SOVIET PLANS TO MODERNIZE THE FOOD-PROCESSING SECTOR

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00591R000100130003-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 31
• Document Creation Date: December 22, 2016
• Document Release Date: January 20, 2010
• Sequence Number: 3
• Publication Date: March 1, 1985
• Content Type: REPORT

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Directorate of Secret
Intelligence
Food-Processing Sector
Soviet Plans To Modernize the
Secret
SOV 85-10038X
March 1985
Copy 4 8 9
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D
Intelligence
Food-Processing Sector
Soviet Plans To Modernize the
This paper was prepared b
Office of Soviet Analysis. A contribution
SOYA,
was provided b SOVA.
Comments and queries are welcome and may be
directed to the Chief, Soviet Economy Division,
Secret
SOV 85-10038X
March 1985
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Soviet Plans To Modernize the
Food-Processing Sector
Key Judgments Faced with the need to reduce waste and improve the quality and variety of
Information available food available to the population, the Soviet leadership recently turned its
as of 17 December 1984 attention to the long-neglected food-processing industry. The growth in
was used in this report.
output of industrially processed food slumped from an average annual rate
of about 4 percent in 1971-75 to about 1 percent in 1976-80, and in four
sectors-meat, vegetables and fruit, sugar, and vegetable oil-production
fell. This dismal performance had its roots in an erosion in the quantity and
quality of raw materials, critical shortfalls in investment, an aging and
often inoperative stock of plant and equipment, bureaucratic squabbling,
and labor shortages.
Strategy
To help increase production, Moscow in the early 1980s adopted a two-
pronged strategy to modernize the food-processing sector. The first phase,
announced in the May 1982 Food Program, called for more investment to
be supported by a sharp increase both in domestic production and imports
of machinery and equipment. Imports were to account for one-fifth of the
total investment in the food-processing industry. In 1983 the strategy was
clearly being implemented. Domestic production of food-processing ma-
chinery grew by some 9 percent, and imports of processing equipment
jumped 21 percent over 1982 levels.
Although the industry has not had time to absorb the injections of new cap-
ital, food processing posted nearly a 3-percent rate of growth in 1983.
Larger deliveries of produce and livestock from agriculture and some
increased processing capacity accounted for much of the improvement. F_
The Outlook for Imports
We expect imports of food-processing equipment to reach between $4 and
$4.4 billion in 1981-85--double the level of the previous five-year plan-
and climb to at least $5.4 billion during 1986-90. Moscow will concentrate
its future purchases on equipment for meat, dairy, fruit, and vegetable
processing.
As part of the Soviets' attempt to offset the imbalance of overall trade with
Eastern Europe, we expect them to import in 1981-85 about $3.4 billion
and in 1986-90 at least $4.2 billion in food-processing machinery from
their traditional Communist Bloc suppliers-East Germany, Czechoslova-
kia, Hungary, Bulgaria, and Yugoslavia. Eastern Europe already accounts
for about three-fourths of all Soviet imports of food-processing machinery,
and any shifts in the pattern of trade probably will be toward these
countries rather than the West.
iii Secret
SOV 85-10038X
March 1985
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Although Western exports of food-processing machinery to the USSR will
rise, we believe Soviet concern over becoming dependent on the West and
reluctance to spend hard currency will limit this trade with.the Soviets to
about $900 million in 1981-85 and to slightly more than $1.2 billion in
1986-90. Moscow will turn to the West for advanced technology, labor-
saving equipment, high-capacity processing equipment, quality-control
systems, and a wide variety of specialty lines. Current conditions in the in-
ternational market indicate that competition among Western suppliers will
be stiff. Countries most likely to benefit from increased sales to the Soviets
include West Germany, Italy, France, Japan, the Netherlands, and
Denmark.
Despite the state of bilateral relations, we project small increases in the
current low level of purchases of US machinery for meat, dairy, fruit, and
vegetable processing. The Soviets, in our opinion, will give some contracts
to US food-processing equipment firms as a gesture to improve overall
trade relations, but will not increase purchases dramatically because of:
A lack of concessionary official credits
? Unwillingness by USfirms to include unlimited maintenance clauses in
contracts.
? Soviet insistence on barter arrangements and embargo protection.
Implications for the Industry
The Soviet plan to inject the food-processing industry with domestic and
imported machinery should help boost production and improve the quality
of processed foods, but we believe the payoff will not be as large or as im-
mediate as Moscow anticipates:
? Despite the already large increases in funding, investment devoted to the
manufacture of food-processing machinery is still small relative to total
requirements, and long leadtimes are required to bring models into series
production.
? Foreign equipment is more susceptible to breakdowns than domestic
equipment under Soviet conditions.
? Soviet managers continue to resist the acquisition and use of equipment
embodying new and unfamiliar technology.
? Ministries overseeing food processing continue to squabble over their
responsibilities.
Farms, procurement agencies, and the transportation network lack
incentives to provide high-quality raw materials.
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Plans for 1981-85 call for output in the food-processing industry to increase
by 4.1 percent per year. Largely because of shortfalls in growth of farm
output, we project a growth rate of 2.5 to 3 percent per year.
Although Moscow will be unable to fulfill planned increases in processed
food production-both in quantity and quality-the Soviet consumer will
benefit from increased attention to the food-processing industry in the form
of expanded variety, some improvements in quality, and an easing of the
wide seasonal fluctuations in the availability of some products.
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Key Judgments
Obsolete Equipment 7
Machinery Mix 12
Outlook for Imports
Implications for the Food-Processing Sector
Difficulties Along the Way
Appendix
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Soviet Plans To Modernize the
Food-Processing Sector F
In 1982 the Soviet leadership adopted a Food Pro-
gram to upgrade the entire food production and
distribution chain, including processing, packaging,
transportation, and storage.' This was the first time
the neglected processing industry received such high-
level attention. Indeed, former President Brezhnev, in
a May 1982 plenum speech, pointed to the key role
the processing industry was playing in the food com-
plex's poor performance: "More and more we encoun-
ter a situation in which the bottleneck is created not
by agricultural production, but by the processing and
storage of products."
The current interest in food processing also reflects an
awareness by Moscow that the least costly path to
improvement in food availability lies in reducing the
prodigious waste in the food network. A significant
share-some 20 to 25 percent of waste, according to
Soviet sources-occurs on the way to and within
processing factories. Moreover, the consumer has
become more sophisticated, demanding greater quali-
ty and variety in foodstuffs. As a- result, Soviet
officials have mounted a campaign both to expand the
industry and to upgrade the technology and raise the
level of mechanization used in the processing of food.
Their plan is two pronged: to boost domestic produc-
tion of food-processing machines and increase imports
of processing equipment.
This assessment presents an overview of the organiza-
tion and capabilities of the Soviet food-processing
industry and the causes for its poor performance
during the late 1970s and early 1980s. In addition,
this report analyzes Moscow's strategy to overcome
output constraints, giving special attention to current
and projected trends in imports of processing machin-
ery, as well as the outlook for production of processed
By international standards, food processing in the
USSR remains underdeveloped. Roughly 60 percent
of the food harvest in the Soviet Union flows through
the processing network, compared with typically 80 to
85 percent in the industrial West. With the exception
of bread, sugar, and alcoholic beverages, consumption
of processed foods also falls below Western levels.
