A REVEALING GORBACHEV CAMPAIGN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000401330001-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 16
• Document Creation Date: December 27, 2016
• Document Release Date: March 1, 2012
• Sequence Number: 1
• Publication Date: September 1, 1987
• Content Type: MEMO

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Central Intelligence igence Agency
Washington. D. C. 20505
DIRECTORATE OF INTELLIGENCE
September 1987
A Revealing Gorbachev Campaign
Gorbachev's campaign for more and better statistics--still
in its early stages--has exposed a major overstatement In cotton
production statistics during the last decade of the Brezhnev
era. The campaign has also stimulated publication of unique data
that suggest Gorbachev's program to improve consumer diets by
increasing sales of perishable produce through urban collective
farm markets is not working.
This memorandum was prepared by
(Office of Soviet Analysis.
Comment and questions are welcome and can be directed to Chief,
Economic Performance Division,
SOV M-87-20087
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Cotton
Data published in USSR in Figures in 1986 (Tsifrakh 1986)
disclose that cotton production during 1976-85 was overstated by
nearly 5 million tons, an amount equivalent to over 5 percent of
the total production previously reported for that period. The
overstatement, which totaled 1.8 million tons during 1976-80,
increased markedly to 3.2 million tons during 1981-85 (figure 1).
The gross overstatement of cotton production revealed by the
new data is consistent with the pattern of events in Uzbekistan--
which produces about 65 percent of the total cotton crop--over
the past decade, as well as with Soviet activity in Western
cotton markets. Western analysts had difficulty explaining the
marked success implied by Uzbekistan's reported cotton output in
the late 1970s and early 1980s. In 1982 Sharaf Rashidov, First
Secretary of the Uzbek Communist Party, was challenged about
discrepancies in cotton production statistics. Shortly
thereafter, he reportedly committed suicide. Reports of
overstated production at the local level then began to surface. At a
major republic plenum in June 1984, Inamdzhon Uzmankhodzhayev
(now the Uzbek First Secretary) charged that "gross padding of
cotton results had been occurring throughout the production,
procurement, and ginning process." In 1984, Uzbekistan's
reported cotton output dropped far more than Western analysts had
anticipated, and it was theorized that overreporting was being
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Sep 21, 1987
Figure 1
USSR: Average Annual Cotton Production, 1971-85
U,
C
0
C
0
Legend
? Original
M Revised
1971-75
1976-80
1981-85
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reduced. The new Tsifrakh statistics indicate that this
a ,,' y %.P L11e 0 a 0 WV D G b l a e G L.
The statistics presented in Tsifrakh 1986 for cotton
production prior to 1976 and for 1985 are consistent with those
in previous publications. The authorities may feel that padding
prior to 1976 was not significant or that it is not a matter of
c
e
conce
nd h
h
985
li
i
t
d
ua ?
as a.
a , , a
a a. a t
au been e
by 1
m
na
e
.
To assess the impact of the cotton-crop revisions on our
calculation of year-to-year changes in Soviet agricultural
production, an annual distribution of the total overstatement was
necessary. On the basis of the events in Uzbekistan, we
estimated that the overstatement initially was probably very
small and, as a percentage of reported production, increased
fairly steadily to a peak in 1982--when Rashidov was at the
height of his power, and then declined to zero by 1985 (table
1). We also assumed that the published production statistics
prior to 1976, the revised 1980 statistic, and the 1985 and 1986
statistics were correct.
As complaints became public and Rashidov came under
increasing censure, the degree of overstatement probably dropped
quickly. The total exaggeration, however, suggests that even in
1984 padding accounted for roughly 300,000 tons of reported
production. Our peak estimated overstatement--11 percent (1.02
million tons) compared with the known 7 percent (730 thousand
ton) overstatement in 1980--is consistent with a recent
Literaturnaya gazeta article (10 June 1987) noting that the
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Table 1
USSR: Selected Statistics on Cotton Production
Originala
Co
rrectedb
Estimated
Annual
Corrected d
Productions Overstatement
1970
6.890
6.890
1975
7.864
7.864
1976
8.278
8.207
.071
1977
8.758
8.583
.175
1978
8.500
8.160
.340
1979
9.161
8.703
.458
1980
9.962
9.230
-
.732
1981
9.636
8.672
.964
1982
9.282
8.261
1.021
1983
9.212
8.383
.829
1984
8.619
8.278
.341
1985
8.750
8.750
1986
8.230
a USSR, Central Statistical Administration, Narodnoye khozyaystvo SSSR
v 1985 g., p. 180; Narodnoye khozyaystvo SSSR v 1979 g., p. 220.
b USSR, Central Statistical Administration, SSSR v tsifrakh v 1986 godu,
pp. 116-117.
