INTELLIGENCE MEMORANDUM DECREASES IN SOVIET MEAT OUTPUT LEADS TO PURCHASES FROM FREE WORLD SUPPLIERS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001600030031-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 22, 2016
• Document Release Date: October 20, 2011
• Sequence Number: 31
• Publication Date: March 1, 1970
• Content Type: IM

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DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Decreases In Soviet Meat Output
Leads To Purchases From Free world Suppliers
~~ECmt-
ER IM 70-31
March 1970
Coot' No. 41
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title.
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
OPOUP 1
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
10 March 1970
INTELLIGENCE MEMORANDUM
Decrease In Sovtet Meat Output
Leads To Purchases
From Free World Suppliers
Introduction
Recent Soviet overtures for the purchase of
sizable quantities of meat from the Free World and
an increased frequency of reported shortages of
retail supplies of meat have focused attention on
current problems in meeting consumer demand for
meat. Following impressive increases in per capita
availabilities of meat in 1965-67, consumption
leveled off in 1968 and declined in 1969. Moreover,
the continued rise in personal money incomes in the
last two years has added to the already existing
and substantial unsatisfied demand for meat. The
purposes of this memorandum are (1) to examine
recent developments affecting the domestic supply
and consumption of meat in 1969 and the first half
of 1970 and (2) to summarize the evidence concerning
the purchase of meat from abroad.
Production in 1969
1. After four years of consecutive increases,
production of meat is estimated to have declined
in 1969. During 1965-67 the rate of growth in
domestic output averaged 11h% per year. This rapid
rate of advance was followed by a leveling off in
Note: This memorandum was produced solely by CIA.
It was prepared by the Office of Economic Research.
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output in 1968 and a drop of 3% to 5% in 1969, as
indicated in the following tabulation:
Meat Output
(Million
Year Metric Tons)
1965 8.8
1966 9.5
1967 10.1
1968 10.2
1969 9.7 to 9.9
Annual Rate
of Growth
(Percent)
a. Estimate1. Official figures for
the production of meat are not ac-
cepted because of evidence of a large
and varying exaggeration (see the
Appendix).
2. The decrease in meat production in 1969 re-
flected the convergence of several developments that
either directly or indirectly affected output of all
livestock products:
(1) At the beginning of the year, there
was a 1/% decline in the carryover of inventories
of livestock from 1968, compared with the corres-
ponding date a year earlier. A small boost in
numbers of sheep and goats was more than offset by
decreases in cattle and hogs. The inventory of
49 million hogs was some 10/ million head below the
level at the end of 1965.
(2) Severe winter weather during the first
quarter of 1969 brought about an abnormally high
rate of mortality among livestock, especially sheep.
It has been estimated elsewhere that losses of sheep
(12/ million) resulted in the forfeiting of 200,000
tons of meat, an amount equivalent to 2% of total
meat output in 1968.*
(3) A small absolute reduction in the
availability of feed per animal also contributed
to the reduced output of meat. Much of the rapid
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growth in output of meat and other livestock prod-
ucts during 1965-67 was attributable to an average
boost of one-fifth in the total supply of feed (in
terms of feed units) and an increase of more than
10% in available feed units per animal.
(4) There were several indications that the
incidence of livestock diseases in 1969 had a rela-
tively greater adverse effect on output of meat and
other livestock products than in any year since 1966.
Specifically, the incidence of foot-and-mouth disease
among cattle and sheep and of W,rek's disease (a form
of avian leukosis) among poultry may have accelerated.
Unsatisfied Demand for Meat
3. The downturn in domestic output, coupled
with the unwillingness of the government to authorize
larger imports, led to a decline of 4% in per capita
consumption of meat in 1969. Hence, the regime has
not sustained the considerable progress in meat con-
sumption made during the first four years of the
post-Khrushchev era. By 1968 per capita meat con-
sumption had increased to about 38 kilograms per
year -- about one-fourth above the depressed level
of 1964, the year of Khrushchev's political demise.*
4. The decline in 1969 came at the very time
when Soviet consumers held high expectations that
there would be a continued substitution of quality
foods -- especially livestock products -- for a
substantial part of the traditional starchy staples
(bread and potatoes). The failure to increase
supplies of meat must be even more evident to the
consumer as the continued rise in personal money
incomes in 1969 and in 1970 adds to the existing
unsatisfied demand for meat. Evidence of the popu-
lation's unsatisfied demand is manifested in
(1) lengthening queues in state stores, where re-
tail prices are fixed, and rising prices in the
* In May 1957, at the time of Khrushchev's atruggZe
with the "anti-Party group," he launched a campaign
to catch up to the United States in per capita pro-
duction of milk and meat in a "few years." In 1964,
the year of Khrushchev's ouster, per capita meat
consumption in the USSR was only 6% above that in
1957 and, instead of progressing toward the goal
of "catching-up," the Soviet consumer had slipped
from approximately 37% of the US ZeveZ in 1958 to
34%.
