PURCHASE PRICES FOR SOVIET AGRICULTURAL PRODUCTS AND THE NEW AGRICULTURAL PROCUREMENT POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700200222-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 13
• Document Creation Date: December 22, 2016
• Document Release Date: August 31, 2011
• Sequence Number: 222
• Publication Date: November 19, 1954
• Content Type: REPORT

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REPORT
CD NO.
DATE OF
INFORMATION 1953-1954
NO. OF PAGES 13
THIS IS UNEVALUATED INFORMATION
PURCHASE PRICES FOR SOVIET AGRICULTURAL PRODUCTS
AND THE NEW AGRICULTURAL PROCUREMENT POLICY
[Summary: This report provides information on the new agri-
cultural products procurement policy, whereby obligatory deliveries
of agricultural products to the state were reduced and surplus prod-
ucts ?4ere made available to kolkhozes and kolkhoz farmers to sell
at increased prices. The report discusses the contract system and the
revised structure of state procurement and purchase prices, effected
7 September 1953, and includes examples illustrating the implemen-
tation of the new policy as well as operational details.
Numbers in parentheses refer to appended sources.]
Reduced Obligatory Deliveries Increased State Purchase and Procurement Prices
In the last years of World War II and in the early nostwar years, ste
purchases of grain and other basic food products were non-existent. However,
in that period, decentralized purchases of Potatoes, vegetables, meat, milk,
mushrooms, and berries were carried out by the workers' supply divisions (ORS)
of enterprises and institutions at prices not exceeding purchase prices fixed by the state. Through these purchases, additional foodksupplies
e
could be acquired to supplement the food supplies made available to workers
and employees through the ration system. However, since so many organizations
were making these food purchases; the purchasing regulations were violated
(products were frequently purchased from kolkhozes which had not fulfilled their
obligatory food deliveries to the state), and purchase prices often exceeded the
established limits.
Consequently, decentralized purchases by the workers' supply divisions and
other organizations were discontinued, and in 1946 the cooperative societies
were made responsible for purchasing surplus agricultural products. Until 1948,
these purchases were made at market prices, and in 1948 maximum purchase prices
were instituted by the
right to make government. Cooperative organizations did not have the
purchases at higher than the fixed prices.
STATE
ARMY
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CLASSIFICATION C-O-_J_F-I-D-E-N-T-I-A_L
CENTRAL INTELLIGENCE AGENCY
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO ROADCASTS
COUNTRY USSR
SUBJECT Economic - Acriculture,procurement policy
HOW prices /
PUBLISHED Monthly, thrice-monthly periodicals
WHERE
PUBLISHED Moscow
DATE
PUBLISHED Oct 1953-Apr 1954
LANGUAGE Russian
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una or m co. n.n r. o. ........ ..axnn.. o? ?cv..
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These limitations on the purchasing activities of cooperatives played an
important part in increasing the accumulations of excessively large stocks of
agricultural products. This is illustrated by the following table, showing
the purchases of potatoes and vegetables in the period 1947-1952:
Potatoes
(1
000 t
Vegetables
,
one)
(1,000 tons)
1947
1948
138.4
161.7
1
4
427.3
171
5
9
9
391
2
.
1950
.
16
87.2
1951
3.7
266
105.1
1952
.2
123.4
163.7
166.6
The above data indicate that the total purchases were not great, and
instead of being increased, in some years were even reduced. Food purchases by
cooperatives were poorly organized. Kolkhozes showed little interest in sell-
ing their products to cooperatives because of the great difference between the.
maximum purchase prices and the state retail prices,?as shown in the
following table:
Products
Potatoes
'Cabbage
Carrots
Onions
Cucumbers
Tomatoes
Meat
Milk
Maximum Purchase
Prices in % of
1952 State Re-
tail 'Prices
33.3
19.2
23..0
51.4
25.0,
23.3
51.0
45.4
Because of the great difference between state retail and maximum pur-
chase prices, kolkhozes tried to sell agricultural products at the market
at higher prices'. As a result, receipts from the sale of products at
kolkhoz markets, and not the money received for products delivered to the
state and to cooperatives, constituted the chief monetary income of kolkhozes
of individual rayons and oblasts.(l)
The system of procurement and purchase prices on agricultural products,
which was in operation until recently (September 19531, became obsolete and
did not accurately reflect the present-day labor and material expenditure
involved.in the production of these products. N. S. Khrushchev, in his
address to the September Plenum of the Central Committee of the CPSU, indicated
that on the whole, in the USSR, the profit derived from the sale of industrial
crops produced by one worker in one workday amounted to approximately 18 rubles,
while the profi+ derived from the delivery and sale of products resulting from
livestock raising amounted to only 5 rubles. This discrepancy in the system
of procurement prices caused livestock raising to appear less advantageous
economically, compared with other branches of agriculture. In addition, the
cultivation of grain was not sufficiently encouraged.