C Described in text.
d
Original less corrected or estimated corrected.
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exaggeration could have reached one million tons in Uzbekistan
alone in the early 1980s. The annual estimates of cotton
production that result from application of our annual
distribution of the overstatement are contrasted with production
statistics reported during 1976-85 in figure 2. We believe the
resulting estimates of annual cotton production are reasonable,
but we remain open to alternative methodologies. Perhaps glasnost'
will in time permit publication of the annual data.
The effect of incorporating the estimated annual cotton
production data into our measure of the value of farm output (net
of feed, seed, and waste) and on crop output (net of
seed and waste) was slight as the following tabulation shows:1
Percentage change
Based on Data Based on Revised
Published During and Estimated Data
1976-85
Crops
Net Farm Output
Crops
Net
Farm Output
1975
-7.28
-8.54
-7.28
-8.54
1976
18.65
7.96
18.54
7.90
1977
-5.21
4.11
-5.36
4.03
1978
8.69
3.18'
8.47
3.06
1979
-6.74
-5.87
-6.93
-5.97
1980
-7.22
-4.06
-7.67
-4.28
1981
-3.56
-0.75
-3.97
-0.92
1982
13.39
7.19
13.51
7.20
1983
2.86
6.05
3.19
6.24
1984
-3.31
-0.73
-2.66
-0.39
1985 -3.47 -1.68 -3.0I
The average annual change over time is negligible.
1
The methodology for deriving net farm output is presented in US Congress,
Joint Economic Oarmittee,USSR: Measures of Economic Growth and Develo nt
1950-80, S% shington, D. C.-,T-December 1982, pp. 245-31B7.
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Sep 29, 1987
Figure 2
USSR: Original and Corrected Estimates of Cotton Production
Legend
^ Assumed Correct
^ Published During
6 ^-^ ^ / 1976 =85
I ? Estimated
I IItt$Iu ISUllllllllltllll,
^ ^ 0 Published in 1986
5.5
1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987
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Urban Collective Farm Markets
Unique data on sales and prices of 17 commodities in
collective farm markets (CFMs) in 264 cities for January-June
1986 and 1987 have been published in Ekonomicheskaya gazeta, No.
32, August 1987, p. 19. These data indicate that less tonnage of
nearly all commodities listed is now being sold in major-city
CFMs than was sold in 1963, when data on tonnage of the major
2
conmodities sold in 251 cities were last published (table 2).
The decline in sales of 16 of the 17 products in the new listing
(parsley is the exception)--and the extent of the decline for
many--in the first half of 1987 compared with the first half of
1986 suggests that Gorbachev's proposal for more state and
collective farm sales of perishable foods through CFMs may be
falling on deaf ears.
The vagaries of Soviet weather undoubtedly played a role in
the 45-percent decline in sales of new potatoes in the first half
of 1987 compared with the same period in 1986 and in the similar
drops in sales of cucumbers and tomatoes. But the brief article
accompanying the statistical tables noted that collective and
state farm sales of potatoes, vegetables, and fruit accounted for
only 2 percent, 5 percent, and 4 percent, respectively of CFM
sales of these products. (Most sales come from surplus produced
on private plots.) It also noted that overall sales for all CFMs
2 See Appendix A for a review of the availability of collective farm market
statistics and the expansion of the 251-city sample to one of 264..