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collective farm market (CFM), where prices rise and
fall according to demand and supply, and (2) an in-
crease in the frequency of reports of complete
absence of supplies of meat in selected urban centers.
5. The data on price movements for Moscow CFM's
suggest a strong upward trend in meat prices in 1969
and in January 1970. Compared with the corresponding
periods a year earlier, Moscow CFM meat prices stood
6/% higher in the first half of 1969 and 9/% higher
in the second half. The price increase from January
1969 to January 1970 was 16%.
6. Beginning in. mid-1969 there was an increase
in the volume of reports concerning prolonged local
shortages and even absences of meat in several pro-
vincial centers. The boost in Moscow collective
farm market prices in January 1970 was accompanied
by a further decline in state-store supplies.
Moreover, mid-January travelers to such diverse pro-
vincial centers as Yaroslavl (Northern European
Russia) and Ashkabad (Central Asia) report little
or no meat available. Somewhat surprisingly, along
with the spate of reports concerning severe meat
shortages, there has been an almost complete absence
of rumors (and no eyewitness accounts) of riots or
demonstrations. On the other hand, a Soviet resi-
lent of Krasnodar in the North Caucasus stated in
mid-1969 that "the mood of the population [is] very
bad and ... outbreaks of violence would not be
surprising."
Outlook for Meat Production in 1970
7. Unless the regime has already authorized
release of a considerable quantity of grain re-
serves for feeding livestock, the outlook for a
marked increase in meat production in the first half
of 1970 is dim. The number of animals to be fed is
approximately the same in early 1970 as a year
earlier, and the carryover in total feed supplies
is only slightly larger. The somewhat greater
quantity of feed grain available from the 1969 crop
is mostly offset by lower supplies of other concen-
trates such as oilseed cake and of succulent feeds
such as potatoes and silage. Moreover, if recently
announced policies are followed, the number of live-
stock will be expanded in 1970 at the expense of
shortrun gains in meat output. In summary, if cur-
rent stocks of feed grain are not augmented, the
change in output in the first half of 1970 is not
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expected to be more than plus or minus 2% or 3%,
compared with the corresponding period of 1969.*
Indeed, production of meat has gotten off to an in-
auspicious start in 1970. Output of industrially
processed meat in January was 2% below the depressed
level for the same month in 1969 and 9% below the
output registered in January 1968.**
8. In looking beyond the first half of 1970,
the critical factor in judging the outlook for meat
production will be the production of crops in 1970,
which will be largely determined by weather condi-
tions. For example, Soviet capabilities for in-
creasing numbers and productivity of cattle and
sheep from mid-1970 to mid-1971 will depend pri-
marily upon the availability of summer pasture
and of roughages which can be stored for use in
the winter holdover period. An increase in num-
bers and productivity of hogs is contingent upon
the availabilities of feed grains and other con-
centrates from the 1970 crop -- a matter largely
dependent on growing and harvesting conditions in
the coming crop season.
Consumer Demand for Meat in 1970
9. Present indicators all point to a further
boost in the demand for meat in 1970. Developments
contributing to added demand include (1) a 1% in-
crement to the country's population; (2) a further
large boost in money incomes of 6%, or about ten
billion rubles; and (3) a huge backlog of personal
savings, which at the beginning of 1970 were at an
alltime high. Savings have skyrocketed in recent
* Of course, the lack of any pubi.ic disclosure to
date concerning the release of stocks does not pre-
clude the possibility that such a course of action
has been put into effect. In November, several in
the leadership indicated that "special measures"
(undesignated) had been adopted to aid the livestock
sector in overcoming "current difficulties." And in
mid-January Izvestiya indicated that "serious mea-
sures" with respect to animal husbandry had been
taken at the December 1969 Plenum. Finally, a
Pravda editorial of 11 February indicated that
"additional ... large quantities of feed had been
allocated to the livestock sector." This formula-
tion strongly suggests the release of grain from
state reserves for feeding.
** The government-operated meatpacking industry
provides more than three-fifths of the country's
total output.
