USSR: ADJUSTING TO THE US GRAIN EMBARGO

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• Document Creation Date: December 22, 2016
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• Sequence Number: 2
• Publication Date: February 1, 1981
• Content Type: REPORT

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Foreign 25X1
Assessment
Center
USSR: Adjusting to the
US Grain Embargo
An Intelligence Assessment
Secret
ER 81-10040
February 1981
copy 2,4 5
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National
Foreign
Assessment
Center
US Grain Embargo
USSR: Adjusting to the
Research for this report was completed
on 7 January 1981.
Chief, USSR Division
This report was prepared byl USSR
Division, Office of Economic Research. Comments
and queries are welcome and may be addressed to
Political Analysis.
This report was coordinated with the National
Intelligence Officer for the USSR and the Office of
Secret
ER 81-10040
February 1981
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USSR: Adjusting to the
US Grain EmbargoF__1 25X1
Key Judgments The impact of the US grain embargo on the USSR last year was substan-
tially lessened by Moscow's ability to find alternative sources of grain. Only
the United States actually cut back on grain exports; Argentina refused to
cooperate, and the other exporters sold more grain to the Soviets than
projected when the embargo was announced. Consequently, the Soviets
were able to replace half of the 17 million tons of grain denied them by the
United States in the Long-Term Agreement (LTA) year ending 30 Septem-
ber 1980.1 25X1
The embargo reduced Soviet grain imports in the LTA year 1979/80 from
an expected 36 million to 28 million tons, which exacerbated an already
tight feed situation. It reduced grain available for feed by roughly 8
percent-assuming no equivalent drawdown in stocks-or an amount suffi-
cient to produce 650,000 tons of pork (carcass weight), equal to about 4
percent of meat production in 1979. To soften the impact of the sanctions,
however, the Soviets by drawing down stocks were able to hold the drops in
grain fed to livestock to 2 percent and in meat production to 3 percent. The
low stock level has left Moscow more dependent on grain imports in 1980/81
following another disastrous grain harvest in 1980. We estimate that to
maintain a status quo in 1981 livestock production would require the
importation of over 40 million tons of grain during the 1980/81 LTA year.
Such a high level of import is not feasible.F__7 25X1
Whether or not the US partial embargo is continued, the Soviets should be
able to obtain enough grain in world markets-including 8 million tons from
the United States-to import during the year ending 30 September 1981
equal to their current handling capacity of 34 million tons-6 million tons
more than in 1979/80. Support for the embargo among our allies has eroded
to the point where availability of non-US grain will be less of a problem for
Moscow than port congestion. In addition, the Soviets should have no
difficulty purchasing 2-3 million tons of soybeans and products, including
some US origin from West European firms. Should the embargo be lifted,
the Soviets would take additional quantities of US corn and soybeans, if
offered, and probably would defer or cancel delivery on similar quantities
from other origins. Such a move would enable Moscow to use larger ships to
carry grain thereby reducing shipping costs and easing congestion at Soviet
ports. 25X1
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Per capita production of meat in calendar year 1981 will be down for the
consecutive year. Meat production is forecast to be no larger, and possibly
smaller, than last year, when it dropped 3 percent below 1979. Prior to the
embargo we had projected no drop in 1980 meat production. The dominant
problem for Soviet meat production in 1981 is a second successive bad
harvest of grain and other feeds. A continuation of the US partial embargo
on grain would have little effect
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Key Judgments
Introduction
Soviet Grain Import Needs, 1979/80
US Sanctions Imposed 4 January 1980
Sanctions Reduced soviet Grain imports
Circumvention of Embargo
Embargo Imposed Logistic Constraints
Impact of Sanctions on Soviet Livestock Sector
Outlook for 1980/81 Soviet Grain Imports
Lifting the Embargo
Impact of Continued Embargo on Livestock Sector
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USSR: Adjusting to the
US Grain Embargo
Introduction
In January 1980, following the Soviet intervention in
Afghanistan, the United States and its major allies
adopted a package of economic denial measures
against the USSR. The denial measure that shocked
the Soviet Union the most and since has been the most
controversial was the partial embargo placed on grain
shipments by the United States and cooperating ex-
porters. Differences continue to exist in the media and
among exporters about the effectiveness of the US
sanctions denying the USSR 17 million tons of US
wheat and corn in the US-USSR Long-Term Agree-
ment (LTA) year ending September 1980.F_~
In an effort to clarify the grain embargo's impact, this
paper traces our preembargo estimate of Soviet grain
import intentions through the US postembargo period
and analyzes its effectiveness. It covers the embargo's
impact on (1) 1979/80 grain imports for July/June
and October/ September marketing years, (2) the live-
stock sector, and (3) port congestion. The probable
effects on Soviet grain imports and meat production of
lifting the US grain sanctions in early 1981 are also
discussed.
