Denial of access to areas of interest such as the Volga valley appeared to be as much a restriction to Intourist routes on which adequate lodging facilities were available as a Soviet desire to limit information. The more significant improvement in Attaché efficiency is in the hands of the United States rather than the Soviet government. The Delegation recommended to Secretary Butz an immediate increase of staffing from two to three and acquisition of Soviet national assistance in utilizing Russian-language material.

On the former it is clear to the Delegation that two Attachés should travel together for maximum efficiency and one Attaché is required in Moscow at all times. This being the case, an Attaché and an Assistant Attache are clearly not adequate. Moreover we were informed that the staffing of the Moscow post is fifth from the bottom for countries with USDA attachés. The foreign national could assist in reading and organizing the valuable but voluminous Russian language publications on Soviet agriculture. A response from Secretary Butz indicates immediate affirmative action. (See Appendix E.)

C. PROSPECTIVE SCIENTIFIC EXCHANGES

In accordance with the Agreement Between the Government of the United States of America and the Government of the Union of Soviet Socialist Republics, signed May 24, 1972, on Cooperation in the Field of Science and Technology specific understandings are now being worked out. This Delegation recommended to Dr. David, Science advisor to the President, inclusion in the Memorandum of Cooperation on Science and Technology Research in the Field of Agriculture the following problem area, "improved techniques for developing technical and statistical systems for crop reporting on a timely, accurate and reciprocal basis." Again the response was affirmative (see Appendix F).

In our meeting with Minister Matskevich this matter was specifically discussed. It is our understanding that he would agree to support mutual efforts to improve data exchange if it were included as a specific program area in the aforementioned Memorandum of Cooperation.

Findings of delegation

The U.S. agricultural attachés continued to do a commendable job in reporting Soviet crop conditions during 1972. Difficulties in timely availability of Soviet crop information in the United States were more due to Soviet disclosure policy, processing of current Soviet weather data in the United States, and deficiencies in the Soviet agricultural reporting system. Some improvement is possible by expanding the staff of the U.S. Agricultural Attaché in Moscow. The Delegation did not however assess the timely availability of information in the United States. This question might fruitfully be pursued in the event Hearings are held on the subject.

Recommendations of delegation

Processing of Soviet weather data in the United States should be accelerated.

The number of agricultural attaches in Moscow should be increased immediately from two to three and Soviet national assistance should be obtained.

Vigorous efforts should be made to improve the exchange of information on crop conditions with Soviet officials.

Soviet officials should be encouraged to provide long term commitments for U.S. agricultural products to ensure adequate supplies and reasonable prices.

The use of earth satellites for gathering photographic data which may be useful in determining or estimating crop conditions in the U.S.S.R. should be explored.

There is an obvious need to modify the U.S. export agricultural sales system to assure that U.S. private traders will, as nearly as possible, be equally as well informed as traders from Russia or other countries which limit freedom of information.

The possibility exists that a series of animal production demonstration projects, similar to the beef feeding pilot project in Korea, could be beneficially established in the U.S.S.R. to increase the outlet in that country for American feed grains and protein supplements.

D. PROJECTED SOVIET IMPORTS OF AGRICULTURAL PRODUCTS FROM THE UNITED STATES

In discussions with Soviet leaders on specific commitments for future sales of U.S. agricultural products the general response was often an indefinite tieing of Soviet imports to exports to the United States and to price considerations. However it is possible to safely predict the likelihood of continuing orders for soybeans, corn and other feed gains, agricultural related products for animal husbandry, and cereal grain-in that descending order of probability.

Soviet production of usable grain provides some indication of level of imports but only in general terms. In 1964 the usable grain was 120 million tons and imports totaled just over one million tons; whereas with 128 million tons in 1972 the net imports are in excess of 20 million tons (see Table 1 below). The three-year credits for $750 million primarily for feed grains provides some basis of projection but not an assured one (see Table 2 below).

TABLE 1.-U.S.S.R.: PRODUCTION, EXPORTS, AND IMPORTS OF GRAIN
[In thousands of metric tons]

Estimate. Net usable grain is estimated as the officially claimed gross output minus excess moisture, unripe and damaged kernels, weed seeds and other extraneous materials, postharvest losses incurred in loading and unloading grain between the grain harvesting combine and storage facilities, and suspected biases in the official reporting of grain production.

2 Including flour (converted into equivalent grain by using a 72 percent extraction rate) and groats.

Data are an average of 2 calendar years, except for imports in fiscal years 1964-66 and 1972-73. Data are for fiscal years ending June 30 of the stated year.

*Including purchases on Soviet account for shipment to East European countries and other client states.

1 Not all deliveries will be made to the U.S.S.R.

2 From previous year's contract.

> Unconfirmed purchases of 500,000 tons of wheat and 40,000 tons of corn would bring total purchases to 28,130,000 tons.

Current Soviet policy is to increase the use of soybeans and corn which they are not equipped by natural conditions to provide themselves. Therefore as long as this policy of improving efficiency in feed conversion continues, the United States has a potential market. If credit and balance of payment conditions permit, other agricultural imports are likely to improve animal husbandry. A specific "shopping list" was prepared for discussion at the Soviet Ministry of Agriculture and verified. (See Appendix G.) Net cereal grain imports, however, run counter to Soviet policy and expectations. Poor weather and possibily depleted stocks may, however, find them in the market again next year.

