CURRENT SUPPORT BRIEF KHRUSHCHEV'S PROGRAM FOR BOOSTING CHEMICAL PRODUCTION AND AGRICULTURAL OUTPUT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001800200004-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 12, 2016
• Document Release Date: May 9, 2002
• Sequence Number: 4
• Publication Date: December 19, 1963
• Content Type: BRIEF

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SECRET
263
Current Support Brief
KHRUSHCHE V' S PROGRAM
FOR BOOSTING CHEMICAL PRODUCTION
AND AGRICULTURAL OUTPUT
CIA/RR CB 63-102
19 December 1963
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
SECRET
GROUP 1
Excluded from automatic
downgrading and
declassification
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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KHRUSHCH.E V` S PROGRAM
FOR BOOSTING CHEMICAL PRODUCTION
AND AGRICULTURAL OUTPUT
The plan for a massive increase in the output of chemicals nin the
next 7 years (1964-70), which Khrushchev unveiled at the December
Plenary meeting of the Soviet Central Committee, calls for about $32
billion of new investment, $32 billion of which would represent equip-
ment. The accomplishment of this goal appears to be generally feasible
only if the Soviet leadership is prepared to support the chemical industry
through a general retrenchment on other major programs. Furthermore,
sizable imports of chemical equipment from the West will be required --
perhaps $1 billion to $2 billion. Because of the depleted Soviet gold re-
serves, the amount imported probably will depend heavily on credits.
It is estimated that Khrushchev greatly overstated the additional
agricultural output likely to be achieved from the sharply expanded use
planned for chemical fertilizers. Judging by North American experience,
30 million to 35 million additional tons* of fertilizer (which Khrushchev
indicated would be allocated to grain from the 70 million to 80 million
tons of fertilizer planned for 1970) probably will yield only 30 million to
45 million tons of additional grain. The total. increase in agricultural
output would permit an annual per capita increase in food consumption
of somewhat more than 2 percent per year, based solely on domestic
production. These estimates do not take account of the possibilities of
increasing agricultural output through extensive irrigation projects which
are still in the talking stage.
The new goals for the textile and footwear industries indicate that
a more realistic appraisal has been made of what is possible, given the
present state of the economy and possibilities for expansion. Many of
the goals have been reduced compared with earlier long-range (and for
the most part unrealistic) projections. The fact remains, however,
that even the more modest goals, if achieved, will mean that light in-
dustrial output will advance at a rate well ahead of the growth in
Tonnages are given in metric tons throughout this publication.
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population -- the fundamental condition for an improved standard of
living. Investment in light industry apparently will not grow at anything
like the tempo set for the chemical industry, but the scheduled increase
is well above the trend of the last several years.
The impact of the chemicals program will be borne by many sectors
of the economy. Investment in heavy industry, particularly in the metal-
lurgical and electric power industries, will lose some of its past priority.
Housing, school construction, and communal services will be affected
adversely. Finally, there also is likely to be a dampening effect on the
rate of increase of defense expenditures, and certain stringencies are
likely to appear because of this new bite into scarce resources. The
competition between defense needs and the new investment demands for
specialized, high-grade resources -- design engineers, scientists,
skilled technicians, and high-quality machinery and materials -- will
almost certainly have an impact greater than the aggregative statistics
suggest.
A massive new program submitted by Khrushchev to the Plenum
of the Soviet Central Committee at its 9-13 December meeting proposes
to solve the problem of lagging agricultural output and at the same time
to raise the production of textiles, plastics, and other modern-process
materials by the single expedient of boosting the output of the chemical
industry.
The new chemical program calls for production to increase to more
than three times the 1963 production during 1964-70 -- the value of out-
put rising from 8 billion rubles ($7. 3 billion) in 1963 to 24 billion to
26 billion rubles ($21.8 billion to $23. 6 billion) in 1970. * Production
of fertilizers is scheduled to rise to perhaps 80 million tons in 1970,
four times the anticipated level of output in 1963; production of chemical
fibers is to rise to more than four times the 310, 000 tons produced in
1963 to 1. 35 million tons in 1970; and production of plastics to more
than six times, from 580, 000 tons to a level of 3. 5 million to 4 million
tons.
The dollar values are based on an estimated ruble-dollar exchange
ratio of 1. 1 rubles to US $1, this rate reflecting the average ratio of
prices for a selected group of chemical products in the two economies.