According to industry experts, fruit and vegetables
represent the area of greatest difference. About 10
percent of the fruit and vegetables consumed in the 25X1
Soviet Union are in canned, frozen, or dried form, in
contrast to some 30 percent in the United States.2F---]
The Soviets rely on simple processing methods such as
concentration, canning, or mixing. Less than 1 per-
cent of all processed fruit and vegetables undergo
flash freezing or freeze drying. Moreover, despite the
large population and extreme ethnic diversity, the
range of products is limited. For example, about 700
different meat items are manufactured in the USSR,
whereas West Germany produces some 1,400 in 600
distinct grades. Nonetheless, the existing assortment
of processed food items represents considerable im-
provement over that available in the 1960s.
Administrative control of the food-processing sector is
divided among nine all-union ministries, although
three-the food-processing, meat and dairy, and fruit
and vegetable ministries-do most of the processing.
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USSR: Administrative Structure
of Food Processing
Level Organizations
All union Commission for Questions of the
Agro-Industrial Complex:
USSR Ministry of the Fruit and
Vegetable Industry
USSR Ministry of the Meat and
Dairy Industry
USSR Ministry of the Fishing
Industry
USSR Ministry of the Food-
Processing Industry a
USSR Ministry of Procurement
USSR Ministry of Agriculture
USSR Ministry of Domestic
Trade
Central Union of Consumer
Cooperatives
USSR Ministry of Machine
Building for Light and Food In-
dustry and Household Appliances
Union republic Union republic counterparts of all-
union ministries and committees
Oblast, kray, Working-level organizations subor-
autonomous dinate to the all-union and union
republic republic ministries. Each of the
8,513 production associations usual-
ly comprises several processing
factories.
Rayon Local organizations that cut across
ministerial lines, concentrating au-
thority for a given territory. Associ-
ations include all farms, processing
enterprises, and agricultural service
agencies in a county-size district.
Under this system of administration,
some processing facilities have been
placed on farm sites, and an attempt
has been made to base incentives on
production in the entire complex so
that problems are not passed from
one branch to another.
The actual ministerial functions cannot be easily
delineated because the lines of responsibility for spe-
cific commodities are blurred. For example, the min-
istries of the food-processing industry, the fruit and
vegetable industry, procurement, and agriculture, and
the Central Union of Consumer Cooperatives each
control their own fruit and vegetable canneries.F_
According to the Soviet definition, the food-
processing industry comprises 10 sectors-meat,
dairy, sugar, bread, fish, confectionery goods, fats and
oils, flour, fruit and vegetables, and beverages.' (See
figure 1 for a breakdown of output, capital stock, and
labor, by sector.) Meat and dairy products represent
the largest sectors in terms of value and tonnage.
Processing sectors are divided alternatively in some
cases into primary and secondary processing. Primary
processed items-including flour, yeast, molasses,
granulated sugar, and raw meat-can be sent directly
to the retail network or used as raw materials for
other processed products. Secondary processed food-
stuffs-such as sausage, bread, and confectionery
goods-undergo further processing and use a combi-
nation of primary processed foods as raw materials.
Although food-processing factories are located
throughout the USSR, the heaviest concentration is
found in the European portion of the nation. Sugar
factories are centered in the Ukraine, Moldavia, and
southern Russia, where about 90 percent of the sugar
beet crop is harvested. Because of high perishability,
processing of fruit, vegetables, beverages, and vegeta-
ble oil occurs largely in corresponding agricultural
regions of Moldavia, the northern Caucasus, Central
Asia, and the Ukraine. Meat and dairy processing is
more widely dispersed because livestock is raised in all
agricultural areas. Flour stores and transports com-
paratively easily, making it'possible to establish bak-
eries in every town. Most of the fish is processed at
sea on fishing boats or at canneries on the Baltic and
Pacific coasts.
' These 10 industrial sectors for the most part do not correspond to
ministerial divisions of responsibility, a situation that further
complicates relations for food-processing enterprises
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Figure 1
USSR: Structure of the Food-Processing Industry, 1980
oil -1.9
Sugar
Fruits and
vegetables
a Food-processing organizations in the USSR numbered 5,600 in 1982,
including 3,600 factories and 1,400 state collective farms.
b Includes flour and other milling, nonalcoholic beverages, beer, and other
alcohol.
c Total work force in 1982 numbered 3,102,000.
Otherb
Fruits and
vegetables -2.9
Fats and
oil -4.6
Sugar
Source: N. P. Sisolev, Ekonomika Ryboy Promyshlennosti (Moscow: Lyokaya i
Pishchevaya Promyshlennost', 1983); S.E. Krasnov, Ekonomika Myasnoy i
Molochnoy Promyshlennosti (Moscow: Lyokaya i Pishchevaya
Promyshlennost', 1982); Ekonomika Pishchevoy Promyshlennosti (Moscow:
Lyokaya i Pishchevaya Promyshlennost', 1981).
During 1976-80-a period of slowdown for Soviet
industry as a whole-growth in output' of processed
foods slumped from the average annual rate of nearly
4 percent achieved in 1971-75 to about 1 percent.' In
four sectors (meat, fruit and vegetables, sugar, and
vegetable oil), production fell. Industrially processed
meat dropped from the 1975 peak of roughly 9.9
million metric tons to 9.1 million tons in 1980.6 Total
To avoid the distortions in the Soviet gross value of output indexes
that result from double counting and disguised inflation, growth in
output has been derived from value-added indexes of processed food
production. In comparison, the average annual rate of growth in the
food-processing industry, measured in terms of gross value of
output, declined from 4.4 percent to 0.7 percent during the period.
' Although the production of many processed items fluctuated
during individual years of the 10th Five-Year Plan period (1976-
80), overall growth was markedly below that of previous plan
periods.
6 About two-thirds of all meat is produced in industrial enterprises.
Statistics do not include meat processed by private households or on
vegetable oil production fell from 3.3 million tons to
about 2.5 million tons in the same period. Except for
slight growth in flour and confectionery goods, the
other sectors showed declining rates of increase (see
table 1 and table A-1, appendix). Although supplies of
labor and capital to the industry remained fairly
stable, supplies of agricultural raw materials dropped
appreciably during the period, slowing overall growth
in inputs (see table 2 and figure 2). Other chronic
problems plaguing the industry (which will be dis-
cussed below) worsened, dampening the rate of
growth even further.
Since 1980 production has picked up in most sectors.
Top performers include the dairy sector and some of
the previous laggards-the sugar and meat sectors.
Larger harvests of fruits, vegetables, and sugar beets
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Table 1
USSR: Average Annual Growth of
Processed Food Production a
Percent
Total processed food
5.8
3.9
1.1
2.0
2.8
2.9
Fish
6.8
7.8
2.3
2.6
-0.3
1.1
Meat
6.7
7.3
-0.8
1.9
0.3
8.8
Dairy
9.8
4.0
1.1
0.1
2.8,
5.6
-0.5
-5.7'
26.7,.
