TRENDS IN OUTPUT, INPUTS, AND FACTOR PRODUCTIVITY IN SOVIET AGRICULTURE

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A003200150001-9
• Release Decision: RIPPUB
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• Document Creation Date: December 9, 2016
• Document Release Date: March 26, 2001
• Sequence Number: 1
• Publication Date: May 5, 1966
• Content Type: REPORT

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TRENDS IN OUTPUT, INPUTS, AND FACTOR PRODUCTIVITY
IN SOVIET AGRICULTURE
STATINTL
5 May 1966
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CQNTENTS
PAGE
I. Introduction 1
II. Agricultural Output During 1950-65 4
A. Measures of Agricultural Output 4
1. The Soviet Gross Output Index 4
2.' Construction of an Adjusted Net Output Index 5
B. Trends in Net Agricultural Production 8
III. Agricultural Inputs During 1950-64
A. Labor Inputs
B. Other Inputs
C. Weighting of Inputs
IV. Trends in Inputs, Output, and Factor Productivity 17
A. 1951-53
. 1954-55
C. - 1956-60
D. 1961-64
E. Trends for Five-Year Periods
F. Limitations on the Meaning of the Results 23
V. Factors Contributing to Changes in Measured Productivity 28
A. Quality of Labor Services 29
1. Changes in Incentives
2. Changes in the Quality of the Labor Force
a. Changes in Age and Sex Composition
29
33
33
b. Changes in the Average Level of Educational
Attainment and Training 36
B. Organization and Management 41
C. Policies Affecting the Use of Land and Livestock 45
1. Expansion of Numbers of Livestock in the
Socialized Sector
2. Crop Policies
45
47
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Appendixes
Appendix A:
Derivation of the Index of Soviet Agricultural Output
51
Appendix B:
Derivation of an Index of Soviet Agricultural Inputs
61
Appendix C:
Index Formula and Selection of Weights
70
Appendix D:
Alternative Indexes of Inputs and Output Per Unit of Input
77
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Tables
PAGE
1. USSR: Indexes of Net Agricultural Production, 1950-65
7
2. USSR: Average Annual Rates of Growth of Net Agricultural
Output, Selected Periods, 1951-65
9
3. USSR: Indexes of Inputs Used by Agriculture, 1950-64
12
4. USSR: Shares of Inputs in Total Agricultural Costs, 1959 16
5. USSR: Estimated Indexes of Output, Input, and Factor Produc-
tivity in Agriculture, 1951-64 18
6. USSR: Real Wages Per Member of the Collective Farm Labor Force,
1953-63
30
7. USSR: Index of Average Size of Private Holdings Per Collective
Farm Household,1953, 1957-63.
8. USSR: Estimated Distribution of the Farm Labor Force by Age
and Sex, Selected Years 1950-62
33
9. USSR: Indicators of Educational Attainment of the Collective
Farm Labor Force, Selected Years, 1939-64
36
10. USSR: Average Annual Rate of Increase in the Number of
Specialists and Trained Machine Operators and Mechanics
on Farms - Selected Periods, 1950-64
38
11. USSR: Indexes of Numbers of Cows, Average Annual Milk Produc-
tion, and Feed Per Cow in Collective Farms, 1958-62 46
12. USSR: Estimated Production of Grain from the "New Lands",
l954-63
13. USSR: Indexes of Net Agricultural Output Computed by Use of
Alternative Price Weights, Selected Years, 1950-65
14. USSR: Indicators of Resources Available to Agriculture
Expressed in Ruble Values or Physical units, 1950-64
15. USSR: Indexes of Output and Inputs in Agriculture, 1950-65
16. USSR: Alternative Indexes of Agricultural Output Per Unit of
Input, 1950-65
49
59
62
78
79
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TRENDS IN OUTPUT, INPUTS, AND FACTOR PRODUCTIVITY IN SOVIET AGRICULTURE
Introduction:
Since 1950 agricultural production in the USSR has increased by about
70 percent. The increase has been spread unevenly over this period, about
two-thirds of the increase having occurred in the 5 years following Stalin's
death (195+-58). Progress since 1958 has been disappointing to the Soviet
leadership. Per capita output in 1965 was less than in 1958, and in the last
three years, the USSR has had to import more than 12 billion dollars worth
of grain from Canada, Australia, and other non-Communist countries.
The steady growth in the Soviet population, the continued rise in per
capita income, and the rapidly rising expectations of the populace have
combined to generate higher demands on agriculture. A large part of this
demand is directed to the reduction in the proportion of starchy staples
(potatoes and bread) in the diet and a concomitant rise in the proportion
of quality foods (meat, butter, and fresh fruits and vegetables). Thus,
the Soviet leadership must respond to domestic pressures for a better -- and
more costly -- product mix as well as free itself from major dependence on
Western sources of food.
Contrary to popular belief, the Soviet regime in this 15-year period
has not neglected agriculture. Since 1950 annual inputs into agriculture
have grown by one-third and have included several costly new programs that
required heavy support from industry. What has been lacking has been a well
conceived and sustained effort directed to such basic problems in Soviet
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agriculture as raising the level of technical skill and improving the system
of management and incentives.
The difference between the 70-percent growth in output since 1950 and
the one-third growth in inputs is of course the effect of the increased
productivity of the resources devoted to Soviet agriculture. Today, the
combined productivity of the land, labor, capital, and other conventional
inputs in agriculture is about 25 percent greater than in 1950. This means
that the package of resources used in agriculture in 1966 would' yield
one-quarter more output than the same resources used on 1950. All of this
gain in productivity occurred before 1959; in the last few years increases
in output have been attributable solely to additional inputs.
Some of the elements involved in-changes in factor productivity in Soviet
agriculture are: (1) improvement in production techniques and the application
of new knowledge over a wider area; (2) a rise in the level of education and
training of the labor force; (3) improvement in the training and skill of
managers and administrators; (.) improvement in the system of management and
incentives; (5) economies of scale resulting from, say, an increase in the
size of the individual farm or from a pooling of repair facilities for farm
machinery; and (6) improvements in the efficiency with which inputs are
combined and used.
The purpose of this paper is to present estimates of output; inputs, and
factor productivity in Soviet agriculture since 1950 and to analyze the
relationships among these elements for the 15-year period and for important
subperiods. Section II provides indexes of agricultural output, divided
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between crops and livestock; a separate index of output is calculated using
a three-year moving average to reduce the effect of year-to-year fluctuations
due to weather conditions. Section III presents estimates of inputs in
Soviet agriculture:. labor, fixed capital (buildings and machinery) land,
current purchases (fertilizer, supplies etc.), and livestock. Section IV
brings together the results of Sections II and III and presents indexes of
factor productivity. Section V examines some of the reasons for variation
in factor productivity since 1950, in particular the reasons for the failure
of factor productivity to rise in the last few years. Four Appendixes give
technical details on the calculation of the indexes and the selection of the
proper formula.
-,3-
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II. Agricultural Output During 1950-65
A. Measures of Agricultural Output
1. The Soviet Gross Output Index
The index of gross value of agricultural output published by the
USSR is not accepted by Western analysts as a reliable indicator of agricultural
growth. The problems are two-fold. In the first place, the official gross
value concept includes intra-agricultural uses of farm products (for example,
feed for livestock) and thus leads to various degrees of double counting between
any two years. l/ In addition, the official index covers the value of
activities not relevant for inclusion in a measure of.farm output --
unfinished production and land preparation for the following year. 2/
A more serious problem with the official measure of gross output,
however, is the unreliability of official production data for some of the
major agricultural commodities. There is evidence of large and varying
amount of exaggeration in official claims of grain output. Similarly, though
to a lesser extent, an upward bias is believed to be present in the output
data for oilseed crops, meat, and milk. The evidence also suggests that most
of the exaggeration in official production series has been a post-1958
phenomenon and that the published data for the period 1950-58 are, for the
most part, reasonably reliable. Acceptance of the official claims of absolute
output since 1958 leads not only to inflation of levels of output for any
I An official index net of all purchases from within agriculture and from
other sectors has, however, been published for some years.
2/ TsSU, Narodnoye khoz a stvo v 1964, Moscow, 1965, p. 812, (hereafter
referred to as Narkhoz 1964 or for other years in the series of official
Soviet Statistical Yearbooks). In addition, an admixture of prices is used
in computing the fficial measure -- actual 1958 prices paid for marketed
produce, average cost of production for non-marketable output. The latter
two sets of unit values diverged significantly in_1958. planovoy=
khozyaystyo, no. 6, 1963, p. 64-70.
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given year in the period 1958-65 but also exaggerates the trend when
comparison is made with 1950-57. The specific deficiencies of Soviet
output data for selected commodities have been thoroughly analyzed by Western
students and need not be reviewed here. 3/ Among the charges levelled by
one or more of the above sources are: (1) padding of production data at the
farm and local level (meat, milk), (2) outright falsification of data at both
farm and national levels (grains), and (3) faulty sampling procedures in
obtaining official estimates in the important private sector (principally
animal products, potatoes, and vegetables).
2. Construction of an Adjusted Net Output Index
The physical commodity series underlying the agricultural production
indexes presented in this paper rely in part on independent estimates for
selected products (the individual grains); in part on estimates that reflect
3/ See the following references:
Joseph W. Willett,"The Recent Record in Agricultural Production" in
Dimensions of Soviet Economic Power, Joint Economic Committee, U.S.Congress,
1962, p. 96-98.
CIA, ER 62-33, Recent Developments in Soviet Agriculture, Washington,
D.C. November 1962, 10.
D. Gale Johnson, "Agricultural Production" in Economic Trends in the
Soviet Union (edited by Abram Bergson and Simon Kuznets) Harvard University
Press, 1963, p. 212-13, 233.
Arcadius Kahan, "Soviet Statistics of Agricultural Output" and commentary
by Luba 0. Richter in Soviet Agricultural and Peasant Affairs, (edited by Roy
D. Laird) University of Kansas Press, 1963.
CIA, ER 64-33, Production of Grain in the USSR, Washington, D.C., October
1964, Appendix A.
U.S. Department of Agriculture, The 1964 Eastern Europe Agricultural
Situation, ERS - Foreign 73, Washington, D.C., 1964) p. 9-13.
~-'c-
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downward adjustments of official,cc ,aims for other products (oilseeds) meat,
milk); and for the balance of the list on the acceptance of official data.
The indexes shown in Table 1 are based on the physical output for
major crops and animal products, including changes in inventories of livestock,
weighted by 1958 prices. In order to obtain a net measure of the physical
amounts available for sale or home consumption, deductions were made for
the amounts of grain, potatoes, and milk fed to livestock and for the amounts
of grain and potatoes used as seed. V' The commodity groups included in the
index probably embrace more than 95 percent of the total value of farm
products available for sale and home consumption; the major exclusions are
fruits and oilseed crops other than sunflowers.
Errors in the estimates of production for individual commodity
groups may be significant. Major or minor adjustments in the official claims
were made for commodities covering 4+5 percent of the ruble value of average
annual net production for each year in the period 1950-55 and 73 percent in
1958-65. Moreover, crude estimating techniques were necessarily used'for
deriving the deductions in the use of potatoes and grain as livestock feed,
the value of which varies between 6 and 12 percent of total net agricultural
production.
1+/ Acceptance of unadjusted official estimates does not necessarily mean
at the evidence clearly implies that output claims for the commodities
i::volved are valid. Often the evidence is ambiguous concerning the accuracy
-i certain official series (for example, production of po-m.atoes),so that,
.king clear-cut indicators to the contrary, most investigators have
accepted the official estimates.
V
-'/ See Appendix A for more details concerning the methodology used in
computing the index of agricultural output.
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USSR:
Indexes of Net Agricultural Production,
1950
- 65 a/
1950 = 100
Total
Crops
Livestock
1950
100
100
100
1951
97
91
105
1952
l04
102
110
1953
lo6
97
119
1954
log
99
123
1955
126
118
137
1956
141
138
145
1957
141
126
160
1958
155
143
172
1959
149
122
185
1960
150
124
184
1961
163
135
1962
161
129
204
1963
153
118
199
1964
170
157.
186
1965
171
141
a/ For commodity composition and procedures for deriving indexes, see
Appendix A.
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Despite these caveats, the indexes are believed to be reasonably
reliable indicators of trends in the availability of farm products for
sale and home consumption during 1951-65. Nevertheless, they should not
be taken as precise indicators of change between any two years.
The production index is computed with 1958 price weights so as to
conform as nearly as possible with the 1959 price weights used in constructing
the index of total resources employed in agriculture. 6/ Although a case
can be made for the use of relative prices of a more recent vintage,
alternative indexes constructed with 1963 and 1965 price weights had about
the same overall configuration as the index in Table 1. 7/
B.. Trends in Net Agricultural Production
Net agricultural production increased by about 70 percent between
1950 and 1965. The major part of this growth took place during the last
half of the 1950's when output expanded by 40 percent. During the first
half of, the present decade, the rate of growth slowed, and by 1965 production was
only- 14 percent above 1960. In order to reduce the effect of annual
variations in weather on the annual index of output,rates of growth shown
in Table 2 have been computed by use of 3-year moving averages as well as
on the basis of estimated output in single years.
6/ The price relatives for 1959 (actual prices paid) were, with the
exception of eggs, about the same as the relatives for the base prices
established in 1958-
I,/ See Appendix A. .