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years, in pant because of the failure of the regime
to match the expansion of money incomes with an ex-
pansion of consumer goods and services. A continua-
tion in 1970 of past trends of expenditure on food
would boost demand for food by at least 4%. Most of
this additional demand would be concentrated in high-
quality foodstuffs, especially animal products,
fruits, and vegetables. And because of shortfalls
in the 1969 harvest, a decrease in the supply of
fruit and vegetables can be anticipated in at least
the first half of 1970, compared with the corres-
ponding period in 1969.
Alleviating the Meat Supply Problem by Imports
10. As indicated above, there is little prospect
for an improvement in domestic production of meat
before the last half of 19 70 , if then. But the
leadership has a strong incentive, occasioned by
the Lenin Centennial in April, to alleviate at least
partly the current shortages of meat. The Soviet
consumer undoubtedly remembers the all-out effort
by the regime in 1967, the fiftieth anniversary of
the revolution, to give the ordinary citizen a better
shake. In addition to a markedly improved supply of
quality foods from domestic sources in 1967, imports
($100 million) of Western-made clothing, footwear;
and other soft goods were substantially increased.
11. Perhaps with this precedent in mind, the
regime has recently taken steps to augment domestic
supplies in the coming months by purchasing consider-
able quantities of meat.* Recent reports from major
Free World exporters indicate that the Soviet Union
may be currently purchasing considerable quantities
of meat for delivery in the first half of 1970.
Purchases of 65,000 tons (approximately $50 million)
Since 1966 the USSR has been a net exporter of
meat, with selected client states -- principally
East Germany, Czechoslovakia, and Cuba -- the main
recipients. Except for a spurt in 1967, exports
to Free World countries for hard currency have
been negligible. In 1967 and 1968, Soviet meat
imports were less than 60,000 tons, with nearly
all imports originating from East European client
states. Although data are not available for 1969,
the evidence at hand suggests a further drop in
net exports as the result of reduced exports to
and decreased imports from the East European
client states and Yugos Zavia.
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tional purchases of 56,000 tons (approximatel
$38 million) remaining unverified.*
Finally, in-
ternational meat circles report a Soviet and
East European buyers continue to make inquiries for
meat in Western Europe and Latin America. However,
deliveries in the next several months from those
sources may also be limited by refrigerated shipping
capacity.
13. The purchase of $100 million worth of meat
from the Free World (roughly 135,000 tons), if
delivery could be made before 1 July, would allow
a significant increase in the per capita supply --
by as much as 10% -- in large urban centers and
selective increases in smaller cities or towns.
Open signs of discontent resulting from shortages
of meat would most likely, as in the past, be
vented primarily in these centers -- say, in the
200 largest cities, where 72 million persons, or
30% of the Soviet population, reside. Indeed,
recent press reports indicate that in a mid-December
Central Committee Plenum, at which Brezhnev pre-
sented the principal report, the discussion con-
cerning shortfalls in output of livestock products
was focused on shortages in "large industrial
centers."
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Conclusions
14. The forward momentum achieved in 1965-67 in
raising the output of meat was lost in 1968 and 1969.
Production during 1965-67 surged to a level nearly
20% above that in the last three years of Khrushchev's
reign, when output had nearly stagnated. This rapid
rate of advance was followed by a leveling off in
1968 and an estimated decline in output of 3% to 5%
in 1969. Moreover, the downturn in domestic output
led to a decline of 4% in per capita consumption of
meat in 1969.
15. The absolute decline in meat consumption in
1969 came at the very time when Soviet c..nsumers held
high expectations that there would be a continued sub-
stitution of quality foods -- especially livestock
products -- for a significant part of the traditional
starchy staples (bread and potatoes). The failure to
increase supplies of meat must be even more evident
to the consumer, for the continued rise in personal
money incomes in 1969 and in 1970 adds to the un-
satisfied demand for meat already present. Evidence
of the population's unsatisfied demand is manifested
in (1) lengthening queues in state stores (where the
relatively low retail prices are fixed) and rising
prices in the collective farm market (where prices
rise and fall according to demand and supply) and
(2) an increase in the frequency of reports of com-
plete absence of supplies of meat in selected urban
centers.
16. There is little prospect for improvement in
retail supplies of meat from domestic production
before the third quarter of 1970, if then. The
regime, however, has a strong incentive, occasioned
by the Lenin Centennial in April, to alleviate at
least partly the current shortages of meat. And,
indeed, the government has recently taken steps to
augment domestic supplies in the coming months by
purchasing from abroad considerable quantities of
meat. Most likely, the bulk of the imports will
originate in Free World sources and will require
hard-currency outlays. Within the last month or
so the USSR reportedly has purchased 121,000 tons
of meat (roughly $88 million) from Free World sup-
pliers. More purchases may be made in the coming
months.
