Agricultural Situation Review of 1978 and Oudook for 1979 Eastern Europe United States Department of Agriculture Economics, Statistics, and Cooperatives Service Supplement 3 to WAS 18 r . E-: ::. Approved by the World Food and Agricultural Outlook and Situation Board
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Agricultural Situation Review of 1978 and Oudook for 1979
Eastern Europe
United States Department of Agriculture
Economics, Statistics, and Cooperatives Service
Supplement 3 to WAS 18
r . am~rfcc;;:
Doc~,-n,;
E-: ::.
Approved by the World Food and Agricultural Outlook and Situation Board
EASTERN EUROPE AGRICULTURAL SITUATION, REVIEW OF 1978 AND OUTLOOK FOR 1979. Eastern Europe and USSR Branch, International Economics Division, Economics, Statistics, and Cooperatives Service. Supplement no. 3 to WAS-18. Approved by the World Food and Agricultural Outlook and Situation Board.
ABSTRACT: In 1978 gross agricultural production increased slightly. Grain, sunflowerseed, and soybean production reached record levels. Potato output was up; sugarbeet and tobacco production was down. The livestock inventory, except for horses, rose. Total meat production increased 4 percent. U.S. agricultural exports to the region amounted to $1.2 billion, with a prospect of a 5- to 10-percent increase in value in 1979. Agricultural growth plans for 1979 range from 2 percent in the German Democratic Republic to 7 percent in Bulgaria.
This report reviews and analyzes major developments in the food and feed sectors of Eastern Europe during 1978 and provides information on the outlook for 1979. Emphasis is given to agricultural developments of major concern to the United States, especially developments affecting the outlook for foreign trade of farm commodities.
The report updates and supplements data found in Supplement 3 to WAS-15, Eastern Europe Agricultural Situation, Review of 1977 and Outlook for 1978. It is one of seven regional publications on the world agricultural situation. Other reports are being published on the USSR, Western Europe, the Western Hemisphere, Africa and West Asia, Asia and Oceania, and the People's Republic of China.
Thomas A. V ankai directed and coordinated preparation of this report. Sections of the report were written by Allen A. Terhaar and Thomas A. Vankai. Paul D. Johnson assisted in the compilation of statistical data. Information submitted by the U.S. Agricultural Attaches in Athens, Belgrade, Berlin, Bucharest, Vienna, and Warsaw is acknowledged with appreciation.
The statistical data given on the tables were taken from the statistical yearbooks of the respective countries or from the yearbooks of the Council for Mutual Economic Assistance if not sourced otherwise.
Any comments, suggestions or questions concerning this report should be addressed to Eastern Europe and USSR Branch, International Economics Division, Economics, Statistics, and Cooperatives Service, USDA, Room 314, 500 12th Street, S.W., Washington, D.C. 20250. Phone (202) 447-8380.
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Thomas A. Vankai, Project Leader East European Situation and Outlook Eastern Europe and USSR Branch International Economics Division
ABBREVIATIONS, TERMS AND MEASURES
Abbreviations CEMA Council for Mutual Economic Assistance
CCC = Commodity Credit Corporation EC European Community EE Eastern Europe
FAO Food and Agriculture Organization of the United Nations FRG Federal Republic of Germany CDR = German Democratic Republic or East Germany
FY 1978 October 1977-September 1978 (U.S. fiscal year) 1978/79 July-June
Terms Agricultural land--Cultivated land, gardens, orchards, meadows, and
pastures. Agricultural trade--Raw materials for food and fiber; feeds; and food and
Transshipments--United States exports destined to Eastern Europe unloaded in Canada or Western Europe and reported by the U.S. Census Bureau as exports to the port of entry.
Bulgaria Czechoslovakia CDR Hungary Poland Romania Yugoslavia
*Commercial rate.
Official rate per U.S. $
Lev Korunas Marks Forints Zlotys Lei Dinar
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0.911 5.60 2.10
39.80* 3.32 4.97
18.44
meal equivalent, or oil equivalent.
Tourist rate per U.S. $
0.911 9.80 2.10
19.90 33.20 12.00 18.44
LIST OF TABLES
Table Title
1 Principal plan indicators, Eastern Europe, 1976-80 plan, 1978 actual .............. . 2 Total and agricultural trade, Eastern Europe, 1974-78 ............................. . 3 Intra-CEMA trade, percent of total and value, Eastern Europe, 1974-77 ........... . 4 U.S. exports to Eastern Europe, total and agricultural, 1971-78 ................... . 5 Volume and value of U.S. agricultural exports to Eastern Europe, including
transshipments, 1971-78 .......................................................... . 6 Volume and value of U.S. agricultural imports from Eastern Europe, 1971-78 .... . 7 Grain trade, Eastern Europe, 1971-77 .............................................. . 8 Trade in selected agricultural commodities, Eastern Europe, 1971-77 .............. . 9 Eastern Europe: Unit prices of U.S. exports in selected. commodities, 1971-78 ..... .
10 Oilseed meal imports, Eastern Europe, 1975-78 .................................... . 11 Domestic production and utilization of oilseed meal, Eastern Europe, 1974-78 ..... . 12 Area of grains, Eastern Europe, annual 1971-78 ................................... . 13 Production of grains, Eastern Europe, annual 1971-78 ............................. . 14 Area of selected crops, Eastern Europe, annual 1971-78 ........................... . 15 Production of selected crops, Eastern Europe, annual 1971-78 ..................... . 16 January livestock numbers, Eastern Europe, 1971-79 .............................. . 17 Production of principal livestock products, Eastern Europe, annual 1971-78 ....... . 18 Per capita consumption of selected foods, Eastern Europe, 1971-77 ................ . 19 Summary of descriptive data, Eastern Europe, 1977 ............................... .
PROTEIN FEED IMPORTS CONTINUE ........................................... . Oilseed Area and Production Increased .......................................... . Livestock Feed is the Primary Use of Oilseeds .................................. . Oilseed Meal Imports Down in 1978 ............................................. . Southern Countries are Self-Sufficient in Vegetable Oil ......................... . United States an Important Source for Protein .................................. . Demand for Protein Feed is Growing ........................................... .
OTHER CROPS ..................................................................... .
LIVESTOCK SECTOR CONTINUES SLOW GROWTH ............................ . 1978 Plans Called for Slower Livestock Growth ................................. . Pricing System--Troublesome ..................................................... . EE Reluctant Meat Importer .................................................... . Livestock Situation in Poland Remains Problematic ............................. : Feed-Livestock Balance Sought in 1979 Plans . . . ............................... .
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11 11 11 12 12 13
Eastern Europe Agricultural Situation REVIEW OF 1978 AND OUTLOOK FOR 1979
SUMMARY
Eastern Europe's (EE) gross agricultural production rose in 1978, but was less than planned. Adverse weather affected spring sowing and plant and fruit development. Excessive precipitation during summer caused high moisture content in grain and delayed corn ripening.
Despite poor weather, EE harvested a record 95 million tons of grain in 1978 from a sown area roughly equal to that of 1977. Among the grains, corn proved the only setback with an 8 percent drop in production. Of an estimated 12 to 13 million tons of grain imported by EE, the U.S. share was 5.4 million tons. The United States supplied an estimated 90 percent of EE corn imports.
Production of the region's principal oilseedssunflowerseed, rapeseed, and soybeans-increased by 5 percent. Domestically produced oilmeals, however, cover only about 25 percent of EE consumption. Oilmeal imports continued to exceed 3 million tons in 1978 but were less than in 1977. Soybean meal accounted for about 80 percent of the total meal imports. U.S. exports of 1.2 million tons of soybean meal remained the same as in 1977 despite the decline in the region's total meal imports.
EE production of potatoes (over 70 million tons) was higher in 1978 than in 1977, but most other crops suffered from the poor weather. Sugarbeet production was down 5 percent, tobacco was down 7 percent, and fruit and vegetable production was below normal.