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USSR: Average Annual Rates of Growth of Net Agricultural Output
Selected Peri?.ods, 1951-65 a/
Straight
Annual Average
Moving Average
for 3 years b/
1951-64
3.8
3.7
1951-53
2.0
2.4
1954-55
9.2
8.7
1956-59
4.2
4.8
1960-64
2.6
1.7
1961-65
2.7
a/ The base year for the calculations shown in each line is the year
before the stated initial year of period, i.e., the average annual rate
of increase for 1951-53 is computed by relating production in 1953 to
base year 1950.
were
b/ Average annual rates of growth/computed by relating the 3-year average
for the terminal year (for example, output in 1953 as the average for
1952, 1953, and 1954) to a similar 3-year average for the base year (1950)..
The 3-year average dampens, but does not completely. eliminate
the effect of changes due to weather. 8/ A comparison of the value of net
farm output during the three successive 5-year periods affords a still
broader view of relative changes over the past 15 years:
Net Output for Average Annual
5-year Period J Output
(billions of rubles)
1950-54
133.08
26.62
1955-59
184.02
36.80
1960-64
205.32
41.o6
a Billions of rubles in 1959 prices. Computed by moving the total value
of output for sale and home consumption in 1959 (38.48 billion rubles) from
Appendix C by the index of output in Table 1.
8/ About three-quarters of the sown area in the Soviet Union in.1958 was in
areas similar in climate and soil to the Great Plains States of'North Dakota,
South Dakota, Nebraska, Montana and Wyoming, and the Prairie Provinces of
Canada. The North American counter-part, due to variations in weather
cc-riditions, have-had a long history of strong swings in crop yields. Acreage
data from Narkhoz. 1958, P. 398. Climatic analogues from D. Gale Johnson,
Climatic and Crop Analogies for the Soviet Union: A Study for the
Possibilities of Increasing Grain Yields, the University of Chicago, Office
of Agricultural Economics, Research .paper No. 5716, December 16, 1957, p. II,
7-8.
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Annual net production in the period 1955-59 averaged 38 percent above the
average annual level in 1950-54. But in 1960-64 average annual output was
only 12 percent above the annual average level in 1955-59.
Although there have been cyclical swings in weather and growing
conditions within each of the 5-year periods, it is doubtful if weather
factors accounting for more than a minor part of the marked divergence
between levels of production in 1950-54 and 1955-59 on the one hand, and
1955-59 and 1960-64 on the other. During 1950-54 there were,(roughly)'
two years of slightly favorable growing conditions (1950 and 1952); and two
years when more or less normal conditions prevailed (1953 and 1954) and one
sub-normal year (1951). 2J In each of the later two 5-year periods (1955\59
and 1960-64) there were single years of exceptionally favorable growing
conditions (1958 and 1964), another pair of above average crop years (1956
and 1961), and two years in each period when conditions could be described as
more or less normal (1955 and 1957; 1960 and 1962). The last period, however,
included one year of exceptionally poor growing conditions (1963), probably
not matched by any other single year in the entire period 1950-65. If the
value of net output.in the single year with the most unfavorable growing
conditions in each of the three 5-year periods (1951, 1959, and 1963) is
deducted from the values shown above, the aggregate increases in output in
1955-59 and 1960-64 comes to 35 and 14 percent, respectively, as compared with
38 and 12 percent for the full 5-year periods. 10/
v "Normal" in the sense that there were adverse weather conditions in at
least one major producing region and above-average growing conditions in others.
10/ Under Soviet conditions there is usually a one-year lag between a bumper
crop and _ts effect on production of animal products. Hence, in the single
"worst crop" year chosen from each of the three periods output of livestock
products actually increased in two of the three (1951 and 1959), reflecting
the carryover of good supplies of feedstuffs from the previous year.
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III. Agricultural Inputs During 1950-64
The increase in farm output since 1950 has been associated with large
increases in four of the five major categories of inputs considered in this
paper -- fixed capital (buildings and machinery), land, purchases of materials
from outside agriculture, and livestock herds. Use of the most important
factor -- labor -- has fluctuated only narrowly throughout the 15-year
period. Indexes for each of the five inputs are presented in Table 3.
Although full documentation of the estimates underlying these indexes
await future publication, a general description of the data used for each
series is presented below, with further elaboration in Appendix B.
A. Labor Inputs 0
Indexes of labor inputs are presented in two series in Table 3: one
is based on the number of persons principally or'exclusively engaged in farm
activity (the farm labor force) and the other is based on an estimate of the
number of man-days worked. Although the two series do not diverge substantially
during 1950-64 there are important differences, in concept because: (1) the
average number of days worked per year by each member of the farm labor force
may vary and (2) a substantial proportion of total days expended in producing
farm commodities is accounted for by persons principally occupied in non-
agricultural pursuits and, hence, not counted in the farm labor force. 11/
ii/ See Appendix B for a more complete explanation of the coverage of the
measure for farm employment. In the USSR there are a large number of
:ouseholds not attached to farming enterprises which maintain small holdings
of sown acreage (plots of kitchen-garden size) and livestock. Besides
providing secondary source of income, these small subsidiary holdings
frequently supply certain perishable foods (especially milk, potatoes, ana
vegetables) otherwise unavailable for various periods of time in local retail
outlets. .local shortages of perishable foodstuffs in state-controlled retail
outlets frequently occur because of malfunctioning of tht distribution system;
less frequently they occur because of serious shortfalls in state procurements
resulting from crop failures.
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Table 3
USSR:
Indexes of Inputs Used by Agriculture, 1950-64 J
1950 = 100
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
Labor
Man-days J
100
N.A.
91
93
95
100
101
98
98
98
94
94
94
91
91
&iployment J
100
96
93
93
92
93
94
96
101
99
95
94
96
94
95
Fixed Ca
ital /
100
111
122
134.
146
164
187
209
234
260
286
310
342
384
432
p
Current Purchases
100
110
112
138
145
152
158
169
184
193
203
221
239
262
279
Land e/
100
105
107
109
114
126
131
131
132
133
135
137
146
144
141
Productive Livestock /
100
105
110
113
121
131
141
151
162
170
172
176
184
187
187
a. The various series of "physical" or value measures from which these indexes are derived are shown in Table 14
b. All man-days expended in farm activity.
c. Limited to persons principally or exclusively engaged in farm activity.
d. Average of stocks at end of given and previous year. Includes value of draft animals.
e. Sown acreage weighted by average grain yields 1949-58.
f. Average of stock values at end of given year and previous year.
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The labor force in agriculture is comprised mostly of persons from
households attached to socialized agricultural enterprises (collective farms,
state farms, etc.). Although the number of days worked per person in
socialized farm activity has fluctuated narrowly since 1950 there have been
annual variations in number of days worked by members of these households
in their own subsidiary enterprises. These fluctuations, in turn, have for
the most part been related to the changes in official restrictions on size
of "private" holdings of land and livestock.
In 1958 between 82 and 83 million persons probably participated at
some time during the year in farming activity as compared to only 41.5 million
persons engaged principally or exclusively in agricultural pursuits. 13
Although persons from non-agricultural households work only a nominal number
of days in farm activity per year the magnitude of the numbers involved
(equal again to the farm labor force) makes their contribution of considerable
importance. 14/
.The preference of one measure over the other depends on the purpose
to be served. For productivity accounting in the conventional sense, the
12/ Although there is contradictory evidence as to whether man-day inputs
have varied on these plots when expressed as days per hectare or per head of
livestock, the evidence, on balance, I believe, suggest slight fluctuations
during the period 1950-64. For a view to the countrary, (i.e., moderate to
large fluctuations in man-days per unit) see Nancy Nimitz, Farm Employment
in the Soviet Union, 1928-63, RM-4623-PR, The Rand Corporation, Santa Monica,
California, November 1965-
12/ The estimate of 82 to 83 million total is for persons age 12 or over and
represents more than one-half of the total population of 154 million age 12
or over for the USSR in 1958. (Population estimates are from Foreign
Demographic Analysis Division, Bureau of the Census -- unpublished).
14/ I have estimated that about 730 million days were expended in farm
activity by these households in 1958 or about 7 percent of the total number
of man-days expended in farming activity. The implied average of about 18
days per person can be compared to an average of about 250 days worked per
.articipant (age 12 and over) in collective farms, either in employment on
the farm or in their families holdings of small land allotment and livestock.
/3 -
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man-day series is the more relevant measure. But from the viewpoint of
alternative returns foregone to the economy the use of the series on persons
principally or exclusively engaged in agriculture may be more appropriate.
For example, the planners may view labor expended (in man=days) on subsidiary
farm activity by households outside of. agriculture as having zero return in
other uses, i.e., they may believe the alternative to work on the plot is
leisure. 15/
B. Other Inputs
The index of capital stock shown in Table 3 reflects the gross
value of reproducible physical assets (buildings, structures, equipment)
and draft animals. Values are expressed in replacement cost ("constant"
1955 prices) gross of depreciation and net of retirements. The productive
livestock index is based on the inventory value of herds of mature !'productive"
animals excluding draft animals. Young animals and those being raised
exclusively for slaughter are also excluded.
The index for materials purchased from sectors outside of agriculture
is based on purchases of fertilizer, electric power, fuels and lubricants,
current repair services, and industrially processed feedstuffs. The sample
of goods and services covered in the index included 92 percent of the total
ruble outlays by farms for current purchases in the base year (1959).
In the case of land, the index is obtained by weighting,the sown
-..:reage in 25 regions with average grain yields, i:e. the index number for
15 / Official policy towards private activity in agriculture has vacilliated
during tr,; period under review and appears to be related. more to ideological
consideradions than economic calculations.
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each year is calculated by weighting the area sown'in each region that year by
the average grain yield for that region in 1949-58. This method ought to
yield reliable results for two reasons: (1) the preponderance of grain
acreage in total acreage (about 64 percent for the period'1950-64), and
(2) the relative homogeneity of at least three-fourths of acreage with
respect to prevailing climate and soil. 16
C. Weighting of Inputs
The five series of inputs are combined by use of 1959 weights that
represent the monetary or imputed costs attributed to each of the inputs.
Data are available on actual expenditures for labor and for current purchases
from other sectors of the economy, but not for the other inputs because there
is no explicit accounting in the USSR for returns to land, fixed capital, and
productive livestock. In order to obtain an "expenditure" weight for the
latter two, rather arbitrary assumptions were adopted. First, the income
share or service flow for these two factors was derived by assuming alternative
interest rates of 8 and 13 percent, and depreciation allowances for capital
(excluding draft animals) were than added in order to obtain a gross return
on total capital stock. 17/ The return to land was taken as a residual --
value of agricultural output minus the expenditures or service flows for the
other four categories of inputs. 18/
16/ See footnote p. above. In a market economy an appropriate measure would
take into account quality differences in land by use of relative prices in a
base year. The base-year value could be extrapolated by use of a quantity
indicator that reflected further qualitative changes from investment or
disinvestment in land (drainage, irrigation) as well as changes in relative
prices paid for products if all hectares of sown acreage were not substitutable
in their production.
17/ See Appendix C for explanation of choice of alternative rates of return of
and 13 percent.
18/ The value of agricultural output for purposes of distribu-;-ng inco.. among
#Fie several fact;irs considered is defined as the value of sales by the farm
sector as intermediate product to other producing sectors (e.g., light and food
industry) plus sales directly to consumers plus value of production consumed
by producers (consumption-in-kind) plus subsidies to farm enterprises. See
Appendix C. for computations.
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The shares of each'input in total costs of production under the
assumptions about alternative weights (interest rates) for capital assets
and livestock are shown in Table 4.
Table 4
USSR: Shares of Inputs in Total Agricultural Costs,
1959
8 Percent
Input
13 Percent
Labor
57.3
57.3
Fixed capital
8.4
11.8
Current purchases
14.1
14.1
Land
17.3
12.1
Livestock
2.9
4.7
Total a!
100.0
100.0
a/ The shares expressed as coefficients in the production function in four
significant places are shown in Appendix C.
Four alternative indexes of total inputs are presented in Table 15,
p. 78, with (1) interest rates of 8 and 13 percent and (2) use of two measures
of labor input, man-days and numbers of persons principally engaged in farm
activity. 19/ In the following Section, primary attention is focused on
one of the four indexes -- that based on an 8 percent rate of return on
capital and livestock and the use of man-days as the measure for labor.
This procedure simplifies the textual presentation, but Table 16 (Appendix D)
.:.ves calculations of factor productivity using all four indexes of inputs
alternat:'vely. All of the four series, however, show about the same overall
trend in factor productivity for 1951-64. 20/
'_9/ All indexes are obtained by combining the several series in a geometric
_Drmula. The implications of the choice of production function and the
weighting system are discussed in Appendix C.
201 In other words the trend in combined inputs for 1951-64 is approximately
the same '.lhen any one of the four series are considered (See Table 16 -
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IV. Trends in Inputs, Output, and Factor Productivity
For the period 1951-64 as a whole, inputs in Soviet agriculture increased
by roughly one-third compared to a growth in output of 70 percent. If the
growth of output had been based solely on the use of additional quantities
of conventional inputs, only about one-half of the gains would have been
achieved. The difference between the observed average annual rate of increase
in agricultural production of about 3 1/2 percent(moving 3-year average,.nd of
additions to inputs of 2 percent was due to an average annual increase of some
1 1/2 percent in productivity. But the averages for the whole 14-year period
obscure important differences in trends of output, inputs, and productivity
for several sub-periods (see Table 5).
A. 1951-53
In the closing years of Stalin's rule (1951-53) small advances in
inputs and factor productivity, averaging about 1 1/2 and.1 percent per year
respectively, combined to give an overall boost in production of nearly 2 1/2
- 0.
percent per year. This period was marked byy7 percent reduction in labor
input (both employment and man-days) and a one-third increase in capital assets.