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2. Agricultural Goals
The revised agricultural goals for 1970 for production of grain,
meat, and milk are expressed as ranges and are based on "recommended
scientific norms of consumption, " according to Khrushchev. The new
targets compared with output in 1962 are as follows:
Million Metric Tons
1962
1970 Goal
Grain
115
230 to 260
Meat
9.5*
20 to 25
Milk
6)*
115 to 135
It should be noted that the Soviet claim for production of grain in
1962 was 148 million tons; this Office estimates that actual output was
close to 115 million tons.
The main feature of the new agricultural program is the proposed
increased productivity per acre that is to be achieved by greatly expand-
ing the application of mineral fertilizers. Small grain croplands (pre-
dominantly wheat, rye, and barley in the USSR) are to be heavily fer-
tilized, especially in the more humid regions, where the greatest
response to fertilization can be expected. In the past, there was little
use of fertilizer on these crops. Increased productivity in animal
husbandry is to be achieved not only by the improved supply of concen-
trate feeds resulting from expansion of production of grain but also by
feeding the livestock urea, synthesized amino.acids, vitamins, and
antibiotics.
3. Light Industry Goals
Several future goals for light industry have now been reduced from
earlier unrealistic plans, notably those for production of textiles and
footwear. The original goal for 1965 for production of chemical fiber,
a related industry, also has been reduced by one-third, although the
* Official Soviet figure.
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goal for 1970 remains unchanged. The success of light industry in the
Seven Year Plan (1959-65) has depended heavily on chemical fibers to
supplement the lagging production of agricultural fibers.
The scaling-down of targets, which were mainly of value to the
regime as propaganda, is not so important as an assessment of the
feasibility of the new levels programed and the degree to which their
achievement will satisfy the Soviet consumer's desire for improvements
in his standard of living. Of the several new 1970 goals for light industry,
two commodities -- textiles and shoes -- have a planned annual increase
of 5 percent. Whereas this rate is not dramatic, it does reflect plans
for a fair degree of improvement in the standard of living when viewed
against an increase in population of about 1. 5 percent a year. Likewise
it stands in contrast to the virtual stagnation in output of both commodi-
ties in 1963.
The question of feasibility is not an easy one to answer without more
precise investment data than Khrushchev gave in his speech. At one
point, Khrushchev mentioned an investment goal of about 1 billion rubles
a year. This sum apparently covers the whole of light industrial invest-
ment, which has been running between 625 million and 750 million rubles
a year. The average annual increase thus required by the plane is about
7 percent in contrast to the 3. 5 percent that has been achieved since 1958.
Against this performance the Khrushchev plan calls for annual increases
of at least 10 percent.
4. Chemical Investment
A total of 42 billion rubles ($82. 4 billion*) is to be invested in the
Soviet economy in 1964-70 to implement the program for chemicals and
to assure the efficient use of fertilizers and pesticides in agriculture.
Of the total investment, at least 25 billion rubles appear to represent
direct investment in the chemical industry (see the chart). The figure
of 25 billion rubles is about 2. 5 times the investment planned in the
chemical industry under the Seven Year Plan -- in part a reflection of
the magnitude of the new program but also in part almost certainly a
reflection of the Soviet realization that chemical investment, per incre-
ment of output, must be larger than that planned for the 1959-65 period.
Consistent with the product priorities, a significant part of the 25 billion
rubles will be used in expanding production of fertilizers, fibers, and
'r Based on an over-all ruble-dollar conversion rate of 0. 51 rubles to
US $1, the weighted ratio estimated for total industry.
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USSR: ESTIMATED DIVISION OF INVESTMENT
IN THE CHEMICAL AND RELATED INDUSTRIES
196+-70
(Billion Rubles)
Equipment
10
Chemical Industry
2?
(40 percent)
Total Capital Investment
42
Related Industries
17
(35 percent)
Equipment* Other
6 11
Other
15
Chemic 1 Processing
Equipment
?5
Domestically
Produced
Ancillary Equipment Materials, Power,
for the Chemical P1rast _ccs, and
Industry ~' ce ;sing .
i
Imports
1.5
Manufacture of Chemical Construction
Containers and Machine Industry
Machinery for Building 1.5
Applying Fertilizer 0.5
1
* Including 0.5 billion to 1.5 billion rubles for imports of capital equipment other than chemical equipment.
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plastics: 4. 5 billion rubles are allocated for construction or expansion
of fertilizer plants,' 5 billion rubles for expanding production of chemical
fibers and synthetic leather, and 5. 3 billion rubles*,** for production of
plastics materials and resins. The new program will attempt in part to
atone for the lag in investment in 1959-63.