2.4
Bread
1.2
1.8
1.5
0.8
-0.3
1.0
Confectionery goods
4.6
2.3
3.5
2.3
1.7
1.9
Fats and oils
-0.1
3.5
-5.2
-2.6
0.4
6.1
Fruit and vegetables
7.9
6.6
-0.7
5.1
5.5
3.4
Beverages and other foods
_
8.5
2.7
1.7
4.8
2.4
1.1
a CIA indexes of Soviet industrial production. These value-added
indexes are calculated independently to avoid distortions in Soviet
gross value of output indexes that result from double counting and
disguised inflation.
b Estimates.
and in 1983 a boost in livestock herds, an upturn in
oilseed production, and some increases in processing
capacity have accounted for most of the improvement
in the food-processing industry. Preliminary data for
1984 suggest that production growth has stabilized at
about 3 percent, although vegetable oil production has
Poor Harvests
With roughly 75 percent of the raw materials for food
processing coming directly or indirectly from the
farm, the sharp decline in the rate of growth of output
during 1976-80 was undoubtedly rooted in the short-
falls in farm output of 1979 and 1980.' A series of
disappointing sugar beet and sunflower seed crops
curtailed the flow of raw materials to those industries.
As a result-of mediocre grain crops in those two years,
livestock slaughter weights were down, lowering in-
dustrial meat production. Moreover, the poor fish
catch after 1976-reduced by nearly 10 percent
because of international restrictions on Soviet access
to foreign waters-left a diminished raw materials
base for processing.
Increased Losses
Despite marginal: improvement in the-gross harvests
of vegetables and fruit during' 1976-80, Soviet sources
report increased losses of these raw foodstuffs,' which
left less for canning, drying, and freezing. Similar
shortages of potatoes, grapes, and berries hurt the
beverage sector. According to Soviet press reports,
losses of fruits and vegetables worsened as a result of
the transport sector's almost total absorption in mov-
ing the grain crop and a continued increase in the
average length of haul for all food commodities. This
increase stemmed from a policy decision to close small
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Table 2
USSR: Average Annual Growth
of Output, Inputs, and Factor
Productivity in the
Food-Processing Industry a
Output
4.4
0.7
2.7
Inputs
4.4
1.2
3.3
Factor productivity
NEGL
-0.4
-0.6
a In the calculation of factor productivity growth (the growth of
output not accounted for by the growth of inputs), we measured the
increase in inputs as an average of the rates of increase of labor and
fixed capital employed in food processing and of purchases of raw
materials by food processing from agriculture. These inputs were
aggregated in a geometric production function. The coefficients for
each input were derived by regression analysis. The measure of .
output is gross output rather than the sum of the value added in the
individual branches of food processing represented in table 1.
Output could not be appropriately measured by value added in this
calculation because the inputs include material purchases in addi-
tion to the contributions of labor and capital employed in food
processing itself.
processing enterprises near farm sites and consolidate
processing capacity in large, often distant facilities.
Congestion on the rail lines and a consequent increase
in railcar turnaround time hit fruit and vegetable
supplies particularly hard because of their perishabil-
ity. Shortages of refrigerated trucks and railcars
aggravated the situation.
Declining Quality of Raw Materials
Compounding the shortfalls in deliveries of agricul-
tural raw materials to the food-processing industry in
1976-80 was a deterioration in their quality.' Because
Soviet processing methods and machinery are not
readily adaptable to changes in raw materials, the
' Deterioration in quality can be traced to the farms, the procure-
ment agencies, and the transportation network. According to Soviet
press statements, poor agricultural practices-faulty measurement
and application of fertilizer, careless harvesting, and inattention to
crop rotation-were primarily to blame. Rough handling and
shortages of storage facilities at procurement centers, as well as rail
transportation bottlenecks, an inadequate rural road network, and
Figure 2
USSR: Factor Productivity in the Food-Processing Industry, 1960-83
I I I I I I I I I I I
Total inputs'
o
output Gross value of
outpuindex
Total factor
productivity
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drop in quality led to occasional machinery break-
downs and sometimes to inedible processed food.
Equipment was often idle as factories tried to find a
way to use low-quality deliveries from agriculture.
Some processing sectors required additional raw ma-
terials from agriculture to compensate for the poor
condition of the produce.'
this erosion in quality affect-
ed a wide spectrum of foodstuffs:
? Falling levels of gluten in wheat and failure to
observe standards for milling flour and baking
bread had a detrimental effect on the leavening,
softness, taste, and perishability of bread and other
baked goods.
? Between 1976 and 1982 the sugar content of beets
decreased by 1.5 percentage points, resulting in
about 1 million tons of lost sugar.'? Declining sugar
levels in grapes and other fruits used in winemaking
also have been reported.
? Numerous complaints in the press cited a lower
starch content in potatoes, and more frequent bruis-
ing and a higher presence of dirt, stones, and other
debris in vegetables arriving at processing facilities.
Although Soviet industry experts did not indicate
that the situation had worsened, they did note that
20 to 40 percent of all fruits and vegetables deliv-
ered to the processing industry during the late 1970s
were substandard.
the food-processing industry had to postpone modern-
ization plans because of a meager capital budget, a
budget that, was
two to three
An increasing share of these limited investment funds
was targeted to reconstruction and reequipment. In-
stead of bringing some needed relief to the food-
processing industry, reconstruction disrupted produc-
tion more than usual. In the case of plant expansion or
new plant construction, because of poor planning and
the leisurely rate of building, funding ran out before
plant completion in some cases, resulting in an in-
crease in unfinished construction.
Because of these and other problems, the Soviets were
unable to accelerate the expansion of production
capacity. Indeed, the available statistics on physical
additions to new capacity show a sharp fall in most
cases during 1976-80, as compared with the 1971-75
period (see table 3)." Although Soviet food-processing
capacity has never been large enough to handle the
peak loads of the short, frenetic processing season of
several major commodities, the shortage became more
troublesome during 1976-80, years of relatively good
fruit and vegetable harvests. Additional strain was
placed on the already saturated processing lines,
causing equipment breakdowns and a slowdown in the
pace of processing. Aggravated by a concurrent lack
of storage, the consequent production backlog resulted
in greater spoilage, with 10 to 15 percent of the
delivered crops lost before they entered the factory
door.
Investment Shortfalls
While grappling with the inadequate supply and
declining quality of raw materials, the food-processing
industry also had to contend with a lower investment
priority. Although total investment in food processing
increased from 2.8 billion rubles in 1975 to 3.1 billion
rubles in 1980,-the industry's share of industrial
investment fell from roughly 7.1 percent to 6.3 per-
cent for these same years. Long burdened by neglect,
two times the amount of agricultural raw material inputs per ton of
processed food as does the United States, in large part because of
this deterioration in quality.
10 This loss in sugar content due to delays in harvesting and
processing and inadequate storage represents $115 million (1984
average price) worth of sugar on the world market.