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These and other discrepaancies show that the system of procurement prices
must have an economic basis, and that the level of procurement prices must be
related to the law of distribution based on labor expenditure and the law of
cost.(2)
The decree of the Plenum of the Central Committee of the CPSU of
7 September 1953 marked the beginning of a new stage in the development of
state purchases of agricultural products. State purchases represented a
powerful economic stimulus for the development of basic branches of agriculture.
In order that a large number of kolkhozes and kolkhoz farmers might have
surplus products for sale and might avail themselves of the advantages of state
purchases as early as 1953, it was considered expedient to lower the norms of
obligatory deliveries of animal products and of potatoes and vegetables.
Accordingly, quotas for obligatory potato and vegetable deliveries in 1953 were
reduced and new plans for their purchase were established. Plans for obligatory
potato and vegetable deliveries were revised to the greatest extent in areas
located near large cities and industrial centers, where they had been consider-
ably higher than in other areas. For example, in Moskovskaya Oblast, the 1953
plan for obligatory potato deliveries was 31 percent of the 1952 plan; and for
vegetable deliveries, 12 percent. In Leningradskaya Oblast, the 1953 plan for
obligatory potato deliveries was 51 percent, and for vegetable deliveries, 9
percent of the 1952 plan. For rayons directly bordering on Moscow, the 1953
plan, in percent of the 1952 plan, was as follows: in Ukhtomskiy Rayon,
potatoes, 6 percent and vegetables, 6 percent; and in Leninskiy Rayon, 12 percent
and 6 percent, respectively. This considerable curtailment of the plan has greatly
increased the surpluses of these products available for state purchases and for
the kolkhoz trade system.
As a result, state purchases in 1953 will constitute a substantial part
of the over-all amount of food products received by the state, as shown in
the following table (in percent).
Total
Total
I
-
Delivered
Obligatory
red
to
to
O
USSR
to
Delieries
chases
State
bligatory
Deliveries P
urchases
Moskovskaya
100
71.7
28.3
100
66.7
33.3
Oblast
100
38.3
61.7
100
22
0
Lenin
gradskays
.
78.0
'Oblast
Sverdlovskaya
100
47.0
53.0
100
15.5
84.5
Oblast
100
47.7
52.3
100
42.0
8
Ryazanskaya
.0
5
Oblast
100
70.6
29.4
100
65.4
34.6
The proportion of potato and vegetable purchases in such important in-
dustrial centers of the countiy as Moskovskaya, Leningradskaya, and Sverdlovskaya
oblasts is especially great. The plans for potato and vegetable purchases in
these areas considerably exceed the plans for obligatory deliveries of these
products. This has been done to induce kolkhozes of suburban areas to expand
potato and vegetable production to benefit the state, the city population, and
the kolkhozes.
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At the same time, state purchase prices on many products were raised
considerably, and the diff
prices was'reduced. erential between state purchase prices and retail
The differential between the new state purchase prices and retail prices
generally amounts to the expenditures of trade and procurement organizations
for transport, packing, storage, and sale of the products. It is a well-known
fact that considerable expenditures are entailed in the shipping, sorting,
storage, packing, distribution, and sale of vegetables and potatoes. Moreover,
there is always some waste due to the lengthy storage of potatoes and vegetables.
All these expenditures must be covered by the differentialthebetweenstatere Otherwise,
tail prices
and the prices at which the kolkhoz sells its products to .
trade in potatoes and vegetables would be unprofitable and its development would
be impeded. Therefore, the increase in the procurement and purchase prices on
potatoes and vegetables effected in 1953 resulted in the maximum prices. Further
increases on these prices are not possible, since they would be detrimental to
trade.
