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The Soviet Food Complex in a Time of Change

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The Soviet Food Complex in a Time of Change Agricultural Trade Reform The Soviet Food Complex in A Time of Change Kenneth Gray (202)786-1621 cartoon published recentlyin the reforming the entire economy. Con­ republics may also play a role in getting A Soviet newspaperEkonomicheskaya sumer demandshould becurtailed, and a thecountry out of itspresent quagmire Gaze ta shows a store clerk facinga custo­ more flexible marketing system setup to (see box). With greater independence mer in an empty aisle under a "Meat make processingand distributing farm from Moscow,individual republics have Department" sign. Theclerk is saying, commoditiesmore efficient. more controlover their business affairs. ''The peoplecomplained aboutthe empty Theincreasing political and economic More direct ties with theserepublics may shelves, sowe removed them." autonomy of the Soviet Union's 15 presentsome American firms with new "MEAT DEPARTMENT" The Union of Soviet Soclallst Republics (USSR) Only half of the Soviet Union's economicdecentralization and the 288 million peopleare Russians. formation of independentsocial Another 20 percent,including the and politicalaction groups. In the B yelorussiansand Ukrainians, are non-Russian republics,this has of Slavic origin. The rest come meant greaterfreedom to trade from a variety of different back­ abroad, withoutgoing through grounds. There are Baits, Geor­ Moscow. "Popular Front" move­ gians, Armenians, and Muslims ments-advocatingexpanded eco­ fromCentral Asia, among others. nomic and political autonomy­ In all, there are over 100different have emerged in severalrepublics. nationalities in the USSR who Thesesentiments are strongestin speak a language other than Rus­ the Balticrepublics of Lithuania, sian as their native tongue. Latvia,and Estonia Economically TheUSSR's 15 republics have advanced and independentfrom · -. · n1<>.qH >+<anonan11ci. · ·Ha ny­ beenheld together since the 1918- Russia betweenWorld Wars I and CTwe nonKH, BOT Mbl MX M y!Spa- nH.- 20 civil war by strongrule from II, they were reincorporatedinto P11c. B. nYrOBKHHA. Moscow. Mikhail Gorbachev's the USSR in 1939. policieshave encouraged growing Themood of frustration behindthis cartoonreflects the USSR's longstanding and complex foodproblem. The Soviets cannot put enough food on the shelves for a populationwith money to spend. Fixed retail prices, high productioncosts, and inadequate and misdirectedinvest­ ment in foodprocessing and distribution have lefttheir mark on Soviet society. But todaythere is hopethat political and economic reforms under way in the Soviet Union will provide solutions to some of theseproblems. Undoubtedly, increasing farm productionis not enough. More attention must bepaid to Theauthor is branch chief theof Centnlly Planned EconomiesBranch, Agriculture and Trade AnalysisDivi• sion. Tadzhikistan October-December 1989 19 Agricultural Trade Reform ------- opportunities fordoing business in the USSR. Table 1. The Diet of the Average Soviet Citizen Has Improved Since 1965 Per capita food consumption Fixed Retail Prices Create Item Excess Demand 1965 1970 1975 1980 1985 1986 1987 1988 The Soviet foodsituation began to stagnate in the1970's when Leonid Pounds Meat and meat Brezhnev was leader of the Communist 1 products 91 106 126 128 137 137 141 143 party. Foodproduction and per capita Fish and fish consumption deterioratedover the products 29 33 38 40 40 42 40 40 decade. By the mid-1970's, the Soviet Milk and milk 2 Union had becomeone of the world's products 554 678 698 693 717 735 753 775 largest importersof bulk foodcommodi­ Vegetable oil 15 15 18 20 22 22 22 22 ties. Each year during the 1980's, the Vegetables and USSR hasimported from 28 million to melons 3 159 181 196 214 225 225 221 221 55 million tons of grain, 4 to5 million Fruits 62 77 86 84 106 124 121 115 tons of sugar, about I million tons of meat, and significantquantities of oil­ Potatoes 313 287 265 241 230 236 232 216 seeds, butter,eggs, fruits,and vegetables, Sugar 75 86 91 97 93 97 104 102 as well as many tropicalproducts. Bread products 344 329 311 305 294 291 291 289 Despite imports and Governmentsub­ Number sidies, consumers still have to wait in long lines forfood, especially fruits,veg­ Eggs 124 159 216 239 260 268 272 273 etables, and livestockproducts. 1 Includes fat and byproducts. Meat products expressed in meat equivalents. 2Milk products expressed in milk The problem withfood shortages fat equivalents. 