THE IMPACT OF CUBAN SUGAR ON THE SINO-SOVIET BLOC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001500230003-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: November 16, 2016
• Document Release Date: May 18, 2000
• Sequence Number: 3
• Publication Date: February 27, 1963
• Content Type: BRIEF

Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
SECRET
Current Support Brief
THE IMPACT OF CUBAN SUGAR
ON THE SINO-SOVIET BLOC
CIA/RR CB 63-23
27 February 1963
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
SECRET
GROUP 1
Excluded from automatic
downgrading and
declassification
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
THE IMPACT OF CUBAN SUGAR
ON THE SINO-SOVIET BLOC
There is no indication to date that the delivery of 10. 7 million
metric tons (mt) of Cuban raw sugar* to the Sino-Soviet Bloc** during
the period 1960-62 has had any profound impact on the Bloc's ambitious
long-term plans for expansion of its domestic production and its per
capita consumption of refined sugar. Certainly these imports have
prompted a number of adjustments, including an increase in Soviet
stocks of sugar (a move involving storage problems and some spoilage),
the allocation of some domestically produced sugar beets for use as
livestock feed, increased sales by the European Satellites of sugar in
markets of the Free World (occasionally at a loss), and the reallocation
by Communist China of certain areas formerly devoted to sugar beets
and sugarcane to the sowing of food grains in an attempt to alleviate
serious internal food shortages. For the most part, however, these
adjustments have not been large and have been accomplished reasonably
effectively, although not without some cost.
It is estimated that in 1963 the Bloc will import about 65 percent
of Cuba's total exports of sugar compared with nearly 75 percent in
both 1961 and 1962. These imports, which may total about Z. 6 mil-
lion mt, will fall well below the level of 4. 9 million mt agreed on for
1963. This reduction is expected to arise (1) from the smaller sup-
plies of raw sugar that are likely to be available for export from Cuba
in 1963 (only about 4. 1 million mt compared with 6. 4 million mt in
1961 and 5. 1 million mt estimated for 1962) and (2) from Cuba's pos-
sible insistence on maintaining exports to the Free World at the
1961-6Z average annual level of 1. 5 million mt or at a higher level.
* Raw sugar is sugar that has not been fully refined to remove the
impurities. Although edible, it generally is not consumed in the raw
state (100 parts of raw sugar will yield about 92 parts of refined sugar).
** Including the USSR, Communist China, Bulgaria, Czechoslovakia,
East Germany, Hungary, Poland, and Rumania.
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
Present world market prices for sugar are above the agreed Cuban-
Bloc price of 4 cents per pound, and Cuba's stringent foreign exchange
position may cause it either to attempt to negotiate an increase in com-
parison with this agreed price or to increase its exports to the Free
World above the level of the 1. 5 million mt. Soviet sugar stocks are
at a very high level, however, probably all
Cuba would allotments of
(perhaps gratefully) any p p
sugar to the Bloc for 1963.
I. Trends in Production of Sugar in the Sino-Soviet Bloc
The total production of sugar in the Sino- Sovvi been Bloc
udomes
tically produced sugar beets and sugarcane has
since the mid-fifties. Preliminary estimates indicate that production
of sugar in the Bloc in 1962 will total about 10.9 million mt, only 3 f percent below the record output
The average
outp58uant
1959-61,
sugar increased by 22 percent as shown in Table 1. The USSR and the sugar has dropped sharply increased
production, but Communist China's output of
since 1959, falling to a 10-year low in 1962.
Supporting the increased output of sugar in the USSR and in the
Satellites has been the rapid increase in the area devoted to sugar beets
during the past 5 years. Between 1957 and 1962, areas planted to sugar
beets for sugar processing in the USSR increased by more than 1 mil-
lion hectares, or about 50 percent, and in the Satellites by about 22 per-
cent. This rapid expansion reflects in the USSR, and to a lesser extent
in the Satellites, the continuation of long-term trends and efforts to
achieve the ambitious plans for production of sugar for 1965. In the
USSR, with no upward tendency in yields of sugar beets in recent years,
the increase in production of beets has been obtained by expanding the r planted area. The Satellites, xcuctionZOf sugaorvbe ets by increas ng
many, have been able to expand prod
both the area and the yield.