11 Ironically, when the Soviets were able to expand a plant's
capacity, they often encountered further obstacles to increasing its
production. For example, some meat-processing plants idled by
frequent breakdowns because of poor maintenance and a shortage
of spare parts reported only half of their capacity in operation
during 1976-80. Construction of other large factories was not
coordinated with the transportation network, resulting in raw
material shortages. Either rural roads were poor or did not connect
farms and processing sites, or plant capacity was too large for the
raw material base in the local agricultural district, forcing the
strained transportation system to haul supplies even greater dis-
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Table 3
USSR: Gross Additions
of New Capacity in the
Food-Processing Industry a
Thousand tons per shift
(except where noted)
1971-75
Average
Annual
1976-80
Average
Annual
1981-83
Average
Annual
Whole milk products
2.5
1.9
1.7
1.4
2.2
1.8
Cheese (tons per shift)
52.2
18.6
45.7
40.3
31.6
39.2
Vegetable oil
0.6
0.8
1.2
0.3
0.5
0.7
a Including capacity originating in new construction and in expan-
sion and reconstruction of existing plants.
Obsolete Equipment
The second phase of the investment strategy-the
plan to reequip facilities with modern, higher technol-
ogy equipment-also met with little success. The
average annual rate of growth in production of food-
processing machinery declined by approximately two-
fifths between the 1971-75 and 1976-80 periods (see
figure 3), reflecting problems in acquiring adequate
supplies of high-quality steel and other raw materials
and difficulties in maintaining technical standards
and precision during mass production of more com-
plex machines. Obsolete equipment remained in pro-
duction (see photographs, page 23).
half of the food-processing equipment
manufactured in the USSR during the late 1970s was
of pre-World War II vintage, and fewer than half of
the systems were automated. This lack of automation
forced workers to clean, sort, chop, and mix food
items by hand. Processing equipment did not include
auxiliary units for loading, weighing, marking, and
packaging. Press reports claim that, because of poor
meat-cutting technology, Soviet-made meat-process-
ing machines left some 8 percent of meat on the bone.
Furthermore, the Soviets continued to use enameled
steel, rather than stainless steel, in machinery, a
practice abandoned by the West some 20 years ago
because of problems with rust and chemical corrosion.
Despite official emphasis on replacing equipment in
the industry, managers chose to keep most of the
aging capital stock in use because of pressures to
increase output. Accordingly, the retirement rate for
food-processing machinery was one of the lowest in all
of Soviet industry during the 1970s. Having exceeded
the standard working life of comparable equipment in
the West, processing equipment became more suscep-
tible to breakdowns. Downtime increased substantial-
ly in the late 1970s, and,
expenditures to maintain this antiquat-
ed equipment surpassed the cost of new equipment by
a factor of 1.5.12
Systemic Weaknesses
Although difficulties with raw materials and capital
stock contributed heavily to the production slowdown
in 1976-80, other weaknesses also added to food
processing's poor performance and magnified the
requirement for modern machinery even further.
Labor. The combination of the second-lowest average
wage in industry, highly seasonal employment, and
12 K. Taksir, Pravda, 5 September 1983, p. 2. Although the author
does not specify how this difference in cost is calculated, he does
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Figure 3
USSR: Growth in Production of
Food-Processing Machinery and
Equipmenta, 1961-83
Average annual rate (percent)
10
0 1961-65 66-70 71-75 76-80 81
a Equipment and spare parts for the food-processing, meat,
milk, and fish industries, excluding flour-milling, mixed
fodder, and granary equipment.
unpleasant. working conditions has made it hard for
the food-processing industry to recruit and retain an
adequate work force. In fact, its principal drawing
card may be the opportunity to steal foodstuffs." The
current labor shortages are likely .to intensify in
coming years as the size of the overall work force
decreases.
The shortage of workers has contributed to the nar-
row assortment of processed foods. Factories have
pushed production of a. smaller range of items that
require little attention from workers, rather than
those consumers would prefer. For example, tomato-
processing factoriesin southern Russia in 1980
changed from producing canned tomatoes-a popular
item with consumers-to tomato paste, a commodity
in little demand: Production of tomato paste uses
more tomatoes, and factory managers can claim
greater' credits toward bonuses for processing record
quantities of the vegetable.
" Emigre reporting indicates that plan goals have been adjusted
downward to compensate for theft. In some sectors, emigres claim
Quality Control. Despite official exhortations to im-
prove standards, worker apathy and.a bonus system
based on quantity of output have led to poor.-quality
processed food. The Soviet press laments, for example,
that bakers allow a high incidence of half-baked,
burnt, or deformed bread loaves to appear on the
shelf. Emigres have said that food-industry workers,
for example, have diluted milk to meet output targets.
Secondary Materials. Valuable byproducts from pro-
cessing-blood, bones, whey, pectin; seeds, and .
skins-commonly are dumped as waste. Managers of
food-processing plants have overlooked these second-
ary raw materials not only because of shortages of
specialized processing machinery, but also because
they view their use as unrewarding. In the West, these
secondary raw materials provide an additional 25 to
30 percent reserve of raw materials that can be
processed as marketable products. For example, whey
can be used as a flour substitute, dough conditioner,
and meat extender.
Packaging
As in the past, Soviet food processing also was
constrained in 1976-80 by problems in food packag-
ing." losses in the pack-
aging sector grew slightly during this period, in large
part because production of food-packaging materials
did not keep pace with the growth-in production of.
processed food. Complaints in the. press indicate that
shortages of metal and cardboard and, in turn, per-
haps a shift to bulk handling of flour,.sugar; and
selected beverages- may have been to blame for the
drop in the percentage of processed food packaged.
the use of packaging materi-
al per value of output in the overall economy-declined
by 15 percent from 1975 to 1980.
" Food packaging refers to.the containers, such as metal cans, glass
jars, cardboard boxes, paper bags, and plastic film, in which
processed foods are preserved. According to Soviet sources; about
40 to 50 percent of processed foods destined for retail sales in the
USSR are packaged=mostly in cardboard boxes, tin and.chrome
plate cans, and glass jars. This compares with a packaging rate of
up to 80 percent in other CEMA countries and more than 95
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Table 4
USSR: Capital Investment in
the Agro-Industrial Complex
Billion
1973 Rubles
Share
of Total
(percent)
Billion
1973 Rubles
Share
of Total
(percent)
Billion
1973 Rubles
Share
of Total
(percent)
Total
213.0
100.0
235.0
100.0
265 a
100.0
Agriculture
171.0
80.3
189.6
81.4
213
80.4
Food-processing industries b
14.7
6.9
15.0 C
6.4
18 c
6.8
Other d
27.3
12.8
30.4
12.2
34
12.8
a Estimated on the basis of (1) Mikhail Gorbachev's statement that
investment in the 1980s would total about 500 billion rubles and (2)
the 1981-85 plan for investment that amounted to 235 billion
rubles.
b Includes investment on collective farms.
c Estimated.
d Includes investment in machine building for agriculture and food
processing, production of fertilizers and livestock feed additives,
fishing, specialized transport, and enterprises of trade and consum-
er cooperatives.
In addition to the slower growth in the production of
packaging materials, Moscow had to deal with short-
ages and low technical standards of food-packaging
machinery. For example, there have been numerous
press complaints that milk cartons leak because too
hot pressing irons scorch and weaken the seams, and
many instances have been cited of jars breaking when
lids are attached because pressure is applied to the
glass unevenly.