Rebuilding of livestock herds continued and the region's hog, sheep, and poultry inventory reached record levels in January 1979. Cattle, however, in the German Democratic Republic (GDR), Hungary, Poland, and Yugoslavia still numbered fewer than in 1975. Low retail meat prices and relatively high producer prices for livestol'k involved significant
consumer subsidies, causing an annually increasing burden on the national budgets.
With the exception of beef, both production and consumption of livestock products were up, though not at planned levels.
Negative foreign exchange balances and export difficulties still constrain EE agricultural imports. The overall trade deficit for the region remained close to $10 billion. All of the countries accepted Western bank credits to finance imports and service debts. Decisions on imports continue to be the monopoly of national governments in most EE countries and foreign indebtedness, ability to export, and other exchange considerations all weigh heavily on such decisions. Nevertheless, the prospects for U.S. agricultural exports to the region in 1979 are good. The demand for imported feedof major interest to the United States-can be expected to remain at least at the 1978 level.
Agricultural growth targets for 1979 range from less than 2 percent in the GDR to 7 percent in Bulgaria. Expansion of grain production through increased yields continues to be emphasized. Corn and barley area is expected to increase in 1979, reflecting the EE concern over feed grain imports. An expansion of the area planted to oilseeds is also planned. The larger area designated for grain and oilseed production will be offset by a reduced area for production of potatoes and low yielding forage crops.
Plans in the livestock sector generally call for slower growth of livestock numbers and for increased meat production through greater productivity rather than through larger livestock inventories. A strong emphasis will continue on efficient feeding practices to help bring livestockfeed ratios more in line with domestic livestock and feed production. (Allen A. Terhaar and Thomas A. Vankai)
PLANS AND POLICIES
Economic Growth in 1978 Slower Than Planned
During 1978 most economic indicators-among them output, investment, and income-grew less
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than the annual level planned for 1976-80 (table 1). The greater-than-planned investments in Romania constitute one notable exception. Agricultural production was up in all countries except in
Yugoslavia, but was less than planned. The rate of increase of gross agricultural output in Bulgaria and Poland, although attaining the planned annual level, reflected a partial recovery from a sharp decline in 1977. The planned self-sufficiency in grain production suffered a serious setback in Romania and Yugoslavia and remained distant for the GDR and Poland.
Reduced Targets Set for 1979
The plans for 1979 are not designed to lift the economy to the course charted originally in the 5-year plans. Accumulated foreign debt and deteriorated terms of tradt forced all countries to scale down plans for domestic consumption and investment. Total investment in Poland is planned to decline by 11.5 percent. Nevertheless, Poland is the only country in the region where investment in agriculture will grow faster than in any other sector of the economy.
All country plans for 1979 emphasize the need to reduce imports and increase exports. Faster growth in feed than in livestock production is a primary goal to achieve this task. To foster better performance, some managerial and organizational changes have been made. Producer and consumer prices were increased selectively to stimulate production and decelerate the growth of consumption.
Agricultural growth targets for 1979 range between less than 2 percent in the GDR and 7 percent in Bulgaria. The plan objectives continue to emphasize self-sufficiency in food production. The general directives call for preserving land for agricultural use, avoiding leaving any land fallow, practicing double cropping, improving labor productivity and production efficiency, using machinery in shifts for full capacity, and adopting new scientific discoveries and technology quickly.
Part-time farming on private plots, merely tolerated in the past, now enjoys government support. The governments now fully recognize the economic significance of capturing idle or overtime labor or filling small empty shelters with livestock. Large farms are urged to cooperate with the small operators by contracting for their products and by providing them with seeds and livestock. Cooperation between the large enterprises for specialized production is to continue also.
Agricultural Investment Plans are Varied
Hungary increased the profit tax of state farms in 1979 by 4 percent. Mandatory contributions to the reserve fund-a fund to be used when profits do not cover minimum wages-were raised from 15 percent to 25 percent of profits on state farms and
from 4 percent to 8 percent on cooperatives. These measures were taken to limit investments which exceeded the planned level by 15 percent in 1978.
In Romania, growth of agricultural investment will trail the growth of investment in the economy as a whole. Agriculture's share in total investment will be 10 percent, down from 11 percent in 1978. In 1976, Poland revised its 1976-80 agricultural will increase to 18 percent from 16 percent in 1978. In 1976, Poland revised is 1976-80 agricultural investment target up from $13 billion to $17 billion1, of which $3.2 billion is earmarked for 1979. In addition, loans will be granted to private farmers if they form associations for specialized production or take over farms from the State Land Fund.
Polish farmers are turning over land to the State Land Fund in exchange for retirement pensions. In 1977, private farmers bought or leased about 90,000 hectares (ha) from the Fund and are expected to take over 150,000 ha in 1979. The majority of the farms relinquished are below 5 ha units. These lands often are unsuited for large scale cultivation because of their locations, but may be better incorporated in privately managed farms. Furthermore, the transferred land is usually of low quality and needs considerable investment for improvement.
World Price Changes Exert Pressure for Altering Domestic Prices
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In the East European countries, producer, consumer, and foreign trade prices are independently fixed by the governments. Price setting by market forces is tolerated only in Yugoslavia and for a limited number of products in Hungary. The Polish government raised the producer prices of livestock in 1978 to stimulate production but was reluctant to increase meat prices for consumers; consequently, shortages continued at retail outlets. Consumer prices of nonessentials, such as coffee, cocoa, tobacco, liquor, and tropical or Mediterranean fruits were, however, increased in all countries. While most East European governments have been reluctant to raise prices for staple foods-meat, milk, bread, and sugar-they have raised other retail prices. Hungary announced approval of a 4.6-percent increase and Romania a 5.5 percent increase in average retail prices to curtail purchasing power of their populations. The Yugoslav leadership is committed to producer price increases not to exceed 9 percent in 1979, which would trigger a 13-percent increase in retail prices. This compares with the 15-percent increase in retail prices in 1978.
1 Based on conversion rate of $1 = 33.20 zloties.
Even in the market oriented Yugoslavian economy, farm prices are subject to government intervention. If farmers cannot obtain an established minimum price on the free market, the government is obligated to buy certain commodities for a protective price, in most instances equalling the set minimum prices. Yugoslavia, to shield domestic price levels, increased custom tariffs in 1978 for most agricultural products. But flexibility is exercised in waiving tariffs; soybeans, for example, are exempted and corn received a special waiver in 1978.
Regional Agricultural Organizations are Emerging
Bulgaria pioneered in 1978 with the creation of self-sufficient regions. Each region is a selffinancing unit with responsibility to distribute income to the affiliated enterprises. Wage earners and cooperative farm members are protected by a government-guaranteed minimum wage. Farms also are eligible for compensation from the state in case of natural disaster. Leaders of the regions are responsible for meeting a food delivery quota and are allowed to import only up to the extent of foreign exchange earnings from their own exports. The system, in operation since 1978, has been termed successful by Bulgarian leaders and will be continued with improved resource organization. Poland intends to shift responsibilities more vigorously to the existing rural self governments. In the past, the rural authorities lacked prestige, and
met with strong farmer resistance when they interfered in individual decisions of farm operations.