Unlike the rest of the Bloc, Communist China is believed to have
r
1959 and 1962 sugar -producing
reduced sharply the acreage
on reflegted
beets and sugarcane) between
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
China's efforts to increase the sown area of grains in an attempt to
mitigate its serious food shortages. The drop in acreage accompanied
by lower yields resulted in substantially smaller production of sugar
beets and sugarcane, so that output of sugar was reduced sharply.
The USSR and the European Satellites each have announced goals
for proddc.tion of sugar for 1965. Achievement of these goals would
provide for an increase in comparison with 1959-60 in both per capita
consumption and exports of sugar. Although these production goals
were established before the long-term (1962-65) trade agreements
with Cuba calling for large imports of sugar, especially by the USSR,
there is no evidence that the goals for production of sugar beets have
been lowered. In fact, the USSR has set at a record level the goal for
1963 of state procurement of sugar beets for processing. 2/ Com-
munist China has not announced plans for production of sugar beets,
sugarcane, or sugar in 1965.
II. Foreign Trade Developments
Between January 1960 and September 1962, Cuba reported ship-
ments of about 10. 7 million mt of sugar to the Bloc, representing
63 percent of its total exports. The largest Bloc importers were the
USSR (65 percent), followed by Communist China, Poland, East Ger-
many, and Czechoslovakia, as shown in Table Z. Beginning in 1962,
the Bloc had agreed to import annually through 1965 almost 4. 9 mil-
lion mt of Cuban raw sugar. This amount was to be distributed in
millions of metric tons, as follows: USSR, 3. 0; Communist China,
1. 2; European Satellites, 0. 56; and North Korea, 0. 10. 3/ Faced
with a relatively poor sugar crop in 1962, however, Cuba reduced
the 1962 allotment to the Bloc -- mostly to the USSR -- by 500, 000 mt.
Although actual exports to the Bloc are estimated to have totaled only
3. 7 million mtiri 1962, about 500, 000 mt of the 4. 8 millionmt im-
ported by the Bloc in 1961 are estimated to have been on 1962 accounts.
Therefore, Cuba came close to fulfilling the revised sugar commit-
ments with the Bloc for 1962.
Cuban exports of sugar to the Bloc in 1963 probably will be below
exports in 1962 by 1 million mt or more. The Cuban sugar crop for
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
low 1963 is estimated at about 4. 5 million tocmt. ks and hi an allovel of production,
combined with little or no carryover domestic requirements, leaves only about 4. 1 million mt of raw sugar wit
of 6. available for export in 1963 comp aced forh1962or If Cuba should resist
for 1961 and 5. 1 million mt estim
on maintaining exports to the Free World in 1963
suga r ava lual
level for 1961-62 of about 1. 5 million n,
able for export to the Bloc would
Bloc owould be ?absorbedllargely
in imports of Cuban sugar by the probably
by the USSR.
The Bloc's new position as the principal market for Cuban sugar
Czecho-
has created some problems for thee surpluses for of sugar. In t e
slovakia, both of which normally produ ro. In and
USSR the large imports during 1961-62 created storage p
resulted in some spoilage. Lacking adequate
Trade has shippedas gartsome-
sugar refineries, the USSR Ministry of
indiscriminately to Soviet cities without
estimated that Soviet stocks
requirements or storage facilities. 4/
of sugar at the end of 1962 totaled 4. 7tmillion to men million mt, equal
to about 60 percent of annual consumption requires.
Poland and Czechoslovakia seem o have
gecause per capita econsump-
ficulty in using imports of Cuban sugar. tion was already at a relativey
Efforts to countries, the Cuban
this sugar
fors expnrtl in
sugar only added to Burplu
reportedly resulted in price cutting amla dt hwasasuccessfull n6market-
rrder to acquire markets. Although P
ing the largest amount of sugar in several
sugar reexports 61Nevertheless,
plained of losing money on the
by the end of 1962, Polish stocks of sugar, although below stocks of 1961,
were above normal.
The USSR and the Satellites have benexpanding their o exrts of
sugar to the Free World during the past few years, 1
-- th Table 3. Bloc exports of sugar to other unt totaled more thane 2a1emil-
year for which complete data ate available 5 Bloc exports of sugar,
lion mt compared with 1. 1 million mt in 1959. /
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
especially by Poland, have been increased to Near Eastern and African
countries as well as to the UK.