But the moderate gains in 1951-53 were not in keeping with the ambitions of the
post-Stalin leadership or the demands of the populace. 21
21 Net production in 1953 was about 14 percent above 1940 on comparable
territory and approximately the same on a per capita basis. For the index
of production relating 1940 to 1953, seefJohnson, in Economic Trends..., op. cit.,
p. 211.
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 Table 5
Ap F,# $e 20d 12f Q fW,79 f)ff6?9&f lm69o ~6auctivity
in,Agriculture, 1951-64
Index of out
t
1951
'1952
'1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
pu
a/
Straight annual
Moving avera
f
97
104
106
109
126
141
141
155
149
150
163
161
153
170
ge
or 3 years
101
103
108
115
127
138
147
150
153
156
160
160
163
166
Index of total inputs when labor
is expressed as:
Man-days
N.A.
99
105
109
116
120
121
123
125
125
128
132
132
1
4
Employment
101
101
105
107
111
115
119
125
126
126
8
3
12
133
134
137
Indexes of factor productivity J
Man-days
N.A.
104
103
106
109
115
121
122
122
125
125
121
123
124
Employment
100
102
103
107
114
120
124
120
121
124
125
120
122
121
Average Annual Rates of Growth (Percent)
1951-55
1956-60
1
61
64
1951-55
1951-5
1
7
-
9
-
3
95
-5
5
195
1956-38
1959-60
1961
64 1
6
6
-
9
1-
2 1963-64
Output - (3-year moving average)
Total inputs
4.9
2.4
8.7
4.2
5.8
1.8
1.7
1.5
1.8
Man-days
nt
lo
m
Em
3.0
1.6
5.1
1.5
2.0
0.8
1.8
2.8
0.8
p
y
e
Factor productivity b/
2.1
1.6
2.8
2.6
4.0
0.4
2.1
2.7
1.5
Man-days
1.7
1.0
2.9
2.8
3.8
1.2
-0.2
-1
6
1
2
Employment
2.7
1.0
5.2
1.7
1.7
1.7
-0.6
.
-1.6
.
o.4
a. Data from Table 1.
b. Data from Tables 15 and 16, Appendix D. Index of output for computing factor productivity based on 3-year moving average. Index of inputs is a weighted
index of the five categories of conventional inputs -- land, capital, current purchases, livestock and labor measured, alternatively, in man days and numbers
of persons principally engaged in farm activity. The coverage for the man-day measure includes total days worked in production of farm products regardless
of whether worked by persons with farming as a principal or secondary source of income. For purposes of this Table the inputs are combined (in a geometric
function) using an 8 percent interest charge for capital and livestock.
1950 = 100
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B. 1954-55
A surge in additional commitments of resources in 1954-55 raised
aggregate inputs an average of more than 5 percent per year. Most notable was
the expansion of sown acreage, highlighted by the "new lands" program, which
in two years, increased the use of land under crops by 18 percent. Although
employment remained steady, partial relaxation of restrictions on private activity
in agriculture and increased incentives in the socialized sector brought about
an 8 percent increase in man-days over the two-year period. In addition, the
new regime sustained the rapid increase, begun in 1953, in sales to the farm
sector of petroleum, fertilizer, and other industrial products. The high rate
of growth in inputs combined with a marked improvement in productivity (up
3 percent a year) resulted in an average annual rate of increase in output
of more than 8 1/2 percent for the two-year period.
C. 1956-60
For the following five-year period (1956-60), productivity continued
.to expand at about the same rate as in 1954-55 (3 percent), but the average
annual growth of inputs fell from 5 percent to 1 1/2-percent. This fall was
accompanied by a sharp decline in the average annual rate of increase in output
-- from an average of 8 1/2 to 4 percent. However, the deceleration was
gradual and average annual productivity rose by nearly a percentage point
..arming 1956-58 (3.8 percent compared to 2.9 percent in 1954-55)?22 These
gains in productivity are at least partly attributable to favorable weather
ir_ 1956-58.
LC '
2( These are the comparative rates when output is centered on a three- year
av-:!-age. Use of actual output in the base year 1955 and terminal year 1958
wu,,,~d show an average annual productivity gain of nearly 5 percent.
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Whatever the underlying causes of this relatively rapid productivity
gains in 1954-58 and especially in 1956-58, the striking success in in-
creasing farm output by some 46 percent with the use of only 17 percent
resources
more/led Khrushchev to base future plans on over-optimistic assumptions.
His principal innovations, the expansion of sown acreage in the "new lands"
and the substitution of corn for other grain and fodder crops, apparently
were huge successes and may have accounted for at least one-quarter of the
increase in output in the period 1954-58.
In this atmosphere of euphoria, future commitments were made to the
consumer -- the USSR would catch-up with the United States in per capita
meat and milk production in 3 or 4 years -- and a marked slackening of
the rate of growth of inputs was planned. In 1959 and 1960 inputs increased
by less than 1 percent per year compared with 3 percent annually during
1954-58. 23 The levelling off in total inputs was highlighted by a 6-
percent reduction in the number of persons principally engaged in farm
activity that reversed the upward trend of 1954-58 in numbers employed.
D. 1961-64
When centered on a three-year average, output in 1960 was some 3 1/2
percent above 1958; but actual production had declined about 3 1/2 percent
in 1959 and had remained about the same in 1960. The failure of agricultural
production during these two years to maintain the forward momentum of the
earlier period apparently convinced the regime that additional resources
23' Inputs, using man-days as the indicator of labor use, rose by about
i:;~/1/2 percent in 1959 and levelled off in 1960; total inputs, using persons
principally engaged in agriculture as the indicator of labor use, were
the same in 1960 as in 1959 after a 1 percent rise in 1959?
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were needed. Beginning in 1961 reductions in the farm labor force
were halted; annual deliveries of new machinery to agriculture, which
had declined by 20 percent in the period 1958-60, were boosted so that
by 1962 they had nearly recovered the 1958 level. Meanwhile, Khrushchev
introduced another major change in land use -- a radical shift in the
pattern of cultivated acreage. The new campaign called for a sharp reduc-
tion in area given over to sown grass, oats, and clean fallow and a com-
parable expansion in more intensive crops -- small grains, corn, sugar
beets, peas, and field beans. This program, launched during the 1962 crop
year, had the net effect of expanding total sown acreage by about 14 million
hectares in two years thus increasing land inputs by an average of 2.5
percent a year.
As a result of these and other measures total inputs expanded by more than
7 percent over the period 1961-64, an acceleration to an average annual rate
of growth of nearly 2 percent a year compared with less than 1 percent in
1959-60. Output, however, did not grow as fast as inputs. and overall produc-
tivity declined by about 0.2 percent a-year.
,E, Trends for Five-Year Periods
In Section I comparisons of changes in average annual output were
made for the three five-year periods 1950-54, 1955-59, and 1960-64. This
was done in an effort to dampen cyclical effects on agricultural output from
changing weather conditions.
_X/_
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When productivity comparisons are made for 5-year periods, as was done above
for output, the following results are obtained:
(1) Total inputs for each of the years in the period 1955-59 averaged
about 18 percent above the average for each year in the period 1950-54; out-
put averaged 38 percent higher. Therefore, additions to production not
attributable to additional inputs came to an average of 20 percent for each
of the years in the latter half of the decade compared to each of the years
in the period 1950-54.
(2) For each of the years in the following five-year period (1950-64)
total resources committed to the farm sector were on the average 7 1/2 percent
above each of the years in the period 1955-59; output averaged 12 percent
higher. Increases in production not explained by additional resources came
to 4 1/2 percent 24
(3) The ratios of additional output per unit of-additional input came
to 17 1/2'percent in 1955-59 and 4 percent in 1960-64.
2 If the single year in each period with the most unfavorable weather
conditions is excluded (1951, 1959, and 1963) from both the input and
output side, the additions in production (35 and 14 percent, respectively)
not attributable to additional resources comes to 18 and 6 percent,
respectively.
_Z 2.-
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f
F. Limitations on the Meaning of the Results
Interpretation of the trends in output per unit of input of combined
resources is.subject to limitations imposed by assumptions concerning the
nature of the aggregate production function for Soviet agriculture as a whole.
The most important limitation is imposed by the assumption that all agricultural
inputs can be aggregated into a single production relation. The serious
reservations about the specification of a single production relation for the
agricultural sector of any country apply particularly to the Soviet Union
because of the artificial compartmentalization of agriculture into three
"sector." Roughly one-third of gross agricultural output is produced by the
"private" sector, comprising individual holdings of one and one-half acres
or less, frequently combined with one or two head of livestock. The balance
of farm output is produced in large enterprises in the socialized sector
(collective and state farms). The former is organized nominally as a
"producer's cooperative", whereas the latter is organized along the lines
of a state-operated industrial enterprise.
The most distinguishing characteristic among these three forms of
organization lies in the use and remuneration of labor services. In the
small subsidiary holdings of individual households labor is intensively
applied to the point of fairly low physical returns; remuneration is directly
tied to output. In the case of the collective farm, labor is used according
:.o the aictates of the collective farm chairman; labor is reminerated as the
residual claimant of the farm's gross income, receiving whatever is left after
claims have been mete In the case of the state farm, which is operated
- 23 -
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directly by the Government, the labor force is used in a fashion comparable to
the industrial labor force; remunerated at a fixed wage or salary invariant to
the net earnings of the farm. 25/
More relevant to the problem of aggregation of all farm labor is the
strikingly different degree of mobility of the labor force in each of the two
types of socialist enterprises. The collective farm peasantry is the only
large social group of Soviet society that is not issued internal passports,
the formal prerequisite for freedom of movement and choice among alternative
employment opportunities. 26/
In contrast, the state farm worker has the same legal status as the
industrial or other non-agricultural employee and, hence, faces considerably
less restriction on entry into non-farm employment.
The differences in the method of remuneration of labor services and
in the degree of labor mobility have had a marked effect on average wages in
collective and state farms. A Soviet study in 1963 indicated that in "recent
years" the average payment per man-day for collective-farm labor in all farm
activity -- private plot and collective farms -- was only two-thirds of the
average wage of workers in local industry, whereas the average daily wage of
state farm workers came to nearly 90 percent of that of workers in local
industry. 27/
L5/ The wage workers on state farms do receive bonuses for overfulfilling
output goals usually expressed in physical terms.. Managerial salaries are
re_ated to gross earnings of the state farm.
26/ Murra-, Feshbach, The Soviet Statistical System: Labor Force Recordkeeping
and Reporting Since 1957, Bureau of the Census, International Population
Statistics Reports, Series P - 90, No. 17, Washington, D.C., 1962, p. 14.
27/ R.V. rlekseyeva and A.P. Voronin, Nakopleniye: razvitiye ko.khoznoy
sob:stvennost', Moscow, 1963, p. 29. Local industrial enterprise=s are
concentrated in rural areas and their labor force is relatively unskilled.
Much of this difference in wages between collective and state farms can
be explained by the higher productivity of labor in state farms due to the use
of relatively more machinery and other forms of capital.
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Given the disparities in the organization and payment of labor among
the three sectors an aggregation into a single measure of all labor engaged
in farm activity may impart a bias to the computed index of total inputs.
The coefficient or "weight" assigned to labor in the formula used to compute
factor productivity assumes that the value of marginal product of labor is
equal to the average net productivity in each of its uses. Intuitively,
in the case of the private sector, this may well not be true i.e., amount
added to total product by the addition of one more man-day of labor may be
considerably below the average net product for all man-days in private farm
activity. Moreover, the lack of mobility between collective and state farms,
the considerably higher wage for comparable labor in the latter, and the
evidence that persons in the labor force of the collective farm would (if
permitted) shift to state farms indicates that alternative returns for use
of labor (as between collective and state farms) are not equal to the value
of marginal productin each of the two sectors. Thus, a shift over time in the
proportion of total labor used in socialized agricultural enterprises from
collective to state farms (to a more "efficient" combiration of resources)
would show up as an increase in factor productivity. In other words, a shift
over time from a disequilibrium combination of resources towards an equilibrium
combination will result in a rise in output per unit of total inputs (other
things being equal).
28 The shares of man-day inputs in farm activity attributable to the three
sectors in benchmark years is estimated to have varied as follows:
1950
1959
1964
(percentage share)
'
Private
30.7
35.2
35.3
Collective farm
61.8
50.4
443.1
State agriculture
7.5
14.4
21.6
190.0
100.0
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Another limitation on the acceptability of the series on factor
productivity stems from the assumption that the cost of an individual input the basis for determining the weight or "coefficient" assigned each of the
categories of inputs -- represent the value of its marginal product. If
there is a divergency between the price paid by farms for a factor of
production and its net return (value of its marginal product) agriculture
is again said to be in "disequilibrium."
Recent work done on estimating the aggregate agricultural production
function in the United States shows that large differentials exist between'the
price paid by farmers for certain resources and the value of their contribution
to production. In the case of fertilizer, for example, the ratio of marginal
product to cost was as high as 5 to 1. 29/ A mis-specification of the weights
in the production relation used in this paper due to the assumption that the
contribution of each factor is equal to its relative share in total costs
could be a source of bias in the results. This is because several categories
of inputs have had markedly different trends over time.
Finally, the weight assigned to land varies arbitrarily because its
contribution to output was calculated as a residual. This variation in the
residual is caused by the absence of an explicit rate of return on fixed
29 Zvi Griliches, "Research Expenditures, Education, and Aggregate Production
Function," The American Economic Review, December 1964, p. 968. Griliches has
estimated that the "disequilibrium gap" (ratio of value of marginal product
to factor price) for fertilizer in US agriculture has declined from about 5 to
1 in 1959 to 2.7 to 1 in 1959 and 2.4 to 1 in 1962. Griliches derived a
statistically estimated production function in which he estimated the coefficients.
for each of several inputs "independently" of their relative shares in total
costs.. The method used in the present paper -- derivation of the coefficients
by use of observed input market prices or their relative shares in total costs --
is comparable to the approach used by the Department of Agriculture in estimating
"factor productivity" in US agriculture.