Soviet Grain Import Needs, 1979/80
In the fall of 1979 Moscow expected to use large grain
imports and drawdown of stocks to soften the impact of
a poor grain harvest on the livestock sector. A disas-
trous 179-million-ton grain crop and poor forage crops
implied a very large deficit (in the 50-60 million ton
range) relative to requirements to maintain herds and
flocks, and fulfill livestock production goals for 1980.
Carryover stocks from the 1978 crop were very roughly
estimated to be about 20 million tons.)
By mid-September) (rel-
atively large Soviet purchases of non-US grain and
Soviet interest in being permitted to buy considerably
more than 8 million tons of US grain permitted under
the upcoming LTA year beginning I October 1979.
The confirmation of Soviet intentions to launch a
massive grain import program surfaced at the October
US-USSR grain consultations when US Department
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of Agriculture (USDA) officials offered them 25 mil-
lion tons of wheat and corn in the year ending 30
September 1980 almost immedi-
ately indicated the Soviets would take all the US grain
offered (including some barley), plus about 10 million
tons of non-US grain, and 2.5 million tons of soybeans
and meal. The total expected purchases of roughly 38
million tons during the year ending 30 September 1980
was near the limit of our estimated Soviet annual port
capacity for handling bulk agricultural commodities.
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Maximizing imports and drawing down stocks would
have softened, but not eliminated the adverse impact of
the production shortfall on livestock goals. Supplies of
grain for feed still would have been below require-
ments.)25X1
US Sanctions Imposed 4 January 1980
The unilateral suspension of US agricultural exports to
the USSR on 4 January 1980 was targeted at the
important and highly vulnerable livestock sector of the
Soviet economy. It immediately denied the USSR 17
million tons of grain, 1.2 million tons of soybeans and
meal, and smaller quantities of poultry scheduled for
delivery in the LTA year ending 30 September 1980.
The trade sanctions imposed several restrictions on US
exporters:
? The remainder of the 8 million tons of wheat and
corn allowed but not shipped as of 4 January had to
leave US ports by 1 April 1980. 25X1
? Export licenses were required to ship grain to the
USSR.
? It was illegal to sell the Soviets US grain not licensec25X1
under the 8-million-ton limit through a third
country. 25X1
? Processed agricultural products made in foreign
countries from US raw products could not be sold to
the USSR, for example, soymeal made from US
soybeans.
? Non-US grain could not be sold by US traders to the
USSR. (This restriction was rescinded last June.)
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To make the US embargo effective, US officials after
imposing the embargo met with representatives of
other major grain exporter nations on 12 January to
obtain their cooperation. None of the exporters-Ar-
gentina, Australia, Canada, and the EC-agreed to
cut back grain sales to the Soviets but stated they
would not replace directly or indirectly the 17 million
tons of US wheat and corn denied. In turn, the United
States agreed not to increase sales to other exporters'
traditional markets. Because commodities other than
grain were not discussed, no agreement was reached on
sales of oilseeds, meal, and livestock products. Subse-
quent discussions with the exporter governments
concerning their actions to control grain exports to the
USSR made it clear that Argentina was not going to
cooperate. Moreover, the other exporters could not be
pinned down on specific export ceilings, but only on
"traditional or historic levels." This turned out to mean
a level as large as or larger than in any other previous
year.