Increase in State Purchase Prices and Relationship Between
New Purchase Prices and Retail Prices in Moskovskaya Oblast
1953 1953
Purchase Purchase
Products Price, in % Price, in
of 1952 Pri %
Eggs (spring
and summer)
per ten
Cucumbers ifi 80.0
Potatoes 160 80.0
Carrots 100 66.6
Beef of - 100 54.0
average fatness
Milk, per liter 130
isn 73.2.
Qe of Retail Price
The increase in purchase and procurement prices, the reduction of obligatory,
deliveries, and the increase in state purchases have greatly raised the monetary
income of kolkhozes. Kolkhozes and kolkhoz farmers of Moskovskaya and Leningrad-
skaya oblasts, according to the 1953 plan, are supplying fewer potatoes
in the form of obligatory deliveries and state purchases than they did in 1952
ir. the form of obligatory deliveries alone. In 1953, kolkhozes and kolkhoz
farmers of Moskovskaya Oblast will receivenot less than 54.7 million rubles 'for
the sale of potatoes including 9.4 million rubles for obligatory potato deliver-.
ies and 45.3 million rubles for state purchases. In 1952, they would have re-
ceived 8.8 million rubles for the same quantity of potatoes, or one sixth of the
1953 receipts. Kolkhozes and kolkhoz farmers of Leningradskaya Oblast will
receive 11.1 million rubles in 1953, as against 1.9 million rubles in 1952.(1)
Following the decree to increase procurement and purchase prices on animal
products, potatoes, and vegetables, the procurement prices on obligatory live-
stock and poultry deliveries were increased more than 450 percent; on milk and
butter, 100 percent; on potatoes, 150 percent; and on vegetables, from 25 to 60
percent. Purchase prices on meat have increased an average of 30 percent, and
on milk, 50 percent.
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The increase of procurement and purchase prices will give kolkhozes and
kolkhoz farmers large additional incomes. In the Kolkhoz imeni Khrushchev of
Leninskiy Rayon, for example, the total income amounted to 3,718,000 rubles
in 1952. In 1953,?because of the increase in procurement and purchase prices,
the income of this kolkhoz will increase by more than 540,000 rubles, of which
the kolkhoz will receive the following amounts (in rubles) for deliveries to
the state:
Obligatory deliveries
and milk 50,000
Potatoes 50,000
Vegetables
Meat 330,000
11,000
The Kolkhoz imeni Stalin of Kuntsevskiy Rayon will receive approximately
400,000'rubles in additional income. Of this amount, the increase in procure-
ment and purchase prices on animal products will provide 80,000 rubles; on
potatoes, 70,000 rubles; and on vegetables, 250,000 rubles.
For obligatory deliveries of meat to the state, kolkhozes and kolkhoz
farmers will now receive the following prices per live-weight kilogram:
Cattle and sheep of average fatness 1 ruble 50 kopeks
Hogs 3 rubles 20 kopeks
Hens and chickens 5 rubles
Turkeys 6 rubles
Ducks and geese 4 rubles
The established price per kilogram of rabbit is 1 ruble 20 kopeks, not including
the cost of the pelt.
The new procurement price on milk is 55 kopeks per liter; creamery butter,
9 rubles per kilogram; and melted butter, 12 rubles per kilogram.
For one kilogram of first-quality fine wool (with a 42-percent pure wool
yield), kolkhozes receive 28 rubles 20 kopeks, according to the new procurement
prices; for one kilogram of semifine wool of first quality (with a 145-percent
pure i+oolyield), 18 rubles 40 kopeks; of semicoarse spring wool (with a 52-per-
cent pure wool yield), 13 rubles 30 kopeks; and of coarse wool, an average of
9 rubles 53 kopeks.
The prices on animal products which kolkhozes and kolkhoz farmers?of
Moskovskaya Oblast are selling to the state in addition to the obligatory
deliveries have also been considerably increased. According to these prices,.
one'live-weight kilogram of cattle and sheep of average fatness is worth 4
rubles 40 kopeks; hogs, 7 rubles 50 kopeks; ducks and geese, 8 rubles 50 kopeks.
The state encourages kolkhozes and kolkhoz farmers to sell.meat not only in the
fall, but in spring-and summer; therefore, special price increases are established
for products sold'during this time.