Romania recently legislated the establishment of General Industrial State and Cooperative Councils (GlASCO). The GlASCO will embrace all types of farm-related organizations: state farms, cooperative farms, machine stations, intercooperative associations, research stations, and regional teaching institutions. The GlASCO's tasks will include the establishment of uniformity in mechanization, plant protection, fertilizer and seed use, record keeping, and extension service. The enterprises under the jurisdiction of the GlASCO will have administrative and financial autonomy. The GlASCO reportedly will be organized in a democratic fashion-at the bottom, the General Assembly of all workers; and at the top, a council with a chairman. The council will be the final authority in all aspects of management, on allocating investment funds, approving crop rotations, etc. A vertical reorganization will become effective simultaneously with this horizontal reorganization. The Department of Food Industry will be detached from the Ministry of Agriculture and renamed the Department of Industrial Processing of Agricultural Products. Each branch of this administrative unit-meat, milk, sugarbeet, etc.-will contract with a regional GlASCO and will have authority to influence production quality and use of inputs on the farms. (Thomas A. Vankai)
FOREIGN TRADE VALUES
Negative Balance of Trade Persists
The East European balance of trade in 1978 is estimated to have slightly surpassed the $10 billion deficit attained in 1977 (table 2). Yugoslavia again had the largest deficit of $4 billion, but Yugoslavia's earnings from invisibles (services and transfer payments) were reportedly higher than in 1977, thus its balance of payments deficit declined. Yugoslavia has the highest invisible hard currency earnings in the region, particularly from tourism and from remittances of Yugoslavians working in Western Europe. Next to Yugoslavia, Poland's and the GDR's trade deficits were the highest, although Poland's deficit declined slightly in 1978. The GDR did not publish export-import value data, but based on fragmentary information, some improvement in its overall trade balance is expected, although its hard currency deficit increased. The trade balance in Hungary deteriorated significantly in 1978 and in Romania it turned from a surplus to a deficit.
A detailed breakdown on hard currency and ruble trade for 1978 is not yet available. Between
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1974 and 1977 the share of ruble trade and the negative balance on ruble account increased annually (table 3). Trade distribution by ruble and dollar accounts is provided by Council for Mutual Economic Assistance (CEMA) sources. Since the East European currencies are not convertible, the individual countries set arbitrary exchange rates. The exchange rates used for the same commodities in ruble or dollar trade do not reflect the official exchange rate quoted between these two monetary units. Prices charged in intra-CEMA trade differ from world prices and are decided during bilateral negotiations.
The East European countries maintain several exchange rates, different ones for commerce than for tourists. Hungary recently announced plans to narrow the gap between the two rates, and at the start of 1979 devalued slightly the tourist rate of the forint against the hard currencies to attract more visitors and augment its hard currency earnings.
West Provides Credits
Western analysts estimate that EE hard currency debt rose to about $35 billion by the end of 1978. All countries continued to solicit and take Western bank credits to finance imports and service debts. In 1978, Poland received $500 million from European Banks and another $500 million from Japanese banks, closing 1978 with about $14-15 billion hard currency debt. Financial circles estimate that Poland will need another $1 billion in 1979 to help repay debt obligations. Poland's debt situation is the highest in EE, both on a per capita basis and in relation to hard currency exports. Other known bank loans are $300 million each to Hungary and Romania from the Eurodollar market and $200 million to Hungary from Japan. Banks apparently consider EE credit worthy and are willing to commit funds to East European borrowers in the absence of adequate demand for funds from the slowly growing Western industrial economies.
Besides bank credits, EE is using project oriented loans or credits from commodity exporters. The EE countries also bolstered their economies by purchasing licenses from the West and by entering into joint ventures with western firms. Counter trade-tying imports with exports-is another approach used by EE countries to circumvent deterioration of trade balances.
Romania and Yugoslavia are considered developing countries; thus they qualified for long term loans from the World Bank in 1978. One agriculture-related loan of $40.5 million was granted for a Romanian irrigation project in Teleorman County. Yugoslavia received a loan for $55 million to benefit about 12,000 farmers in BosniaHerzegovina, and another loan for $82 million for irrigation in Macedonia.
CEMA-EC Negotiations Stalemated
Periodic meetings between representatives of CEMA and the EC continued during 1978. The negotiations covered mostly administrative matters. The EC reiterated its position to cooperate only in exchanges of information, forecasts and statistical data, product standardization problems, and in environmental protection. The EC remained adamant in its view that the CEMA is not its equal as an institution since it is a loose association with no influence on individual member's tariffs and has no authority to negotiate trade agreements binding to its members.
Agricultural Trade Negative
Agricultural trade values are not yet available for 1978. In 1977, agriculture accounted for about 37 percent of EE's total trade deficit, up from 35
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percent in 1976 (table 2). The share of agricultural deficit in dollar account was even higher. Hungary and Bulgaria were net agricultural exporters, Romania slipped to a net importer position in 1977 and most likely remained so in 1978.
Agriculture accounted for close to 14 percent of the region's total imports in 1977 and 10 percent of exports. Poland and the GDR, the leading agricultural importers, reduced their agricultural trade deficit somewhat in 1978. Their grain imports declined and Poland did not import meats in 1978. Coffee, a significant hard currency import item in each East European country, reportedly accounted for 40 percent of total food imports in Hungary.
Value of U.S. Agricultural Exports Up in 1978
Agricultural commodities accounted for three-fifths of U.S. exports to EE. The U.S. share of the region's total agricultural imports was 10 percent in 1977, 16 percent in 1976, and probably ranged between 10 and 16 percent in 1978.
U.S. agricultural exports to EE recovered to $1.2 billion (including transshipments) in 1978 after peaking at $1.4 billion in 1976 and declining to $.9 billion in 1977. As in previous years, grains, oilseeds and oilseed products were the principal U.S. exports to the region. Grain accounted for 50 percent and oilseeds and oilseed products for 34 percent of the total export value (table 5). The value of all principal export commodities-except soybean meals-to EE increased. A roughly 8-percent increase in average export unit price helped to lift the export value of corn. Soybean and soybean meal unit prices declined, but the volume of exports increased (table 9). The price of cattle hides increased 20 percent.
Poland remained the region's leading importer of U.S. agricultural products with over $500 million, but the GDR, Romania, and Yugoslavia each imported more than $100 million. In 1978 U.S. exports to all countries except the GDR and Czechoslovakia surpassed the 1977 values. Nevertheless, the GDR remained the region's second most important importer of U.S. agricultural products.
The trade values published by the U.S. Census Bureau are adjusted by the USDA to include transshipped products. Some goods destined to EE via Canadian, West German, Belgian, or Dutch ports show only the initial port of entry on U.S. export declaration documents, thus distorting actual trade values collected and reported by the U.S. Census Bureau. Transshipment value peaked at $474 million in 1976 but declined to $86 million in 1978 (table 4). The GDR, with warehousing in Hamburg, accounted for three-fourths of the transshipped value in 1976 and for more than half in 1978.
U.S. Agricultural Imports Higher
The United States ran up a considerable surplus in its agricultural trade with EE. Despite a 28-percent increase in 1978, the value of imports was less than half that of exports (table 6). Processed meat accounted for 70 percent of total agricultural imports. Poland is the region's leading exporter of processed meats, followed by Yugoslavia. All countries except Bulgaria increased their processed meat exports to the United States in 1978.
U.S. Export Promotions
Commodity Credit Corporation (CCC) credits played an important role iri promoting U.S. agricultural exports, totaling $505 million in FY 1978 to Poland. Credits made available to EE in FY 1979 include $404.7 million to Poland; $110 million to Romania; $42 million to Hungary; and $21.5 million to Yugoslavia. In addition, the CCC guaranteed $100 million to U.S. exporters of agricultural products to Poland for noncommercial risk protection. Romania requested the credit for feed grain purchases, Hungary for oilseed meal and cotton, Yugoslavia for soybeans, and Poland for a variety of products. More than half of the credits to Poland covers grain purchases, and the remainder soybeans, oilmeals, vegetable oils, cotton, soy protein, tobacco, and tallow.
Last October, the Agricultural Trade Expansion Act of 1978 became law. This Act authorizes the CCC to grant intermediate credits-from 3 to 10 years-for breeding animal purchases, for wheat bought for reserve in consistency with international agreements, and for constructing marketing facilities for agricultural products. Eligibility requirements for intermediate credits are
the same as for short term; consequently, Bulgaria, Czechoslovakia, and the GDR are excluded. Another promotional clause in the new Act authorizes the USDA to open 6 to 25 agricultural trade offices abroad, with locations under consideration in EE.