The exporters, including Argentina, agreed to partici-
pate in monitoring grain trade to the USSR. They have
met regularly with US officials to exchange informa-
tion on new sales, measures taken to control exports to
the USSR, and actual shipping data. The EC has not
cooperated in providing transshipping data through
north European ports, citing commercial secrets as the
reason.
CIA and USDA estimated that in the marketing year
ending 30 September 1980, the Soviets could probably
replace 12-15 million of the denied 17 million tons of
grain if major exporting countries failed to support the
US embargo and 6-9 million tons if exporters coop-
erated with the United States. Considerably less grain
was available in the marketing year ending 30 June
1980 because of the shorter time the Soviets had to
arrange new chartering and shipping schedules to
move large quantities of Argentine corn and soybeans
available from the April harvest.
Sanctions Reduced Soviet Grain Imports, 1979/80.
We estimate that Soviet grain imports in the I October
1979-30 September 1980 year totaled nearly 28 mil-
lion tons, as shown in table 1.' This amount fell 8.4
million tons short of preembargo expectations. Imports
included 8.4 million tons of US grain and 19.2 million
tons from other origins. Without the suspension, we
had expected the United States to export about 26
million tons and other suppliers 10 million tons to the
USSR. Thus, the Soviets have been able to make up
only about half of the 17 million tons of US grain
embargoed-at the high end of the 6-9 million ton
range we estimated last January. F__1
Estimated imports in the 1 July 1979-30 June 1980
marketing year (MY 1980) were larger at nearly 31
million tons but still 6 million tons below preembargo
projections. US exports at 15 million tons were nearly
7 million tons larger, however, than during the
October/September year (see table 2). This reflects
the large US grain shipments during July-September
1979, before the LTA year began on 1 October 1979
and the year in which the sanctions applied. F_~
Circumvention of Embargo. We have no evidence that
large amounts of US grain were diverted through third
countries to the USSR. Based on incomplete informa-
tion we estimate that 500,000 tons of US grain could
have gone that route-divided between Romania and
northern European transshipping operations. Similar
quantities of US soybeans and meal were probably
transshipped through northern European ports.
' The press-both domestic and foreign-has contributed to some
confusion regarding the effectiveness of the embargo because import
statistics differ between the marketing and the LTA years. The
usual marketing year for grain begins I July and the years under the
LTA begin 1 October. It was under the agreement year beginning
1 October 1979 that we denied the Soviets 17 million tons of US
wheat and corn. Some published reports have incorrectly chosen to
use the July/June year statistics to show that US exports greatly
exceeded the 8 million tons agreed to under the sanctions. The
marketing year ending 30 June is normally used to analyze availabil-
ity of grain for livestock feeding.F_~
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or Agreements
to Date
Total
8.79
21.38
20.32
27.64 b
36.0
34.1
29.0
United States
6.1
14.8
15.3
8.40
25.9 a
8.0
8.0
Canada
1.5
2.7
1.9
4.30
2.4
6.5
6.5
Australia
0.5
0.3
0.6
4.40
3.0
3.5
3.3
0.2
1.60
0.6
2.1
1.5 a
Argentina
0.23
3.2
1.6
6.00
3.0
10.0
7.0
Eastern Europe
0.4 e
0.22 e
0.7
1.80
0.9
1.8
0.8
Thailand
0.02
0.10
0.4
0.4
South Africa
0.10
Sweden
0.30
Turkey
New Zealand
Brazil
0.06
0.16
a Excluding rice.
b Including an assumed but undocumented 500,000 tons received
through diversion.
Including 900,000 tons of barley.
d Including wheat flour and 500,000 tons mixed feed, at least 65
percent of which is grain.
e Calculated from calendar year statistics.
Reports from Western Europe claiming large amounts
of US grain were transshipped through Eastern Eu-
rope are exaggerated and unsubstantiated. Larger
East European imports were needed to support live-
stock production goals because of a shortfall in their
1979 harvests. We estimate that less than a million
tons out of Eastern Europe's total import of 17 million
tons-3 million more than 1978/79-were used to
replace exports of domestic grain and transshipments
to the USSR.