The [state] purchase price for 10 eggs is 5 rubles, and for one liter of
milk, 1 ruble 20 kopeks. However, in those rayons of the oblast which deliver
milk to Moscow, the established price is 1 ruble 50 kopeks. Kolkhozes and
kolkhoz farmers delivering milk to Moscow from 1 October to 1 May receive an
additional price increase of 20 kopeks per liter.
At present [Octcber 19531, it is very advantageous for kolkhozes and
kolkhoz farmers to sell as many animal products as possible to the state.
Aside from increasing their own monetary income as a result of the increased
prices, kolkhozes and kolkhoz farmers are granted a number of privileges for
making timely deliveries of milk; meat, eggs, and wool to the state.. For each
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100 rubles' worth of animal products sold to the state, kolkhozes can obtain
100 rubles' worth of various manufactured goods at retail prices
.
Should kolkhozes prefer to obtain feed concentrates instead of manufactured
goods, in exchange for milk and butter sold to the state, they can buy oil cake,
bran, and all-mash. In selling meat to the state, 4 metric quintals of feed
are allowed for one live-weight metric quintal of cattle and sheep; and 5.5 metric
quintals of feed concentrates are allowed for one live-weight metric quintal of
hogs and poultry.
Kolkhozes must conclude special contracts with procurement organizations
for the sale of animal products. To provide a financial incentive for kolkhozes
and to encourage them not only to fulfill the concluded contracts but to sell
products above the plan, the state has established additional monetary of 20 percent. The kolkhoz can receive these premiums for meat sold in excess
of 30 percent above the Obligatory premiums
a 20-percent premium for milk andy eggs tsolditorthe governmenthineexcess ofc500ve
percent above the obligatory deliveries-0)
To increase the monetary income of kolkhozes concluding contracts for the
sale of meat and milk under the state Purchasing system, a monetary advance of
30 percent of the purchase price of these products will be paid each quarter
on products to be delivered under contract within that quarter.(4
manner, the Central Union of Consumer Cooperatives has now bean extendedithe
right to issue to kolkhozes monetary advances of 25 percent othe cost of
potatoes and vegetables purchased from them.(5) By the decree of the
February-March 1954 Plenum of the Central Committee of the CPSU, the Central
Union can sell trucks, automobile tires, electric motors, construction materials,
and manufactured and household goods to kolkhozes which provide
state purchasing system, at a rate of 50 rubles' worth of these commodities at
retail prices for each 100 rubles' worth of grain under the
? grain.(,.)
Kolkhozes have also been extended the right to issue kolkhoz farmers
advances amounting to approximately 25 percent of the money income received by
the kolkhoz from the sole of livestock and livestock products. This advance ent
every formall workdaysdspentoonhcollective farm work and up too100ts up to 15
spent on livestock raising and fodder percent
procurement.(4) percent for workdays
When kolkhozes, in addition to fulfilling the purchase contracts, fulfill
the plans for increasing the number of cattle, sheep or hogs and for wool and
meat deliveries to the state, as well as the plan for payment in kind for MTS
work, the obligatory delivery norms established for kolkhozes on milk, wool, or
meat will be lowered 10 percent in the following year.
In addition, kolkhozes are encouraged to expand livestock raisin
the plan for construction of livestock buildings, and to produce admeetingequateontracts
of fodder. In fulfilling their obligatory deliveries and in t
thasu
for the sale of animal products to the state, kolkhozes become entitled to aPstate
bonus in the form of one truck or automobile.
In the decree of the Council of Ministers IBSR and the Central Committee
of the party, "Concerning Measures for Increasing Production and Procurement
of Potatoes and Vegetables in Kolkhozes and Sovkhozes From 1953 to 1955," it
is indicated that after fulfillment of obligations for delivery of potatoes
and vegetables to the state, the kolkhozes will still retain a large amount
of these food products.
In Moskovskaya Oblast, the procurement price on obligatory deliveries to
the state was set st 100 rubles per ton for late potatoes, and 250 rubles per ton
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for early potatoes delivered before 31 July; from 1 to 15 August, the price is
200 rubles; and 125 rubles for delivery from 16 to 31 August. In delivering
potatoes to the state, kolkhozes also receive the usual bonuses for quality,
size, and starch content of the potatoes, and for early delivery.
