Book reviews

the cost of the CAP to the consumer in the form of higher prices and reduced consumption is referred to throughout the book, the reader is not supplied with any estimates of this cost ele- ment. This is a disappointing omission since quantitative estimates are avail- able from a number of sources (although these are referenced).

In writing on the CAP it is unavoid- able that authors find the sand be- neath their feet forever shifting. Thus, although Harris et al probably felt fairly safe in concluding that, as far as reform of the dairy sector is con- cerned, ‘dramatic measures should not be expected (p 105), quotas now look

an odds-on bet as the way forward in reducing the Community’s milk sur- plus, Nevertheless, the book offers an up-to-date account of the workings of the CAP, and rightly makes explicit the role of the food industry in the overall picture. As such it will appeal not only to those whose main concern lies with events at the farm level, but also to those with an interest further down the food chain.

L. J. Hubbard Department of Agricultural Economics

The University of Newcastle Newcastle, UK

Soviet agriculture in crisis THE ECONOMICS OF FEASIBLE SOCIALISM

by Alec Nove

George Allen and Unwin, London, 1983

USSR IN CRISIS The failure of an economic system

by Marshall I. Goldman

W. W. Norton, New York, 1983

PROSPECTS FOR SOVIET AGRICULTURAL PRODUCTION AND TRADE

by Ad Hoc Group on East/West Economic Relations, Committee for Agriculture

OECD, Paris, 1983

Soviet agriculture is in a state of acute crisis, poorly managed and organized. It has shown an inadequate and apparently declining rate of response to the large increase in investments over the last twenty years and to its improved terms of trade, and has been badly supported by its service indus- tries, particularly transport and ferti- lizers. Its problems have been com- pounded by poor weather in 1972, 1975 and in four years back-to-back, 197982.

Real gross agricultural output aver-

aged an annual rate of increase of 3.9% for 196670, then 2.5% to 1975 followed by 1.7% to 1980. Real gross annual output for 1981-83 is unlikely to exceed the average for the previous quinquennium. The trend of real net output for 1970-83 is virtually flat. Recent Soviet analysis suggests that an increment of 100 rubles real gross output required 70 rubles in 1966-70, 89 rubles in 1971-75 and 107 rubles in 197680 (constant 1973 prices for all values).

Total food consumption has in- creased by around a 2% annual rate since 1970, with meat at some 2.5% per year. The gains are substantially less than originally envisaged in the 1976-80 Plan. They have depended almost entirely on imports of grain and livestock products which were made possible by the two outstanding pieces of good fortune in the USSR’s foreign account in the last decade - the increases in energy and gold prices. Table 1 illustrates this.

There have been four principal sets of Kremlin policy reactions to the deteriorating domestic supply situa- tion. First, overall financial incentives, mostly higher prices for official pro- curements but also input subsidies, have been raised substantially since the mid-1970s and by 1980 repre- sented at 37 million rubles almost 40% of the total value of state purchases. Subsequent increases in procurement prices have taken consumer subsidies to around 50 million rubles in 1983,

and there have been large write-offs of bad debts and delays in loan repay- ment owed by farms. This is already an over-travelled road.

Second, some steps have been taken to relate payment of farm workers to the results of the harvest rather than to individual tasks completed, and claims are made that large gains in productivity result. But egalitarian and bureaucratic sensitivities are in- volved and the overall change is prob- ably limited.

Third, since 1978 the status of peasant plots, which have supplied about one quarter of the gross output of Soviet agriculture for many years, has been legitimized in the Soviet Constitution and strengthened by va- rious measures, culminating in 1981 with a decree permitting a contract system to supply feeder animals and feed to peasants who sell the fattened animals back to farms.

The Food Programme approved by the Central Committee of the Com- munist Party of the Soviet Union in May 1982 added one new component in the search for improved efficiency in management and resource alloca- tion, the RAPOs (Regional Agro- Industrial Organizations). Over 3000 RAPOs have been established at the rayon administrative level and some 156 intermediate coordinating units between them and the highest level of agricultural administration. The indi- vidual RAP0 is intended to be a coordinating body for agriculture and its input and marketing industries, ie aiming for the more effective match- ing of activities which in Western agricultures comes from the operation of market forces and from vertical integration arrangements. It has some limited powers to rearrange procure- ment policies, interfarm prices and investments for farms within its orbit. Its council of farm managers, agri- cultural administrators and directors of service industries is intended to improve the bureaucratic planning process.