Communist China, traditionally a net importer of sugar, has easily
consumed its imports of Cuban sugar. The high caloric and quick energy
values of sugar can usefully augment the skimpy Chinese diet. The bar-
tering of rice as part payment for the Cuban sugar in the face of domestic
grain shortages, however, seems to confirm the suspicion of political
motives behind the Chinese trade relations with Cuba.
III. Per Capita Availability and Consumption of Sugar
Per capita consumption of sugar in the USSR has shown a sig-
nificant increase since 1958, reaching an estimated level of 33 kilo-
grams by 1962, which compares favorably with consumption in other
economically developed countries in the world. The increase in
Soviet per capita consumption reflects rising incomes along with in-
creased availabilities of sugar. Per capita availability of sugar has
increased much faster than per capita consumption, and, as a result,
stocks of sugar (raw value) have increased to an estimated level of
4. 7 million to 5. 0 million mt.
Consumption has been restricted by the relatively high-,.retail
price of sugar. In spite of the large imports of Cuban sugar and of
mounting stocks of sugar at both the wholesale and the retail level, the
Soviet government reduced the price of sugar by only 5 percent to an
estimated price (in equivalent US terms) of about 35 cents per pound,
as of June 1962 (the US price was then 11.6 cents). 6/ The Soviet price
policy suggests that the government prefers to hold consumption in line
with or near to the growth of domestic production of sugar so as not to
become dependent on foreign sources. Also, the accumulation of large
stocks of sugar provides the USSR with greater flexibility in diverting
the use of sugar beets from sugar to livestock feed during the next few
years.
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
The plan for 1965 calls for Soviet per capita consumption of
sugar to rise to about 41 kilograms, as shown in Table 4. There is no
reason to believe that an all-out effort will be made to achieve such a
high level of consumption, but some increase can be expected. Thus
as long as it is politically advantageous to take Cuban sugar, the USSR
probably will use it to increase consumption,; and will adjust the quan-
tity of sugar beets processed for refined sugar, using a larger share
of production of its beets for livestock feed. By continuing to expand
production of beets and by increasing its capacity for processing beets,
the Soviet sugar industry maintains a capacity to readjust with little
strain if imports of Cuban sugar are curtailed. 7/
2. European Satellites
Imports of Cuban sugar by the European Satellites have had
little effect on per capita consumption. Although consumption has been
gradually. trending -up, as shown in Table 4, the rise has resulted from
the increased availability of sugar from domestic production. In the
major sugar-producing Satellites -- Poland, East Germany, and Czecho-
slovakia -- per capita consumption in 1958 was relatively high (28. 5 to
34.9 kilograms) and therefore has shown a much slower rate of growth
than in the USSR during the period 1959-62. These Satellites, tradi-
tionally exporters of sugar, have been rather successful in finding mar-
kets for Cuban sugar. East Germany, because of a shortfall in the
1961 sugar beet harvest, probably used part of the imported Cuban
sugar to maintain per capita consumption levels in 1962.
There is no formal rationing of sugar in any of the Satellites.
During the Berlin crisis (1961) and the Cuban crisis, scare buying of
food staples caused the various Satellite governments to restrict the
amount of sugar that an individual could purchase at any one time.
This measure probably was taken to keep from overburdening the in-
efficient distribution and transportation systems rather than because
the stocks of sugar were low. The relatively high price of sugar in
Rumania and Bulgaria keeps consumption in line with availability.
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
3. Communist China
The per capita availability of sugar in 1961 Communist
was roughly double
lowest in the Bloc. Even though availability in w
mounte that in 1959> as shown in Table 4,
it is increase estimted have 1 bidlityly
to 2.7 kilograms per person. This e
he im in 1961 in comparison with 1959 aof food in Chinat astwell asothetannual
of Cuban sugar. Severe shortages
rate of increase in population, make it possible for China to absorb large
quantities of imported sugar. Most staple foods, including sugar, have
been rationed by coupon in Ch'eChinaeprobablytwill remain pro-
duction of sugar significantly increases,
net importer of sugar. China's 196Z-65, g nif fulfilled, wo d help toymain-
lion mt of sugar annually during
tain the 1962 levels of per capita availability.