The following prices are established for late vegetables of the first
quality, depending on the area of cultivation:
Product
Rubles per Ton
Cabbage
100
- 200
Onions
350
- 1,000
Cucumbers
300
- 1,000
Carrots
130
- 300
Beets
80
- 200
Tomatoes
350
- 1,500
The following prices are paid for early vegetables sold as obligatory
deliveries, depending on the time of delivery and area of cultivation:
Product
Rubles per Ton
Early cabbage
120 - 625
Garden cucumbers
500 - 1,100
Garden tomatoes
boo - 1,500
Early carrots
180 - 500
Garden beets
90 - 450
In Moscow and other cities of the oblast, kolkhozes often deliver vegetables
directly to the stores and dining rooms. The government has decreed that the
products which kolkhozes deliver to stores and dining rooms, such as hothouse
vegetables, early garden greens, and early potatoes, must be paid for at retail
prices, with a 25-percent discount.
Potatoes and other vegetables are
the following fixed purchase prices:
purchased by the state from kolkhozes at
Product
Rubles per Ton
Potatoes
300
Cabbage
250
Carrots
350
Beets
250
Cucumbers
450
- 1,200*
Tomatoes
550
- 2,000*
*Spending on cultivation area
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The same system is established for payment of salted and pickled vegetables.
Kolkhozes of Moskovskaya Oblast specializing in the production of potatoes
and vegetables can purchase, for each 10 metric quintals of such crops de-
livered to the state, one metric quintal of grain in state warehouses at uniform
retail prices, with a 40-percent discount.
come Ino1953, kolkhozes wwill illvreceive nnearly 3.8 billion rubles of additional in-and development of agriculture, kolkhozes andpukolkhoztting fin 1953her
a total of over 13 billion rubles in additional income, and in 1954 they will
receive over 20 billion rubles of additional income.(3)
Sale of Agricultural Products in Suburban Areas
In 1940, the proportion of vegetables produced in the Moscow suburban
zone and brought into Moscow and industrial centers of Moskovskaya Oblast
amounted to only 35.5 percent of the total agricultural production of the zone,
and in 1952 it increased to 51.1 percent. Since the vegetable production in
kolkhozes of the zone must be increased considerably in accord with the tasks
decreed by the September 1953 Plenum of the Central Committee of the CPSU, the
areas under vegetable cultivation in kolkhozes of the Moscow suburban zone have
been expanded. As the result of the grass-field system of crop rotation, im-
provement of agricultural techniques, and increased mechanization of labor over
the past years, vegetable yields have been somewhat increased. However, they
are still extremely unsteady.. For example, according to data of the past 16
years, the cabbage harvest has fluctuated from 92 to 248 metric quintals per
hectare; cucumbers, from 43.5 to 120 metric quintals, and tomatoes, from 74 to 147
metric quintals. It is clear that with such fluctuations it is impossible to es-
tablish permanent vegetable bases in the suburban zone. The yield of vegetables
per hectare of sown areas has remained practically unchanged since 1940.
The experience of leading kolkhozes indicates that the yield from vegetable
crops in the Moscow suburban zone can be doubled and even tripled. Leading
kolkhozes with large crop areas receive steady harvests of cabbage amounting to
60-70 tons per hectare; carrots, 50-60 tons; and onions, 30-34 tons. The causes
of the over-all lag in vegetable p-eduction revealed by the September 1953 Plenum
also apply in the case of kolkhozes of the Moscow suburban zone. The existing
procurement and purchase prices on vegetables did not sufficiently encourage
kolkhozes and kolkhoz farmers to step up vegetable production. Errurs permitted
in calculation of vegetable procurement norms, especially the increased norms
for leading kolkhozes, underminded the interest of kolkhozes in striving for high
harvests and in marketing their vegetable products.
These deficiencies, hindering the development of vegetable production,
have now been eliminated. Higher purchase prices on late and early vegetables,
lowered norms for vegetable deliveries, and a widely expanded system of state
purchases under the contract system now permit the government to plan in advance
the amount of production remaining after the obligatory deliveries have been
fulfilled. Such a system makes it possible to grant monetary advances to kolkhoz
farmers.