5. Machinery and Equipment Requirements
The Khrushchev chemical program will require more equipment
during 1964-70 than can be supplied from domestic production. The
value of the required equipment is estimated to be 16 billion rubles
($32 billion,"' **k), as follows:
Billion Rubles Billion US $
Total equipment for the chemical
program
16
32
All equipment for the chemical
10
20
industry
Chemical and rubber process
6.5
13
equipment
Other (pumps, compressors, in-
traplant transport, controls,
7
and instruments and mining)
3.5
Equipment for related industries
6
12
Materials,
power, and plastics
6
processing
3
Manufacture
of containers and
2
machinery for applying fertilizer 1
1
Chemical machine building 0.5
Construction industry 1.5
3
>;c Investment in agricultural chemical facilities :plus the investment
needed to implement their use in agriculture is planned to total 10. 5
billion rubles.
** Excluding investment required for providing facilities to fabricate
plastics.
*** Rubles are converted to dollar equivalents on the estimated price
ratio for producer durables of 0. 5 ruble to US $1.
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It is estimated that 16 billion rubles of equipment would comprise
some 8 to 10 percent of the Soviet requirements for producer durable
equipment for the entire economy during 1964-70 compared with per-
haps 5 percent of the total comprised by corresponding types of equip-
ment during the preceding 7 years 1957-63.
It appears that there will be a significant gap between requirements
and the domestic production capability for chemical, rubber, and plastics
processing equipment, which it is expected the USSR will seek to import
from the European Satellites and the Free World.
In recent years, Soviet plants producing chemical equipment have
increased their output, rapidly but have had difficulty in producing the
desired assortment and quality of output. During 1959-63, production
rose by 1:67 percent to a volume valued at almost 300 million rubles in
1963 -- very close to the 1965 target of 350 million to 360 million rubles.
The new 1970 target is for output valued at 1. 2 billion rubles ($2. 4 bil-
lion), and the cumulative production over 7 years would be approximately
5. 0 billion rubles ($10 billion).
The chemical equipment industry does not have an adequate base
for the production demands being placed on it. Less than 100 million
rubles ($200 million) were invested in the chemical equipment industry
during the 4 years 1959-62. During the 7 years 1964-70, 1. 5 billion
rubles ($3 billion) will have to be invested. To quadruple output above
that of 1963 by 1970, the industry will face severe problems in establish-
ing production of new models of equipment and in obtaining the necessary
engineers and skilled workers.
Some under fulfillment is to be expected of the production plan for
chemical equipment, perhaps as much as 5 to 10 percent. For some of
the more technologically advanced types of equipment, the underfulfill-
ment probably will be larger. If there is access to technology from the
Free World, however, what amounts to a substantial fulfillment of the
domestic production program is to be expected, assuming that priorities
for chemicals are sufficiently high. Fulfillment of the planned production
volume of 5.0 billion rubles during the 7 years 1964-70, however, would
still leave an import requirement of 1. 5 billion rubles (see the chart").
The regime appears to be committed to devote extensive resources
to building up the capacity of the chemical equipment industry. Leonid
Kostandov,` chairman of the State Committee for Chemical and Oil Machine
Building, is an impressive administrator who has been termed by Western
observers the "top fertilizer man" in the USSR. He has been active in
>;< P. 5, above.
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negotiations for equipment from the Free World and is familiar with
Western technology.
6. Labor Requirements of the Chemical Program
Only a slight acceleration in the growth of employment in the
chemical industry will be required to carry out the planned tripling
of chemical production by 1970. The number of production workers
in that industry currently is estimated at about 1 million and repre-
sents 5 percent of the production workers in all manufacturing and
mining industries.
Nikolay Baybakov, chairman of the State Committee for the
Chemical and Oil Industry, announced at the recent Plenum that
"some 850, 000 skilled workers and 350, 000 engineers and technicians
will have to be trained in the next decade" to meet the demands of the
chemical program. To reach this goal would require the graduation
of at least 35, 000 chemical engineers and technicians annually com-
pared with 14, 000 currently, which may prove to be a bottleneck.
Skilled workers for the chemical industry would have to be trained
at an annual rate of 85, 000 compared with the current rate of 60, 000.