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capital and livestock. Thus, the alternative rates of interest of 8 and 13
percent resulted in a varying "weight" assigned to land.
Although there is no apparent way of determining the net effect of the
above (or other) sources of error of measurement, the principal findings (as
to conformation of trends in productivity) would probably be maintained if
such errors could be eliminated.
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V. Factors Contributing to Changes in Measured Productivity
Assuming that errors of measurement of the type cited above do not radically
affect the overall magnitude of changes in productivity or the configuration of
the trend for the period 1951-64, what can be said about the forces underlying
the observed changes in output and productivity.) To recapitulate the main findings
in Sections II and III:
(a) The rate of annual increase in farm output in the USSR accelerated after
1953 to a peak output in 1958, followed by a decline in 1959, a levelling off in
1960, and new peaks in 1961 and 1965. A 3-year moving average (to dampen the
"weather effect") showed an average annual rate of increase of about 4 1/2 percent
for the 1950's (nearly 7 percent a year for the period 1954-58) followed by a
marked decline to about 1 1/2 percent per year for the first half of the 1960's;
(b) Except for the two-year period, 1954-55, when there was a spurt in use
of inputs of more than 5 percent a year, annual increases in conventional inputs
fluctuated between 1 and 3 percent;
(c) A comparison of trends in output and inputs shows that overall factor
productivity increased about 2 1/4 percent for the 1950's (nearly 3 1/2 percent for
the period 1954-58) followed by a slight decline in the first half of the 1960's.
Thus, all of the increase in output in the period 1961-64 can be explained by
additions of conventional inputs.
Although factors that account for the underlying changes in efficiency in
the use of resources are complex and not readily measurable, they can, nevertheless,
be identified conceptually. Some of the more important to be considered in the
Soviet setting are: (1) changes in the quality of labor services underlying the
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physical measures of man-days and employment, (2) changes in the formal organ-
ization and management of agriculture affecting the efficiency with which resources
are combined, and (3) changes of policy in the use of land and livestock tending
to dampen or augment the flow of their service.
A. Quality of Labor Services
The measures used in this report for the input of labor (employment and
man-days) do not take into consideration possible variations in the intensity or
quality of work done. In the institutional setting of Soviet agriculture such,
variations may result either from changes in the system of rewards and penalties
or in qualifications of the labor force. Changes in the quality of the labor
force are a function of the age and sex composition as well as the level of skills.
The latter, in large part, depends on the level of educational attainment, either
in occupational training or general education.
1. Changes in Incentives
Incentive arrangements in the collective farm system have varied
% over the period covered in this paper and have presumably influenced the effort
put forth by the average participant in the labor force.30
l0-Even under the most favorable conditions, however, there is a tenuous connection
between effort and reward for the individual member of a collective farm. As
indicated above, the peasant is a residual claimant of the farm's income after
all other farm expenses have been met (including involuntary savings for future
investment). Moreover, the average payment per workday on the collective farm
is determined in such a manner that extra effort on the part of one individual
member is not apt to be commensurately rewarded.
In the period 1953-58 -- there were many incentive measures designed to induce
the collective farm peasant to contribute more days of participation in collective
farm work and a higher quality of labor service. The incentive measures adopted
included sharp increases (a tripling between 1952 and 1958) in commodity prices
paid collective farms and individual producers as well as abolition of compulsory
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deliveries and tax concessions for private plot owners. The attitude of the
individual member towards participation in the work of the collective farm was.
strongly influenced by the penalty for not contributing the compulsory minimum
number of days in collective farm work -- loss of his private plot. These
measures gave the peasant a rise in real income between 1953 and 1958 that
was relatively larger than the rise in real income of urban wage and salary
workers. (See Table 6).
Table 6
USSR: Real Wages Per Member of the
Collective Farm Labor Force
1953-63
,
1953 = 100
Year
Year
1953
100
1959
194
1954
115
1960
193
1955
149
1961
224
1956
181
1962
224
1957
182
1963
232
1958
206
_E .j Nimitz, op,cit.,p? 97. The in-kind payments are valued in state
retail prices. Data in source are expressed in current prices and have been
deflated by use of a combined index of retail prices in state stores and col-
lective farm markets. Wages are for participation in collective farm work
only and exclude returns from other economic activity, e.g. work in the private
plot.
The marked increase in wages per man-day in the period 1953-58 undoubtedly
had a positive effect, on the attitude of the collective farm peasant towards
But the evidence suggests that after 1958 the
work in the socialist sector,. already large disparity between average real
wages for collective farmers and other groups has again increased. Accordingly,
there were increased indications that the tempo of out-migration of the
relatively more skilled workers increased. 32
32 The moderate up turn in collective farm wages after 1960 is in part spurious.
After 1958 the money share of earnings from collective farm work rose sharply
and payments in grain and other products declined. Adequate supplies of farm
prodacts in the villages (e.g. grain for flour or for feeding livestock) in ex-
change for the increased money payments were often not available and a ruble
increase thus was not equal to a ruble value of physical product. Ibid., p. 100.
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Concomitant with the sharp turning point in 1958 in remuneration for
collective farm work was a change in the official attitude towards private
agriculture, including the small holdings of land and livestock of households
attached to collective farms. Pressures were applied to reduce the average
size of private plots and holdings of livestock. This situation
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had the double effect of directly retarding growth in output and reducing the
incentive of the peasant to participate in collective farm activity so as to
have his "own enterprise." By 1960 the size of the privately sown acreage
and livestock holdings per household was about 14 and 8 percent, respectively,
less than in 1958 (see Table 7). After the fall of Khrushchev in October 1964
the new administration quickly announced its intension to relax the rules on
private holdings.
Table 7
USSR: Index of Average Size of Private Holdings
Per Collective Farm Household
1953, 1957-63
1953 = 100
Year
Sown Acreage
Livestock aJ
1953
100
100
1957
102
132
1958
l04
136
1959
102
130
1960
9o
125
1961
91
134
1962
92
141
1963
N.A.
138
J Average of total cattle, hog, sheep, and goat inventories at beginning and
end of year valued in base procurement prices of 1958. The coverage of house-
holds excludes about 2 percent of the number of households included in the
acreage and livestock data.
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2. Changes in the Quality of the Labor Force
a. Changes in Age and Sex Composition
The flow of services from a farm labor force may vary over time
due to changes in the age and sex composition. In some farm activities males
and females are substitutes, in others, they are not. Similarly, there are
many farm activities in which youths and oldsters lack the physical capability
to undertake at all or are less effective than mature, able-bodied persons.
F The man-day and employment measures used in this paper are not differentiated
according to the age and sex of the individuals in the farm labor force and,
hence, changes in composition overtime are not reflected in the index series.
Estimates can be obtained for the distribution of the Soviet farm labor
force between males and females for the following three age groups: youths,
12 to 15 years of age, the "able-bodied" ages (males, age 16 to 59, and females,
age 16 to 54),and the over-aged.(see Table 8)
Males (age 12 and over)
35
36
37
38
39
40
Females (age 12 and
over)
65
64
63
62
61
60
Table 8
USSR: Estimated Distribution of the
Farm Labor Force by Age and Sex
Selected Years, 1950-62
1950
1953
1955
1958
196o
1962
By Age
Youths, age 12 to 15
16
15
10
8
10
11
"Able-bodied"
of which
74
73
77
73
69
66
Males,age 16 to
59 24
25
28
29
28
28
Females,age 16 t
o 54 50
48
49
44
41
38?
Over-age CL
By Sex
10
12
13
19
21
23
Source: Author's estimates (unpublished), Persons in households attached to
socializec. agricultural enterprises exclusively or principally engaged in farm
activity either in the socialist enterprise or in their family's private holding.
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'Changes in the composition of the farm labor force between 1950 and 1964
are explained in part by structural changes in the population as a whole and
in part by migration from agricultural to non-agricultural employment or vice
versa. The evidence indicates only small to moderate changes in rates of
labor force participation by each of the age groups.
The moderate increase after 1950 in the proportion of "able-bodied" males
in the farm labor force reflects the slow recovery of the Soviet Union from
its critical "male deficit." The losses during the two World Wars, the
revolution, and the collectivization campaign of the early 1930's so decimated
the male population that by 1950 there were only 60 males per 100 females in
the Soviet population, 35 years of age and over.33
33 James W. Brackett, "Demographic Trends and Population Policy in the Soviet
Union," in Dimensions of Soviet Economic Power, op.cit., p. 519.
The cyclical variations during 1950-62 in the proportion of the farm labor
force comprised of youths was primarily due to relatively high birth rates in
rural areas between the end of the collectivization drive (1934) and World
War II; depressed rates during the war; and recovery in rates in the post-war
period. The sharp increase in the proportion of over-aged persons in the farm
labor force is due in part to demographic changes common to the population as
a whole and in part to selective immigration from outside of agriculture.
Because of the direction of these structural changes in age and sex of the
labor force (see Table 8) a qualitative adjustment upward in the employment index
shown in Table 5 would seem to be in order for this period. The rise in the
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proportion of males, 16 to 59 years of age, and the decline in the share of
youths suggests that the average "physical" capability of the labor force
improved. Much of the increase in the share of oldsters during this period
was due to the growth in numbers of those just over the upper limit for the
able-bodied (age 54 for females and 59 for males); what they may have lacked
in physical ability as compared with youths was probably more than offset by
skills acquired through experience.
'Similarly, a downward adjustment appears appropriate for the period
1958-62 to allow for the decline in the proportion of workers in the able-
bodied category. The lower average quality per member of the labor force
brought about by this decline in the share of able-bodied -- from about three-
fourths to two-thirds -- probably more than offset the gain due the slightly
higher proportion of,males.
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u. Changes in the Average Level of Educational Attainment and Training
i
Results of recent research on the sources of economic growth in the
United States have highlighted the significance of the educational level of
the labor force in explaining changes in productivity over time.
EconomicGrowth
34 Edward F. Denison, The CitteefforEconomic
Development,Supplementary and
the Alternatives Before Us,
Paper No. 13. New York, 1962. Chapter VII.
Griliches, og cit?, p. 965
Griliches found that one-fifth of the increase in productivity of conventional
inputs in US agriculture between 1949 and 1959 could be attributed to increases
in the level of formal schooling of the farm labor force.
A major improvement in the educational attainment of the Soviet farm labor
force took place between the census years of 1939 and 1959. Although benchmark
data are not available for post-war years before 1959, the evidence indicates
that most of this gain came in the years 1950-58. The fragmentary data for
the period after 1959 suggest that in recent years the increase in educational
attainment has slowed down (see Table 9).
Table 9
1SSR: Indicators of Educational Attainment
of the Collective Farm Labor Force
Selected Years, 1939-64.af
Share of Total
Percent
1959 1962 1963
1964
ars of Schooling 1939
Y
e
o to 6.9 98 77 77 76
74
7 or more 2 23 23 24
26
a Source: Soviet statistical abstracts. Data are not available for level of
education of the state farm labor force.
36-
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Enrollment in grades 5 to 7 at rural schools averaged 3.8 million pupils
per year during 1945-49, 8.1 million pupils during 1950-54, and 4.6 million
pupils during 1955-58. The spurt in annual enrollments in the early 1950's
reflected a combination of high rates of birth in the late 1930's and an
official campaign to expand enrollments after the fourth year of schooling.
The sharp reduction in annual enrollments in the following four years can be
explained by the depressed birth rates during the war and immediate post war
years. Given the two-year lag in the cycle of peak enrollments and initial
entry into grades 5 to 7, a relatively large influx into the labor market
of persons with at least 7 full years of schooling probably occurred in the
period 1952-56. 35
35 The majority of youths graduating from grade 7 would probably have been
1 to 15 years of age. The proportion of primary school graduates in rural
areas enrolling in secondary schools (grades 8 to 10)in the mid 1950's
appears to have been relatively low. In 1955-56 enrollments in grades
8 to 10 at rural schools amounted to 27 percent of enrollments in grades
5 to 7 three years previously (1952-53).
Similarly, the slow progress after 1959 in raising the proportion of the
collective farm labor force with 7 or more years of formal schooling was due
in part to the sharp decline in the average annual enrollments in grades 5
to 7 in the period 1955-60 and in part to an increase in out-migration par-
ticularly among the young with a relatively high level of educational
attainment. The above pattern of school enrollments, graduations, and out-migration
would bring about similar qualitative changes in the two sub-periods (1950-58 and
1959-64) in the labor force in both the collective and state farms.
Another indication of change in the qualifications of the farm labor force
between 1950-58 and the years following is the increase in the number of
professionally and vocationally trained personnel residing on farms ---
technicians (agronomists, zootechnicians, and veterinarians) and mechanics
and mach_ne operators. The number of technicians in agriculture grew rapidly
in the period 1953-57 under the impetus of post-Stalin programs aimed at
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relocating agricultural specialists who had been trained but were employed in
non-farm activities. A levelling off in the number of specialists in 1958-60
was followed by a moderate increase in 1961-64, as shown in Table 10.
Table 10
USSR: Average Annual Rate of Increase in the Number of
Specialists and Trained Machine Operators and Mechanics on Farms
Selected Periods, 1950-64 J
S ecialists J
Machine Operators
and Mechanics J
1951-53
N.A.
