293. Telegram From the Embassy in the Soviet Union to the Department of State1

11164. Dept. pass USDA/FAS for Saylor, Vovotny; USICA. Subject: Effectiveness of U.S. Grain Embargo on the USSR: Mid-July Assessment.

1. (C-entire text).

2. Although the grain embargo has been less effective than originally hoped for in terms of limiting total Soviet grain imports, it has nevertheless been costly to the Soviets. It certainly compounded the [Page 860] problems the Soviets were already suffering from the small grain harvest in 1979. Instead of importing the 36 to 37 million metric tons (MMT) of grain the Soviets had planned in 1979/80, they were able to buy only an estimated 31.2 MMT. Moreover, the Soviets paid a considerably higher price for the non-U.S. grain and may well have gotten lower quality grain. We have heard reports that the switch in origin of certain imported grain caused shortages and problems in formulating animal rations, particularly for poultry.

3. Based on published statistics, it appears that the Soviets have been able to maintain cattle and poultry numbers in spite of the embargo, but they have been forced to reduce hog numbers due to limited feed supplies. The rate of build-up in Soviet animal numbers has also definitely been slowed, affecting future production potential.

4. It now seems clear that the crop failure in 1979, combined with the embargo has resulted in a serious setback to Brezhnev’s plans to improve the availability of meat and other animal products to Soviet consumers. Not only will meat production fall in the short-term, but we think the Soviets will have no chance of meeting planned production goals for sometime into the future. In effect, this means that per capita meat consumption, already at a low 57 kilograms (Poland is close to 82 kg), will not likely increase for sometime to come. Also during 1979/80, the Soviets were forced to draw down their strategic grain reserves to a level where we think it is causing considerable concern. Based on current crop prospects, plus estimated grain import availabilities in 1980/81, we see little, if any, chance of rebuilding these reserves without a further cut in meat production in 1981.

5. Recently there have been many reports about food shortages in the Soviet Union, mainly meat and dairy products. We believe such shortages are in part related to the U.S. embargo on grains sales. Although there are reports suggesting that current shortages are due to the Soviets stockpiling meat for the Olympics, Soviet published statistics show that meat production has been declining steadily since the first of the year. Cattle and hog slaughter weights are declining due to the tight feed situation. Partly as a result, total meat output in May was 5.5 percent below the same month a year ago. We feel official statistics will show that meat output in June will be as much as 8 percent below a year earlier. State procurements of meat have been running at an even lower level than production.

6. There is no question that the availability of dairy products is also less, with the embargo aggravating an already bad situation. Milk production in the Soviet Union has been trending downward for the past three years, mainly as a result of the difficult feed situation. Milk output so far this year has been running 5 percent under a year ago, and government procurements 6 percent under. The butter shortage is [Page 861] probably the most acute problem as production has been sliding for the past 3 years. So far this year butter production is down another 8 percent. The Soviets have been attempting to shift limited milk supplies into cheese production probably as a protein food in lieu of the meat shortage.

  1. Source: Carter Library, National Security Affairs, Staff Material, International Economics, Tim Deal File, Box 14, USSR: Grain: 7/80. Confidential; Immediate. Sent for information to Belgrade, Berlin, Brussels, Bucharest, Budapest, Prague, Sofia, Warsaw, and USNATO. Printed from a copy that indicates the original was received in the White House Situation Room.