The considerable time that will be required to prepare these
skilled workers, as well as to train the additional engineers and
technicians, suggests that the existing fierce competition among
industrial managers for such personnel, who are still in very short
supply in spite of rapid gains in education, may be intensified tempo-
rarily.
Additional demands for manpower also will be felt in the machine
building industry, in construction, and in other branches of the economy
that will have to provide the capital equipment for the chemical industry.
Because no significant acceleration in the growth of the labor force is
expected during the remainder of the 1960's, these demands will have
to be met by a diversion of labor resources from other nonagricultural
activities.
7. Foreign Trade Requirements
The gap between the estimated Soviet production capability and re-
quirements for machinery of all types for the chemical program during
1964-70 could be filled by imports totaling about 2 billion to 3 billion
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rubles ($4 billion to $6 billion). The largest and most important part
of this requirement is for chemical equipment. Given the estimated
future performance of the Soviet chemical industry, imports of about
1. 5 billion rubles ($3 billion) would be needed to meet requirements.
In the-.7--year period 1956-62 the USSR imported chemical equip-
ment valued at 675 mzl ion ru'bles($1. 4 billion), more than 60 percent
of which was su .plied from the Free World. Soviet purchases from
the Free World were composed largely ofadvanced processes and
equipment. The leading suppliers of chemical equipment to the USSR
have been Czechoslovakia, the UK, East Germany, and West Germany.
Khrushchevstated that Satellite deliveries.-of _ chemical equipment
could ap ovint to 1 billion rubles ($2 billion) during 1964-70', It is un-
likely, however, that these countries could provide snore than thr ee-
fourths of this amount in view of their past export performance, their
own internal economic difficulties, and ambitious plans to develop their
own chemical industries.
To fulfill the new plan, Soviet requirements for chemical equip-
ment from the Free World are sizable -- perhaps $1 billion to $2 bil-
lion. Because of the depleted Soviet gold reserves, the amount imported
probably will depend heavily on credits. The assessed maximum Satel-
lite capability for such exports is 750 million rubles over the 7-year
period. Part of the equipment to be imported from the Free World in
1964-70 already has been contracted for. The implication in the
Khrushchev speech that the Satellites would fill the major part of Soviet
import needs for chemical equipment does not reflect the Soviet need
and preference for equipment from the Free World. Both the USSR and
the Satellites are deficient in the latest engineering advances and the
associated process technology.
The USSR must have credits just to maintain its 1963 level of im-
ports from industrialized countries of the Free World. Soviet reserves
of foreign exchange are negligible relative to what is needed. Moscow's
ability to expand exports to generate foreign exchange is very limited
at present. The gold reserve now being used to finance grain purchases
will be reduced in 1964 to an estimated $1. 5 billion, or less if grain
purchases from the US go through, a level that could well be regarded
as very disturbing by the Soviet leaders. Embarking on a stepped-up
program to purchase Western chemical facilities would impose addi-
tional strains -- hence the Soviet drive for more favorable credit terms.
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8. Impact on the Soviet Economy
Investment of 42 billion rubles in the chemical program for the
7-year period is roughly equivalent to total new fixed investment in
1963. Of this amount, 60 percent, or 25 billion rubles, is scheduled
for the chemical industry. Thus investments in this branch of industry
may increase as a share of industrial investments from 10 percent in
1963 to 18 percent by 1970. This shift would result from an average
annual rate of increase of 22 percent in investments in the chemical in-
dustry and an assumed annual increase for total investments in industry
of 9 to 10 percent.
The chemical. program will generate requirements for expansion
of production capacity in several areas of machine building in addition
to chemical equipment. These areas include equipment for plastics
processing, the application of agricultural chemicals, the electric power
industry, ore mining, the petroleum and gas industries, the manufacture
of paper, the manufacture of containers and bags, the alloying of metals,
and the manufacture of process control and laboratory equipment. Such
an expansion will lessen the possibility that production capacity for
chemical equipment can be enlarged at the same time that the invest-
ment requirements for machine building as a whole are held to low
levels or will require a slowdown in the rate of acquisition of machinery
by other programs.
The reallocation of economic resources for Khrushchev's chemical
program probably could be carried out without serious disruption of
the economy; however, there will be a retardation in the growth of many
other sectors. In addition to a probable slowdown in the recent rate of
increase in defense outlays, certain other elements in both heavy industry
and consumer services probably will have to expand more slowly than
in the past decade. For example, over-all investment in what the USSR
labels as nonproductive activity -- housing, schools, communal services
may be held to its recent slow pace. The rapid acceleration of housing
and other investments in consumer welfare in the latter half of the 1950's
brought the nonproductive share of total investments up to about 40 per-
cent. But the annual average increases of 20 to 25 percent for 1956-58
were replaced by rates of increase of 1 to 3 percent in the early 1960's.