7.9
1954-57
30.7 J
8.1
1958-60
-0.1
3.4
1961-62
4.7
1.6
1963-64
2.6
5.2
J Source: Soviet statistical yearbooks, various editions.
21 Agronomists, zootechnicians, and veterinarians with specialized secondary or
higher educational degrees.
J Mechanics, tractor drivers, combine operators and truck chauffers. Engineers
and the small number of persons whose sole classification is "mechanic" are ex-
cluded. The large majority of qualified mechanics are found among the persons
classified as "machine operators."
85 percent of the increase in the number of specialists between 1954 and
1957 came in the two-year period 1954-55.
The large increase in parks of power machinery on farms in the period
1954-57 was matched by an equally large boost in mechanics and machine operators.
But as in the case of specialists there has been a slowing in recent years of
the earlier rates of increase in machine operators and mechanics trained in
vocational schools or on farms. As a result, the ratio of trained operators
and mechanics to the stock of power-driven machinery on hand has declined. The
following tabulation shows the number of trained operators and mechanics on
farms per unit of equipment (tractors, trucks, and grain combines) in
selected years:
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Year
Operators and
'echanics Per
Unit of Equipment
1950
1.25
.1953
1.15
1957
1.13
1960
1.08
1964
0.98
In addition to the decline of average numbers of machine operators per
unit of power equipment there has been an apparent decline in their average
quality. This deterioration in quality is in part due to inexperience due to
the high rate of turnover. For example, in state and collective farms of
the Russian Republic in "recent years 84 tractor drivers left for every 100
new ones to arrive .... (this is) caused by shortages of housing ....and often
by low pay for machine operators." As a result "the level of qualification is
not sufficient. Two-thirds of the tractor drivers on state farms have a
third-class qualification." 36
36 (Plenum Tsentral'nogo Komiteta Kommunisticheskoy Partii Sovetskogo
Soyuza 24-26 March 1965, Stenograficheskiy Otchet. p.111 ? The third-class
category includes only those drivers recently trained and with less than
one year's experience.
The decline in the ratio of qualified operators per machine led to a
reduction in services per machine and thus a lengthening of operations during,
critical periods of planting, cultivation and harvesting. Between 1960 and
1964 the average use of tractors per'day of operation (e. g. acreage plowed)
declined by 21 percent on collective and state farms (2.9 hectares to 2.4
hectares) and the average number of daily shifts per tractor during the period
1960-64 fell to 1.32 in collective farms compared to 1.46 shifts in 1957 in
the defunct machine tractor stations. 37 Thus, the lack of timeliness in
field operations and the depressing effect on crop yields, a perennial problem
in Soviet agriculture, may have worsened in recent years.
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37 Ekonomika sel'skogo khozyaystv0 no. 12, 1965, p. 20. The reduction in
average use of tractors and combines was also in part attributable to a
deterioration in the repair and maintenance of machinery discussed in Section
B, below.
I
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B. Organization and Management
It is difficult to say whether the numerous reorganizations in Soviet
agriculture since 1950 have engendered net gains.or losses in efficiency or
have had no effect. 38/
38/ There have been at least 11 major organizational changes in Soviet agri-
culture in the past 15'years. For a good account of the various organizational
changes in Soviet agriculture during the Khrushchev era see:
CIA ER 63-23, Vacillations in the Organization of Soviet Agriculture, -6 ,
Washington, D.C., 1963.
Howard R. Swearer, "Agricultural Administration Under Khrushchev," in
Soviet Agricultural and Peasant Affairs, op. cit.
Alec Nove, "Some Thoughts on Soviet Agricultural Administration," Soviet
Agriculture: The Permanent Crisis, New York: Praeger, 1965
On balance, the frequent changes in the administrative structure and personnel
of organizations directing farms from above probably disrupted the normal flow
of decision making. But with the exception of one innovation (discussed below)
the evidence is not persuasive that Khrushchev's long series of organization
and management moves were any more disruptive in the period when factor pro-
ductivity was declining (1961-64+) than in the earlier periods. 39/
39 The organizational changes after 1960 tended to weaken the position of the
government bureaucracy and enhance the position of the party in directing farm
activities. It could be argued that the latter were technically less qualified
than the "technocrats" in the Ministry of Agriculture and other government
bureaus and, thus, the quality of decision making in the recent period had
deteriorated.
In any case, the new regime is anxious to give the world the impression that
most of the problems besetting Soviet agriculture in recent years stems from
Khrushchev's frequent innovations in management and organization. The following
quote from P. Ye. Shelest, First Secretary of the Ukrainian Party, is typical:
The subjectivistic (i. e. Khrushchev) approach to the solution of
the most important questions in agriculture was manifested in
the flagrant violation of the principles of planning, in sham adminis-
tration, .... in many reorganizations that had not been thought
through. All this even now is costing our country and particularly
the collective and state farms dearly.
Plenum, op. cit., P. 36
These numerous and varied reorganizations clearly have not altered the essential
characteristics of the management of socialized agriculture. Khrushchev, through
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major innovations in agricultural administration, apparently tried to establish a
balance between central control and local autonomy in decision making. But he
failed in his attempts to partially decentralize the planning of farm produc-
tion in 1955 and 1964 by permitting farm managers to decide their own crop and
livestock production programs failed.; 40 In general, deviations from the
40 This failure was explicitly acknowledged by K. Obolenskiye, Director of the
All-Union Scientific Research Institute of Agricultural Economics, Ekonomika
sel'skogo khozyaystva, no. 3, 1965, p. 8
traditional pattern of detailed direction of farm activity from above have been
unstable and have quickly resulted in reestablishment of central authority. Thus,
as in other areas of the economy, centralized planning and control have remained
the guiding principles.
. In addition, the success criteria for managers of farm enterprises have remained
essentially unchanged. These criteria provide managers of farm enterprises with
little incentive to save on inputs. 41
41 For a good discussion of success criteria for farm managers, see Alec Nave
Incentive for Peasants and Administrators," in Soviet Agricultural and Peasant
Affairs, op.cit., p. 51-68
The pay and bonuses of farm managers are keyed to the fulfillment of physical
production goals and government procurement plans. If the farm manager responds
to these "success indicators" he cannot simultaneously respond to other goals
such as "profits." 42 The manager's non-monetary incentive is to please his
L2/ The accounts of the collective farms do not show net revenues. Although
such accounts exist for state farms, up to 1965 the prices paid to state farms
were generally set at, levels below those required to cover current ruble outlays
of most farms. Moreover, most capital investment funds for state farms are
provided as free grants from government budget sources.
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superiors in the administrative hierarchy above the farm, especially that of
the Communist party; here again, he pleases when he gets out physical production;
cost considerations are secondary.
The evidence indicates that at least one of Khrushchev's major innovations
in agricultural administration -- the abolition of the machine tractor stations
(MIS) -- had a negative impact on factor productivity. The MTS system had
been established by Stalin to provide a pool of machines and machine services
for the collective farms. In 1958 Khrushchev proposed that the MIS be dismantled
and that most of their machinery and functions be transferred to the collective
farms. / Many of the largest MTS were distributed to non-agricultural
43 In 1957 the average MTS serviced the needs of 10 collective farms.
organizations and state farms. The remaining facilities which were either
assigned to collective farms or to a new network of government operated repair
technical stations (RTS), could not maintain previous standards of machinery
repair and maintenance. V. V. Matskevich, reappointed as-Minister of Agriculture
in the wake of Khrushchev's removal, claims that as a result of the dissolution
of the MIS System, "the government repair base ... was shattered and repair
services (for collective farms) essentially eliminated." L4 In Belorussia,
L4J Voprosy ekonomiki, no. 6, 1965, p. 5-6.
for example, in 196+ nearly one-half of the volume of repairs of agricultural
equipment was done by collective farms that "not only had no standard repair
sho:) nor even the simplest repair shop, but only smithies." / At the same
L5J Plenum, a. c.t., p. 55.
-' 1J--
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March Plenum the First Secretary of the Armenian Republic provided further
evidence:
Experience showed that with the so-called reorganizationof the machine-
tractor stations a significant part of the repair base in fact was wasted
and machine-tractor station buildings were changed into various warehouse
facilities or at best were transferred to secondary needs of industry.
For example, in the Armenian SSR after the liquidation of the machine-
tractor stations, we managed to preserve only 35 of the 52 well-equipped
standard repair shops existing before 1959. The others were transferred
to various organizations ... All this was done in an unorganized and
poorly thought out manner, as a result of which agricultural production
suffered enormous damage. 46
Ibid., p. 217.
Moreover, the decentralization of the repair facilities of the MTS
apparently led to the loss of important economies of scale. In Tambov Oblast,
the "cost of capital repairs of tractors during recent years has more than
doubled in comparison with the cost of repairs in the MTS."
Ibid., p. 76. Part of this increase in cost could be attributed to a
large increase in prices of purchased spare parts.
- $ -
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C. Policies Affecting the Use of Land and Livestock
1. Expansion of Numbers of Livestock in the Socialized Sector
The propensity of Soviet planners to increase the size of livestock
herds irrespective of the availability of feed supplies has probably contributed
to the decline in growth of factor productivity in recent years. Because of
the relatively low availability of feed per head of livestock in the Soviet
Union a high proportion of feed must be used for the maintenance of herds
rather than for production of milk, meat and other products. 48 Under these
If a cow produces only 1,000 kilograms of milk per year about three-fourths
of the feed consumed is required for maintenance; but if output increases to
1,500 kilograms, only two-thirds of the feed consumed goes for maintenance.
Johnson,in Economic Trends,.., op.cit., p. 230.
conditions, if the number of livestock were to remain unchanged, the value of
an additional unit of feed in terms of output of products would.increase the
average value of output per unit of all feed.
Milk output per cow in collective farms, for example, doubled between
1953 and 1959 due in part to increased quantities of feed per head and in
part to improvements in the quality and a change in the seasonal distribution
of feed. Khrushchev's program for a rapid expansion of corn acreage led to
a three-fold increase in silage over the period 1953-59, thus providing a
valuable qualitative addition to the feed ration.49 The-continued expansion
19 See D. Gale Johnson and Arcadius Kahan, "Soviet Agriculture: Structure
and Growth", Comparisons of the United States and Soviet Economies, Joint
Economic Committee, U.S.Congress, Washington, 1959, Part I, p. 219-20.
of herds of.livestock after 1959 in the face of stagnating or more slowly growing
c~ .gut of feed, however, resulted in lower efficiency in the use of feed and
co:tributed to a lower rate of growth in the factor productivity. The
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following relevant data are available for cows held by collective farms:
Table 11
USSR: Indexes of Numbers of Cows, Average Annual Milk Production,
and Feed Per Cow in Collective Farms, 1958-62 J
1958
1959
1960
1961
1962
Total numbers
100
109
110
111
119
Milk output per cow
100
103
.96
91
87
Use of feed per cow
Grain and other concentrates
100
117
101
73
Silage
100
115
110
ill
98
Hay
100
97
78
70
64
e.. Source: k'inansy SSSR, no. , 1964, p. 12.
Includes silage and other succulent feed, such as potatoes, feed roots,
and sugar beets.
The same conclusion emerges from data that show change in the total stock
of animals and total outlays of feed in state and collective farms for the
benchmark year 1953 and the period 1958-64. The fact that livestock numbers
after 1958 rose at a faster rate than feed availabilities not only signalled
an absolute decline in milk output per cow, but probably also declines in
meat and other animal products per ruble of livestock inventories.
Index of Index of Total Feed Expenditures Per
Livestock Inventories J Feed Expenditures J Unit of Livestock
(1958 = loo)
1953
80
75
94
1958
100
100
100
1959
113
108
96
1960
124
ill
90
1961
134
112
84
1962
145
112
77
1963
138
100
72
1964
131
98
75
y Cattle, hogs, sheep, and goats on collective and state farms. Index of
inventories reflects the mean of herd values (all ages)at beginning and
end of year.
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b. Feed expenditures expressed in total feed units as officially reported in
Soviet statistical yearbooks (various editions). The data before 1961 excluded
the feed obtained from pastures. Since the contribution of the latter to total
feed supplies remained nearly the same in the period 1961-64+, it was assumed
that the absolute level of pasture supplies in 1961 remained the same for the
period 1959-61. Pasture conditions were exceptionally good in 1958 and thus
the feed units obtained from pasture for that year are roughly estimated at
30 percent above the 1959-61 level. There are indications that in 1953 pastures
contributed roughly the same magnitude of feed units as in 1961.
2. Crop Policies
Dramatic changes in the use of land for current or future production
of crops have occurred over the past decade in the USSR. Although the impact of
these changes cannot be evaluated in detail here, a summary appraisal can at
least point the direction of their impact on overall factor productivity. 1
0 For a brief but good description of several land use programs see Willett,
op. cit. For a more detailed and critical survey see Naum Jasny, Khrushchev's
Crop Policy, Glasgow, 1965.
In a series of programs inaugurated between 195+ and 1962, Khrushchev
directed an expansion of more than 60 million hectares in sown acreage and
a radical restructuring of crop patterns. The "new lands" campaign,
51 This expansion of acreage constrasta sharply with an increase of less than
0 million hectares over the previous 40 years (1913-53; on comparable territory).
initiated in 1954, was quickly followed by an even more ambitious "corn program"
in 1955. The former program resulted in the plowing up of some 42 million hectares
of virgin and long-followed lands, mostly in Kazakhstan and Siberia. The "corn
prc2;ra f expanded the acreage of corn for grain, silage, and green feed from
to a peak of 37 million hectares in 1962.
