell grain to
the USSR.
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USSR:
Table 2
Exports, Imports, and Net Trade in Total Grain and Wheat
1960-62 Annual Average and 1963-67
Thousand Metric Tons
1960-62
Annual Average
1963 1964 1965 1966
1967
Exports
Total grain a/
7,483
6 278 3 524
4
Of which:
I
,340 3,568
6,257
Wheat
Imports
5,063
4,106 2,030 1,663 2,805
5,284
Total grain a/
Of which:
Wheat
312
3,052 7,281 6,375 7,746
2,185
n
266
3,052 7,281 6,375 7,583
1,828
Net trade b/
H
Total grain a/
-7,171
-3,226 +3
757 +2
035 +4
,
,
,178 -4,072
Of which:
Wheat -4,797 -1,054 +5,251 +4,712 +4,778 -3,456
a. Excluding rice and flour
Th
.
e quantities shown i
T
bl
n
a
e 4 differ from the
amounts shown above to the extent that rice and flour are included in Table 4.
b. A plus sign denotes net imports; a minus sign, net exports.
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USSR: Imports of Wheat, a/ by Country of Origin
Trade Years 1960/61-1962/63 Annual, Average
and 1963/64-1967/68
H
Country of Origin
Trade Year
AA
entina
Australia
Canada Y
France
United
states
other
Total
1960/61-1962/63
annual average
--
--
68
--
--
--
68
1963/64
10
1,537
6,055
150
1,720
572
10,044
1964/65
54
921
1,279
99 c/
46
257
2,656
1965/66
2,186
576
5,792
130 c/
--
503
9,187
1966/67
21
--
3,264
822
--
576
4,683
1967/68
--
--
1,820
--
--
100
1,920
a. Inczuasng wheat our zn wheat equzva en s.
b. Including exports to Cuba from Canada on Soviet account.
C. Excluding exports to Eastern Europe on Soviet account.
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11. The Soviets are expected to purchase in the
near future at least a portion of the 4 million tons
of grain remaining under a three-year agreement with
Canada. Under the original terms of the 1966
agreement, the Soviet Union was obligated to purchase
9 million tons before mid-1969. The USSR bought 3
million tons in 1966/67 and 2 million tons in 1967/
68. The fact that none has been purchased thus far
in the 1968/69 trade year has led to speculation
that the Soviets may renege on their commitment.
The consensus in international grain trade circles,
however, is that the Soviets will honor the con-
tract, either precisely or by renegotiating the terms.
For example, the mid-1969 deadline might be extended
for one or two years, with most of the grain going
to Cuba (on Soviet acccunt) or to Soviet Far East
ports.
Soviet Grain Exports
12. The principal recipients of Soviet grain
exports during 1964-66 were Czechoslovakia, East
Germany, Poland, and Cuba. Exports to Free World
countries for hard currency were negligible. From
the beginning of the 1965/66 trade year through the
1967/68 trade year, exports to client states in
Asia (North Vietnam and North Korea) and Africa
(the UAR and Algeria) have increased rapidly. The
expansion of exports to individual countries in
these areas, however, has been irregular. Thus,
exports of wheat to Asia and Africa combined in-
creased from 300,000 tons in the 1965,'66 trade year
to about 1.1 million tons annually in the 1966/67
and 1967/68 trade years. Exports of grain to the
UAR during 1967 reached 1 million tons (see Table
4) but declined to 300,000 tons in 1968. North
Korea received 390,000 tons during the 1967/68
trade year. Shipments of flour to North Vietnam
reached 160,000 tons in calendar year 1967 and will
probably reach 250,000 tons in 1968.
13. Total grain imports of these client states
from all countries in the 1968/69 trade year are
projected at 11.2 million tons, somewhat above the
1967/68 level. Soviet exports of grain to these
states are expected to range between 5.6 million
and 6.6 million tons, or from 50 to 60 percent of
total import requirements. Given the greatly im-
proved Soviet supply position for bread grains, the
international political environment, and the desire
of the client states to conserve hard currency, these
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USSR:
Exports of Grain, a/ by Country of Destination
1960-62 Annual Average and 1963-67
Thousand Metric Ton
1960-62
s
Annual Average_
1963
1964
1965
1966
1967
7,616
6,662
3, 969
4,710
3,993
6,780
Eastern Europe c/
4,616
4,239
2,736
3,205
2,894
3,679
Czechoslovakia
1,429
1,501
900
1,169
1
242
1
349
East Germany
1,940
1,577
1,191
1
054
,
1
148
,
1
187
Poland
771
820
110
,
491
,
504
,
1
042
Hungary
302
141
15
378
--
,
101
Bulgaria
82
150
120
113
--
-
Cn
Rumania
UAR
34
--
400
--
--
-
--
C!)
n
202
Negl.
1,000
M
lr1
H
Cuba d/
North Vietnam
362
14
762
4
777
2
745
2
855
15
927
220
f-?
North Korea
133
50
--
101
118
251
Communist China
Other
2,307
1,607
454
455
111
703
a. Including flour (converted into grain equivalents by using a 72 percent ex-
traction rate) and groats.
b. Preliminary estimates.
c. The total includes Albania and Yugoslavia.
d_, Tnicluding imports of grain and flour from Canada and Mexico on Soviet account.
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states no doubt will cry to get the USSR to provide a
larger share of their total requirements.
14. The total demand of the Eastern European
Communist countries for imported grain in the 1968/
69 trade year is projected at 6.4 million tons,'10
percent above the 1967/68 level. The overall net
increase in import requirements of nuarly 0.7 million
tons reflects the need to compensate for lower out-
put in East Germany, Hungary, and Bulgaria; relatively
good harvests in Czechoslovakia and Poland have re-
duced thei : import needs below the 1967/68 level.
The USSR has a current commitment to supply slightly
more than 4 million tons of the estimated required
imports of 6.4 million tons. About one-half of the
remainder has been purchased or contracted from Free
World countries. In view of the need to conserve
hard currency, Poland, Hungary, and Bulgaria may
seek additional grain from the Soviets above the
present commitments.
Other Client States
15. During the 3.968/69 trade year, client states
outside of ,;astern Europe will require total grain
imports of about 5 million tons. The USSR probably
will supply as much as 2.0 rtiillion tons and possibly
more to the five countries involved -- Cuba, North
Vietnam, North Korea, UAR, and Algeria. Given the
uncertainty of alternative supply arrangements, the
USSR may be asked during the balance of the trade
year to contribute a considerably larger share of
the total.
16. For the present, however, the outlook calls
for the Soviet Union to prcviae grain imports to
the five countries at about the same levels as in
the past year, the amounts being about 0.9 million
tons for Cuba, 0.4 million tons for North Vietnam,
0.2 million tons for North Korea, and perhaps 0.5
million tons for the UAR and Algeria combined.
The Free World
17. Despite the desire to expand earnings of
hard currency, the Soviets have not indicated an
intention to significantly increase grain sales to
the Free World. The new International Grain Agree-
ment (IGA), subscribed to by major Free World traders
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(but not by the Soviet Union), should not restrain
the USSR from attempting to regain the previous level
of exports in Free World markets, which averaged 2.3
million tons in 1960-62. Although IGA member im-
porters are obligated to buy stipulated portions of
their total requirements from IGA member exporters,
a sizable potential market in hard currency areas
still remains. The Soviet Union could, for example,
attempt to sell grain to its major trading partners
among the developed countries (the United Kingdom,
West Germany, Japan, Italy).
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