Purchase prices on vegetables in the USSR as a whole are being increased,
on the average, 25-40 percent. Additional increases are granted on procurement
prices for cabbage, onions, carrots, and beets received from suburban kolkhozes.
To eliminate the lag of early vegetable production, procurement prices on
early vegetables have also been increased, with additional price mark-ups granted
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to suburban zones. Hothouse produce and early greens will be procured by stores
and public eating enterprises at retail prices with a 25-percent discount.
Moreover, the sale of grain from state supply houses at uniform retail
zoned (poyasnykh) prices with a 40-percent discount on the fixed price is an
important incentive for suburban kolkhozes. This sale is contingent on the
fulfillment of obligatory deliveries and payments in kind to be made, and will
be carried out at a rate of one metric quintal of grain of each 10 metric quin-
tals of potatoes and vegetables.
Since many kolkhozes specialize in vegetable and potato cultivation, and
to stimulate their further expansion, a reduction of 25 percent on obligatory
grain deliveries is granted to kolkhozes in suburban zones and in zones con-
taining the alcohol, starch, molasses, and drying and canning industries, where
the potato and vegetatle area under cultivation is 10-15 percent of the total
sown area; and 50 percent to kolkhozes sowing 15-20 percent of their total area
to potatoes and vegetables. Kolkhozes sowing more than 20 percent ')f their
total area to potatoes and vegetables are completely relieved of any obligatory
grain deliveries to the state. These privileges are granted only when the ob-
ligatory deliveries of potatoes and vegetables to the state for the current
year have been made, and payments in kind to MTS, as well as the return of any
borrowed potato stocks, have been carried out.
In the Moscow suburban zone, many kolkhozes and even whole rayons are
eligible for there privileges.
Radical changes are now taking place in the type of sale that can be made
by kolkhozes in marketing vegetables, as illustrated by the following data:
Obligatory deliveries to the state
State purchases
Total
1952 1953
Actual Sale Planned Snip
(in % of total) (in % of total)
96.2
21.9
78.1
100.0
According to the table, trade relationships between kolkhozes and the state
in 1952 consisted chiefly of vegetable deliveries to the state. The propresportionum
of sales to the state and cooperatives was not large. The 1954 [
ably 1953) plan provides essential changes in the sale of vegetable produce,
decreasing the proportion of deliveries to the state and increasing consider-
ably state purchases under the contract system.
Present [December 1953) procurement prices on potatoes are 2 1/2 times
higher [than those in effect before the September 1953 Plenum). Under the de-
creased delivery norms, kolkhozes are now also able to sell a considerable quan-
tity of potatoes at the purchase price, which is 8.3 times higher than the former
procurement price.
Further increases in the commodity output of potatoes by suburban kolkhozes
are contingent upon increased yields through broader mechanization and the use
of the checkrow method of cultivation, expansion of early potato crops, and
planting crops in better soil. Increased procurement prices, decreased deliveries,
and expanded purchases at highest purchase prices, as well as the change in rates
of payment in kind, will promote a very rapid development of potato sales.
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Measures for increasing livestock raising and the marketability of dairy
products have also been worked out. Procurement prices on milk are being
doubled, and purchase prices for kolkhozes of the Moscow suburban zone are
being increased threefold.(4)
Contract System in Operation
The contract system is now [March 1954] one of the chief means of state
procurement of agricultural products. A large number of industrial crops of
national economic importance, such as cotton, sugar beets, fiber and seed flax
and hemp, tobacco, makhorka, several oil crops, new bast crops, fruit, wine,
tea, and medicinal and melon crops are now procured under the contract' system.
The contract system as a type of procurement of agricultural products
originated a long time ago. Now, however, according to resolutions of the
September 1953 and February 1954 plenums of the Central Committee of the CPSU,
its importance is increasing. Contractual purchases are arranged for grain
surpluses, potatoes, vegetables, oil seeds, meat, milk, and other products
which remain in the kolkhozes after obligatory deliveries and payment in kind
for MIS work have been carried out, grain has been laid in, and other require-
ments satisfied.