4 1/2 illion iectares in 1962,/ When the effects of these two programs on output
began to taper off,?Khrushchev initiated yet another program, the "plow-up"
campaign of 1962. The latter was designed to shift the-cropping pattern radically,
principally through a drastic reduction in the area sown to perennial grasses and
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a restriction of the practice of clean fallowing .52/ The newly released
2 Under the practice of clean fallowing the land is not planted and is
cultivated only as needed to prevent growing of weeds. The practice also
permits accumulation Of moisture in the soil,
acreage was to be put under cultivated crops.
The first two major innovations in land-use -- the new lands and corn
programs -- had a favorable short-run impact, promoting sizeable increases in
output and productivity, but by the end of the 1950's the impact had tapered
off, and the evidence indicates that in the early 1960's the new lands program
even had a detrimental effect on output and productivity. These deleterious
effects stem from the fact that in an effort to obtain additional amounts of
"cheap" grain, Soviet planners -- at Khrushchev's behest -- ignored certain
farming practices essential to maintaining yields in the new lands regions.
Much of this area is comprised of marginal and sub-marginal soils subject to
frequent droughts; good land management in analogous areas of North America
(mostly the Prairie Provinces of Canada) demands that 30 to 40 percent of the
cultivated area be in clean fallow. But the practice of fallowing was largely
ignored in the new lands and by 1963 only 5 percent of the cultivated area was
under fallow. Continuous cropping has resulted in the deterioration of the
~,-.:ructure of the soil, heavy infestation of weeds, a decline in fertility,
and a depletion of reserves of soil moisture. / Although the available
/Kommunist, no. i, 1953 p. 61+,
information is inconclusive, the above practices have apparently brought about
ward
own/trend in the yields per hectare of grain in the new lands as shown in
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Table 12
USSR: Estimated Production of Grain from the "New Lands"
1954-63 a
Year
Area Sown
to Grain
(Million
Hectares)
Yield of Grain
(Centners per
Hectare)
Production of
Grain
(Million Tons)
1954
4.3
10.5
4.5
1955
18.5
4.3
8
1956
26
9.6
25
1957
26
5.o
13
1958
26
8.8
23
1959
23
7.0
16
1960
26
6.9
18
1961
26
5.8
15
1962
25
6.8
17
1963
25
4.0
10
Source: CIA, ER 64-33, The Production of Grain in the USSR, October 1964, p. 17.
In the 5-year period, 1959-63, grain yields in the new lands (as estimated by
CIA) averaged 6.1 centners per hectare compared to 7.6 centners in the previous
5-year period.
On balance, the corn program proved successful, but the levelling off of
acreage in areas in which corn is reasonably well adapted and the expansion in
areas unsuitable for corn brought about a levelling off of the program's contri-
bution to output at the end of the 1950'x:7 Moreoever, the peak seasonal needs
for labor and machinery in cultivating and harvesting of corn overlaps the peak
seasonal needs of other crops. The failure in recent years to maintain earlier
rates of increase -in tractors and other types of fih1d equipment combined with
the overall reduction in the size of the labor force has put a strain on re-
so--,----:es in ma,-';or corn-growing regions. Thus, yields of corn and other crops with
which corn competes in timeliness of field operations may have been adversely
affected.
J See footnote page 50 mn
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24/ For example, harvesting of hay in late spring and early summer, fall plowing
or spring sowing of small grains and fall seeding of winter wheat. For an
appraisal of the corn program in the 1950's see Johnson;f_n Economic Trends.;..,
op?cit?, p. 228.
The third major innovation in land use -- the "plow-up" program -- was
intended to replace "low yielding" crops (sown grasses and oats) and fallow
with "high yield" crops (peas, beans, and sugar beets). The program,announced
in October 1961 and two-thirds completed during 1962, was roughly comparable
to the new lands campaign in its requirements for additional manpower and
machinery. Unlike the case of the new lands, however, the additional resources
were not provided and there is no evidence that a significant increase in net
output per hectare occurred. Moreover, abandonment of the grass rotation system
in the Northern USSR -- a key part of the program -- may have resulted in serious
depletion of soil nutrients because the use of additives (fertilizer and lime)
was not expanded enough to replace the nutrients previously contributed by sown
grasses. In the March 1965 Plenum of the Central Committee several speakers
explicitly condemned the plow-up program as "damaging" and "disruptive" to
livestock raising because fodder supplies were depleted both by the reduction
yields
in perennial grasses and by lower crop resulting 'rom "violation" of crop
rotations. 55
Plenum, op? cit., especially pp. 115, 170-172, and 220-221.
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Appendix A
DERIVATION OF THE INDEX OF SOVIET AGRICULTURAL OUTPUT
A. Sources of Data
1. Coverage
The index shown in Table 1 of the text is based on the quantities
available for sale and home consumption of : grain, potatoes, vegetables,
cotton, sugar beets, sunflower seed, flax fiber, meat, milk, wool, and eggs.
In addition, changes in livestock inventories that may be hold for investment
purposes are included. The weights used in aggregating these quantities are
state procurement prices established for collective farms in 1958. For
purposes of productivity accounting it would be appropriated to include in
the concept of output changes from year to year in the inventory of farm
commodities ( including feedstuffs). Such data are available for socialized
farms for selected years but are expressed in current ruble values aggregated
in such a manner that deflation into "constant 1958 prices" is not feasible.
Changes in stocks of farm commodities held by the Government are not published.
2. Gross Output Data
The official series for production of the above eleven commodity and
livestock inventories are available for 1950-64 from the following official
statistical yearbooks:
TsU, Sel'skoeJKhozyaystvo -SSSR. Moscow, 1960.
TsU, Narodnoye.Khozyaystvo"v 1964. Moscow, 1965.
For 1965 from:
'T'sU. SSSR v Tsifrakh v 1965. Moscow, 1966.
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Official data on the gross production of the following products have been
accepted without adjustments:
potatoes, cotton, flax fiber, wool., and eggs.
The derivation of the production estimates for the others is as follows:
a.. Grain
1950-55, 1957: Official data for gross output (excluding corn
in the milk-wax stage) are accepted.
1956, 1958-65: Independently derived estimates as follows:
Official Estimated
Year
(millions of metric tons)
1956
125.0
112.5
1958
134.7
119.0
1959
119.5
95.7
1960
125.5
93.0
1961
130.8
109.5
1962
140.2
109.0
1963
107.5
92.0
1964
152.1
120.0
1965
120.5
100.0
The deduction for 1956 is a rough estimate of the excessive post-harvest
losses resulting from inadequate transportation and storage facilities in
the new lands areas to handle the bumper crop produced.
As was noted above, Western analysts are in general agreement
that Soviet agricultural statistics have become increasingly unrealiable
since 1957, especially in official claims of production of grain. One
source has this to say:
Beginning with 1958, Soviet officially reported annual
yields of grain, especially wheat and corn, have been considerably
higher than yields for any other year in Soviet history. In
addition, reported yields have shown a stability that is uncommon
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to any previous known period of comparable length and that
seems to conflict with the fluctuations that would be
expected from the dissimilar weather conditions in the
.individual years ......
A new estimating procedure apparently was introduced
in 1958. Instruction No. 1684 of the Central Statistical
Administration, dated 23 April 1958, includes information
on the method to be used in estimating the grain crop.
This instruction apparently has not been published for
public dissemination.
(CIA, ER 64-33, Production of Grain in the USSR, October 1964,
p. 20, 22).
Because official production claims are so inflated independent
estimates are obtained in the following manner:
In estimating the actual amount of grain harvested
..in a given year, Western analysts use data on grain
acreage and its distribution among kinds of grain and
regions. 'Estimates of yields per hectare are based on
reports on weather and the condition of the grain crop at
various times during the season; on the progress in seeding
and harvesting; on the amount and progress of grain procure-
ments in the various administrative subdivisions; on
statements made by Soviet officials; and on a qualitative
consideration of changes in inputs (such as machinery,
fertilizer, and seed) that would affect the grain harvest.
Estimates are made of the yield of each of the major kinds
of grain in the various regions of the USSR, and these
estimates are compared with figures obtained for earlier
years when crop and weather conditions in the different
regions were similar.to those prevailing in the year in
question. These yields then are applied to the data on
grain acreage in arriving at estimates of production of the
various kinds of grain and consequently the total grain
harvest. (Ibid. P. 15-16).
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The above summarizes the approach used in deriving the estimates for gross
grain output for the years after 1957. As the above report notes, a check
on grain production estimates by estimating utilization "provide inconclusive
results because the great number of estimates required in the calculations"
(Ibid. p. 16) (waste, industrial uses, net exports, seed, feed, food and
change in stocks). However, the fact that in recent years the Soviet Union
has been a major net importer of grain (11 million tons after the poor 1963
harvest and contracts for another 72 million tons after the mediocre 1965
harvest) provides adequate evidence that large stocks of grain have not been
accumulated. This and other evidence on utilization provide benchmark
indicators and give some assurance that the production estimates are
reasonably accurate.
b. Sunflower Seed:
1950-57: Official data for gross output are accepted.
1958-64: Production claims have been reduced by about 8 percent
to allow for the excess moisture and trash that results when "bunker weight"
(i.e., as measured in the harvesting machine) instead of "barn yield" is
used in determining the size of the harvest. The discount used is that
required for the year 1958 (Ekonomika Sel'skogo,Khoz~a1stya,,no. 6, 1959,.
32). The 1964 statistical yearbook (Narkhoz. . 1964, p. 316) indicates
tnat "bunker" estimates have been used for all years since 1950. For
present 2urposes a flat 8 percent is used only for the period 1958-65
although it also may be appropriate to discount for earlier years, and
:,though the annual required discount may fluctuate from year to year to
an unknown extent.
--3 r
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c. Sugar Beets:
Official data on state procurements of sugar beets are used in
place of gross production. It is assumed that sugar beets not procured by
the state are fed to livestock or are used in production of seed.
Official production data (including fat and offal) have been
adjusted by reductions of 10 percent for the years 1950-56, 11 percent for
1957, and a range of 12 to 15 percent for the period 1958-65. These
represent notional allowances for assumed padding of official statistics.
Under the pressure of Khrushchev's campaign for "catching up" with the
United States in meat and milk output (initiated in 1957) it is believed that
pressures on reporting officials at various levels to fulfill unrealistic
goals led to a greater degree of falsification in years after 1956.
e. Milk:
Official production data minus a deduction of 5 percent for
1950-56 and a variable rate of 6 to 10 percent between 1957-65. See note
above for meat.
f. Changes in Inventory of Livestock:
1950-62, 1964-65: Changes in inventory of livestock are
estimated by changes in the number of cattle, hogs, sheep, and goats at
the end of the given year in comparison with numbers at the end of the
previous year. No allowance is made for changes in average vague per head
due to differences in average weight or other indicators of prcductivity.
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1963: The major shortfall in grain output in 1963 provided the
setting for a major reduction in numbers of productive livestock, especially
hogs, between the end of 1962 and the. end of 1963 (hog numbers declined more
than 40 percent). Changes in the number of livestock in 1963 undoubtedly
resulted from slaughtering young animals or animals of very light weight
and foregoing the breeding of livestock. Thus it is not'appropriate to
weight this decline in numbersby the usual method of applying the value of
animals of average size purchased by the state during 1953-59.
The method of determining the value of the decline in the
number of livestock in 1963 is as follows. On the basis of the past
relationships between the number of meat-producing animals at the beginning
of the year and production of meat during this year, production of meat for
1963 was projected at 8.53 million tons (9.93 billion rubles). Assuming
that the value of the meat produced in excess of this amount was equal to
the value of the decline in the herd, the following value of net agricultural
production is derived.
1962_ 1963
Item
Billion Rubles
Meat
9.47
9.93
Livestock
1.00
0
Other components
20.31
19.27
Total
30.78
29.20
3. Use of Production for Feeding of Livestock
a Grain and Potatoes
Estimates of utilization of grain and potatoes as feed were based
on a number of considerations:
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(1) net availabilities after deductions for other uses (industrial
use, food net exports) change in stocks);
(2) food requirements implicit in the level of meat and milk output;
(3) scattered official evidence on total amounts fed for certain
years or per head rates of feed utilized.
In making the needed deduction from the gross value of livestock
for the value of grain and potatoes fed it was assumed that one-third of
the grain used as feed from a given crop will be fed during the calendar
year in which it is produced or during the period 1 July - 31 December and
and that two-thirds will be fed during the following calendar year or during
the period 1 January - 30 June.
b. Milk
A flat deduction of 10 percent was made in the adjusted milk
series as an allowance for feeding to livestock.
4.- Use of Production for Seed
a. Grain
The amount of grain deducted for seed in a given year was
estimated at 0.15 ton per hectare of the area sown to grain for harvesting
in the following year. (Pravda, 11 Feb 64. and Entsiklopedicheskiy
sel'skokhozyaystvennyy slovar'spravochnik, Moscow) 1959, p. 68, 408, 547,
703, 738, 1020.)
b. Potatoes
The amount of potatoes deducted for seed in a given year was
;:stimated at 1.9 tons per hectare of sown area for harvesting in the following
year. (S.A. I1'in) Ekonomika proizvodstva kartofelya. Moscow, 1963, p.
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5)?
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5. Price Weights Used in Aggregating Quantitative Data
Official purchase prices of 1958 were used as weights. These
were established in 1958 by the government as base prices for collective
farms from which actual procurement prices were to fluctuate. The new
official prices were supposed to provide enough gross receipts for farm
outlays for..both current expenses (labor, materials) and investment goods
(machinery, buildings). This attempt to establish "full cost" prices for
collective farms was largely due to the abolition of the machine-tractor
stations in 1958 which previously had provided machinery services to
collective farms at nominal cost.