The United States waived for Romania in 1975 and for Hungary in 1978 the restrictions imposed by the Jackson-Vanik amendment of the Trade Act of 1974, which ties trade concessions to emigration policies. Since the restrictions were waived, those countries now receiv~ Most Favored Nation (MFN) treatment from the United States. It is expected that the MFN status will result in improved U.S. trade relations with Hungary as it did in the case of Romania.
U.S. Export Outlook Favorable for 1979
Based on the 1978 domestic feed production and yearend livestock inventories, the demand for imported feed-where the main U.S. export prospect lies-is expected to continue in 1979 at about the 1978 level; however, imports in the second half of 1979 will be influenced by the 1979 harvest. Increased agricultural imports by Bulgaria, Romania, and Yugoslavia will most likely offset reduced imports by the other four countries of the region. Based on the import intentions indicated in the respective countries and on world commodity supplies, we estimate a slight decline of U.S. wheat exports to EE to be more than offset by increased corn and soybean meal exports. Based on these estimates and the forecast of higher export prices, the U.S. exports to EE should approximate $1.3 billion, 5 to 10 percent above the 1978 value. (Thomas A. Vankai)
WEATHER HAS UNEVEN EFFECT ON CROP PRODUCTION IN 1978
Cold and wet weather was the norm in the more northern East European countries, while damaging storms and drought reduced corn, fruit, and vegetable yields in the southern countries. Winter grains got off to a poor start in the fall of 1977 and did not winter well because of low soil moisture in Hungary, Czechoslovakia, Romania, and Bulgaria. In October 1977, for instance, Hungary's mean soil moisture was only 45 percent of normal.
Above average winter precipitation compensated for the shortfall and by April 1978, all of the countries had close to average soil moisture. Cold and wet spring weather seriously delayed corn and soybean planting and retarded early growth. A late
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spring frost damaged fruits, vegetables, and tobacco in Yugoslavia. Severe storms and hail during mid- and late June caused serious damage to 950,000 hectares of crops in Bulgaria and forced the replanting of much of the area. Low rainfall in July and August hurt crop development (especially corn) in Yugoslavia, Romania, and Bulgaria. Storms and almost continuous rainfall plagued EE during the summer harvest, causing lodging, delays, and high moisture content in grains. Hungary, Poland, and Czechoslovakia reported grain arriving at purchasing centers with 30-40 percent moisture content. (Allen A. Terhaar)
TOTAL GRAIN OUTPUT AT RECORD LEVEL, BUT CORN DISAPPOINTING
Total grain output for the region reached a record 95 million tons in 1978. The area sown to grain in each country remained almost the same as in previous years, although its composition was somewhat altered (table 12). The area sown to barley increased in the region as a whole and jumped more than 20 percent in Bulgaria and Romania. The area planted to corn was up about 3 percent in Bulgaria, but dropped slightly in the other EE countries. In Poland, which has had little success with its corn program to date, the area of corn harvested for grain decreased from 57,000 hectares in 1977 to only 33,000 in 1978.
Grain output was up in every country except Yugoslavia (table 13). Czechoslovakia and Hungary had record crops. Production of wheat, rye, and barley showed gains over 1977, with record harvests of wheat and barley for the region. Because of poor weather and reduced area for grains other than wheat, Yugoslavia harvested its smallest grain crop since 1972. Yugoslavia's total grain crop was down 16 percent from 1977, with the largest shortfall occurring in corn. PolandEast Europe's largest grain importer-harvested a larger grain crop than in 1977, but was still short of its 1974 record. Hungary and Romania were the only two countries to show increases in corn production in 1978, but both countries fell short of previous harvests.
There were problem areas despite the record grain crop in 1978. Heavy and consistent rainfall during harvest and the late ripening of corn caused much of the grain to have very high moisture content. A general shortage of grain drying facilities in EE means that there were quality losses. The emphasis put on high-yielding wheat for feed in Hungary caused a shortage of high-quality milling grain. To correct this situation, efforts are underway to tie farm prices to grain quality. In Yugoslavia the government banned the use of 1978 wheat for animal feed in order to preserve the shortfall crop for human consumption.
Corn proved the disappointing crop in 1978 with an 8-percent drop in production on an area reduced by only 4 percent. Yugoslavia accounted for much of that shortfall, but Czechoslovakia experienced a 20-percent reduction on a nearly constant plant~d area. Yugoslavia had its smallest corn crop th1s decade and began to import corn for the first time since 1973/7 4. It is also thought that Romanian corn production figures do not fully discount higher moisture content when recording grain tonnage, thus the 1978 Romanian corn crop is probably overstated.
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Grain Imports Steady
Total EE grain imports in 197~ are estimated at about 12 to 13 million tons, almost equal to 1977's 12.6 million tons (table 7). Due to the record wheat harvest in 1978, however, wheat imports are expected to be down 1.0 to 1.5 million tons in 1978179. 1 The difference will be made up in the record level of coarse grain imports for feed.
All the EE countries except Czechoslovakia and Yugoslavia are expected to buy more barley this year. Barley imports are estimated at 3.5 million tons in 1978/79, and corn imports are expected to rise to 5.0 million tons, up nearly 1.6 million tons from the previous year. The general shortfall in corn production heightened the need for feed imports. Only Hungary is expected to be a net exporter of corn. Romania and Yugoslavia-normally -net corn exporters-were forced to increase their corn imports greatly over the previous JulyJune levels. Poor hay and silage results in 1978 also contributed to the high level of feed imports.
The United States maintained its position in 1978 as the region's largest supplier of feed grains (table 5). Corn made up over three-fourths of the U.S. coarse grain exports to the region and the United States supplied an estimated 90 percent of total East European corn imports. Yugoslavia is expected to purchase over 1.1 million tons of corn in 1978179, and final imports may go even higher. In addition, Yugoslavia already has purchased close to 100,000 tons of U.S. grain sorghum.
Other major suppliers of grain to the region are Western Europe, Canada, Argentina, and the USSR. Poland already has purchased a half million tons of wheat from the Soviet Unionwhich had a record wheat harvest in 1978. The GDR and Czechoslovakia also are expected to buy grain from the USSR. France has agreed to sell Poland as much as 800,000 tons of wheat and/or barley. French grain is attractive because of high EC export subsidies, favorable credit, and low transport costs.
In spite of high interest rates on credits and large EE hard currency indebtedness, CCC credits continue to play an important role in U.S. trade with the region. Poland and Romania were the two EE countries that undertook CCC financing of grain imports for FY 1979. Poland was extended CCC credits for about 1.4 million tons of feed grains and 462,000 tons of wheat. CCC credit .«iS
1 Here July-June import figures are used to reflect the influence of one crop year on imports. EE countriesexcept Poland and Yugoslavia-only report import figures on a calendar year basis.
established for Romania for the first time to finance imports of U.S. feed grains consisting of approximately 1.1 million tons, primarily of corn. Imports resulted from the combination of a belowplan corn harvest and a very strong emphasis on expanding meat production for export and domestic consumption.
Feed Grain Production Emphasized in 1979
Eastern Europe continues to emphasize strongly the expansion of grain production, especially feed grains. These goals are consistent with the policy of trying to reduce hard currency imports of grains and to bring domestic feed production more into line with livestock numbers in each country.
The 1979 plans call for grain production increases ranging from 2 percent in Hungary to 6 percent in Romania. Corn and barley are the two grains that are strongly emphasized. Hungary intends to increase the area under grain crops by 50,000 ha (1.7 percent), with the largest increase in corn. Hungary, however, faces a perennial problem in getting some farms to plant corn on the full allotted area, as returns are low in comparison with other crops. Thus, it remains to be seen whether Hungary can expand corn production to the planned level. The area designated for both corn and barley is expected to increase in Czechoslovakia in 1979. The planned increase in barley area is 10 percent. Yugoslavia and Hungary plan to decrease the area sown to wheat this crop year, but plan to increase output.