Although the food-processing industry enjoyed some
relief after 1980 from larger agricultural harvests and
livestock herds, most of the problems behind the
1976-80 shortfall in production have continued into
the early 1980s. In addition, serious administrative
problems erupted in 1981 between the fruit and
vegetable and food-processing ministries. The fruit
and vegetable ministry, whose formation was an-
nounced in January 1981, was tasked with the respon-
sibility of centralizing and monitoring production of
all fruit and vegetable products. Its tasks include
delivering fresh fruit and vegetables to the retail trade
network, canning, flash freezing, and drying. Yet the
ministry of the food-processing industry has been slow
to relinquish its role in canning. The level and tone of
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tries have intensified because of bureaucratic squab-
bles and consequent hoarding.
Organizational discord and disarray are also apparent
at the republic level. In general, the structure of
republic ministries mirrors that of all-union organiza-
tions. However, some important sectors on the two
levels differ in terms of size, responsibility, and
intraministerial links, contributing to management
and coordination problems.
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The Industrial Experiment and
Modernization Program in Packaging
To supplement the reforms of the Food Program, the
Soviet leadership included the food processing indus-
try in two other highly publicized projects. In the
first, the food processing ministry in the Ukraine-a
republic heavily involved in food processing joined
four other ministries in an "industrial experiment"
giving greater automomy to local enterprises. The
experiment, which began in January 1984, simplifies
success indicators by which factories in the five
participating ministries are judged; it also allows
enterprises within the ministries to link earnings to
performance and gives them greater freedom in for-
mulating plans.
Preliminary evidence suggests that there has been
some improvement in production and an easing of the.
conflict over resource allocation within the Ukrainian
food processing ministry. It is too early, however, to
judge whether any permanent advances have been
made or whether the gains will fade when the spot-
light turns to other problem areas. At least for the
moment, the Soviets appear committed to continuing
the experiment in the Ukraine and will extend the
reform in 1985 to the Belorussian Ministry of the
Meat and Dairy Industry; the Russian Ministry of
the Fish Industry; and the Estonian, Belorussian,
Moldavian, Latvian, and Azerbaijani Ministries of
Food Processing.
major disadvantages in using glass. Moscow hopes
to switch to metal containers, which are easier to
fill and seal and require less sterilization time and
storage space. Other claimants for steel and alumi-
num-the machinery and defense sectors-have
high priorities that will leave little high-grade
metal for use in canning. But the advantages of
metal in packaging are so large the Soviets appear
willing to use lower quality metal for this purpose.
? Increase the use of plastic. The food sector could
extend the shelf life of many perishable items that
presently are not packaged by increasing the pro-
duction of plastic film and bags. Plastics are
lighter, add less to shipping costs, and can be used
in packaging a wider variety offoodstuffs than
competing materials. Nevertheless, it is unlikely
that the Soviets can increase the use of plastic
wrapping materials much in the future.
high priority demand from heavy in-
dustry and the military leaves less than 5 percent of
the available polyethylene material for packaging'
food. High levels of a substance believed to be a
carcinogen have been found in the other major
Soviet plastic film, polyvinyl chloride (PVC). PVC
is banned in the United States as a food packaging
material because of the potential health risks. The
Soviets, however, continue to use it in food packag-
The second project focuses on modernization of the
packaging materials industry. Its major objectives
are to:
ing in limited amounts.
? Substitute metal for glass. The high cost of shipping
and storing jars, as well as the frequency of break-
age-roughly 25 percent in the Soviet Union-are
Strategy: More Money for Machinery
The Investment Pie
Faced with mounting difficulties in providing more
and better quality processed foods to the population,
the Soviet leadership realized it could no longer leave
the processing industry on the back burner. In May
1982 Moscow adopted a two-pronged strategy to
modernize this sector. The first element of this strate-
gy, promulgated in the Food Program, is to increase
investment in the previously neglected agro-industrial
machine-building sectors, a decision that the Soviets
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hoped would yield high returns in a relatively short
time (see table 4). Specifically, planned investment in
industries producing machinery for food processing
statements that opportuni-
ties for food-processing equipment sales to the USSR
were and would continue to be good for US firms
despite political tensions between Washington and
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Investment in the food-processing industry itself also
was increased, although the composition of investment
suggests food processing was again shortchanged.
a portion of the
investment in agriculture was to be used to build
small-scale processing and storage facilities on farm
sites. This near-term focus on on-farm processing and
storage would give Moscow time to build up the rural
road network and other infrastructures and at the'
same time reduce the raw material waste that results
from off-farm processing. During 1986-90, the food-
processing industry's share of investment will rise, and
construction will be shifted to more integrated, cost-'
efficient plants located close to farm sites.
The Role of Imports
The second-and unannounced-part of the Soviet
agenda is to increase imports of food-processing
equipment. Aware that the domestic machine-
building sector could not cope with the additional
requirements for high-capacity and modern technol-
ogy-especially in a short time-Soviet trade repre-
sentatives in early 1982 began an extensive'canvass of
East European and Western machinery suppliers.
Moscow would rely on im
ports to fill roughly one-fourth of its needs for food=
processing equipment for the 1984-90 period. More-
over, Soviet statements suggested that Moscow's
equipment interests span the entire range of food
items, with' a general preference for comprehensive
processing systems rather than individual pieces of
equipment.
Soviet trade officials
are looking for conventional-not state-of-the-art-
technology that could be copied without much diffi-
culty.15
During preliminary negotiations in 1982 and 1983,
special overtures were made to US companies. Deputy
Foreign Trade Minister Sushkov noted in public
Moscow.
Recent Imports
Foreign trade data show that this flurry of maneuver-
ing and negotiation in 1982 and 1983 was translated
into a significant step-up in imports. Recently pub-
lished statistics for 1983 show food-processing ma-
chinery purchases jumped to nearly $900 million, a
21-percent hike over 1982 (see table 5)." Measured in
current prices, imports of food-processing equipment
" In perspective, Soviet imports of food-processing machinery
represent about one-third of total food-related machinery purchases
and almost 80 percent of agro-industrial equipment imported from
the West. Agro-industrial machinery purchases, however, account
for a very small fraction of total investment in Soviet agriculture.
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Calling in the KGB
As part of the overall campaign to upgrade the food-
processing industry, Moscow has called on its covert
collection organizations to acquire food processing
equipment and technology.
organizations. have stepped up their visits to food-
processingfacilities in the United States and Western'
Europe and have collected technical information and
engineering specifications from other firms. F__]
Because most food processing technology is in the
public domain and not subject to US or COCOM
export controls and because covert acquisition of
processing technology would preclude access to train-
ing, spare parts, and maintenance agreements, we
believe the KGB s operations in this area are not
extensive. Rather, this campaign may represent a
means to gain insurance against possible future em-
bargoes and probably reflects the Soviet tendency to
call on all available resources to solve a high priority
problem.
filling and packaging systems to cut down waste. The
largest share of import funds, however, was spent on
equipment for canning-an activity having one of the
lowest rates of mechanization in the processing
industry.