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USSR: Sales of Selected Co modities in Collective Farm Markets
251 citiesa
264 citiesb
Potatoes
1428.4
1408.1
996.5
532
Cabbage
299.4
232.3
158.6
126
Dry onions
144.5
137.6
103.0
94
Cucumbers
176.0
194.1
130.8
44
Tomatoes
232.7
195.6
143.8
30
Beef
93.9
120.7
136.7
46
NLtton
31.3
26.1
27.7
4c
Pork
83.9
45.3
53.8
72
Pork fat
25.8
16.7
17.5
20
a Sovetskaya torgovlya, Nbscow, 1964, p. 267.
b
Based on 6-month data from Ekonanicheskaya gazeta, no. 32, August 1987, p. 19.
The estimate assumes sales during January-June account for half of total annual
sales. This probably means total vegetable sales, and particularly sales of
cucumbers and tomatoes, are understated. An alternative assumption--that only one-
third of annual sales occur in the first half--led to the same conclusion except
that the pork anomaly (footnote c) becomes larger, pork fat quantities increase well
above 1963 levels, and sales of cabbages and dry onions were roughly the same as in
1963.
c
The marked increase in estimated tonnage of pork sold in 1987 is a puzzling
contrast to the decreases in all other products listed is puzzling. It could
perhaps result from larger-than-usual slaughter and CFM marketing of hogs both by
collective and state farms and by individuals in the early months of the year when
the unusually harsh winter increased demand for feed supplies and snarled -
transportation, making feed replenishment difficult.
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were down by 12 percent. The decline in CFM marketings is
reflected in comments such as those reported in Sovetskaya
Rossiya, 8 August 1987, p. 1, that in Kurgan "We haven't seen any
of the change promised on radio and television and in the press
that was to result from the creation of the agro-industrial
complex." Ironically, some of the decline in CFM marketings may
result from Food Program initiatives that allow farms to
encourage individuals to produce commodities on contract and
permit cooperatives (who procure large quantities of fruits and
vegetables, primarily from farms) to buy more from individuals.
In both cases, commodities produced by individuals are marketed
through state channels.
The decline in sales has been accompanied by an increase in
prices. A crude index based on sales of roughly half of the
commodities listed in the new tables (using weights derived from
our Moscow CFM price index) indicates that the average price
level over one year in the 264-city sample increased by about 10
percent.3 The article containing the new price data notes that
for all CFMs, average prices "increased by 6 percent" in the
first half of 1987. Our Moscow CFM price index indicates that
the average price level for the 17 products systematically
reported there (not the same 17 that appear in the newly
published statistics) increased by 4.4 percent in the first half
of 1987.
3 See Appendix B for comparisons of the official CEM statistics with
unofficial Nbscow data and Radio Liberty data. 25X1
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Because no US Embassy Moscow CFM price observations were
reported for June 1986, a May 1986 - May 1987 comparison was
constructed to provide an average CFM price level comparison for
Moscow approximating that available from the 264-city
sample. The result was surprising: the Moscow price level
calculated from the US Embassy survey was unchanged, but the
officially compiled 264-city price level increased by 10
percent. Changes in average meat prices were roughly the same in
Moscow and in the 264 cities, but prices of most Vegetables in
Moscow were down by 7 percent or more. Thus Moscow residents
may, in fact, perceive an improving situation. The apparent
decline in Moscow vegetable prices may result from relatively
larger supplies--individuals prefer to "bring their suitcases to
Moscow"--or simply from limitations of the data.
Although the Soviet 264-city data present new problems of
interpretation, these data provide new, if tentative, insight
into the progress of Gorbachev's food initiatives, and highlight
the danger of placing undue weight on the Moscow CFM or Radio
Liberty CFM price reports. The data inadequacies of non-official
Soviet CFM data are clear. The emigre responses suffer from a
"recall" problem, and the US Embassy reporting on Moscow CFMs
covers only a very limited sample geographically and
temporally. Differences between emigre data and the US Embassy
Moscow data probably reflect the substantial city-to-city price
variation, especially for seasonal produce.
