SOVIET GRAIN SITUATION

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-558-14-11-5
• Release Decision: RIPLIM
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: January 11, 2017
• Document Release Date: July 24, 2012
• Sequence Number: 11
• Publication Date: March 30, 1973
• Content Type: MEMO

} _.-. __ No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5 j~
_ MI;AIORANI~UN~
NATIONAL 51aCURITY COUNCIL
S ET
MEMORANDUM FOR HENRY A. KZ551NGE1t
FROM: A. W. Marshall ~~ A ` `" ~`"
SU73JECT: Soviet Grain Situ~.tion
5ovict grain supply and demand.
iT1LGENT, INFORMATXON
March 30, 1973
ON-FILE NSC RELEASE INSTRUCTIONS
APPLY
You should be aware o? an emerging Soviet problem with grain. Last
year, as you know, they had.a disastrous wheat crop, and were forced
to buy 2b million tans of grain abroad. Mare than 11 rn.illion of this was
U. S. wheat, and you will xecall that a corn.bination of shrewd Soviet buying
and inepL? U. S. gavernm.ent response to the situation resulted in high sub-
sidy cost to us, abnormally higli'~ric~~s for wl~~~tt a'nd its products later an
the U. S. market, and widespread adverse domestic comment and publicity.
+~+~ ~ i~,h ~rri~..c~h Q~''F b:Q,l ~ ~]C7?x' STraiCt i~.e,ai.i? txii.^.. 'y'Cu.r '[hToah{~ar
xi% u:~'v' C'C' Ols? ~ _~
conditions this winter have been very adverse to a good crop of w~tex
wheat. While so.zne of the lass can be made up by greater effort in spring
planting, and thus we cannot say positively now that they face a crisis,
there is a food chance_that they will need to im~axt very lark quantities
of rain. 13ecausc of world su 1 conditions, rraost of this will have to
come from the U. S. Attached at Tab A is a C7A report which indicates
that even if tlic Soviets are able to recover and achieve a .record crop,
they will still need to ixnpoxt substantial amounts of grain. The report
also points out Soviet activity taking place now' in anticipation of the need
to cover themselves. At Tab B is a ;mare recent and detailed report of
this activity, indicating; that they arc already getting substantial quantities
of grain under contract in this country and elsewhere, and are making
arrang;czY~cnts to move it. l~.t Tab G is a table showing recent and projected
Background
13rcrlYnc~v's Pxoblern
Tlic pxizacig:~-1 factor that sustains Soviet demand far grain appears to be
13xc~hnev's cletcrznination to continue improvement in the quality of tlic
DLCL11.5 ~ ?hC;llS
13YAU'.l'II - II.A.I~
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 5ECRI:T~ ~ s 2
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Soviet- diet. This means eacpanding meat output, which takes a lot
of gain. There is same evidexxce that- disagreement over continued
emphasis on the consumer led to the demotion of Polyansky from
Deputy Premi~_r to Minister of Agriculture, anti the ouster of Matslcevitch
from. the latter post.
Soviet agricultural problems, and the fact that the leadership seems to
feel a need to continue policies resulting in high grain demand, suggest
an opportunity for the U. S? As a minimum, we would wish to avoid
bailing Brezhnev out, and paying for the privilege, as we did last
summer. Further, there may be some way to use this situation to
our advantage.
SECRF
No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5 ~--~
 No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5
of ~:~t;efv;,,n rtnme~stic requirements and export commitment
Soviets Begin ldedv Grain 1Vcgotiations
The Saviets ltavc apl?roachrcl tltc United States, Canada, Australia, and
France for a new round of grain purchases. Although none of the reported
- ~~iitracts has been confirn~cd, the Soviets logically would begin to shop.
for a basic ,grain package at this time. Tltc Canadian and Australian contracts
presumably would he for wlzcat to be delivered in the fiscal year beginning
in July. The French repartcclly sold the Soviets 300,000 tans of feed barley
far delivery this spring. Tlid rumored US sale is,for an estimated S million
tons of corn, possibly far delivery during an IS-24 mantlt period. Last
year the Saviets bought almost 20 million tons of grain from these four
countries, about three-fourths of their total purchases.