East European Suppliers. Moscow has increasingly
called on its CEMA partners and Yugoslavia for
food-processing equipment. These countries supplied
an average of three-fourths of the Soviet purchases in
the early 1980s (see table 6). East Germany, renowned
for its high-quality meat- and milk-processing equip-
ment, was the major CEMA supplier, followed by
Czechoslovakia and Hungary. Although Budapest
earlier had managed to restrain its exports (and keep
its processing machinery for domestic food produc-
tion), Hungarian suppliers acquiesced to Soviet de-
mands in 1983 and increased sales of food-processing
equipment by 35 percent. Other East European coun-
tries posting large increases in exports of food-pro-
cessing machinery to the USSR in the first year of the
Food Program included Czechoslovakia, Bulgaria,
and Yugoslavia.
these food items.
CEMA machinery imports play an especially large
role in the processing of selected food items. Accord-
ing to Soviet statements, CEMA countries supplied
25 percent of the equipment required by the meat and
dairy sectors during 1976-80. Similar dependence on
CEMA has been reported in Soviet journals in more
recent years for equipment for the production of
sugar, confectionery goods, canned fruit and vegeta-
bles, and dairy products. According to Soviet calcula-
tions, the share of output produced on East European
equipment since 1980 was as high as 40 percent for
Contributions From the West. Although sales of
grew at an average annual rate of 18 percent during
1976-80 and by 2.6 percent annually during 1981-82.
Machinery Mix. Within the food industry, the grain
elevator, meat-processing, beverage, and dairy sectors
have received the largest additions to their capital
stock since 1980. With. the exception of grain eleva-
tors, these purchases expanded the variety of products
that could be manufactured and included companion
Western food-processing machinery to the USSR
increased during the 1976-80 and 1981-85 plan peri-
ods, they fell short of Western expectations because of
strained political relations and higher priority accord-
ed to other hard currency purchases. During, 1981-83,
Western suppliers lost roughly one-fourth of their
1976-80 share of the Soviet food-processing equip-
ment market to Eastern Europe. US firms were the
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Table 5
USSR: Imports of Food-Processing
Machinery and Equipment, by Sector a
1976
1977
1978
1979
1980
1981
1982
1983
Plan
1985 b
Total
307.6
326.6
387.5
509.2
701.2
615.5
738.6
897.1
1,227
Grain elevators
25.4
37.7
89.9
118.2
NA
Confectionery
26.0
30.8
30.7
34.2
31.7
38.5
34.1
40.4
NA
Meat processing
16.0
?18.2
28.2
41.8
NA
Butter and cheese
33.2
41.7
63.8
32.1
30.8
38.3
NA
Vegetable oil
19.7
27.7
NA
Sugar refining
48.4
34.8
51.8
96.8
84.1
94.2
79.6
67.9
NA
Brewing, nonalcoholic beverages
21.5
22.1
42.9
42.3
47.0
53.5
71.7
58.9
NA
Dairy
54.1
55.4
48.2
78.1
74.4
77.1
110.7
96.8
NA
Canning
51.8
75.9
57.7
90.5
186.6
107.1
155.5
218.6
NA
Other
105.8
107.5
122.9
126.2
172.2
157.0
118.3
188.3
NA
a Because of rounding, components may not add to the totals shown.
b Announced by a Gosplan official in Ekonomicheskoye sotrudni-
chesivo stran-chlenov SEV. No. 9, 1982.
Source: Vneshnyaya torgovlya SSSR for appropriate years. Con-
verted from rubles at the official rate of exchange.
Table 6
USSR: Imports of Food-Processing
Machinery and Equipment, by Supplier a
Million
US$
Percent
629
28
352
16
233
10
Source: Vneshnyaya torgovlya SSSR for appropriate years.
Amounts were converted from rubles at the official rate of
exchange.
Million Percent
US$
656 29
384 17
248 11
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Figure 4
USSR: Shares of Food-Processing
Equipment Imports From Western
Europe, 1981-83
Percent
Denmark -3.1
Switzerland
Sweden
hardest hit. Their already small market share dwin-
dled to almost nothing during 1981-83. The majority
of US trade involved fruit and vegetable, meat, and
beverage equipment. West Germany remained the
leading Western supplier, its sales consisting primari-
ly of meat-processing and dairy equipment (see figure,
4). Italy and Finland, the other chief West European
trading partners, provided a wide variety of food-
processing machinery, including meat-processing,
canning, and pasta equipment. Much of the equip-
ment imported from the United Kingdom was for
margarine and vegetable oil processing.
Western standards, most of the equipment sent to the
USSR employed standard, conventional technology
with little of the state-of-the-art technology pioneered
by leading Western firms. Nevertheless, in terms of
capacity, variety, and general technology, Western
businessmen report that. Western exports are in large
part superior to Soviet and CEMA machinery.F_
Western machinery also has dominated certain pro-
some 70
percent of packaged foods offered for retail sale in the
USSR was prepared on imported Western packaging
lines. Moscow also has relied heavily on Western
technology and equipment for the prodution of pow-
dered infant formula, nonfat dry milk, and continu-
ous-linked sausages.
Potential Areas.of Growth
Statements by Soviet officials at the highest levels
suggest. strongly that imports of food-processing ma-
chinery will accelerate throughout the 1980s as.the
Food Program gains momentum. Indeed, top Soviet
trade representatives have indicated that purchases of
processing equipment have been accorded priority and
will receive funding, despite possible slow growth in
the overall Soviet economy.
Orders, trade agreements with Eastern Bloc countries,
and reports on contracts from Western businessmen
suggest these plans are within reach. We believe that
total imports of processing machinery will be $4
billion or more in 1981-85 (see table 7). Purchases in
1984 and 1985 are likely to be roughly $875 million
per year, down slightly from 1983 as Moscow post-
pones purchases until new funding resumes for the
1986-90 five-year plan.
We estimate that processing machinery imports could
increase to at least $5.4 billion in 1986-90. Our
projections are based on a partial Soviet shopping list
of equipment and confirmed East European and
Western contracts (see table A-2, appendix).
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Table 7
USSR: Purchases of
Food-Processing Equipment
Communist countries
Other
Actual Projected
1976-80 1981-85a
1.6 3.1 to 3.6
0.6 0.7 to 1.1
a This projection is based on orders, trade agreements with Eastern
Bloc countries, and contracts
It also incorporates statements about planned
spending targets for food-processing machinery. Alternative as-
sumptions were derived for the relative roles Communist and
Western countries will play as suppliers. The upper end of the range
assumes the share of equipment imported from Eastern Europe falls
to its 1976-80 mean level of 72 percent during 1984-85 and
averages 78 percent in 1981-85. The lower bound assumes that
Eastern Europe's share rises to 82 percent in 1984-85 and averages
80 percent during 1981-85.
of trade, they will demand more food-processing and
packaging equipment from their Communist partners
(see table 8 for examples of future purchases)." If
there is to be any shift in trade among suppliers, it will
likely be toward these countries. Moscow is closely
watching developments in East Germany's fledgling
robotic meat-cutting sector. Bulgaria is being pres-
sured to step up exports of fruit- and vegetable-
processing equipment in the second half of the 1980s,
although internal constraints will most likely prevent
Sofia from delivering all Moscow wants.