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Appendix A
Statistical Lacunae
The two comprehensive statistical publications on domestic
trade are old. Sovetskaya torgovlya, Moscow, 1956 and 1964,
included annual data on the value of sales in all CFMs (except
village markets), indexes of the physical'volume of sales of a
the major categories of products sold (grain, fruit, and
vegetables, for example), and tonnages for a number of products
sold in CFMs in 251 cities. They also included selected data on
CFM sales of a few products in each of 32 cities. No data on the
prices of individual products were included. Although during the
late 1960s the Central Statistical Administration (CSA) several
times promised to publish another volume in the series, CSA has
not yet done so.
After 1964, the annual Narodnoye khozyaystvo SSSR continued
to publish a few tables on all aggregate value and price-index
CFM series for 251 cities. In 1968 the yearbook repeated the
1967 tables but--without explanation--noted a 264-city base. The
indexes of quantities sold and of prices were also rebased from
1950 to 1960. CIA analysts compared the 1967. and 1968 data sets
to determine whether the 264-city data were indeed a new series
or whether the larger sample data presented in 1968 were merely
linked in. The results were inconclusive, because only three
years of data were available and the rounding necessary for the
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USSR to publish three-digit numbers markedly reduced precision.
Technical literature at the time indicated that the 264-city
sample was merely an expansion in coverage, that is, an addition
to the original 251, not a change in the basic list. The cities
included have not, to the author's knowledge, been listed in any
publication available in the West. The matter lost importance,
however, as the tables in question have not been repeated since
1968. (The only official CFM statistics available since then are
the value of CFM sales in current prices and the CFM shares of
total food marketed both in CFM prices and in state retail
prices.)
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Appendix B
The newly published price statistics also permit a
comparison of official statistics on CFM prices in 264 cities
with US Embassy observations in three Moscow CFMs (table B1).
For the most part, Moscow, as would be expected, appears to be an
expensive city. Only three markets in Moscow are observed by US
Embassy price checkers on one day (not necessarily the same day)
each month. The new CSA 264-city-sample price averages may mask
large price variations within the month as well as between
cities. Thus one cannot judge the degree to which the Moscow
CFMs may be atypical. Soviet textbooks claim that the CSA
collects daily price data from many CFMs in each of the 264
cities. The new statistics also permit a comparison of average
prices of eight commodities in 264 cities with those in 67
reports from emigres for June 1986 (table B2). The prices in the
264-city sample are consistently lower than those reported by
emigres, probably reflecting in part the predominance of emigres
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Table B1
USSR: Comparison of Observed Collective Farm Market Prices
Rubles per kilogram
264 citiesa
Nbscow
June 1987
June 1987b May 1987 c
Potatoes
.58
1.50 .60
Dry onions
1.05
NA 3.00
Carrots
1.21
NA 2.00
Cucumbers
2.06
2.06 2.08
Tanatoes
3.95
3.95 3.50
Apples
3.18
6.00 4.33
Beef
4.93
9.00 7.75
Mutton
5.36
7.00 8.00
Pork
4.43
8.00 7.75
Pork fat
3.97
6.00 5.67
a Ekonanicheskaya gazeta, No. 32, August 1987, p. 19.
b
US Bibassy Nbscow, UR 7052, 9 July 1987.
c US Bnbassy Moscow, UR 7051, 9 July 1987.
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USSR: Collective Farm Market Prices, June 1986
Soviet Official: Radio Liberty
US Embas y
264 Citiesa Food Reportingb
Moscow
Rubles per kg.
Rubles per kg.
Deviation
Rubles per kg.
Deviation
Potatoes
.47
1.01
+115
.60
+ 28
Cabbage
.94
1.37
+ 46
NA
+ NA
tomatoes
3.04
3.55
+ 17
8.83
+190
Apples
3.00
3.62
+ 21
4.33
+ 44
Beef
4.93
8.25
+ 67
7.75
+ 57
Mutton
5.20
9.81
+ 87
8.00
+ 54
Pork
4.39
9.78
+123
7.75
+ 77
Butter
7.42
7.52
+ 1
NA
+ NA
Ekononomicheskaya gazeta, no. 32, August 1987, p. 19.
Based on data from 67 respondents.
Percent deviation from Soviet official price average for 264-cities.
Observations for May 1986 (US Embassy Moscow, UR6057, 22 July 1986).
No US Embassy observations were reported for June 1986.
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