The contractual agreements are carried out in a form of bilateral agree-
e-
ments between state procurement organizations and the kolkhozes on the basis
of the state contracts plan for a given agricultural established yearly
by the Soviet government for republics, krays, and oblastsct~The tcontract plan
is established for a republic, kray, or Oblast by a resolution of the Council
of Ministers of the republic or by the kray or Oblast executive committee of
the council of workers' deputies, and is extended to the rayons. In bringing
the state contracts plan to the rayons, the Oblast executive committees dif-
ferentiate between quantitative and qualitative tasks according to local
natural and economic peculiarities.
In any contractual agreement between the purchasing official of a state
procurement organization and the supplying kolkhoz, both sides carry certain
obligations. Obligations on the part of the supplying k0Lkhoz are the sowing
of a fixed amount of crops contracted for in the agreement, the delivery of a
certain quality and quantity of raw materials to the purchaser, the observance
of delivery schedules, and the repayment of monetary advances. Obligations on
the part of the contracting organization are payment for delivered ouput at mone iprssuance
price, advances, the paent of fixed manufactured commodities and food products.
The contract system makes it essential to provide for the proper imple-
mentation of basic agricultural production processes. In this connection,
agrotechnical obligations specified in the contract are very important. The
following are most frequently provided for in the contracts: the use of a
specific sown area and type of soil for a given crop, correct preparation of
soil, timely utilization of fertilizer, thorough and timely plowing and sowing,
proper care of crops (weeding, billing, and irrigating). and prompt harvesting.
State procurement organizations, in turn, are obligated to aid koLkhozes by
providing the best seeds and by helping them fight pests and plant diseases.
at present in the fiber-flax contract systemecified in the agreement operating
1. On the part of the su
l
pp
ying kolkhoz; i
delivery of stipulated quality
and quantity of fiber and seed flax from a determined crop area in a certan
t
period, to he kolkhoz bis transported d to carry oututheefollowinrbnotht kolkhoz. In addition,
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weeding the flax crops, pulling the flax quickly afte not later
r it has become ripe, thresh-
ing the flax rapidly after the sheaves have matured (to be completed est), spreading most of the straw flax in August (to be
c than 10 ompleted days not after later t harvhan 15 September), raising the straw on schedule from the
retting area, and sorting it for quality.
2. On the part of the receiver office of "Glavzagotlen" (H.ain Administra-
tion for the Procurement of Flax: delivery of a monetary advance to the kolkhoz
amounting to 15 percent of the cost of the fiber contracted for; prompt payment
for products received at procurement prices in effect, as well as the payment
of premiums in addition to the procurement price for products delivered in ad-
dition to the contractea amount; the sale of wheat, cotton, textiles, vegetable
oil, or sugar, as well as oil cake, to kolkhozes in a specified amount and at
corresponding prices.
Thus, contract agreements for agricultural products provide a whole system
of technical and economic measures for increased production and supply.
The following material incentives are used in the contract system to stim-
ulate production: (a) Payment for products at established contract
price depending on the quality and quantity of products delivered. the
yme
of premiums, in addition to the basic procurement price, upon ethe delivery ofnt
products above the established minimum. The size of the premium is proportion-
ately increased with each additional delivery per hectare of crop. (c) Issuance
of monetary advances to kolkhozes for contracted produce. The amount of advance
is directly proportionate to the quantity and quality of produce which the kolkhoz
is obligated to deliver according to the contract. (d) Countersale to kolkhozes
of industrial goods and food products at advantageous prices. Norms of counter-
sale are established per unit of produce supplied by the kolkhozes; therefore
the total amount of commodities received will depend on the amount of agricultural
products delivered according to the contract.
In addition, other material incentives are employed in the contract system
for certain products.
Under noncontractual procurement, there are two systems of delivery prices
on grain, potatoes, oil seeds, vegetables, meat, milk, and other products pro-
cured through obligatory deliveries and state purchases: the procurement prices
on products turned over as obligatory deliveries, and the higher purchase prices.
Consequently, the most important aspect of obligatory deliveries is the definite
limitation of delivery norms, the violation of which is punishable by law. This
guarantees the kolkhozes the opportunity to sell surplus products at increased'
purchase prices and encourages them to increase the yield of agricultural crops
and livestock, productivity to obtain more surplus produce.