About 75 percent of the estimated 8.6 million tons of
grain replacement came from Argentina, Canada, and
Australia (see table 1). Shipments to the USSR in
1979/80 were a record for all of the major exporters
except Canada. The other 25 percent was imported
from a number of exporters, including Sweden, Thai-
land, Eastern Europe, and France.F___-] 25X1
Embargo Imposed Logistic Constraints. The US sanc-
tions added to logistical constraints on the quantity of
imported grain and oilseeds the USSR could handle in
1979/80. We estimate the throughput capacity of the
ports was reduced by several million tons. Thus, even if
more non-US grain had been available, it is doubtful
the Soviets could have imported much more than the 25X1
estimated 30 million tons (including soybeans) they
were able to purchase during the LTA year 1979/80.
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USSR: Grain Imports a
1 July-30 June
Exporters
1978/79 1979/80
Preliminary
1980/81
Forecast
1980/81
Sales and
Agreement b
Total c
15.1 30.7
30.8
29.0
Argentina
1.4 5.1
8.0
7.0
United States
11.1 15.3
8.0
8.0
Canada
2.0 3.4
5.9
5.9
Australia
0.1 4.0
3.5
3.9
EC
0.2 1.0
1.8
1.3 d
Eastern Europe
0.2 1.5
1.5
0.8
Spain
0 0
1.0
1.0
Sweden
0 0.2
0.5
0.4
Thailand
0 0.1
0.4
0.6
Turkey
0 0
0.2
0.1
South Africa
0 0.1
0
0
a Excluding 0.5 million tons of rice.
b As of 25 January 1981.
Because of rounding, components may not add to totals shown.
d Including wheat flour.
Prior to the embargo, CIA estimated the annual Soviet
grain-handling capacity of its major ports at 36 million
tons. Adding 2-4 million tons for imports to minor
ports and by rail gives a total of 38-40 million tons.2
Suspending shipments of over 18 million tons of US
grain, soybeans, and meal, which would have moved in
large bulk ocean carriers, forced the Soviets to buy
from a larger number of suppliers who were unable to
sustain the same scale of grain movements. The shift
away from US deepwater ports substantially increased
the number of smaller ships arriving in Soviet ports.
For example, because of draft limits roughly twice as
many ships are needed to move the same quantity of
grain out of Argentine ports. Congestion existed at
most ports during 1980, with berth throughput rates
down and turnaround times up. The increased use of
transshipment facilities in Western Europe, which re-
-]Nee
appendix for discussion of Soviet port and transport capabilities for
handling grain
quired the use of large numbers of coasters, also added
to congestion in Baltic ports.
Impact of Sanctions on Soviet Livestock Sector. The
consequences of reducing grain imports from 36 mil-
lion to less than 28 million tons because of the embargo
have fallen most heavily on the livestock sector. Be-
cause port capacity limited imports, even without the
embargo the poor 1979 grain and forage crops would
have forced the Soviets to make adjustments. Meat
production in 1980 probably would have shown no
increase, and a downward adjustment in growth of
livestock inventories also would have been needed to
match the reduced feed base. However, the embargo
worsened the situation by further limiting grain im-
ports.
The 8.4 million tons of grain denied the Soviets by the
embargo would have resulted in roughly an 8-percent
reduction in grain available for feed, assuming it was
not replaced from stocks. Expressed in another way,
this was enough to produce roughly 650,000 tons of
pork (carcass weight), equivalent to 4 percent of meat
output in 1979. Because of a large stock drawdown,
however, the total grain available for feeding only
dropped an estimated 2 percent in 1979/80. The short
feedgrain supplies actually impinged on the livestock
sector in three ways-a lower meat and milk output,
lower animal weights, and slower growth in herd num-
bers.
Meat production in 1980 came to 15.1 million tons-3
percent less than last year and 4 percent below the
sharply reduced plan of 15.7 million tons. Livestock
inventories at yearend 1980 were roughly equal to
those of a year earlier because of a determined cam-
paign to sustain herds in the socialized sector. Poultry
is probably the only category that showed much in-
crease in numbers and product output over last year.
Given official data for egg production, the poultry
sector undoubtedly received priority in the distribution
of concentrated feed supplies because of its relatively
high efficiency in converting feed into products.
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embargo action over Poland.