Although agricultural exports from the United States to the Soviet Union in 1972 (FY 72-73) were at an all-time high, it is conceivable that future sales will be higher. It is also reasonable to assume a lower but substantial level continuing over time, as indicated in Variants A

Year

1970

1971

19722

19732

1974 2

19752

19762

19772

TABLE 3.-COMMODITY COMPOSITION OF U.S. EXPORTS TO THE U.S.S.R., 1970-77

1 Excludes hides and skins.

2 Estimated.

3 One-half of amounts for fiscal year 1976-77.

Note: Variant A assumes $1,950,000,000 in exports of agricultural products during the period fiscal year 1972-73 to fiscal year 1976-77 plus $185,000,000 ordered for delivery in fiscal year 1971-72. Variant B assumes $750,000,000 to $1,000,000,000 in exports of agricultural products during the period fiscal year 1972-73 to fiscal year 1976-77 plus $185,000,000 ordered for delivery in fiscal year 1971-72.

E. PROBLEMS OF MAINTAINING SOVIET AGRICULTURAL MARKET

In the past the Soviet Union has been in the agricultural market. only in bad-weather years for cereal grains. Because of higher shipping costs and sometimes less favorable credit the Soviet Union has turned to the United States only as a source of last resort-as in 1963. With the political climate improved the United States is now on equal footing with other grain supplying nations. Also with the current priority for animal husbandry in the Soviet Union some long-term stability in Soviet imports is possible. With each of the relevant Soviet officials the point was made that the uncertainty of the Soviet market for the agricultural products needed to be reduced in our mutual interest: 1. Reserves of agricultural products in the United States

The reserve of cereal and feed grains in the world have largely been reduced to the stocks in the United States. Although these stocks in some cases may be sufficient for several years without bumper crops for replenishment, the quality of the stocks cannot be ascertained with certainty until drawn on or used. Much of the reserve assumed to be of number one cereal grain quality may in fact be useful only for poultry feed.

Moreover, large new demands for grain from countries such as India, Bangledesh, and China are possible and preclude accurate prediction. With a poor crop year in the United States and credible but large demands from other countries a crisis demand well beyond available reserves is possible.

2. Shipping

When in the offices of the Minister of Merchant Marine in Moscow the Delegation was reminded that the first American ship in twenty years was enroute from Houston to Odessa carrying wheat. With the shipping agreement of the Fall, 1972, 40 U.S. ports were opened to Soviet ships. Indeed the Minister indicated Soviet ships would even proceed through the Great Lakes to the Port of Duluth. With special cargo handling ships they were also aware of the prospects for grain shipments from Tulsa through the new inland waterways. It is the Soviet intention to press for the opening of all ports in the United

Likewise, the requirement that Soviet and United States trade be 50-50 between Soviet ships was changed to a one-third formula for each of the trading partners with an option to use third country ships for the remaining third. This makes U.S. grain cheaper and more competitive.

3. Price

Much was made by Soviet officials of the importance of favorable, competitive U.S. agricultural prices in projecting the level of Soviet imports. No one in Soviet officialdom admitted any impropriety in the grain purchases in summer 1972. "They took the market as it was and could not have been expected to tell us their full intentions." By implication they would proceed in the same fashion in the future. They implied that their good fortune in obtaining United States grain at a low price should be tempered by the fact that only a disastrous crop year forced them into the market. It is not by chance that Soviet grain traders are called Export-Khleb (Grain Export) as their policy is to export grain, not import it.

4. Credit

Three-year Commodity Credit terms at 6% percent appears to be competitive with other agricultural trading countries. The $750 million credit received by the Soviet Union, primarily for feed grain has not been used as rapidly as expected. Indeed the Soviets appear to have permitted Poland to use some of the credit line to import from the United States. Perhaps this is to offset a shortfall in anticipated Soviet deliveries to Poland.

Findings of Delegation

Agricultural products from the United States are now fully competitive in price, credit, shipping costs to those of other exporting nations. Agribusiness especially the efficiency of animal husbandryin the United States has a special attraction to Soviet officials. If their policy of improving animal husbandry and meat output continues we can expect continuous, substantial orders for soybeans, feed grains, and related agricultural equipment. The inability to raise soybeans of sufficient quantity to meet felt needs was acknowledged by Soviet officials to the Delegation as well as the interest in relying on the United States as a source.

Recommendation of Delegation

Soviet officials should be encouraged to provide long term commitments for U.S. agricultural products to ensure adequate supplies and reasonable prices, including grains, soybeans and agricultural equip

ment.

III. POLISH AGRICULTURE

A. PRIORITIES IN THE ECONOMIC PLAN

In spite of the traumatic experience of industrial workers revolting against Party control in the Baltic Sea ports in 1970-an event which brought Party Secretary Gierek to power-the economic priority appears to be for improvement of agriculture. To be sure agriculture is expected to provide more meat for Polish workers. The lack of meat availability and price increases may have helped spark the revolt.