Overall grain production is expected to rise in EE. Wheat production is planned to rise with constant or declining area sown. This is to be accomplished by improving varieties and by using more fertilizers and plant-protecting agents. Oats and rye continue to be deemphasized and should
continue their trend toward smaller sown area and lower production.
General weather conditions during sowing and the early stages of growth indicate that the 1979 grain production plans may already be in trouble. Extremely wet conditions delayed sowing in the region. In Hungary, wet conditions delayed sowing and then a late fall drought left the topsoil with insufficient moisture and hampered emergence. Fall work and sowing were delayed 1-3 weeks in the GDR and Czechoslovakia. Poland and Yugoslavia appear to be the most affected by unfavorable weather. The area sown to winter grain in Poland fell 300,000 hectares short of plan because of weather-induced delays. Grain stands were not yet well established prior to -14°C temperatures in early December. There was, however, good to heavy snow cover in EE from late December through February. Heavy snowfall and a sudden thaw, however, led to flooding on 176,000 hectares in Hungary, 50,000 of which had been seeded. Severe flooding in Poland inundated approximately 1 million hectares. There is a shortage of certified seed in Poland in 1979 and the general quality of spring sowing seed is poor. The National Seed Center can ensure supplies of only about 73 percent of the demand for spring grain seeds. Farmers are being called on to use reserves and postpone seed stock improvement to make up for the shortfall. Spring wheat and oats are the grains most affected.
Based on present plans and the present crop situation, EE grain imports in 1979/80 are likely to remain at about the 1978179 level. Since Romania is maintaining its ambitious plans for expanding livestock production, that country can be considered a likely market for U.S. feed grain exports if they remain competitive on the world market. (Allen A. Terhaar)
PROTEIN FEED IMPORTS CONTINUE
Oilseed Area and Production Increased
Oilseeds in EE are sown on about 4 percent of arable land. Sunflowerseed is the leading oilseed, followed by rapeseed and soybeans. Sunflowerseed and soybeans are principally sown in the southern countries, while the northern countries are the principal rapeseed producers (table 14). The combined harvested area of sunflower, rapeseed, and soybeans was up 4 percent in 1978. Sunflowerseed and soybean area reached record levels; rapeseed area declined because late sowing and inclement weather in Poland hindered sprouting and seed development in some parts of the country. Sunflower area increased in Hungary and Yugoslavia. Soybean area almost doubled in
7
Bulgaria and increased in Romania and Yugoslavia. The expansion of sown area was stimulated by comparatively high producer prices and the availability of higher yielding hybrid sunflowerseed varieties. Some new sunf1owerseed varieties propagated in Romania that are resistant to blight, rust, and drought, yield more than 40 quintals per hectare and have edible oil content exceeding 50 percent. Romanian farmers planted the new varieties on about 30,000 hectares. Hungary also began to shift from Soviet varieties to Romanian and French hybrids, which adapt better to the Hungarian climate and soil.
Production of the three principal oilseeds is estimated to have increased by 5 percent in 1978
(table 15). Linseed, a minor crop, is produced exclusively for seed in the southern countries and is declining. In the northern countries it is harvested as the by-product of flax fiber. The leading linseed producers, Poland and Romania, each harvested about 50,000 tons of linseed. In Hungary, both area and production of linseed show a declining trend because low yields make linseed production unprofitable.
livestock Feed is the Primary Use of Oilseeds
The primary use of oilseeds is to provide protein to livestock; of secondary importance is their use in vegetable oil and margarine. The use of soy protein as a meat substitute is not yet widespread. All EE countries are deficient in protein feed production, but the southern countries are surplus producers of vegetable oil. In the northern countries where rapeseed is the prominent oilseed, both rapeseed meal and oil are blended with other products to minimize the ill effects of erucic acid in food and feed. Vigorous research is conducted to breed varieties with reduced erucic acid content; Czechoslovakia has reported some progress.
Each country of the region imports either protein meal or oilseeds or both. The southern countries export sunflower oil, and Poland, rapeseed oil. Hungary exports sunflowerseed because of inadequate processing capacity (table 8).
EE produced about 1.5 million tons of oilseed meal in 1978 from its 1977 crop, covering about 25 percent of domestic meal consumption (table 11). In addition, approximately 0.5 million tons of oilseed meal were processed from imported seeds, mostly soybeans. The processing capacity of Romania and Yugoslavia exceeds the domestic oilseed supply. Poland exports some rapeseed and imports soybeans.
Oilseed Meal Imports Down in 1978
The total oilmeal supply in 1978-from 1977 production and 1978 trade-is estimated to be 0.5 million tons less than the 1977 supply (table 11). Soybean meal imports from Brazil declined. ·Because of the outbreak of African Swine Fever in Brazil, some EE countries placed an embargo on imports of soybean meal for several months, fearing it to be an eventual transmitter of the disease. Also, Indian peanut meal exports were reduced sharply and apparently these import shortfalls were not compensated from other sources.
Domestic protein feed requirements increased since the hog inventory grew 3 percent during 1978 (table 16). Indications are th:1t less protein meal and more straw pellets treated with urea were fed to cattle. It is also likely that an adequate stock of
8
oilseed meal accumulated from previous years prevented any drastic reduction of protein in mixed feeds for hogs and broilers.
Soybean meal dominates oilseed meal imports, with an annually increasing share. The average annual share of soybean meal imports in 1977 and 1978 approximated 80 percent of the total oilseed meal imports (table 10). The U.S. share in total soybean meal imports during those years was about two-fifths. Brazil and some western European countries, particularly the Federal Republic of Germany (FRG), provided the remainder. The GDR imported 240,000 tons of soybean meal from FRG under special agreement which excludes GDR-FRG trade from the foreign trade restrictions imposed by the European Community. Besides oilseed meals, EE imports fish meal and a lesser quantity of meat meal. Annual fish meal imports average about 400,000 tons. Among the leading suppliersbased on less than full year data-Peru increased and Norway decreased fish meal exports to EE in 1978.
Southern Countries are Self-Sufficient in Vegetable Oil
Vegetable oil consumption is the highest in the principal sunflower growing southern countries. Consumption is growing in the region, especially among the urban population. After increasing its processing capacity in 1978 to 200,000 tons of oil annually, Yugoslavia (an importer in previous years) had a surplus of 10,000-20,000 tons. Hungary is constructing a modern processing plant with a daily capacity of 1,000 tons. When this plant is completed (scheduled in 1980), Hungary's processing capacity will double; however, several of the five plants currently in use will be closed down because they are obsolete and inefficient. Hungary presently exports two-thirds of its sunflower oil production. Romania, the principal exporter of the region, plans to increase output by 14.7 percent in 1979.
United States an Important Source for Protein
The United States exported 1.2 million tons of soybean meal and 0.6 million tons of soybeans to EE in 1978. All EE countries imported soybean meal or soybeans from the United States (table 5). Poland bought two-fifths of the U.S. soybean meal exports to EE and an additional 113,000 tons of cottonseed and linseed meal. Romania and Yugoslavia were the principal importers of soybeans. Czechoslovakia imported 17,000 tons of sunflowerseed, 11,000 tons less than in 1977. Some discrepancy exists between U.S. export data and the data published by the recipient c~untries
(table 10). This results from the varying EE methods for registering trade data, estimated adjustment for transshipments through Western Europe, and shipments attributed to Yugoslavia that are actually destined for Hungary.