If Khrushchev intends to concentrate on consumer programs that give
more emphasis to the quality and quantity of food and clothing, attain-
ment of housing goals will be pushed into the next decade.
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Khrushchev did not disclose which industrial sectors might have
to give way under the impact of resource diversion for chemistry,
merely saying that "some industries" would have to slow their growth
"temporarily. " Earlier this fall a Soviet official said that certain seg-
ments of the machine building industry would be trimmed; he also men-
tioned the coal, industry, which for several years has been growing at
a rate considerably below original objectives of the Seven Year Plan.
The ferrous metallurgy industry has been a favorite Khrushchev target
whenever he has wanted to point to an industry that has been growing
at an unnecessarily high rate. Although many of the required resources
for the new programs -- construction materials, carpenters, bricklayers can be obtained by holding housing and other nonessential programs to
present levels, stringencies may be felt because of shortages of certain
categories of specialized resources. There is evidence that diversion
of "quality" resources to military and space programs has been more
important in causing the recent slowdown in over-all growth than the
quantitative shift reflected in the aggregate statistics. For example,
there has been increasing competition between defense and investment
needs for specialized, high-grade resources -- scientists;-,design engi-
neers, highly trained technicians, and high-quality materials and machinery
components. The very industrial sector that Khrushchev wants to expand
most rapidly (chemicals) demands large quantities of these specialized
resources. If the possibilities for expanding the supplies of these re-
sources are very limited, the impact of the new program on military
and space programs may be greater than suggested by aggregative data.
Production of nitrogenous fertilizers and of some missile propellants,
conventional ammunitions, and explosives is based on virtually identical
basic materials and processes. However, in terms of fixed nitrogen,
military requirements for the next few years are unlikely to account for
a significant percentage of total nitrogen production. The incremental
availability to nitrogenous fertilizer that this percentage represents
would appear to be much too small to be crucial to the success of
Khrushchevas long-term program. Only in the very short term (1964),
when an increment of 20 percent in the application of nitrogenous fer-
tilizer seems desired, could any significant gain to the fertilizer program
be derived from inroads into military requirements.
9. The Program and Agricultural Output
In evaluating Khrushchev' s program, it is important to recall that
grandiose plans for Soviet agriculture are not new and that achievements
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have nearly always fallen far short of goals. There has never been
any evidence that Soviet "plans" for agriculture are arrived at by a
serious and systematic calculation of required inputs versus a reason-
able expectation of outputs. Rather, the plans generally seem to in-
volve three elements: (a) a notion of "needs" -- that is, what it would
be nice to have; (b) a notion that all farms ought to be able to do as well
as the best farms; and (c) the propaganda and political impact, both
domestic and international.
The response of crops to fertilization that is expected by Khrush-
chev and by some Soviet scientists appears to be too high. The more
enthusiastic scientists have stated that "at least" 2 to 3 tons of grain
may be expected per ton of fertilizer, as opposed to a US experience .
rate of 1 to 2 tons of grain per ton of fertilizer. Khrushchev chose the
rate of 2 to 3 tons as being "commonly believed" but apparently used the
rate of 1. 5 tons to calculate the increase in production of grain that can
be expected.
Past performance in the use of resources in Soviet agriculture,
particularly the use of chemical fertilizers, strongly suggests a some-
what lower response of crops to fertilization in the USSR than has been
realized in North America. The response in North America has been
obtained through relatively efficient use of fertilizers. Within their
institutional framework the USSR is unlikely by 1970 to match the level
of efficiency in the use of fertilizer that has been achieved in North
America and could well fall far short of it.
An estimation. of the over-all benefits to Soviet agriculture of
quadrupling production of chemical fertilizers is extremely tenuous.
However, the estimate at this time is that with this amount of fertilizer,
net agricultural output by 1970 may increase by roughly one-fourth above
the 1958-62 level.