Because farm output lagged after 1958, further major adjustments
in prices followed in 1962, 1963, and 1965s. The 1958 prices had failed to
generate enough';gross income to cover additional investment needs and to
provide a boost in lagging farm wages. Large increases in prices were
adopted for livestock (1962 and 1965); cotton, sugar beets, and potatoes
(1963); and grain and milk (1965). If it is assumed that the relative
prices for, say, 1963 and 1965 better reflect the needs (planners
preferences) and costs (relative scarcities), and thus the appropriate
rates of substitution among the products, it can be argued that they
would provide a more appropriate set of weights in computing a net index
of production. But despite the rather dramatic shifts in commodity prices
between 1958 and 1965 the use of price weights for 1963 and 1965 had
_elativrly little impact on the overall index of net production as shown
in Tab.. 13.
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Table 13
USSR: Indexes of Net Agricultural Output Computed by Use
of Alternative Price Weights, Selected Years, 1950-65
(1950 = loo)
Total Output
Livestock
Crops
A
B
C
A
B
C
A
B
C
1950
100
100
100
100
100
100
100
100
100
1955
126
124
125
137
143
141
119
112
113
1960
150
146
149
184
191
186
124
120
120
1965
171
167
172
212
221
220
141
135
135
A - 1958 base prices.
B - 1963 actual prices.
C - 1965 base prices.
The moderate acceleration in the index of output of livestock products due
to the change in relative prices after 1958 is offset by the dampening of
the index of output of crops by use of the latter sets of prices. In
addition there is close, agreement among the three times series in turning
points, especially those computed with the 1958 and 1965 price relatives.
B. Divergence of the Net Index Based on the Above Estimates of
Production from the Index Based on Acceptance of Official
Production Data.
If above noted adjustments are made in the official gross production
data for milk, meat, sunflower seeds, and grain for the years 1950-65 the
average absolute level of production for each year in the period 1958-65 is
48 percent above the average absolute output for each year in the period
1950-55. If unadjusted gross output data are accepted the average
differential comes to 59 percent -- approximately one-fifth larger. To
test for the impact on the overall change in absolute level oa: output
resulti:.17 rom the adjustments in the non-grain commodities (meat, milk,
sunflower seed) a comparative calculation was made by accepti -; the official
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claims for the latter crops. The average increase in absolute output for
each year in the period 1950-55'(compared to the average for each year in
the period 1950-55) was 51 percent, suggesting that about three-fourths of
the difference between the adjusted and unadjusted series is due to
discounting of official claims.for grain output; one-fourth to discounts
in the official data for the other three commodities (meat, milk, and
sunflower seed).
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Appendix B
Derivation of an Index of Soviet Agricultural Inputs
Detailed exposition of the derivation of the data underlying the several
indexes of inputs is not possible in this paper. This appendix describes
briefly the concepts and coverage of the individual series on which the
indexes of inputs are based and explains ,the procedure for obtaining the
factor-share weights for 1959 used in combining the individual series into
an index of total inputs. The individual value and "physical" series from
which the volume indexes in Table 3 were derived are shown in Table 14.
A. Labor Input
Alternative series have been constructed for the labor input based
on: (a) the number of persons principally or exclusively engaged in farming
activity, and (2) the actual expenditure of work-days in agricultural
production (conventionally expressed in Western literature as "man-days").
The labor force series is based on relatively reliable data; the man-day
estimates are less reliable, especially that part reflecting inputs of
days in the private sector.
1. Numbers Principally or Exclusively Engaged in Farming Activity
The concept of agricultural employment used in this paper includes
persons 12 years of age or over who are principally or exclusively engaged
.,ring the year in farm activity, except for members of households whose
nead is principally or exclusively engaged in non-agricultural activities.
,!T,2 latter provision is designed to eliminate from the employment count
-,nose members of households whose only or principal employment consists of
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USSR: Indicators of Resources Available to Agriculture
Expressed in Ruble Values or Physical Units a/
1950-64
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
Ca ital Stock b/
billi;a,., of le s,
--
1955 ?Vices
10.15
11.25
12.40
13.60
14.85
16.65
18.95
21.25
23.70
26.35
29,00
31.50
34.75
38.95
43.85
Land -.t c /
Ain,,: _ so? n acreage
(millions of hectares)
146.3
153.0
155.8
157.2
1,66.1
185.9
194.8
193.7
195.7
196.3
202.0
204.6
216.0
218.5
212.8
Index of weighted yields
(1950=i00)
100.0
100.6
100.7
101.0
100.1
99.3
98.7
98.9
98.9
99.1
97.5
97.8
98.6
96.7
97.0
Weighted acreages
146.3
153.9
156.9
158.8
166.3
184.6
192.3
191.6
193.5
194.5
197.0
200.1
213.0
211.3
206.4
Current Purchases J
billions of rubles --
1959 prices)
2.59
2.85
2.90
3.58
. 3.76
3.95
4.10
4.39
4.77
5.00
5.26
5.72
6.18
6.78
7.22
Productive Livestock J
(billions of rubles --
1955 prices)
8.25
8.65
9.05
9.35
9.95
10.80
1.6o
12.45
13.35
14.00
14.20
14.50
15.15
15.45
15.45
Labor
Man-day .
(Mill i.olis)
10, 619
N.A.
=9,627
9,866
10,123
10, 662
lo, 691
lo, 462
10, 437
lo, 408
10,004
9,941
9~ 932
9,630
9.1693
Number of persons
principally engaged
(thousands)
41,054
39,457
38,280
38,054
37,579
38,180
38,785
39,308
41,468
40,674
39,013
38,548
39,422
38,759
38,963
V The data in this table represent the underlying ruble values or physical units presented in Table 3 as indexes. Because of rounding of the data
in this tabJF the implied index numbers (1950=100) may not be comparable to those shown in Table 3 (computed from unrounded data).
J Incluats b'da e of fixed assets (machinery, b-~ildings and other structures, land improvements such as irrigation and drainage) and value of draft
livestock. Values are expressed in prices of 1 July 1955 with subsequent adjustments.,-- mean of beginning and end of year values.
J Sown acreage in each year for each of 25 regions weighted by the average grain yield for each region in 1949-58-
See text for categories of purchases included.
See text for description of types of livestock included.
Labor used in farm activity only. See text for discussion.
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work on the "plot" (kitchen garden and/or small holdings of livestock) held
by a household not attached to an agricultural enterprise in the socialist
sector (or as an independent peasant) but whose family maintains a kitchen
garden and/or holding of livestock as a secondary source of income.
Members of households attached to agricultural enterprises
(collective and state farms and other state agricultural enterprises) whose
head is principally engaged in non-farming activity (capital investment
activity, municipal services, or subsidiary industrial production) are
included if their principal occupation is in farming.
The requirement for inclusion in the farm labor force count is
rather lax; only a nominal participation is required in terms of days per
year. The coverage is more in keeping with the concept of "work experience"
as enumerated by the U.S. Bureau of the Census. The concept used since 1940
for the farm labor force in the United States counts family members in farm
households as participants only if they work 15 hours or more in a family
farm during the "census week".
2. Man-Days
A series of total days worked in farm activity in the USSR was
derived for all years in the period 1950-64 except 1951. It represents a
measure of the volume. of time spend directly in production of agricultural
products -- crops and livestock -- and in associated administrative activities.
The days are undifferentiated as to the age and sex of the persons employed.
coverage includes not only time workea by the persons included in the
c:u.;~loymenr Ser_~,a shown in Table 14 but also embraces the input of days by
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persons *of households whose head is principally engaged in non-agricultural
activities but who maintains (in non-agricultural enterprises) small holdings
(kitchen garden and/or small holding of livestock). Also included are days
worked in farm activity by members of households attached to agricultural
enterprises with a principal occupation in a non-farm production activity
(e.g., capital repair, municipal service) but who have a secondary source of
employment in farm production activity.
B. Capital Stock
The ruble series for capital stock is comprised of two components:
(1) value of fixed reproducible assets, and (2) value of draft animals.
1. Fixed Assets
Official Soviet index numbers for agricultural fixed assets are
available for 1928, 1940) 1952-53, 1958, and 1960-64. The ruble values
underlying the index series are said to have been computed in "comparable
prices" undepreciated and net of retirements. To get the series used in
this paper, the ruble value of fixed assets at the end of 1962 was officially
estimated, category by category, in 1955 prices. This base figure was then
moved by the official index number series. Values for missing years were
-interpolated by use of official investment data (also in 1955 prices) and
implicit retirement rates. The national census of capital stock in state
sectors of the economy as of 1 January 1960 and a comparable census of
.-ollective farm assets as of 1 January 1962 have caused some adjustments in
the official index series.
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Detailed descriptions have been published of the inventory and
Structures and Machinery Combined
_'s
revaluation of capital in the censuses of 1960 and 1962. Nothing is known,
however, about the method used in obtaining the index series (undepreciated
and in "comparable prices") used to extrapolate the benchmark values of fixed
assets. As an independent check on the reliability of the official index,
an index of machinery inventories was constructed and combined with an
independently constructed index of buildings and other structures. The
machinery index was computed for the years 1928-40 and 1950-59; the sample
of machines weighted by prices of 1 July 1955 probably included 90 percent
of the value of agricultural machinery and equipment during the two periods.
Similarly, a rather crude measure of the value of the other major component
of productive capital in agriculture -- buildings and other structures was obtained for the terminal years 1928 and 1959. Basic to the derivation
of the index of structures is the use of'the official investment series
(expressed in prices of 1 July 1955). The independently constructed indexes,
of stocks of machinery and structures were weighted by the relative shares
of each in the total asset structure of agricultural enterpriese at the end
of 1962. The results of the exercise are comma red with the official index
o,." capital stock, excluding livestock:
Index of Capital Stock
computed in Agriculture (1928=100)
1nr::ainery 728
3.-oduc,,:'ae" Structures 514
racture and Machinery Combined 657
t. 'ficial
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The differential in the indexes comes to about 5 percent and
seems to be a reasonable, albeit rough, chec$ on the official volume indexes
of fixed assets published in the annual statistical abstracts
2. Index of Draft Animals
The
/Value of draft animals (horses, oxen) at the end of 1962 of 1.1
billion rubles (1955 prices) was moved by the inventory of horse numbers
at the end of each year. The benchmark value in 1962 is equal to the value
of draft livestock held by socialized enterprises of approximately 1.0
billion rubles plus 0.1 billion rubles as an estimate of the value of
draft animals held by the private sector.
C. Purchase of Materials
The index of current purchases of materials from other sectors of
the economy is comprised of five series: (1) fuels and lubricants, (2)
current repairs of machinery and buildings including repair activity carried
out by the farms on their own account (3) use of electric power for
productive purposes (4) deliveries of fertilizer and (5) production of
processed feeds (millfeed, oilcake) by industry.
1. Fuels-,%and Lubricants
The index of fuels and lubricants for 1950-56 was obtained by
cstimating the quantities of each fuel and lubricant used for tractors and
r--DL,isines and weighting them by. use of regional delivery prices of 1 July 1955?
Tie index for 1950-56 was extrapolated to 1964 by use of an index of total
power on ?arms expressed in horsepower units.
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2. Current Repairs
The index for current repair outlays is based on the estimated
series of outlays on fuels and lubricants. Reasonably reliable estimates
of actual ruble outlays (expressed in current prices) for current repairs
are available fbr 1950, 1955-58, and 1962. When crudely constructed price
indexes are used to deflate the current ruble series the implied "constant
price" index appears generally consistent with the movement of the index
based on the use of petroleum products. Accurate data are not available on
the rather substantial changes in prices of spare parts and other repair
materials and on wage rates of repair workers. These data would be
necessary to obtain reliable deflators for the current ruble expenditures
in selected years.
3. Fertilizer
Data on deliveries of nitrogen, potassium, phosphorous,
phosphorous meal, and several minor fertilizers (expressed in standard
nutrient content) were aggregated into a total index by use of factory
prices (f.o.b.) prevailing for each type of fertilizer in 1958-59 plus
estimat(-:a average delivery cost per type of fertilizer from station to user.
4+. Electric Power
This series is based on the consumption of electric power
expressed in-kilowatt-hours) for productive purposes. Electricity used
for home lighting on farms and other "nonproductive purposes" is exclud.,:...
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5. Feedstuffs Purchased
The index is based on estimated production of milifeed (net of
losses) obtained from the milling of small grains and pulses and production
of oilseed cake obtained from cotton and sunflower seed. These series were
aggregated by use of 1958 prices paid by collective farms. Production used
in constructing the series is limited to materials processed in government-
operated facilities. All such production of milifeed and oilcake is assumed
to be used for domestic feeding of livestock. Excluded from consideration
are inter-farm transfers of whole grain and other feedstuffs that result from
the re-sale of government procurements to farms. These purchases were counted
as intra-agricultural sales and were deducted in computing net output, as
explained in Appendix A.
6. The Overall Index of Material Purchases
Indexes for the above five series of goods and services purchased
from other sectors were available for 1950, 1953,1955-64. The series for
1951-52 and 1954 were interpolated from adjoining years by use of the index
of estimated outlays on petroleum products. The separate series were
aggregated by use of the actual expenditure weights for 1959 (see Appendix
3, below). The weight used for fertilizer was the actual expenditure by
agriculture for all chemical products (pesticides, herbicides, paint
products, etc., as well as mineral fertilizers). The non-fertilizer
elements are minor when expressed as a share of total outlays for chemical
product
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D. Land
The measure for land is the change in sown acreage in each of 25
regions weighted by average grain yields in each region for the period
1949-58. As noted in the text the similar characteristics with respect to
climate and soil of most of the sown acreage in the Soviet Union leads to a
relatively small change in weighted yields regardless of the major overall
expansion and shifts regionally in sowings during the past decade. Moreover,
grain yields in the areas that are rather sharply differentiated in climate
and soil conditions (Northern European Russia and the Transcaucasus) from
the major agricultural regions are not significantly different from those
prevailing in the major areas. As a result the weighted average yield moved
narrowly, the high for the fifteen year period coming in 1953 (8.65 centners
per hectare) and the low in 1963 (8.28 centners per hectare).