Demand for Protein Feed is Growing
The planned increase in livestock production, the expanding mixed feed industry, the emphasis on efficient feeding, and the present modest protein ratio in feed all indicate substantial growth potential for protein feed use in subsequent years. The southern countries plan to divert land from other crops to sunflowerseed and soybeans; Czechoslovakia from potatoes to rapeseed. The production growth, however, will be limited by the availability of irrigable land. On the other hand, the EE governments can set prices and bonuses making oilseed production comparatively more profitable to farmers than com production despite the disparity in yields. A federal government directive in Yugoslavia calls for a 47-percent increase of soybean area and a 10.7-percent increase of sunflower area in 1979. Hungary plans a 4-percent increase in sunflower area. Lack of storage and processing capacity limits expansion in Hungary. Hungary temporarily abandoned past plans for tripling soybean area because with the present low soybean yields and high com yields, the price ratio between soybeans and corn on the international market favors corn production. Poland's plan calls for a 7.8-percent increase in rapeseed production. Late planting and severe winter, however, dimmed harvest prospects in Poland.
Czechoslovakia would like to gradually increase sunflower production in Slovakia up to 40,000 hectares. Officials call for an increase in selfsufficiency level and for improved processing efficiency.
Due to the region's limited capability for increasing domestic production, the growing demand for protein feed will have to be covered by imports. In the short run, however, hard currency shortages pose a constraint on imports, making it unlikely that 1979 imports will surpass 1978 levels. The United States has a good chance to maintain or increase its past share in the region's oilseed meal imports and is expected to continue to be an almost sole supplier of soybeans.
The United States continues to grant CCC credits to eligible EE countries. CCC credits will encourage Poland to import, at current prices, 225,000 tons of oilseed meals and 70,000 tons of soybeans in FY 1979. CCC credits to Hungary are adequate for the purchase of 160,000 tons of soybean meal and to Yugoslavia for the purchase of 73,000 tons of soybeans. It is expected that during the 1979 marketing year EE purchases will significantly exceed the credit limits and that imports may reach 1.4 million tons of soybean meal, based on reports about import intentions of the individual countries. During the 1979 marketing year through February, EE imported 540,000 tons of U.S. soybean meal and 200,000 tons of soybeans. Poland also requested CCC credit for vegetable oil purchases. It is expected that Poland's vegetable oil imports will match last year's volume of 18,000 tons, of which 80 percent was linseed oil. (Tiwmas A. Vankai)
OTHER CROPS
Potatoes
The area planted to potatoes has steadily decreased in this decade and in 1978 was down 4 percent from 1977 (table 14). Production, however, was up 10 percent in 1978, totaling more than 70 million tons (table 15). Poland, Hungary, Czechoslovakia, and the GDR had larger harvests than in the previous year, with Hungary harvesting a record crop. Poland-by far the region's largest potato producer with 66 percent of the totalalmost fulfilled its 1978 planned potato harvest with a 13-percent increase over the 1977 crop. This was good news for the Polish hog industry as potatoes are an important feed item on private farms. Very wet conditions in Poland and the GDR during harvest mean that there are probably losses from potato rot. Other countries reported potatoes to be of good quality.
Indications are that the area planted to potatoes
9
will continue to decline in 1979 as the land is shifted to grain and other crops. Because feed grains remain in short supply in EE, potatoes are likely to remain an important feed item in hog production on private farms and household plots. Per capita consumption of potatoes can be expected to continue its slow decline in the region because of improved diets. The more northern countriesPoland, the GDR, and Czechoslovakia-have the highest per capita potato consumption. Per capita consumption in Poland is close to 170 kilograms yearly and in the GDR, close to 140 kilograms (table 18).
Sugarbeets
Total area planted to sugarbeets in EE in 1978 was down very slightly from the 1977 total (table 14). Sugarbeet area was up by about 4,000 hectares in Yugoslavia and Czechoslovakia, but
was stable or down in the other countries. Production fell 5 percent short of the 1977 record (table 15). In Hungary, the harvest increased by 8 percent over that of 1977, while in Poland it increased by less than 1 percent. All other EE countries produced smaller sugarbeet crops in 1978. In Romania this decrease was 7 percent; in the GDR, 10 percent; and in Czechoslovakia, 12 percent.
Hungary was the 1978 success story in sugarbeet production with a record 4.2 million tons harvested and processed, and a sugar content (at 16.9 percent) that was more than 1 percentage point higher than in 'the previous year. This windfall allowed Hungary to export about 10,000 tons of sugar and to plan to decrease its area planted to sugarbeets by 10,000 hectares in 1979. Czechoslovakia also reported the sugar content of beets to be about 1 percentage point greater in 1978.
Poland-Eastern Europe's largest sugar producer and an exporter of sugar refining technology-fell about 2.5 million tons short of its 1978 sugarbeet production plan. Because of adverse weather conditions throughout the growing and harvesting season in Poland, it is likely that sugar content was low. Romania reported reduced sugar content as well as a drop in its 1978 harvest. Poor weather in the GDR was responsible for a shortfall of almost a million tons under the 1977 record crop.
In Yugoslavia, sugarbeet production declined in spite of a 5 percent increase in producer prices. The reduced harvest was the result of lower yields due to adverse weather. Acreage planted to sugarbeets is expected to increase by 5 percent in Yugoslavia in 1979 and five processing mills are expected to be added to the existing capacity. Yugoslavia is a net importer of sugar, and also one of the world's highest cost producers.
Tobacco
Tobacco production in EE is estimated to have fallen to its lowest level since 1971, with a total of only 331,000 tons for the region (table 15). This is 7 percent below the 1977 harvest. Poland and Yugoslavia were responsible for the decline as bad weather hampered planting, growth, and drying. Area planted to tobacco was down by over 10 percent in both countries. Harvesting and drying were delayed at least 21 days in Poland.
Bulgaria-by far the region's largest tobacco producer-recorded a 7 percent increase in the 1978 harvest on a slightly increased area. Oriental tobacco accounts for over 85 percent of Bulgaria's crop, and flue-cured and burley tobaccos account for approximately 10 and 2 percent, respectively. Bulgaria leads Eastern Europe in per capita production of cigarettes and is the major supplier of tobacco and cigarettes to the CEMA countries.
Poland, Yugoslavia, and Czechoslovakia continued to import tobacco from the United States in 1978, but imports were down 13 percent for the three. Yugoslavia raised producer prices for tobacco by 15 to 19 percent in 1978 and Poland raised its producer price for tobacco leaves and seeds for the 1979 crop by an average of 25 percent. It is hoped that these price increases will help to reverse the downward trend in planted area since 1976.
Fruits and Vegetables
Poor weather in 1978 was especially hard on fruit and vegetable production. Freezing temperatures in late May as far south as Yugoslavia and Bulgaria seriously hurt vegetables and fruit trees in the blossom stage. Hail storms damaged fruit and vegetables in Bulgaria in late June and early July, and drought affected production through summer in Yugoslavia and Romania.
Production of many fruits and vegetables was below normal in the northern countries. In Czechoslovakia, total vegetable production was down 19 percent and fruit and grape harvests were approximately 6 percent lower than in 1977. Cucumbers and tomatoes were the vegetables which showed the greatest production declines and shortages of these vegetables appeared in the markets. Apple production was reported to be slightly below normal, whereas pear production was off sharply.
Romania, Hungary, and Yugoslavia also recorded poor fruit and vegetable harvests. Grape production in Romania was reported to be down by about 10 percent and sugar content-important in the manufacture of wines-was also poor. Peppers, cucumbers, tomatoes, peaches, and cherries were all less than planned in Hungary. The processi':lg of tomatoes and pepper preserves-a Hungarian export item-was expected to be down by as much as 50 percent. This is in contrast to Hungary's 1977 vegetable production which exceeded processing capacity.