Moscow may push for other East Europe-
an countries also to act as middlemen in the future in
order to save valuable hard currency and operate at a
lower profile. However, because of hard currency
constraints of their own, we believe CEMA suppliers
will not accept more than a nominal role in this
respect.
The Soviets also have sent strong signals concerning
the composition of future imports. Moscow will con-
tinue to buy food-processing machinery for all sectors
but will concentrate on meat and fruit and vegetable
equipment because shortages of these types of equip-
ment are most pronounced and because Soviet con-
sumers are most sensitive to supplies of these com-
modities. Machinery for processing dairy products
will be another priority area;
two dairy-processing enterprises to be built in Molda-
via and Belorussia will be supplied completely with
imported machinery.
a majority of these future food-
processing equipment purchases will include integrat-
ed packaging lines. Moscow does not seem overly
interested in the more advanced technology available
on the market-such as aseptic packaging and retort
sealing-but rather appears primarily to want to raise
packaging capacity quickly and thereby increase the
percentage of food that is packaged. Special areas of
concern include meat packaging, vegetable and fruit
canning, and bottle filling and sealing for milk and
other beverages.
Reliance on CEMA
As the Soviets attempt to lighten the burden of their
support for Eastern Europe by improving their terms
Competition in the West
While Soviet imports of Western food-processing
machinery will rise, Soviet concern over becoming
dependent on the West and reluctance to increase
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hard currency borrowing will, in our view, probably
limit Soviet purchases of such equipment to about
$900 million in 1981-85 and to slightly more than
$1.2 billion in 1986-90. Moscow will turn to the West
for labor-saving equipment, high-capacity processing 25X1
equipment, quality-control systems, and a wide range
of specialty lines.
Competition will be stiff among potential Western
suppliers. The Soviets appear particularly receptive to
the special financing terms offered by West German,
Italian, and French firms for meat, pasta, confection-
ery, dairy, and canning equipment.
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Soviet trade officials
already have placed several orders for 1986-90 with
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1? The Soviets have been running sizable trade surpluses-averaging
about $3 billion annually during 1980-83-with Eastern Europe in
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Table 8
USSR: Selected Future Planned
Imports of Food-Processing
Equipment From Eastern Europe
Type of Equipment
Number
Processing and drying onions and other vegetables
31 lines
Bulgaria
Producing stewed fruit
21 lines
Bulgaria
Producing dried and mashed potatoes
15 lines
Hungary and Yugoslavia
Slaughtering and processing poultry
34 lines
Hungary and Yugoslavia
Processing smoked sausage
24 lines
East Germany and Czechoslovakia
Producing boiled sausage
80 lines
East Germany and Czechoslovakia
Producing sausage casing
1 factory
Czechoslovakia
Prefabricated storage buildings and companion
refrigeration, mechanization, and processing equip-
ment for short-term storage at procurement centers
800 units
Yugoslavia
final stages of negotiation. Because of their more
competitive contract terms and specialized technol-
ogy, we believe West Germany, Italy, and France will
remain the leading Western suppliers of food-
processing equipment to the USSR for some years to
come. Aggressive marketing by Denmark and the
Netherlands of equipment for processing meat,
cheese, and other dairy products suggests they will
boost dramatically their current small market share
during 1986-90. Japan, also active in expanding trade
in this area, will sell more of all types of food-
processing equipment but most notably fish-process-
ing machinery. Although the United Kingdom has a
favored position in margarine equipment sales, Lon-
don may be disappointed in sales of other processing
equipment because of the more extensive trade cam-
possess some strong selling points such as large capac-
ity, durability, waste-free technology, the availability
of training programs and maintenance agreements,
and packaging systems-aspects well suited to cur-
rent Soviet needs. Political considerations may give
additional impetus to Moscow to buy US equipment.
In the absence of a US agreement to sell top-priority
energy equipment, Soviet officials may wish to keep
trade channels open with less controversial purchases
of food-processing equipment as a gesture of support
for better US-USSR relations, as well as a means of
maintaining pressure on Washington to relax
COCOM controls. The leadership may also hope to
see some spillover from improved trade relations in
political discussions and perhaps the arms control
talks in Geneva.
paigns of its West European rivals.
Although the potential for future trade with US firms
may not be great, we expect moderate increases over
recent levels, especially in machinery for meat,. dairy,
and fruit and vegetable processing. Although West
European food-processing machines in general are
more attractive to the Soviets, US equipment does
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Implications for the Food-Processing Sector
The Bottom Line
We believe that the Soviet effort to boost the produc-
tion of processed food quickly with injections of
domestic and imported machinery will work, although
the payoff will not be as large or as rapid as Moscow
anticipates. Because the Soviet food-processing sector
is relatively underdeveloped, the industry is primed to
soak up new capital equipment and give higher re-
turns to investment than in other links of the food-
production chain, such as farms or the transportation
network.
The investment strategy has been helped, moreover,
by more rational planning than in the past:
? Processing facilities have been scaled down in size
and located near farmsites.
? Processing machinery purchases, to a large degree,
will be turnkey, and many will be integrated with
agricultural equipment imports.
? Some imports will involve comprehensive worker
and management training and supervision.
Because of these factors, we believe Moscow stands a
good chance to assimilate technology, reduce waste,
and regulate production. The leadership also will
avoid, through its purchases of more highly automat-
ed food-processing machines, some of the problems
that will emerge with the decline in the growth of the
variety of processed foods.
labor supply. Perhaps most important, the industry
will acquire the potential to improve the quality and
and chemical preservatives.
Difficulties Along the Way
Although domestic production of food-processing ma-
chinery will receive a higher priority and greater
funding, investment will still be insufficient to meet
long-neglected requirements. Recent Soviet state-
ments indicate that the processing industry may be
constrained again by investment shortfalls because
the distribution of planned funding is falling behind
schedule. Moreover, more money cannot substantially
shorten the long leadtimes necessary for research and
development and for bringing prototypes into series
production. In addition, the ferrous metals and chemi-
cal sectors may be unable to provide adequate supplies
of rolled steel, tinplate, rubber, plastic components,
Machinery imports probably cannot be counted on to
offset completely shortfalls in domestic investment:
processing equipment, particularly from the West, is
more finely tuned and therefore more susceptible to
breakdowns than domestic Soviet machinery. Al-
though the Soviets have taken measures to protect
the imported equipment-such as including pur-
chases of washing and sorting lines to prepare the
primary harvest, replete with stones and debris, for
processing
imported food-
expect Soviet officials to violate the rather
25X1
25X1
25X1
25X1
rigid technical operating specifications for the
machinery.
the capacity of imports will be the attitude of Soviet
managers. They almost certainly will resist the
introduction of the new equipment because the
disruptions that will occur when imports are
brought into the factory will jeopardize short-term
plan fulfillment. Managers may be unwilling to
push the foreign equipment to its designed capacity
in any case because future production goals could be
raised even further.