Outlook for 1980/81 Soviet Grain Imports
Following a second successive poor grain harvest, the
USSR will try to import as much grain as possible
during 1980/8 1 to hold down losses in the livestock
sector. A 1980 grain harvest of 189 million tons will
leave the Soviets far short of requirements.' We also
believe Soviet dependence on imports is much greater
than a year ago because of smaller grain stocks and a
poor potato crop. The estimated large stock drawdown
in 1979/80 probably has reduced operating stocks to a
dangerously low level by Soviet standards.' Additional
drawdowns this year may be tempered by Moscow's
likely concerns over the uncertain outlook for the 1981
winter grain crop and Western threats of new grain
soymeal, and manioc.
We expect Moscow to import about 34 million tons of
grain in the current LTA year ending September 1981,
more than 6 million tons above 1979/80, even if the
US partial embargo continues. Imports will be limited
more by port and internal transport constraints than by
Moscow's ability to buy grain in world markets, espe-
cially if Argentina has a good coarse grain harvest this
spring. Although grain supplies are tight, the willing-
ness of the Soviets to pay premium prices should at-
tract all the non-US grain they can handle. Moscow
also should have no difficulty purchasing some 2-3
million tons of soybeans and meal. So far we estimate
the Soviets have purchased or agreed to purchase some
29 million tons of grain and 2 million tons of soybeans,
The continued effectiveness of the partial US embargo
on grain exports is being rapidly eroded by increased
sales from other exporting countries and by the Soviet
ability to circumvent some of the logistical constraints
present during the last LTA year. Only Australia and
the EC of the major exporters are cooperating with the
United States to hold exports at last year's level, but
both planned to review this policy after 20 January. US
diplomatic representations that the embargo was
' We estimate a deficit of roughly 40 million tons exists if: (1)
livestock herds are not reduced, (2) no additions to grain stocks are
made, (3) livestock production is maintained at current levels, and
(4) no decrease occurs in nonfeed uses of grain.
' The USSR holds an unknown quantity of strategic stocks of grain
to supply their military forces and civilian consumers in time of war.
This is in addition to operating and buffer stocks accumulated or
drawn down in years of good and bad harvest, respectivelyF_~
important as a continuing sign of disapproval to the
Russians have been undercut by the signing of the US-
China grain agreement. Both Canada and Australia
regard that agreement as a violation of the US pledge
not to increase grain sales to their traditional markets
during the embargo.F__1 25X1
In the marketing year ending 30 June 1981 (MY
1981), the 12-month period normally used to analyze
feed availability, Soviet grain imports will be limited to
about 31 million tons plus 2-3 million tons of oilseeds
and bulk feeds or roughly the same as MY 1980. This
reduced level of grain import compared to the 34
million tons projected for the LTA year ending
30 September 1981 reflects the continued adverse im- 25X1
pact of January's partial embargo on both availability
of grain from non-US sources and congestion at Soviet
ports in the July-December 1980 period.' Nonetheless,
we expect Moscow to contract for delivery in MY 1981
for more than the 31 million tons of grain they can
handle logestically to ensure adequate supplies should
unforeseen shipping delays by selected exporters de-
velop. The USSR has already purchased 29 million
tons of grain plus 2 million of soybeans and bulk feeds
for delivery by 30 June 1981. 25X1
Lifting the Embargo
Should the United States lift the partial embargo on
grain this month, the Soviets could help ease port
congestion by rescheduling larger bottoms to move it
and stretch out or reduce deliveries of Argentine grain. 25X1
For the same reason, if no longer embargoed US
soybean meal would be imported directly rather than
transshipped or processed through West European
suppliers. These measures would have little impact on
'During this period we estimate that a total of only 17 million tons of
grain, soybeans, and meal were unloaded at Soviet ports or trans-
ported by rail from Europe. Without the embargo we expected the
USSR to import upwards of 20 million tons in this period. Thus
another 17 million tons will have to be imported in the first half of
1981 to achieve our total estimate of 33-34 million tons for MY
19810 25X1
We believe the Soviet ports will be hard pressed to handle more than
17 million tons of grain and oilseeds during January-June 1981. This
period includes the usually severe winter months of January-March
that normally reduce the number of active Baltic ports, slows
offloading operations, and disrupts rail transport. For the first time, 25X1
the Soviets have chartered six grain ships with ice cutters in an
apparent effort to maximize imports this winter through Baltic ports.