Alec Nove, Emeritus Professor of Economics at the University of Glas- gow, has written extensively on the Soviet Union for twenty years or more. The Economics of Feasible Socialism is a general analysis of Marx-

172 FOOD POLICY May 1984

ist socialism and its evolution into the Soviet system and the important alternative models (Hungary, Yugos- lavia, Poland and China). In the words of its cover page, it concludes with a schema of socialism which ‘avoids far-fetched or Utopian assumptions and the deformation of “actually ex- isting socialism” of the Soviet species’. This book, despite its quite extensive references to the farm systems of the Soviet Union and other communist countries, has agriculture as but one of the many illustrative cases to more general themes and might seem out- side the remit of Food Policy. Howev- er, five pages (pp 85-90) on ‘Agricul- ture and the peasants’ are an extreme- ly forceful and effective statement on the inherent wastes of Soviet collecti- vization, the diseconomies of very large scale production, and the appa- rent inevitability of clumsy, error- prone bureaucratic controls. Professor Nove concludes:

It is interesting . to study the much more successful Hungarian (agricultural) experience. The key contrasts are, first, the absence of compulsory deliveries, and therefore the much greater flexibility to choose what to produce and what to sell; secondly, almost total freedom to purchase inputs; thirdly, much greater flexibility in internal organisation and in organising the work of peasant members; fourthly, the successful incorporation of the private sec- tor in the production of food, with adequ- ate supplies of fodder, equipment, well- organised marketing facilities, and so on. In my view none of this is inconsistent with a properly understood socialism, but this is now how Soviet ideologists see things. (reviewer’s emphasis)

Although apparently drafted in 1981, this conclusion points to a scale of required changes which leaves the 1982 Food Programme tinkering with fundamental problems, with in par- ticular the prospects of the RAPOs being barely more than talking shops. If we accept Professor Nove’s diagno- sis, the burden of resource misalloca-

tions and of ‘x-inefficiencies’ which plague Soviet agriculture will not be eased appreciably in the foreseeable future.

Marshall Goldman, an Economics Professor at Wellesley College and Associate Director of the Russian Research Center at Harvard, also is concerned with the totality of the Soviet economy. USSR in Crisis: the Failure of an Economic System argues that Russian planning remains trapped in the Stalinist model of the 1920s and that ‘the chances of a turnaround . . . hinge on reform of the system - reform that the Soviet leaders fear might trigger unpredictable and un- controllable forces that have been pent up for the last sixty-five years’.

Soviet agriculture figures prominen- tly in his analysis. In particular, one chapter reviews its development from Lenin to the 1982 Food Programme, emphasizing the wasteful concentra- tion of investment on large-scale macro-projects, which it appears Brezhnev acknowledged as mistaken in a major speech in November 1981, and the associated lack of influence on investment decisions by Soviet farm managers at the collective level and querying, although somewhat ambi- valently, how long the current ‘be- nice-to-peasant-plots phase’ will last. One may wonder whether Professor Goldman is overstating the continuing pressure to large-scale geographically- overconcentrated investments and whether even the present system can secure much more efficient allocations if ‘biggest is beautiful’ is at least a partially discredited doctrine. There is also need for some discussion of the micro-technical adjustments (eg better balanced animal feeds, extended sum- mer fallowing) which could bring im- portant gains within the existing framework of administration and in- centives. There is also lacking a dis- cussion of two possible counters to

Table 1.

Hard currency USSR trade ($ million) Net export of fuels Net import of agricultural products Difference

Annual value of USSR gold sales ($ million)

1970 1980

485 14395 410 8322

75 6073 ns 1600

Note; ns = not significant.

Prospects for Soviet Agricultural Pro- duction and Trade has been prepared by the Ad Hoc Group on East/West Economic Relations for the Commit- tee of Agriculture of the OECD. It examines the technico-economic per- formance of Soviet agriculture in great detail to develop a base from which it projects the prospects for domestic production of cereals, non-cereal animal feeds and livestock products over the 1980s and from these to the outlook for USSR net imports of grain. (The report is excellently summarized in the OECD Observer, No 125, November 1983.)

FOOD POLICY May 1984 173

Book reviews

these opportunities for muddling through: the Soviet Union’s ability to finance future food imports if world energy markets, particularly natural gas in Europe, continue to weaken; and, climatic change, given the possi- bility, maybe probability, that the adverse conditions which have been critical since the mid-1970s may reflect longer term trends taking over from above-normal and favourable pre- cipitation of the mid-1960s to mid- 1970s. Either separately, or even more powerfully together, would tighten the economic pressures which Professor Goldman depicts.

But his fundamental challenge stands, and should be set against any ready acceptance that the USSR is at the beginning of a radical reform and revitalizing of its agriculture:

Soviet leaders at least have come to see that most of the billions of rubles that have gone into agricultural investment have been for naught. But now the challenge will be to induce the planners to change their investment strategy. This will be an upending of everything they have been doing all these years (p 82)

It may be that the only way Soviet peasants will enrich the lives of the Soviet proletar- iat is that if the Soviet leadership decides first to enrich the lives of the peasants. But that is playing with class animosities and may be a politically impossible step to take . .(p 84)

More could have been done to increase peasant prerogatives and incentives. However, this would have had to come at the expense of the collectivized sector. Consequently, if such steps had been taken, they might have just been the first step in the unraveling process that the Soviets seem to fear, and that is a step which the Soviets would only take with extreme caution (p 172)

Book reviews

Its finding of most general interest is that the USSR net imports of grain are likely to trend sharply downward in the 1980s from around an annual average of 35 million tonnes for the last four years (including an estimate for 1983) to some 15 million tonnes in 1985 and even below 10 million tonnes by 1990. These projections are direc- tionally correct, and the magnitude of the envisaged changes would probably seem reasonable to many other analysts of Soviet agricultural trade.