Yugoslavia's fruit and grape harvest fell about · 17 percent from the previous year. A 16-percent
decline in plum production accounted for much of the decline. Dried prunes are exported by Yugoslavia to the USSR under a trade agreement to supply from 8-12,000 tons of prunes annually until 1980. With production of prunes estimated to be down almost 40 percent from 1977, exports of prunes are expected to drop to 10,000 tons, a 35-percent decline.
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Hay and Silage
Because of its feed grain deficit in recent years, EE is giving increased emphasis to green fodder, silage, and hay production in order to bring cattle feeding capabilities in line with cattle numbers. In
this respect, 1978 was disappointing. Poland, Czechoslovakia, and the GDR-the chief EE importers of feed grains-all reported sharply decreased green fodder and hay crops. Corn silage production fell by more than 40 percent in the GDR. Green fodder harvests and silage reserves were lower in 1978 than in 1977 in Poland as that country underwent one of its most severe winters on recent record. Poland's meadow hay production decreased by 6 percent and was reported to be of poor quality due to incessant rainfall during harvest. Czechoslovakia recorded a 24 percent decline in both corn silage and hay production.
Corn silage and forage grass production for green fodder are growing in importance in EE, as closer attention is paid to getting optimal mixes of feed grains and green fodder and/ or hay so as to reduce grain consumption per unit of output. In Poland, close to 400,000 hectares of corn were planted for use as silage corn in 1978, whereas in 1970 only 156,000 hectares were planted. All but 10 percent of this area was on state farms, since Polish private farms still lack the proper harvesting and storage equipment to prepare silage. On state
farms in Poland and elsewhere in EE harvesting is done with field forage harvesters and dump trailers, with silage storage done mostly in pit silos. Spoilage continues to be a problem. In the GDR, for example, such losses are reported to be from 20-30 percent for silage. In Poland, the losses for bulk fodder during harvesting and storage are reported to be 30 to 40 percent.
Strong emphasis is now being put on full utilization of heretofore neglected meadows and pastureland in EE. Pastureland management is being stressed and artificial fertilizers are being applied in some areas. Meadow and pastureland area has differing significance in the various EE countries, ranging from 14 percent of all agricultural land in Hungary to 44 percent in Yugoslavia. In Poland, Czechoslovakia, and the GDR meadows and pasturelands make up 21, 25, and 20 percent of total agricultural land, respectively. Often small areas of pastureland are used by state or collective farm workers to supplement their private fodder supplies since the large farms cannot adequately use these areas. (Allen A. Terhaar)
LIVESTOCK SECTOR CONTINUES SLOW GROWTH
Herd rebuilding, which began in 1977 following substantial reductions in animal inventories in 1976, continued through 1978 (table 16). Cattle numbers in most EE countries were still below January 1975 levels. Hog numbers tended to be recovering faster than cattle numbers. Hog, sheep, and poultry inventories were all higher for the region as a whole. Poland, Hungary, and Bulgaria, however, still had fewer hogs than the record numbers of 1975 and 1976. Poultry inventories continued their steady upward trend.
Production of principal livestock products in EE was up, though not to the expected plan levels in most cases (table 17). Poultry production was strongly upward, and pork, egg and milk production registered gains in all countries. The increase in pork output, while beef production in most EE countries was stagnating or dropping, was influenced by the continued use of a high percentage of homegrown feed and fodder for pig raising, the faster reproduction of pigs, and a strong tradition of pork consumption in many EE countries.Poultry consumption continues its steady upward trend in all EE countries despite higher retail prices for poultry meat compared with pork or beef. Progress is being made in larger scale and more efficient production of broilers and eggs. In turn, this has led to greater demand for highprotein mixed feed for poultry at a time when EE
11
country payment balances are suffering from the high cost of agricultural imports.
Part of this year's shortfall in feed corn is expected to be made up through the use of relatively abundant poor quality food grains and through expanded use of such feeds as treated straw and straw pellets. EE countries, especially the GDR, Poland, Czechoslovakia, and Hungary, where livestock raising is done increasingly in large specialized operations, continue to emphasize the development of mixed-feed producing capacity. In the GDR there are 92 plants that produce mixed feed. Of total GDR mixed feed production, 31 percent is pelletized. Other EE countries view the GDR mixed feed industry as a model. If they are to continue to develop their mixed feed capacity, however, these countries must produce more of high quality feeds-or continue to make up the difference with imports.
1978 Plans Called for Slower Livestock Growth
EE plans generally called for slower growth of livestock numbers in 1978 than in previous years in order to bring livestock-feed ratios more into line with domestic production. Increased meat production was not to come through larger animal inventories. Instead, efforts were to concentrate on
attaining heavier slaughter weights and greater feeding efficiency. Poland and Romania were the notable exceptions, with the former calling for a 7.6-percent rise in cattle numbers and the latter an increase of 12.6 percent over 1977. Both countries, however, fell far short of their ambitious plans. In contrast, the GDR planned to maintain constant !ivestock numbers and Hungary, a modest Increase.
Plans to increase slaughter weights and feed efficiencies were not entirely successful. Consequently, average slaughter weights declined in some countries. The need to keep domestic meat consumption at least at previous levels and to maintain exports of quality meats caused these negative results. Hungary, for example, reported lower slaughter weights for cattle, and accelerated hog slaughter in the GDR led to lower average weights.
Pricing System-Troublesome
Producer prices for livestock and retail prices for meat in EE countries continue to be fixed by government decree and, therefore, tend to be highly inflexible. In the cases of the GDR and Poland, retail prices for meat have not changed in more than 10 years. Hungary and Yugoslavia are notable exceptions as they try to bring consumer prices more in line with actual costs of production. Yet even in those countries meat production remains highly subsidized.
Fixed producer prices for livestock prove highly profitable at times (usually immediately after they are adjusted upward), but become unattractive when the costs of feed or other inputs rise. Then, private farmers or workers with household plots no longer find it economically attractive to raise livestock. The need to import feed for hard currency has made the price question even more complicated. There is a reluctance to offer the necessary feed and concentrates to the private sector at the same subsidized prices they are offered to the socialized sector. Thus, in Poland, for example, there was an overall rise in livestock numbers and in state purchases in 1978, yet private farms showed declines in animal production. The gains came solely from the highly subsidized socialized sector. Most EE governments gave large producer price rises in 1978-or planned such action in 1979-in order to make animal husbandry more attractive.
EE Reluctant Meat Importer
EE continued to be a large importer of feed and a reluctant importer of livestock and meat products in 1978. Meat that was imported tended to be of low quality and for low prices. In spite of tight
12
domestic supplies, Poland decided not to import any meat or animal fats in 1978, whereas 138,000 tons were imported the previous year. Yugoslavia imported an estimated 30,000 tons of fresh beef and veal in 1978, up 47 percent from 1977 levels. Australia was the primary supplier.
Imports of dairy breeding stock from the United States fell from 6,188 animals in 1977 to 1,625 in 1978. More beef breeding animals were imported, however, with a total of 233 animals compared with only 89 in 1977. The largest importers were Yugoslavia, Hungary, the GDR, and Bulgaria. Imports of beef and dairy breeding animals reflect the current concern in EE countries for upgrading domestic stock and for expanding the use of singlepurpose (only beef or only dairy) breeds in their livestock sectors. Chicken breeding stock worth $471,000 was also imported from the United States in 1978, whereas none was imported in 1977. Close to 3.6 million cattle hides were imported from the United States in 1978, up 7 percent from levels of the previous year.
Livestock Situation in Poland Remains Problematic
Despite plans for major increases in livestock production in 1978, this sector continued to be a serious problem for the Polish economy. The government strongly emphasized expanding beef production, nevertheless it declined in 1978 by more than 1 percent. Total pork production was reported to have risen as much as 8 percent in 1978 over the disappointing results of 1977, but pork production in the private sector increased at a much slower rate than in the socialized sector. Poultry production was the only truly bright spot, with steady gains over previous years.