IV. Prospects for 1963
The total availability of sugar in the Bloc during 1963
dwill uct ono bf -
low the levels of 1961?=62 for two reasons. First, Bloc p ear -- was
sugar in 196Z and 1961. which
The largest shortfall in production was
below that t in 1960
registered by the European a of sugar from Cuba duringt1963.an
be expected. in the level of imports , the
196 On the basis of preliminary esti hrreswill be no3significang ca arryoverll
be only about 4. 5 million mt. T
exports made for domestic to Free World counties
stocks from 1962,.and allowance and sfo be
requirements of 0. 4 million mt of 1. 5 million mt. On the basis
auseathe prate
exceed million g grntlt is
exports to the Bloc may not exce
of sugar on the world market now substantially exceeds the 4 cents per
pound paid by the Bloc, 8/ Cuba may attempt to negotiate for a higher
price from the Bloc or may try to maintain or increase exports to Free
World countries at the expense of exports to the Bloc.
The USSR probably would be the Bloc country to absorb most of
any cutback in Cuban exports. A very drastic cut in imports of Cuban
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
sugar in 1963 probably would have no effect on the availability of sugar
to the Soviet consumer. The major effect would be to increase the Cuban
indebtedness to the USSR. Soviet stocks of sugar as of the end of 1962
were more than sufficient to meet consumption requirements in 1963.
Because of large stocks and the favorable world market price for sugar,
the USSR may try to increase its exports in 1963 in comparison with
previous years.
The Satellites may be smaller exporters of sugar in 1963 than dur-
ing 1962 because of smaller domestic harvests and reduced availability
of Cuban sugar for reexport. Rumania and possibly Bulgaria may have
difficulty in meeting trade commitments in 1963 if per capita consump-
tion of sugar is not sacrificed. The need to increase foreign exchange
earnings will create pressures to expand expo-Jrts of sugar by Poland
and Czechoslovakia. Therefore, these two Satellites, disenchanted
with economic returns from their aid to Cuba, may strongly resist any
proposed cutback in Cuban allotments of sugar.
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
rn d
0 P
N o
0
c+1d
WFi
(D O
in (D
tD P
N? m
0
N ri
W H
co H
H O D Fes-'-' H
c 00
- \O N F-3 \-n F-~ \n
O H
\,O W W fi Ol OD H
-a -~ N lO OD l
N F~ O O -r=- -P~
N -FrO1WVi\O,h^
N~ W'D O W
P" P,
N
o
0 caw 00~co
vi vnOW\-fOO
BP~-2IPIPIP9P,
b ' b
0O -OO1
W
R)
o
N
W
4:-
Vl (D
co
01~ 11
N
11
--J 03
\_9 m
00 (D
Ol
U1
cr,
Ow~
Vl (D
"0 '
0Q
H
O1
D
'~ Ef
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
0
1-3
H
~
u~
0
pt
~
c+
o Q
ci-
\O
F0
a
c+
p
N
O
O
0
W
c+
N
W
F-'
P4
H O
O\
N (D
`n 0 0 N
N O\
N
\-n
0 0 N 0 0 0 0
0 N N
N
O 0 0 0 0 0 0
H
W
\n
0
00
'co)
1-'
N
In 0
O~ G)
CO
-J
-~
co
(D W
Fi
N
N
C
(D (D
N Cp
,
W
OD
a` O
N N
y b
r\) N \n
O O 0 H 0 0 O\ -
FJ O \O \-n ---I
4=- I--' W
CIN V V V
O 0 N \Nn -~ N 0
N LP \O \O W W IJ \O
N
N \n W \~n 1 1--' W 00 0
W O F-' 0 O --1 -1 O
0
0
F-'
O\
0
H
Ol
N
I
0
-ci
r=
(D
et
0
O
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
H
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
Sino-Soviet Bloc Trade in Sugar a/
1956-62
Thousand Metric Tons, Raw Value
- 1962
Country 1956 1957 1958 1959 1960 1961 Jan-Se
Exports
USSR 180
214
218
214
262
951
467
Communist
China 1
6
114
30
14 b
70
78
Bulgaria 2
12
23
15
39
85
14
Czechoslovakia 155
219
414
393
343
435
373
East Germany 81
55
182
329
128
377
51
Hungary 22
5
2
61
117
119
8
Poland 67
109 J
279
306
337
700
509
Rumania 0
0
0
0
84
16o
46
Total 508
620
1,232
1,348
1,324
2,897
1,546
Of which
to other
countries
341
487
988
1,126
1,064
2,134
N.A.