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total imports in the first half of 1981, but by the third
quarter of the year they might ease the port problem
enough to raise grain import potential by some 2
million tons. The railroad system hauling grain away
from the ports, however, would have to be assigned a
higher priority to move the additional grain to interior
Moscow would be more interested in additional quanti-
ties of US corn rather than wheat. We would expect
Moscow to purchase immediately for nearby delivery
several million tons of corn, if made available, and cut
back or delay shipments of Argentine wheat and pos-
sibly sorghum. Shifting to US grain could substan-
tially reduce Moscow's costs by lowering shipping
charges and largely eliminating current high pre-
miums being paid for non-US grain.
Impact of Continued Embargo
on Livestock Sector, 1981
Following a second successive poor grain crop-es-
timated at 189 million tons-the Soviet feedgrain
problem will be worse this marketing year. The use of
grain stocks will be limited by the large drawdown last
year necessitated to a large extent by the embargo.
Given the level of projected grain imports for 1980/8 1,
as outlined above, and no stock drawdown, we estimate
that grain available for feed use could be down roughly
5 to 10 percent from a year ago. If the Soviets allow
livestock herds to decline, we believe 1981 meat .
production would equal roughly the 1980 level of 15.1
million tons. Alternatively, should the Soviets attempt
to maintain herds on the assumption of a return to
normal grain crops in 1981, meat production could
drop to 14.5 million tons, or 4 percent. If the United 25X1
the net increase in imported grain.
States rescinded the partial embargo on grain, another
100,000 tons of meat might be produced in 1981 from
Meat shortages will be serious during 1981 with or
without an embargo. Moscow can be expected to be
active in international markets for large meat imports
to help fill the gap. We estimate that Soviet meat
imports reached at least 700,000 tons in calendar year
1980-a record-and could approach 1 million tons
this year.
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Appendix
Transport Constraints on Soviet Grain
Imports
In addition to external grain market conditions, the
amount of grain that can be imported annually by the
USSR is constrained by three key transportation
factors:
? The capacity of Soviet ports to offload grain.
? The limited ability of the internal Soviet transporta-
tion network-primarily the railroads-to haul the
grain from the ports to storage areas.
? Soviet grain storage capacity.)
our total estimate (see table A- I).
Soviet Port Capacity
We estimate that Soviet ports have the capacity to
handle as much as 36 million tons' of grain imports
annually under normal conditions. The four main
Soviet ports-Odessa, Leningrad, Ilichevsk, and
Novorossiysk-have a combined annual capacity to
import grain in excess of 18 million tons. Imports above
this rate were observed for short periods during 1973,
1975, and recently when grain imports reached historic
peaks. We also know of 14 other Soviet ports that have
been used to unload grain and these are factored into
rail system suffers from poor management.
The task of handling large quantities of grain up to
port capacity is difficult. The Soviets have a barely
adequate inventory of excess railroad cars to move
grain imports inland and have had difficulty in devel-
oping efficient transportation schedules from the port
to internal storage areas. Moreover, the entire Soviet
The USSR's major grain ports are currently working
the same number of ships as during the peak periods of
past lifts, but are operating at reduced efficiency. The
maximum number of berths currently used for grain is
near historic highs, but the average load delivered is
' To estimate grain handling capacity at Soviet ports, the following
factors were considered:
? Total number of berths used for grain imports at 18 ports.
? Average grain unloading rate.
? Ship turnaround time and average deliveries.
? Port working hours (assumes two eight hour shifts and a 240-day
work year).