The Soviet winter .grain crop got off to a bad start, but a successful
spring crap would recoup these losses. The Soviet leaders wilt not have
a reasonable appreciation of the probable size of the 1973 crop until early
July, after winter grains have reached maturity and spring grains are in
the critical. "heading" stage. With a successful sowing campaign, normal
weather, and average yields, a record crap of 153 million tons could be
han~ested, compared with 134 million tons in 1972 and the previous record
of 150 million tons in 1974. Assuming continued pursuit of the 1975
livestock goals, a normal increase ?me the'~detnand f'o'r-~raih for other uses,
and export commitments equal to those in FY 1973, total demand for
gain this year could reach 16S million tons. Thus the Soviets would need
t~ i.nnr.rt ~t la?ct t 7 mill;nn Ynn.c nF main a~~ct mitre if tht'y decide t0
..~.,._.
rebuild buffer stocks For future harvest sli+artfalls. Subnormal weather could
easily result in a crap which would be as much as 25 mi
S,EC~~`~
No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5
 No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5
;~ ~~?;
.'~~
~
2~rn, ?
~ , .. .:.
Evid4nco Cancerninc~ flew Soviet Ptzrch~~,sGS of US_ Coin
' ~Cn the ivconomzc xntellic~ence Weekly of 29 i~laLCh it wus
indicated that the 5oviei:s, as past o~ anew round ?t: gr4~i.n
puLClYases, may have recent7.x },ought 5 railJ.ion tons o~ Ua
warn. ~ This est~imatc; was buac~d on the followinr~ ;
(;u) During tho post wee;, Scandinavian steamship com~~an~es
a~:e re~~o~:tod co have time?~ohartered throe quarters of a
;r ~ ....
ni~.~.~.ion dead~~-ei.ght tc~ns~' {D~~7T) a~ bulk carxiors on Yae17a1~~
~~~ o~ the USSR yor pera.ocis of one tU t~~+o years. This ship
tonnage ttitoul.d be sufi'ioient to move al.mast~ dive niil.lien tons
o~ US graa.z~ to the USSR in a 1~ear.
.. The ~'irn~s i.nvolvecl are IClavexiess, a Norsrec~ian company - ...
whiclx has ch~~rtcred al-~vut X150 ~ 4Q0 DWT of shi.~~a and t'1ugu:~t '
LoZ~lez, a Sr.~c.dirh ~lii.l,7oaJncr. wl~o has lined up about
300, Q00 17;~~T.
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 ' r.
~haiaay they will probahJ.y Uo used out of the Great Laces to
? + ..
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.. ..'' ~?~+25X1? ?,, ,t;.~:i...~i~::i~~.~!.~~
.. . ? ,
.,
A Reuters di;~pat;ch dated 2Q P~iarch rc:p?rts froth sources
in the ClxXCago }3aai?c~ o?f' Trade that heavy bool~.irga h1d been
ntada c~it;l~ Sca~xda.nav~-~~n stoa?>=hik, comlxan3.es to carry L'S
corn t:o L-1xL 131ac1;~ St;:a in Sc~~tcr~~'ber x,573 and aftLr. ? rased
pI1 tha na.c~nitiud~: of the bookings, the Board has reportedly
conclud+~d that the ~ISSI:i: w3.1]. impoyt:?3~5 m3.~.l~.on tons o~
' .w ~ .. ;, ~a, ..,
grain ? ram the US (i.n ~'~' l9 7 ~
l~iany of the sh~.ps chartered by it}.a~-on~ess are ~:eported
t? be fittoci ?or. Gznc-xt bakes 5erv~.ee, ~.ndicating tr:hat
during the Ap~::~.1 through rlavember seasotx on the St. La~vx:onco
? ~.ift US gia3.tx. .