3Excludes fruit used in wine. seems to belie gainsin consumption made since the mid-1960's. According Source: Official statistics of the USSR State Statistics Committee. to officialSoviet data, in 1988 the aver­ age citizen consumed half again as much meat and fish,over twice as many eggs dards. The problem is controlledretail According to officialsources, in 1987, (slightly more than the average Ameri­ pricescombined with the rising incomes 66percent of food(by value) wassold in can), and moremilk than in 1965 (table of many citizens. This situation pro­ Statestores, 25 percent in cooperative 1 ). Although the officialfigures may be duces excess demand that an inadequate stores,and 9 percent in collective farm exaggerated, it appearsthat the average distributionsystem cannot service. markets. The USSR's policyof cheap Soviet is eating bettertoday than 20 The Soviet Governmenthas regulated foodmainly benefitsthose living in large yearsago. retail prices formany years. Guaranteed, cities becauseState stores in these areas But many Soviets simply do not low, and stableprices have long been arebetter stocked. Soviets living in believe that the quality of their dietshas vauntedas an advantage of socialism. small cities and the countrysideoften do improved. Consumers probably would Retail food prices in State stores have not have access to Statestores. They be surprisedif more knewthat their aver­ remainedunchanged since the1950's for have to dependon the consumer coopera­ age red meat and poultryconsumption is such staples as sugar, bread, and cooking tive network and farmmarkets for their on par with thatof Sweden or Britain oil and since 1962 forlivestock products. foodpurchases. (table 2). Pricesare still controlledin cooperative The other factorcontributing to food On the whole, foodshortages in the stores, but at higher levels. Food is more shortagesis risingincomes. In the USSR are occurring at levels of con­ costly in farmmarkets, where prices are sumption that arehigh by world stan- determinedlargely by supply and demand. 20 National Food Review Agricultural Trade Reform . Table 2. In 1985-86, Soviet Red Meat 19(i()'s,incomes startedto increase faster timeshigher. Fertilizerapplication far and Poultry Consumption Was Like thanlabor productivity when the State exceeds amounts used in climatically That of the United Kingdom or Sweden relaxed wage controls. Such phenomena similar areas of North America. can beregulated in capitalist countriesby Although the Soviet economy has pro­ Country Pounds lndex2 1 restrictivemonetary controls. However, duced large amounts of farm machinery per capita the USSR is just beginning toestablish a and other farm inputs, they are of poor United States 270.4 100 modem banking system and has not qualityand limitedselection. To rectify East Germany 217.2 87 learnedhow to controlits expanding the situation, PartyChairman Mikhail Belgium 209.1 84 money supply under new economic con­ Gorbachev has proposed removing most West Germany 209.1 84 ditions. Deficitspending by the Govern­ Statecontrol from the farm supply France 198.7 80 ment-estimatedthis year at 10 to 11 business. percentof Soviet gross national prod­ According tohis plan, requiring the Ireland 186.8 75 Czechoslovakia 186.1 75 uct-has also affected people's incomes. sector to be profitable would make equip­ Austria 182.3 73 As money incomes grew, so did demand. ment and agrochemicalmanufacturers Switzerland 181.0 73 Fixed prices, unable to rise except under more responsiveto the needs of social­ Denmark 180.4 73 limitedcircumstances, could not check ized farms,and farmoperators more cost demand. conscious and demanding in what they Hungary 173.5 70 "We have everything, but nothing is buy (see box). Socializedfarms would Italy 167.1 67 Netherlands 162.9 66 available" is a common expression be responsiblefor their costs. Creditand Greece 152.8 61 Soviet urban dwellers use to describe financialbailout would not be offered Bulgaria 150.6 61 shortagesof foodand other consumer automatically. The most inefficient items. Buyers armed with more money farmswould either bebroken up and Spain 147.5 59 than they...,can spend quickly snap up leased or incorporatedinto more produc­ United Kingdom 141.9 57 available products. Shelves then remain tive neighboringones. However, it has 138.0 56 Iceland yet provenpolitically infeasibleto imple­ Finland 135.8 55 empty most of the time. To betterunder­ Poland 135.3 54 stand this situation, Americansmay ment the plan and stop all subsidies. recall U.S. price controls in the1970's. Farmproductivity has also suffered USSR3 132.5 53 Largeamounts of gasoline, forinstance, fromtwo decades of policiesto raise and Romania 125.6 51 werebeing sold, but there still were lines guarantee farm wages without suffi­ Sweden 120.3 48 and spot shortages. ciently tying them to work results. To Norway 105.5 42 Yugoslavia 101.8 41 improve productivity on socialized Portugal 101.5 41 Production Gains Have farms,Gorbachev has triedto writenew Been Costly farmlabor contractswith smaller groups 1 Slaughter weight. 2Percent of U.S. consumption. After Brezhnevcame to powerin of workers
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