The situation is somewhat different in the case of the contract system of
procurement which covers industrial crops. Under this system, there is nc two-
fold price structure; the whole commodity output is sold at single contract
prices. The structure of contract prices is different from that of procurement
prices under obligatory deliveries. Contract prices are closer to the true value
of agricultural products. These prices not only cover the production expenditures
of kolkhozes, but guarantee surpluses above the expenditures and to a much greater
extent than procurement prices under obligatory deliveries. This surplus over
production outlay is the means for accumulation and expansion of production in
the kolkhozes, and increasing incomes of kolkhoz farmers.
The material incentive of kolkhoz farmers is further stimulated by the
issuance of monetary advances under the contract system. The payment of advances
for cotton is based on the number of tons of cotton which are'to be delivered
according to the agreement. The amount of the advances also differs according
to the grade of cotton, in the same way that procurement prices differ.
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higher prices and advances apply to high quality fine-fiber cotton. Consequently,
h
te total amount of advances received by a kolkhoz specializing in cotton pro-
duction depends on the quantity and quality of cotton contracted, as the follow-
ing table indicates:
Amount of Advance per ton of Contracted
Raw Cotton (rubles)
After thinning and
primary processing
inspection
250 400
Such a system and schedule of advances stimulates the timely sowing and
the interrow cultivation of cotton plant, which is very important in increas-
ing the cotton yield. Most of the advance payments received by kolkhozes in
cotton contracting must be distributed among the farmers according to workdays.
In this way, the material incentives are extended to individual workers as well.
The-system of premiums added to the procurement price and based on a pro-
gressively higher ratio of delivered output is particularly significant in
stimulating production. The higher the output per unit of above-plan produc-
tion, the higher the premium. For example, the scale of premiums for cotton
of Soviet grade in irrigated areas is as follows:
After conclusion of
a contract
Soviet Grade Soviet Fine-Fiber Grade
Raw Cotton Per Hectare of
Crops Under Planned De-
livery (in metric quintals)
Up to 6
From 6 to-10
From 10 to 15
Over 15
Premiums in % of the
Procurement Price per
Metric Quintal of Cotton
Delivered Above Plan
200
The premium system also applies in the cultivation of sugar beets, hemp,
fruit, grapes, and other agricultural products under contract.(6)
Increased procurement and purchase prices, the contract system, and the
development of the system of countersale have had a favorable effect on the
kolkhoz economy. For example, the Kolkhoz imeni Malenkov of Voroshilovskiy
Rayon in Stavropol'skiy Kray received 700,000 rubles' worth of additional in-
come in 1953 through increased prices on agricultural products. Moreover, it
was shown that from 1 January to 1 September 1953, the kolkhoz sold 52 tons
of meat and 32 tons of milk to procurement organizations, while from 1 Sep-
tember to 1 November 1953, it sold 128 tons of meat and 108 tons of milk.
For products sold after the fulfillment of its contracts, the kolkhoz is to
receive numerous motor vehicles and a large quantity of construction materials.
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Although the system of countersale established by the party and government
provides a new incentive for economic development, there are essential short-
comings in its organizations. One of the main shortcomings is that while the
demand in kolkhozes for construction materials, trucks, and other commodities
needed for production or household use continues to increase, the countersale
in exchange for industrial crops, particularly flax and cotton,. is carried on
chiefly to satisfy the needs of kolkhoz farmers only for consumer goods. The
demand of kolkhoz farmers for consumer goods in a number of cases is not taken
into account by the procurement organizations and consumer cooperatives. Fur-
thermore, many kolkhozes fail to issue monetary advances to kolkhcz farmers on
time, thus-depriving them of the opportunity to buy goods under the countersale
system. This lessens the value of countersale as an economic stimulus in the
development of kolkhoz economy. To build up this incentive, it is necessary
to eliminate these shortcomings and increase the assortment of manufactured
goods sold to kolkhozes under the contract system.(5)
SOURCES
i
1. Sotsialisticheskoye Sel'skoye Khozyaystvo No 10, Moscow, 1953, PP.34-42
2. Voprosy Ekonomiki No 4, Moscow, 1954, p 28
3. Bloknot Agitators No 29, Moscow, Oct 53, PP 30-38
4. Voprosy Ekonomiki No 12, 1953, pp 39-47
5.. Voprosy Ekonomiki No 2, 1954, pp 34-35
6. Sotsialisticheskoye Sel'skoye Khozyaystvo No 3, 1954, pp 46-53
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