..: Shipments of 2 m3.~.3.ion L-ons of corn
,,.....nark. crop year by agree ~
original.l.y scheduled
to take p~,acc prior to 3Q June have lacer deferred into the
moat 1}ctwcon the Sc~v~.ets and U~
traders. l'~ddi.uion~~l tor~nages of a~heat~ and o1/hex gLains ~.
could also pall a~-er into tt~e nca.~:t c~:op year: Uccausc of i
diffi.cult3.c~;:~ in getting grain out: of Gulf pazta, bra.ixc~~.ng
t}~a f:gtal 1:annagc of grain contracted in fiscal 19'73 but
xem7ini.nc7 tv be slx:~~,ped in ~iscml x97 above 2 million tons.
~'hca USSR ~?~auld not bc' arz:atxga.ng t~?ra year i:imc chartel_s of
fo>rcigt~ v" . 25X1
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 No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5
. -- ? I J W 1' J I
25X1-
toi" Trani o~~=ins Grain in F~" 197a
gova.et Ca ~~-~1ai.1 i Y t>d I'Y' ~ 7~~ _.
~xovia the Sova.e'~a with a capab~-lity .
riat.g t
hat:t~
.
. ~ Th~.s c
`.? .::.~ c,s l.n Fiscal 1974 and 1975 c~-o.~e to those ~.tt
~,a ?move tonnac~ .
~, al 1.973.. With xiszng time and voyage cha~:ter z:ates toz
~a.,.~G' 7r,c'YjC .~
s i s at their higheNt levels since the L' years of
~ra3.n h P
hard to ~a.nd, the
~~???:1963 and 1970 and with suitahl? shi.P~? .nc pasit~-o'n '~o
5av3.ets appaxently 4rant to be a.n a evntingc y
le xairi ~.tn~aoxt:s 9.n r`L 1974 and rY 1975 at levels close
>>an~' g ~ s comntited
`to tho: c in ~'Y 1973.. The. tannage of ~.ts o~~rn -ship? w caxr
the grain la.tt from the Ua, 1.5 ~etil].~.vn tit+r, caula Y
i1li.on tons in a year= if assi.grted .~u7.lti.mc:.to the i:ask.
Q . (~ m ~ a~.1~.pa
. The 'USSR also has at least 2Q0,000 p~~1T of t:hia:a-~tla.r~
.La......_ ~,~,-rPrc~c? ~.n OctobeL 1972. whose chaxtezs e~,tend into
?.$iscal 1.974. 7n ac~ditiotl e the USSR ~4?ill be using U '- ~
~- are available, in meeting its
?ships ~ .to the e~ctent they
. ~aitment under the US/Soviet.I?garita.me Agt:cement to giV? __ . , -
co
.._.~ ...~ , . ? S ships the oppox?tur,i.ty to cap: ry At ].east ono--th~.i:Q of
U
,(1S/Svvzet Tt:auE. ~? , _ zain
bulk of S?v.ie.~. g
Over the ne~.t ttlo fiscal. ycaLS the
da
.imports cail]. come gxom the US. ~ The extant to whioh, Cana txac~e
usta?al.~ia, and other suppl-iers part,~.ci.pate in the ~Sov~.cL
A
will. c]eY.~end on their harvests- and the rcc~,aa.xo,11i=nL?s of thc~~-t="
oustomC~'s ? thus o the tannage glow be~zng lined up ~'~
~:egulat:
? Mosco~:~ need not al.l be used tot: ,Arncx scan shl.p1netti:s .
No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5
 No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5
Table 2
USSR: Estimates of Grain Supply and Demand
FY 1971-FY1974
i
Million Metric Tor
Supply of Grain Dez~and for-Grain
ear Beginning ~?e-c ~ Food, Seed & Inventory I,zvestock
1 July Production Imports Total Exports Industrial Use tidaste Cha~~.c~e Feed ~ot~
971/72 148 8 _ 156. 8
rojected 153 i2 165 6
1973J74
85
4~
1
54 ~
15;
$7~
4~
-3~
59~
15E
86~
5
a
62~
16(
s6~
5
a
67~
16`
No Objection to Declassification in Part 2012/07/24 : LOC-HAK-558-14-11-5