E. Livestock
The measure reflects the value of productive livestock (excluding
draft animals) held as breeding stock or for purposes of producing a flow
of services over a series of year (e.g., dairy cattle for milk, sheep for
wool). The portion of the herds that is comprised of young stock before the
reproductive age or animals raised solely for slaughter is excluded. The
value of such livestock are included as working capital in official
accounting procedures.
_6g
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Appendix C
II. Index Formula and Selection of Weights
A. Choice of Index Formula
The several inputs considered are aggregated into a production function
of the following form:
(1) Qt = At
Bt
Ct
Dt
Et
Also, it is assumed that
(2) a+b+c +d+e = 1
(3) a = PA,A, b = PA B , etc.
PO0 P00
The variables are defined as follows:
Qt = predicted output in year t resulting from the use of given amounts
of inputs considered (A, B, C, D, and E)
At = labor inputs
Bt = capital inputs (reproducible fixed assets and draft animals defined
as a flow of services)
Ct = current purchases from non-agricultural sectors
Dt = land inputs
Et = livestock defined as a flow. Excludes draft animals and other classes
PA
A
PO
0
of animals considered as working capital
= Price of input A. etc.
= quantity of input A, etc.
= Price of output for sale or home consumption
= Quantity of output for sale or home consumption
The small case letters shown represent the coefficients (or relative shares)
for each of the categories of inputs in total output. The concept of output considered
is value added by agriculture plus purchases from non-agriculture of materials for
current use.
The second assumption implies constant returns to scale and if each of the factor
is paid the value of its marginal product in the base period each coefficient will
represent the proportionate share of total output. Thus, the third assumption
defines each coefficient as the proportion of total costs of production attributable
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to each category of inputs.
B. Estimation of Value of Output for Sale and Home Consumption in 1959
Total value of production for sale and home consumption plus subsidies
to state agriculture is estimated to have amounted to 38,1+82 million rubles in
1959 in current prices.
The estimate is made up of the following components:
(million rubles)
1.
Sales to nonagricultural sectors as intermediate product
23,1+83
2.
Net sales to consumers as final product
4,211
3.
Consumption of farm products as income in-kind
9,800
14.
Net foreign sales
660
5.
Subsidies to state agriculture
300
Total
38,1+82
Line 1:
Comprised of receipts of agricultural sector from sales to other producing sectors,
primarily the food and textile industries. This sum of 23,1+83 million rubles is
comprised of value of purchases by industry of 21,233 million rubles (expressed
in final purchase prices paid to government procurement agencies) as estimated by
Vladimar Treml' (The 1959 Soviet Intersectoral Flow Table, Volume 1, Research
Analysis Corporation, November 1961+ p. 97) plus estimated subsidies paid to pro-
curement agencies of 2,650 million rubles to cover the difference between the prices
paid to farms and the lower prices paid by industrial enterprises to procurement
agencies (Abraham Becker) Soviet National Income and Product 1958-62: Part I -
National Income at Established Prices RM - 1+394 - PR, Rand Corporation, June 1965,
p. 137) mina: (:-.,sta.-.;sated turnover taxes of 1+00 million rubles added to prices paid
the food industry for purchases of grain from procurement agenci::s (unpublished
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estimate by Vladimir Treml').
Line 2: Sum of direct sales by agriculture to the population of 793 million rubles
through "commission" stores ('Narkhoz. 1962, p. 540) plus 3,448 million rubles
of net sales through the collective farm market (3,831 million rubles gross sales
Narkhoz,. 1962.
. 540 minus an allowance of 10 percent for trade margin).
Line : Unpublished estimate by Constance Krueger. Prices used are the average
realized prices received by producers.
Line 4: Value of exports of agricultural products (expressed in domestic prices)
is estimated by Vladimir Treml' as 660 million rubles (see
Line 5: Government subsidies to state agriculture of 167 million rubles for the
RSFSR inflated to 298 million rubles ( Narkhoz. RSFSR 1960, p. 478) by assuming
a proportional subsidy on state farm acreage in the other republics.
*Note to Editor: Reference is to contribution by Treml' appearing in this JEC
Compendium.
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C. Estimation of Coefficients
When Rate of Return on Fixed Capital and Productive Livestock is
8 Percent 13 Percent
1. a (labor) = 0.5725 0.5725.
2. b (fixed capital) = 0.0842 0.1185
3. c (current purchases) = 0.1411 0.1411
4. d (land) = 0.1731 0.1206
5. e (livestock) = 0.0291 0.0473
Coefficients in Columns 1 and 2 are obtained by dividing the payment to each
of the factors of production by the total value of production for sale and home
consumption of 38,482 million rubles. The sum total of the payments to the',factors
is equal to the value of output.
1. Labor
Sum of wages paid to the labor force engaged in farm activity on
state agriculture and collective farms, sales by households of agricultural com-
modities, and farm income-in-kind. Wages for state agriculture of 3,201 billion
rubles was derived as follows:
Average annual wage of 642 rubles plus payments to social insurance of 4.4
percent for a total return of 670.2 rubles per average annual worker. The average
annual wage for 1959 is obtained as the mean for the years 1958 and 1960 (average
monthly wages of 53.1 and 53.9 rubles, respectively, times 12, Nar. 1964, p. 555)?
The deductions for social insurance is equivalent to 4.4 percent of the annual wage
(V. Krilikoskaya et. al 7Planirovaiye byudzheta gosudarstvennogo sotsial'nof^o
strakhovaniya. 1959, p. 18). Average annual number of workers in farming activity
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in 1959 came to 4,557 thousand in state and institutional farms and 219 thousand
Se'lskoe iozyaystvo op.cit.
in machine and repair tractor stations L./ 1960, p. 450, 51, 450). It was
assumed that the average estimated wage for state agriculture was also applicable
for MTS and RTS workers.
The following returns to labor are from unpublished estimates of Constance
Krueger: wages paid to farm members and hired labor 'by collective farms attri-
butable to farm activity (4,450 million rubles) plus share of net income from
sale by households of farm products attributable to use of labor (4,580 million
rubles) plus income-in-kind (9,800 million rubles).
2. Capital
Charges for capital stock are comprised of three items:
(1) depreciation charges on structures and equipment.
(2) interest on structures and equipment.
(3) interest on horses.
Using alternative interest charges of 8 and 13 percent, the flows come to:
8 Percent 13 Percent
Depreciation 1,130 1,130
Interest 2,110 3,430
Total 3,240 4,560
a. Depreciation Charges
Depreciation charges were obtained by the use of a 4.5 percent
rate and capital assets valued at 25,100 million rubles in 1959. The relevant
rate for depreciation is assumed to be that used for replacement only excluding
a-nortiza?:.cf allowances set aside for capital repair. The rate of 4.5 percent
was that implied for 1963 - 7. for state agricultural enterprises.
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Amortization allowances of 905 million rubles were set aside for replacement
against a stock value.or 20,200 million rubles (exclusive of livestock). Amorti-
zation deductions are from Narkhoz. 1963, p. 653. A similar rate appears to
be appropriate for collective farms (11.7 percent in 1963 for collective farms
of the RSFSR only - L.N.Kassirov and V.A.Morozov, Khozyaystvennyy raschet v
kolkhozakh and sovkhozakh, Moscow, 1965, p. 45).
The rate for 1963 was deemed to be more appropriate than the implied lower
rate for 1959? Major revisions (upward) in accounting for amortization were
undertaken in 1963 in order to obtain a more realistic set of allowances.
The data cited above for value of assets (including draft animals) are
from unpublished estimates of Scot Butler.
b. Interest Charges
As indicated above I have arbitrarily used alternative rates of
return of 8 and 13 percent. Until this year (1966) there has not been an explicit
charge levied on reproducible assets in the Soviet economy. Investment funds for
state enterprises were for the most part part provided either on a grant free
basis from the State Budget or from retained profits of the enterprise. But
under the provisions of the new planning system for industry a charge will be
__evied on undepreciated value of capital stock. For the enterprises to be
,.,ransferred to the new system in 1966 the charge will vary from 3 to 8 percent,
jt this is a "minimum" to be increased in the future (Finansy SSSR, no. 3, 1966,
p. 23-214.). Soviet economist are discussing a future range of interest rates of
6 to 12 p,-:cent with some arguing in favor of a higher of 15 percent.
The average rate of return in the U.S. on depreciated capital in manufacturing
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enterprises (before taxes) between 1946-58 came to 11 percent (George J. Stigler,
Capital and Rates of Return in Manufacturing Industries Princeton, New Jersey,
1963, errata statement p. 8). The implied rate on undepreciated capital would,
of course, be lower.
In the case of the Soviet Union one would expect to observe a higher rate
of return than in the U.S. because of the greater degree of scarcity of this
factor of production in the Soviet economy compared to other resources (e.g.
labor). Moreover, the priorities of Soviet planners are such that the "recoup-
ment rate" used by planners as a rule-of-thumb measure in choosing among alterna-
tive uses of investment is higher for agriculture than it is for, say, heavy
industry.
3. Current Purchases
Current purchases of materials from non-agriculture sectors of
in The 1959 Soviet Intersectoral....,
5,428 million rubles are from Treml y (op.cit.,). Treml' has included services
purchased from transportation, communications, internal trade, and distribution.-
For present purposes of obtaining net purchases by agriculture from the rest of
the economy these are excluded on grounds that most of the expenditures reflect
double counting of outlays (e.g. trade and transportation) which are included
in purchases from other sectors (e.g. food industry).
4. Land
The return to land of 6,660 and 4,640 million rubles (Column 1 and
Columr_ 2) was obtained as a residual. It is the difference between total value
of sale: and home consumption for agriculture of 38,482 miliio~i rubles and the
summa _on of the payments to-.the other factors (lines 1 to 3 and line
5)
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5. Livestock
Comprised of interest charges of 1,120 and 1,820 million rubles,
respectively. These are imputed charges based on assumed rates of return of
8 and 13 percent on total estimated value of herds of 1+,000 million rubles
which is the mean of end-of-year values for 1958 and 1959 of 13,800 and 14,200
million rubles, respectively. Values of herds of productive livestock estimated
by Scot butler (unpublished estimates).
Appendix D
Alternative Indexes of Inputs and output Per Unit of Input
The index of total inputs and factor productivity shown in Table 5 of the
text (p. above) was based on a set of weights for the geometric index formula
that reflected an interest rate of 8 percent on fixed assets and livestock and
the use of man-days as the indicator for the input of labor.
In Table 15 the 2 indexes derived by use of the 8 percent rate of return
(labor, alternatively, expressed as man-days and employment) are compared to
those derived with a rate of return of 13 percent. The latter rate was arbi-
trarily chosen to test for the sensitivity of the results to variations in the
assumed contribution of fixed assets and livestock and the return to land
obtained as a "residual:" The overall conformation of trends,in inputs and
output per unit of input are not seriously modified (see Table 16).
_;77-
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Table 15
USSR: Indexes of Output and Inputs in Agriculture., 1950-65
1950=100
1950
1951
1952
1953 '
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964 1965
Output:
1. Straight Annual
100
97
104
106
109
126
141
141
155
149
150
163
161
153
170 171
2. 3 Year Moving Average
100
101
103
108
115
127
138
147
150
153
156
160
160
163
166
Inputs:
3. Rate of Return on Capital
and Livestock - 13%
a. Tabor as numbers
principally engaged
100
101
101
106
108
112
116
121
128
130
129
132
138
14o
143
b. Labor as man-days
100
N.A.
100
106
110
117
121
123
126
129
128
132
136
137
140
4. Rate of Return on Capital
and L . ~. ' 8-
a. Labor as numbers
principally engaged
100
101
101,
105
1.07
ill
115
119
125
126
126
128
133
134
137
b. Labor as man-days
100
N.A.
99
105
109
lib
120
121
123
125
125
128
132
132
134
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Table 16
USSR:
Alternative Indexes of Agricultural Output Per Unit of Input, 1950-65
Output/Input
190
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964 1965
A.
Output as 3 Years Moving
Average
1. Index of Inputs - 13%
Rate of Return
a. Labor as numbers
principally engaged
100
100
102
102
106
113
119
121
ll7
118
121
121
ll6
116
1.16
b. Labor as man-days
100
N.A.
103
102
104
108
ll4
120
119
119
122
121
118
119
119
2. Index of In?,.ts.-
Rate of Return
a. Labor as numbers
principally engaged
100
100
102
103
107
ll4
120
123
120
121
124
125
120
122
121
b. Labor as man-days
100
N.A.
104
103
106
109
115
121
122
122
125
125
121
123
124
B.
Output as Straight Annual
1. Index of Inputs - 13%
Rate of Return
a. Labor as numbers
principally engaged
100
96
103
100
101
112
122
117
121
115
116
123
117
109
119
b. Labor as man-days
100
N.A.
104
100
99
108
1.17
116
122;
116
117
123
118
1.12
121
of Inputs -
9 of Return
a. Labor as numbers
principally engaged
100
96
103
101
102
114
123
118
124
1.18
119
127
121
1.14
]24
b. Labor as man-days
100
N.A.
105
101
100
109
118
117
126
119
120
127
122
116
127
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