Imports
USSR
342
639
394
335
1,717
3,597
2,257
Communist
China
io6
68
220
50
476
1,533
938
Bulgaria
0
0
0
o
0
57
118
Czechoslovakia
0
0
0
2
22
25
156
East Germany
0
7
0
0
62
112
179
Hungary
34
27
26
2
0
2
2
Poland
0
0
0
0
174
262
151
Rumania
0
0
43
31
0
33
N.A.
Total
482
741
683
420
2,451
5,621
3801
Of which
`
from Cuba
260
365
249
274
2,260
4,791
3,623
a. 114/ unless otherwise indicated.
b.
c. Based on source 16/.
d.
- 11 -
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79T 1003 001500230003-7
~dP~o WP N rO M
N~~ w P
~-' o P C o
0 < P~~
ci-
((v~ H
IJ P? 1 0 ,(cl ri)
aD ~P
1\fl -BHP IH
~nNNODW OWN
CD I-'
CD
ch
p., cl-
(D
P. (D
(D
O
(D
of
CD
N.
C)
F-i
P
to
(D
kj
H D rO W P N
O Ol`n\p F~ N F'
C
W~JtNDJNN?
H --J
I
NcD NF"OLA) W;7
IJ
V1 `n
ODF-''-.0 NW\O
V'I
OD
N N N N W H
N
C
\p ~n \O C71 f-
O\
Vl
I
ODOIW~DO'nW 0
P NNWWN
H
Ol-.101\ 0 (rNN W
O
I
\O \O (3l W W -~ -J N
LA)
~O - N OD O N N
Ol0 ODN O-4\n
I- W NW W N W
N W
OlN-a N CO \,O
OOOO0\n\,OO
H
iN
H CpD
G
L9
W W
b
NOO~NN"
'
\ I
o 2,
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
S-E-C-R-E-T
Analyst:
Coord:
Sources:
25X1A
1.
2.
3.
Agriculture, Hong Kong. AGR-19, 11 Dec 62. U.
Planovoye khozyaystvo, no 1, 1963. U.
CIA. CIA/RR EM 62-9, The Impact of Cuban Sugar Imports
on the Sino -Soviet Bloc, May 6 2, p. 3. S.
4.
Ibid., p. 5. S.
London
ti
ll
5
,
n,
e
ternational Sugar Council. Statistical Bu
I
.
6.
n
selected issues, 1961-62. U.
Agriculture, Economic Research Service. The Agricultural
Situation in 1961-62 in the Soviet Union and Other Eastern
European Countries, Sep 62, p. 15. U.
don
L
61
,
on
,
tional Sugar Council. Sugar Year Book 19
rn
t
I
a
n
e
Aug 6 2, p. 271. U.
i
i
7.
cs,
st
FAO. Monthly Bulletin of Agricultural Economics and Stat
no 9, vol 11, Sep 62, p. 15-16. U.
8.
CIA. CIA/RR EM 62-9 (3, above), p. 3. S.
9.
Agriculture, Hong Kong. AGR-19, 11 Dec 62. U.
4
10.
,
Licht, F. O. International Sugar Report no 11, vol 9
10 Dec 62, p. 177. U.
11.
Agriculture, Warsaw. AGR-7, 16 Nov 62. OFF USE.
12.
CIA. CIA/RR EM 62-9 (3, above), p. 11. S.
4
13
,
Licht, F. O. International Sugar Report, no 21, vol 9
.
23 Oct 6 2, p. 280 - 28 1. U.
14.
International Sugar Council (5, above). U.
15.
Agriculture, Hong Kong. AGR-19, 11 Dec 62. U.
1961)
k
16
,
,
Rocznik statystyczny 1961 (Statistical Yearboo
Poland
.
,
1961, p. 280. U.
62
17.
Rumania. Rumanian Statistical Pocket Book, 196Z, 19
p. 185. U.
18.
Licht, F. O. International Sugar Report (13, above). U.
l
i
19.
ona
USSR. Narodnoye khozyaystvo SSSR v 1958 godu (Nat
Economy of the USSR in 1958), Moscow, 1959, p. 746-751.
U.
S-E-C-R-E-T
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
 Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7
SECRET
SECRET
Approved For Release 2000/06/07 : CIA-RDP79TO1003AO01500230003-7