Khrushchev indicated that 30 million to 35 million tons of fertilizer
would be applied to grain crops by 1970. It is estimated that the in-
crease in production of grain that probably will result from the use of
this fertilizer will be about 30 million to 45 million tons. Thus produc-
tion of grain in the USSR by 1970 is expected to increase one-fourth to
one-third above the grain crop that would be expected from the current
grain acreage under normal weather conditions. The increments to
the production of other crops, attributable to increased fertilization,
will be less pronounced. Natural conditions will limit the response of
crops to the very high rates of fertilization planned for the future. The
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USSR has no large areas climatically analogous to the southeastern US
or to the Corn Belt, where. moisture is abundant and soils are highly
responsive to fertilization. A much larger part of the cropland of the
USSR is in subhumid areas like the US Great Plains and the prairie
provinces of Canada, where potential crop yields as a result of fertili-
zation are less than in more humid areas.
The Soviet livestock industry will benefit significantly from the
increments to production of grain and other forage crops. Production
of livestock products in the USSR by 1970 may increase by roughly
one-fourth as a result of the larger supplies of feed accruing from the
fertilizer program together with some improvement in the efficiency
of feed use as a result of the feed additives.
10. The Program and the Consumer
For Khrushchev, who has posed as the champion of the consumer,
the present situation must be particularly galling. He has aroused
consumer expectations by his unending pronouncements of unrealistic
consumption goals. By reducing taxes, by raising transfer payments,
and by allowing the upward drift in money incomes to continue, he has
given the Soviet population purchasing power that cannot be used under
the existing supply of consumer goods and services. Since 1959,
as shown in the table, * the growth in average levels of real consump-
tion has faltered badly while per capita disposable income has con-
tinued to increase at about 5 to 7 percent per year.
Although the rate of growth of consumption recovered somewhat
in 1962, the outlook is for a setback in 1963. In spite of the decision
to import wheat and flour, the poor harvests of this year probably will
depress production of food products through 1964 and lower their quality.
Distress slaughtering may push output of meat upward this winter, but
the rate of 'increase should decline later as a result of the impact of
such slaughtering on numbers of livestock.
There are firm signs of significant inflation in the USSR. Between
1959 and 1962, prices on the collective farm (free) market rose from
31 percent to 49 percent above prices in state stores in spite of the
increases in prices of meat, butter, and potatoes in the latter stores
during 1962. The index of prices on the collective farm market for the
P. 14, below.
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USSR as a whole rose by 14 percent during 1961-62, and the index un-
doubtedly has continued to rise in 1963. Between January and October
of 1963, prices in the Moscow collective farm markets increased by
23 percent.
Average Annual Per Capita Rates of Growth of Consumption
1-951-55
1956-58
1.959-62
1960
1961
1962
Total consumption
,,er capita,
5.6
4.0
3.0
2.1
1.5
3.3
Food
4.1
3.1
1.8
0
0
2.8
Nonfood
11.6
5.9
4.6
4.8
2.9
3.9
Soft goods
10.1
3.5
3.7
1.9
3.3
Durable goods
N.A.
9.1
10.1
7.4
6.1
Services
4.0
4.3
5.2
5.5
5.0
4.4
Ilousing
0
2.7
2.5
3.0
1.8
1.3
Much of the slowdown in growth of per capita consumption can be
traced to those components of consumption -- food and soft goods --
that the chemical program could be expected to help most. It is not
likely, however, that either the fertilizer program or the expansion of
capacity for output of artificial fibers could have much effect before
1965 or 1966. If the overdue good harvest year occurs in 1964, con-
sumption levels could increase over the next year or so without the
benefits of the chemical program. Increased output of fertilizer and
the spreading of knowledge of how it should be used are supposed to
insure successful harvests thereafter. In any case, Khrushchev's
announced goals for agricultural output in 1970 are almost unchanged
from those put forward in 1961. However, they still contain a heavy
element of propaganda rather than an estimate of the concrete results
to be derived from the fertilizer program. Present tentative estimates
of agricultural output in 1970 would allow an average annual per capita
increase in consumption of food of somewhat more than 2 percent from
domestic production alone.
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S-E-C-R-E-T
In his speech, Khrushchev took a more realistic view of his plans
for light industry, and the original 1970 goals for-textiles and leather
footwear were cut back. Although he stressed future reliance on
chemical fibers, he announced a new goal for the output of chemical
fibers in 1965 that is one-third lower than the existing plan.
Another factor in the gloomy short-run outlook for the consumer is
the effect of the chemical program on priorities for housing, schools,
and other investment in,the communal economy. It seems likely that
the future pace of construction in these areas will not allow any increase
in the rate of growth of the services component of consumption.
S-E-C-R-E-T
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SECRET
SECRET
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