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17. In the past, open signs of discontent over
the supplies of quality foods such as meat have been
vented in one or more cities. The importation of
$100 million worth of meat (roughly 135,000 tons) in
the first half of 1970 would permit a considerable
boost in the retail supplies of meat to these urban
centers.
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Exaggeration in Soviet
Production Statistics for Meat
Western analysts generally have agreed that offi-
cial Soviet production statistics for some of the
major agricultural commodities contain considerable
exaggeration. Although most publicity has been given
to the inflation of statistics on grain, there is
also evidence of exaggeration in output claims for
meat, milk, and selected oilseeds.
In the case of meat, estimates reduce Soviet
official production data (including fat and offal)
by the percentages for 1950-68 given in the following
tabulation:
Year
Percent
Year
Percent
1950-56
10
1960-61
15
1957
11
1962
14
1958
12
1963
16
1959
14
1964-68
12
These rates of discount represent notional
allowances for assumed padding of official sta-
tistics. The step-up in discounts for 1957-63 re-
flects an allowance for the pressures of Khrushchev's
campaign (initiated in 1957) for "catching up" with
the United States in meat output. It is believed
that pressures on reporting officials at various
levels to fulfill unrealistic goals led to a greater-
than-usual degree of falsification during 1957-63.
In 1964-68, however, collateral evidence bearing
on the validity of official claims of meat output
did not suggest the need for either a varying rate
of discount or as high a rate as for the latter
years of the Khrushchev era.
The Central Statistical Administration (CSA),
in its anaual plan fulfillment announcement in
January, claimed that the combined output of meat
by the socialized and private sectors of the economy
in 1969 was 11.6 million tons -- the same level of
production claimed for 1968. Available evidence,
however, supports a judgment that production of
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moat in 1969 actually declined somewhat. The same
official announcement by the CSA also admitted to a
3% decline in the output of meat processed by
government-operated meatpacking plants. Roughly
90% of industrially processed meat comes from animals
supplied by the collective and state farms, with the
balance provided by private agriculture. The indus-
trially processed meat, in turn, constitutes nearly
90% of the total meat output of the socialized
sector of the economy, some 10% being accounted
for by slaughter and processing on state and co.1-
lective farms. Changes in the output of the
industrial meatpacking plants and in the total meat
output of the socialized sector, therefcr3, are
usually closely correlated. Hence, it is likely
that the announced reduction in output of indus-
trially processed meat implies a, decline of com-
parable magnitude in the total meat output of the
socialized sector (from 7.2 million tons in 1968
to 7.0 million tons in 1969).*
Accordingly, to reach the claimed total of 11.6
million tons of meat for the economy as a whole,
the official measure of production*of meat from the
private sector would have had to increase by 4/%,
from 4.4 million to 4.6 million tons. But, based
upon the past relationship between the size of
privately owned livestock herds and the production
of meat by the private sector, such an increase
does not appear likely. Concomitant with a reduc-
tion in the size of private holdings of livestock
in 1967 and 1968 -- by roughly 5% per year --
official claims of meat output for the private
sector remained at about the same level. Although
official statistics are not available concerning
the meat output of the private sector in 1969,
there was a further reduction of 5% in overall in-
ventories of animals held by individuals. Finally,
a higher-than-usual rate of discount to official
In addition, the CSA announcement indicated that
retail sales in state stores '.:3cZined by 4% in 1969.
Although supplies for state stores depend for the
most part on output from government meatpacking
plants, they also reflect some additional procure-
ments from both the socialized and private sectors
by "decentralized" means. Nevertheless, changes
in state retail sales from year to year are less
reliable as indicators of changes in production
because they can be affected by changes in levels
of stocks and net imports.
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claims of meat production is also suggested by the
admission by Brezhnev in a speech in late November
to the Kolkhoz Congress that per capita consumption
of meat in 1969 was 4% below that in 1968.
In summary, available indicators of meat output
by the socialized sector and by the private sector
imply a decline in total meat output, in contrast to
the official claim that output in 1969 was maintained
at the 1968 level. Given the above considerations,
it is tentatively estimated that the appropriate
rate of discount for deflating the official claim
for meat output in 1969 should be 15% to 16%. This
results in an estimated output of 9.7 million to
9.9 million tons, a drop of 3% to 5% below the esti-
mated level of output in 1968.
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