Problems of low profitability, low feed efficiency, poor allocation of resources, and subsidization all continued to interfere with performance in the livestock sector. The January 1979 livestock census showed a rise in overall livestock numbers, with cattle up 0.4 percent, pigs up 2.5 percent, and sheep up 3 percent over year-earlier figures. All of this increase, however, took place on state and collective farms. On private farms the number of cattle decreased by 0.6 percent and sheep by 0.9 percent. Hog numbers on private farms increased by 1.5 percent, but the number of piglets decreased by 4 percent. Since the private sector in Poland holds over 75 percent of cattle and hogs and 68 percent of sheep, and provides much of its own fodder, this indicated that additional incentives for livestock production had to be provided to the private sector. In June 1978, producer prices for hogs were raised by 8.8 percent and for cattle by 16.8 percent, with premium prices given for heavier weight animals. Effective September 1, 1978, the
producer price for milk was raised almost 10 percent.
The price raises were introduced to improve the profitability of livestock production in the private sector. They came, however, at the cost of an everwidening gap between producer and retail prices for animal products, thus enlarging the state subsidy to agriculture, which was 61 percent higher than in 1975. This subsidy is now estimated at more than 270 billion zloties ($8.2 billion) annually-or about 40 percent of the total sales value of goods and services of the food industry.
Despite official pronouncements that private farming is socially acceptable and every means of support should be given to "modern and efficient" private farmers, farmers still experience wide-ranging difficulties in acquiring needed inputs such as high protein feeds, equipment, and building materials. At the same time, state and collective farms are often found to be "wasting" high-priced imported feed through their low feeding efficiency. Since such farms are guaranteed feed supplies at heavily subsidized rates, they tend to overuse highprotein feeds in order to inflate their own production results. The persistence of such problems suggests that Poland's livestock production goals will not be reached simply by better weather conditions or even larger feed imports.
A network of "commercial" meat stores was set up in 1977 to sell meat at prices as much as 100 percent higher than those in regular state retail outlets. It was thought that higher prices could be legitimized by assuring greater availability and wider selection in such stores. In 1978 the network of "commercial" stores expanded from 300 to around 450 and was reported to be retailing onethird of all high-quality meats and cold cuts in the country. Waiting lines and short supplies have, however, become the norm for those stores as well. Despite the open admission that heavily subsidized agricultural production is critically undermining the national budget, there is no indication that the Polish government intends to attempt another across-the-board raise in retail prices at this time. It is estimated that personal income in Poland in 1978 increased 2.5 times as fast as the increase in meat supplies.
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Feed-Livestock Balance Sought in 1 979 Plans
Since a feed-livestock imbalance persists in Eastern Europe, the 1979 annual plans again call for more modest gains in livestock production than in crop production. Total livestock numbers in the GDR and Czechoslovakia are planned to stabilize. Cattle numbers in Poland are to rise 2.2 percent and hog numbers only 0.5 percent. Hungary planned steady hog numbers and an increase of 0.8 percent for cattle. Yugoslavia is expected to show a continuing decline in cattle numbers and a continuing rise in hog numbers. Romania, on the other hand, is the only country which has decided to push for large gains in livestock numbers and plans a 3.5- and 7.3-percent growth in cattle and hogs, respectively. Since these percentages are given with respect to the 1978 planned growth targets (which were not reached), the Romanian plan is probably unrealistic even given a good year.
There are already indications that 1979 could see a reduction in animal inventories instead of the projected slight increases. The northern countries had very severe winter weather and it is suspected that there were stock losses in Poland and the GDR. In Poland during December 1978 (and prior to the very severe weather) 3.5 percent fewer sows were bred than during the previous December. The harsh weather in Poland, combined with the seeming disinterest in animal breeding despite producer price increases, does not bode well for that country's livestock sector.
Stress is again being put on improving feed efficiencies, reducing mortality, and marketing at optimal weights rather than on increasing livestock numbers in order to achieve greater meat production with reduced feed imports. Given the inflexibility of livestock production in EE, these tend to be long-run solutions and cannot be expected to solve the problem of feed imports immediately. Continued emphasis on raising living standards through higher consumption of meat, dairy, and poultry products, while attempting to export high quality meat and while holding retail prices far below production costs, means that the livestock sector will continue to be strained to the limit. (Allen A. Terhaar)
Table 1--Principal plan indicators, Eastern Europe, 1976-80 plan 1), 1978 actual
Item :Bulgaria Czecho- : GDR Hungary Poland Romania Yugo-slovakia; slavia
Percent increase
National Income 1976-80 plan 45 27-29 27-29 30-32 40-42 69 40-44
1978 actual 6 4.3 4 4 2.8 7.5 7 1979 plan 7 4.3 4.3 3-4 2.8 8.8 6
Industrial Pro-duct ion
1976-80 plan 55 32-34 34 33-35 48-50 72 47 1978 actual 7 4.8 5.4 5.2 NA 8.4 9 1979 plan 7.8 4.5 5.5 4 4.9 11.3 7
Agricultural Production
1976-80 plan 25 14-15 15 16-18 16-19 39-54 22 1978 actual 5 1.5 2.5 2 4.2 2.5 -5 1979 plan 7 3.8 1.3 3-3.5 3.9-4.8 5.1-5.6 5
Capital Invest-ment
1976-80 plan 31 36-38 31 32 37-40 83 47 1978 actual 3.6 NA 3 4 0.2 16.2 NA 1979 plan 5.2 NA 5.6 0 -11.5 9.1 7
Real Income 1976-80 plan 20-25 23-25 20-22 18-20 16-18 32 18-19
1978 actual NA 3.4 NA 3 0.4 NA NA 1979 plan 3.2 NA NA 2 1.1-1.4 1.5 2
Jj As defined in USDA, ESCS, FAER No. 153, September 1978.
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Table 2--Total and agricultural trade, Eastern Europe, 1974-78
Item :Bulgaria : Czecho- GDR Hungary Poland Romania Yugo- Total ;slovakia slavia
1/ Thousand pieces. 2! Converted from metric tons to pieces at 20 kilograms per piece. Jl Includes poultry meat. "§; Raw value. From the International Sugar Organization.
Sources: Statistical yearbooks of respective countries, CEMA yearbook, FAO Trade book, Statistical yearbooks of trading partners •
29
Table g--Eastern Europe: Unit prices of U.S. exports in selected commodities, 1971-78
. . : . · Czecho- • Yugo-Year : Imports :Bulgar~a : 1 k" : GDR : Hungary : Poland : Romania : : Total :s ova ~a : slavia
:
bOOO tons :
1975 : Oilseed meal : 218 652 875 505 948 268 150 3,616 Soybean meal : 178 (512) (725) (417) (539) (268) (139) (2' 778) United States exports 11 : 24 305 298 196 228 13 13 1,077 Imports from the United States II : NA 345 NA 216 193 NA 50 NA
Soybean meal : 220 (588) (720) 498 567 320 247 (3,160) United States exports 11 : 11 475 230 71 392 98 182 1,459 Imports from the United States II : NA 338 NA 123 378 NA 109 NA
1977 : Oilseed meal : 330 (633) (898) (594) 1,551 (230) 211 (4,047) Soybean meal : (260) ( 489) (800) (550) 756 (230) 211 (3,296) United States exports ll : 0 341 414 94 178 47 109 1,183 Imports from the United States II : NA 258 NA 117 189 NA 86 NA
~/ Data include only cows milk for consumption in Romania and Yugoslavia for the entire series, and in Hungary since 1975. In the remaining countries data include milk sucked by calves. In the GDR, milk production is given in 3.5 percent fat equivalent. One liter is equal to 1.031 kilograms.
44
Table 18--Per capita consumption of selected foods, Eastern Europe l/, 1971-//
1/ Central Intelligence Agency data, (in 1977 $). Il Includes self-employed farmers.
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