The result is supported by a detailed examination of likely trends in the production of grains and non-cereal animal feeds and of the prospects for their more efficient use (eg reductions of harvest waste, better balanced animal feeds).

But the projected residual demand for imported feedgrains rests on the assumption that the Kremlin will be content to realize levels of meat con- sumption and domestic production well below those envisaged in the 1982 Food Programme. This is possibly correct but its plausibility is not de- monstrated. We have Hamlet without the Prince. The Ad Hoc Group makes no assessment, either in general terms or in detail, of the outlook for Soviet foreign exchange earnings and the capacity to finance food imports. Also missing, yet probably giving strong

support for the Group’s assumed levels of meat consumption and pro- duction, is any consideration of the fiscal burden of consumer food sub- sidies. The macroeconomic back- ground is seriously incomplete.

The strength of Prospects for Soviet Agricultural Production lies in its de- tailed analysis of the components of supply such as feed conversion, stor- age capacity, the scope for reducing harvest field losses, prospects for the massive Non-Black-Earth Program- me, the supply potential of peasant plots, and the productivity of the non-cereal animal feed sector. There is a mine of information to be used in getting perspective on the relative importance of the various factors checking Soviet agricultural output - overall capital shortage, capital mis- allocations, technical inadequacies and misconceptions, inadequate in- centives and inappropriate adminis- trate arrangements. From this view- point the OECD study is a valuable complement to the kinds of approach represented by the books by Profes- sors Nove and Goldman.

George Allen Newton Tracey

Barnstaple Devon, UK

The CO2 greenhouse effect: food implications CHANGING CLIMATE

by the Carbon Dioxide Assessment Committee, US National Research Council

mate basis for essentially all of the world’s food. A trace gas of Earth’s atmosphere, its pre-industrial concen- tration in the atmosphere is estimated to have been somewhere in the range

National Academy Press, Washing- of 260 to 270 parts per million (ppm).

ton, DC, 1983, 496 PP, $29.50 Now, however, due to mankind’s

CAN WE DELAY A GREENHOUSE voracious appetite for fossil fuels such

WARNING? as coal, gas and oil, its concentration has reached a value of 350 ppm; and

by S. Siedel and D. Keyes (US En- the recent report of the US National

vironmental Protection Agency) Research Council (NRC), which is one of the subjects of this review,

US Government Printing Office, suggests that a nominally doubled

Washington, DC, 1983, 192 pp, $6.00 value of 600 ppm is likely to be reached by the year 2065.

Carbon dioxide (CO,) is one of the These observations are generally primary raw materials of the photo- viewed with alarm in meteorological

synthetic process, providing the ulti- circles, for CO* is considered to be a

174 FOOD POLICY May 1984

‘greenhouse gas’, ie an atmospheric constituent which when increased in concentration tends to reduce the loss of terrestrial heat radiation to space and thereby warm the planet. Indeed, it is the consensus judgment of both the NRC report and the report of the US Environmental Protection Agency (EPA) that a 300 to 600 ppm doubling of the atmospheric CO2 concentration will lead to a 3 + 1.5”C increase in the near-surface air temperature of the globe.

Doomsday scenarios

The planetary warming predicted by the NRC and EPA reports is not expected to be uniform, but to be moderate in equatorial regions and several times greater than the global mean in polar regions. As a result, huge quantities of polar ice and snow are projected to melt, raising sea levels and flooding coastal lowlands. Globally, precipitation is expected to intensify slightly. However, some parts of the Earth are predicted to experience rainfall reductions. One of these regions is the USA, the major western watersheds of which are pro- jected to suffer streamflow reductions ranging from 40 to 75%.

One does not need much of an imagination to appreciate the rami- fications of such consequences for the world food situation. As the EPA report puts it, ‘agricultural conditions will be significantly altered, environ- mental and economic systems poten- tially disrupted, and political institu- tions stresses’. Indeed, it is the fear of food shortfalls which is the great underlying concern of practically all groups that have ever broached the C02-climate question.

So what can be done? In attempting to answer the question posed in its title - Can We Delay a Greenhouse Warming? - the EPA report comes up empty-handed. Its authors find, for instance, that a 300% tax on the cost of production of all fossil fuels would only slow the predicted warming by about five years. They also find that a ban on synfuels and oil shale would have only about the same meagre effect. Even a total ban on coal is projected by them to hold back the