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? Although the Soviets may establish small pockets of
efficient and relatively high-quality processed food
production as a result of the machinery imports,
they will have a hard time diffusing their gains to
the rest of the industry. By relying on imports for
technological advances, Moscow will penalize its
technical base.
We believe poor synchronization of operations among
processing factories, farms, procurement agencies,
and the transportation sector and the lack of an
adequate incentive system to maintain quality control
over agricultural raw materials will probably dilute
the campaign to reduce waste." Moreover, the sub-
stantial leadtime necessary to alter the mix of packag-
ing materials and increase packaging capacity will
preclude any immediate gains from the increased
emphasis on packaging foods. According to evalua-
tions of industry experts in the West, the Soviets can
expect to cut losses in food processing by an average
of 10 to 15 percent. Larger reductions in spoilage may
be achieved in the fruit and vegetable sector, the area
most susceptible to perishability. These potential
gains will not be realized, however, if programs to
enhance storage facilities, upgrade roads, and mod-
ernize transportation equipment are not fully imple-
mented. Press reports suggest that little progress has
been made in this area during 1984. For example,
transportation delays in moving sugar beets from the
fields have been cited frequently in the press as
hindering sugar processing.
Plans for 1981-85 call for output in the food-process-
ing industry to increase by 22 percent, or by an
average of more than 4 percent per year (see table 9).
We consider these targets to be overly ambitious,
largely because growth in net farm output is not likely
to exceed 2.0 to 2.5 percent per year for the rest of the
11th Five-Year Plan period. We believe the average
annual rate of growth of food-processing output in
1981-85 will more likely be in the range of 2.5 to 3.0
percent.
Because the development of the Soviet food-process-
ing industry will depend strongly on the vicissitudes of
agriculture, we have projected a range of forecasts of
Table 9
USSR: Plan Goals for
Total Growth of
Food-Processing Production
22a
NA
28
NA
Milk
13
NA
Processed meatb
35
NA
Canned milk
21
NA
Cheese
31
NA
Baby food
100
NA
Tonic drinks
190
NA
Vegetable oil
44
60
Confectionery goods
10
10
Granulated sugar
60
NA
Total sugar
12
40
Macaroni
NA
20
Champagne
Grape wine
Beer
a Revised downward in 1982 from original target of 23 to 26
percent.
b Includes sausage, canned meat, stews, and other meats that
undergo secondary processing.
Sources: N. K. Baybakov, "On State Plan for the Economic and
Social Development of the USSR for 1981-85," Pravda, 17 No-
vember 1981, and Planovoye khozyaystvo, March 1984.
average annual growth in net farm output for 1986-
90. These forecasts incorporate different assumptions 25X1
about weather, leadership attitudes toward supplying
agriculture with inputs, and the degree of success of
programs to raise efficiency. On the basis of the most
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likely scenario for 1986-90, we believe net farm
output will increase by an average annual rate of 2.0
to 2.5 percent and production in food processing will
grow by 2.5 to 3.5 percent per year.20
Although the Soviets will be unable to achieve
planned increases in processed food production, in the
eyes of the consumer-and, in turn, the leadership-
there will be a payoff in the form of expanded variety,
improvements in quality, and an easing of the season-
al fluctuations in the availability of some commod-
ities.
m The baseline projection for growth in the agricultural sector
assumes that (a) weather approximates the long-range norms for the
balance of the decade (weather would thus be better than that
experienced, on average, after 1978, but not as good as that
experienced from the mid-1960s to the mid-1970s); (b) given some
breathing room because of better weather, planners reduce the
current rate of growth of inputs; (c) policy measures to increase
productivity are partially successful and at least stop the productivi-
ty decline of the 1970s. See Soviet Agriculture in the 1980s for
Secret 20
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Secret
Appendix
Table A-1
USSR: Industrial Production of
Selected Processed Foodstuffs
Pork
2,249
3,335
2,446
2,468
2,402
2,728
NA
Beef and veal
3,463
4,511
4,392
4,381
4,344
4,654
NA
Poultry
357
704
1,224
1,350
1,460
1,573
NA
Other meat
653
885
732
733
721
779
NA
Sausage (thousand metric tons)
2,286
2,953
3,074
3,056
3,078
3,193
3,300
Canned meat c (million standard cans)
817
1,395
927
995
921
987
NA
Fish (thousand metric tons)
7,828
10,357
9,526
9,656
9,979
9,900
NA
Canned fish c (million standard cans)
1,393
2,270
2,830
2,927
2,853
2,918
NA
Whole milk products (thousand metric tons)
19,800
23,700
25,500
25,700
26,400
27,800
28,600
Canned milk c (million standard cans)
1,104
1,465
1,360
1,321
1,329
1,381
NA
Butter d (thousand metric tons)
963
1,231
1,278
1,210
1,290
1,455
1,500
Cheese (thousand metric tons)
466
547
648
656
699
744
NA
Granulated sugar - (thousand metric tons)
8,196
7,879
7,494
6,836
9,309
9,574
NA
Refined sugar (thousand metric tons)
2,005
2,478
2,607
2,664
2,791
2,819
NA
Macaroni (thousand metric tons)
1,184
1,337
1,554
1,619
1,634
1,598
NA
Confectionery goods (thousand metric tons)
2,896
3,247
3,861
3,951
4,019
4,096
4,200
Vegetable oil f (thousand metric tons)
2,327
2,744
1,892
1,789
1,769
1,892
1,860
Margarine (thousand metric tons)
762
999
1,263
1,361
1,432
1,483
1,400
Canned fruit and vegetables c
(million standard cans)
7,332
9,445
10,111
10,561
11,446
11,753
NA
Vegetables
2,611
3,016
3,370
3,233
3,233
2,916
NA
Tomatoes
1,303
2,351
2,212
2,144
2,256
2,364
NA
Other canned goods c (million standard cans) 32
53
42
58
56
63
NA
Dried fruit (thousand metric tons)
34.7
45.2
33.6
32.1
33.3
56.5
NA
Frozen vegetables (thousand metric tons)
4.0
2.6
4.4
2.9
3.9
3.3
NA
Beer (million dekaliters)
418.6
570.5
613.3
629.8
646.7
661.0
NA
Grape wine (million dekaliters)
268
297
323
344
349
351
NA
a Estimated.
b Does not include meat produced in private production. Total
output was about 16.4 million tons in 1983.
c Canned refers to both metal cans and glass jars.
d Does not include butter produced in private production. Total
output was about 1.562 million tons in 1983.
e Represents total granulated sugar minus refined sugar.
f Represents total vegetable oil minus a margarine equivalent.
Source: Narkhoz for appropriate years.
21 Secret
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 Figure 5
Soviet Food-Processing Equipment
Production of pelmeni, a ravioli-like Russian prepared
food.
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During bottling of milk, many containers are broken
because of the pressure applied to the glass.
A Soviet worker monitors a mechanized butter-
processing line.
Sugar beets are stored in huge mounds outside the
factory. If beets are not processed within 110 to 115 days,
a measurable portion of the sugar content is lost.
Workers prepare continuous-linked sausages for cooking.
Comparable US equipment is fully automated.
The end of the production line for bread. One of the
staples of the Soviet diet, bread is usually not sliced or
packaged.
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Secret
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