Maximum Average Total
Number Daily Daily
of Berths Unloading Grain
Used for Rate per Unloading
Grain Berth Capacity
(Metric Tons) (Tons)
Total 73 150,250
Black Sea 36 79,500
Odessa 8 2,500 20,000
Novorossiysk 7 2,500 17,500
Ilichevsk 7 2,500 17,500 25X1
Nikolayev 3 1,750 5,250
Tuapse 3 1,750 5,250
Kherson 3 1,750 5,250
Poti 2 1,750 3,500
Zhdanov 2 1,750 3,500
Batumi 1 1,750 1,750
Baltic Sea 31 60,250
Leningrad 8 2,500 20,000
Kaliningrad 6 1,750 10,500
Klaipeda 5 1,750 8,750
Riga 4 1,750 7,000
Ventspils 3 1,750 5,250
Baltiysk 3 1,750 5,250 25X1
Tallinn 2 1,750 3,500
Pacific Ocean 6 10,500
Nakhodka 3 1,750 5,250
Vladivostok 3 1,750 5,250
down while turnaround time is up (see table A-2). 25X1
There are several factors contributing to this ineffi-
cient performance:
? The US embargo, which has forced Moscow to in-
crease grain imports from Argentina. Such imports
must move on smaller ships due to draft restrictions
at Argentine grain ports compared to Gulf ports.
This has increased the number of ships that now
must be handled at Soviet ports to deliver a given
quantity of grain and has led, in some cases, to longer
turnaround times.
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 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000200370002-4
Secret
Soviet Grain Ports: Average Load
and Turnaround Time
Load
(Thousand
Metric Tons)
Turnaround
Time
(Number of
Days)
Turnaround
Time
(In Days,
During Peak
Imports)
1973
24.7
15.5
22.7
1975
32.0
19.7
35.9
31.1
18.7
-
1980 (January-
November)
18.1
21.4
-
? Continued problems in the USSR with railcar avail-
ability, especially those designed to carry grain.
? Increased transshipment of grain on Soviet account
in Antwerp, Hamburg, and Rotterdam for delivery
by small coastal vessels to river and sea ports in the
Soviet Baltic area, which has increased congestion
there.
? Ongoing Soviet labor and management problems in
coordinating the grain import program
Internal Transportation Constraints
The Soviet transportation system moves a large volume
of grain annually in conjunction with the domestic
harvest and the distribution of imported grain. The
overwhelming share is transported by rail-the pri-
mary mode of transportation in the Soviet Union; some
93 percent of all grain tonnage was shipped by rail in
1975 while only 6 percent was transported on the
rivers.
allocation of investment resources have severely
strained the capacity and flexibility of the rail system.
Shocks to the rail system, such as surges in demand for
rail transport services in connection with larger grain
imports and transit traffic to Iran have resulted in
disruptions, delays, and temporary embargoes.
While the Soviet rail system serving the grain ports has
sufficient capacity to handle more than the 36 million
tons of grain that the ports can handle, the actual
operation of the rail system is stretched so tightly that
any additional strain would lead to further deteriora-
tion in performance. The current strains in the system
are reflected in several ways:
? Railcar turnaround time is increasing rapidly, lead-
ing to inefficient fleet utilization.
? Labor productivity on the railroads is declining.
? Train speeds are slowing.
? The annual rate of increase in traffic hauled is stag-
nating.
Only by enhanced rail productivity (decreased turn-
around time, increased average loads, shorter average
length of haul), improved management (particularly
more efficient scheduling and allocation of railcars and
locomotives), and by not moving low-priority items or
assigning these to other transport modes can the rail
system relax some of its tautness and be able to accept
the movement of additional grain.
Moscow must make a decision on economic priorities
for this to occur. If the internal grain supply situation
becomes critical enough, we feel that the Soviets will
divert nonessential trade and allocate the required
transport assets to do so. The drawback to such an
undertaking, however, would be disruptions to the
domestic economy
Until the early-to-mid-1970s, when nearly all eco-
nomic activity was concentrated west of the Urals,
railroads were able to handle the increased demand for
freight and passenger services along with the growth of
the Soviet economy. In recent years, however, the
continued growth of the economy, the geographical
shift in demand for longer haul freight services as
Soviet dependence on Siberian resources has in-
creased, and the relative neglect of the railroads in the
25X1
2 A11
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000200370002-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000200370002-4
Secret
Declassified in Part - Sanitized Copy Approved for Release 2012/03/14: CIA-RDP08SO135OR000200370002-4