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Lo 213.3;IIV . :7. v! z: r J féés’ - ; iii" . . . ‘ 9 A a u“- .s....... .1”)! i s . y in F i: ; .38 ii { 0 t" I357: nrnallv £10.? :I I. . ‘btl’l.lval:lvhn.u ; f.v|1)1:'1ul.! 'Oivttlblt\ pl: 11“ u‘ O...vll‘.t...lnv- .ID DIVA .~:,oo"o!.h||'-‘ .. , 'ol'.l.otlsatib". IoIfl..lIll ‘ ,0 ngFawnfi F. 34. MICHIGAN STATE now III IIIIIII IIIIIIIIIIIIIIII 293 00891 7159 II II IIIII This is to certify that the dissertation entitled A COMPARATIVE STUDY OF THE LINKAGES IN THE DEVELOPMENT AND USE OF SELECTED AGRICULTURAL AND ENERGY RESOURCES OF THE USSR AND THE USA presented by Abiodun O. Oriyomi has been accepted towards fulfillment of the requirements for DOCTOR OF PHILOSOPHY degreein RESOURCE DEVELOPMENT Major professor Date My 9, 1990 MS U Lt an Affirmative Action/Equal Opportunity Institution 042771 LIBRARY Michigan State I Untverslty PLACE IN RETURN BOX to remove this checkout from your record. TO AVOID FINES return on or before date due. ————_—____—__..—_—_———_——fi DATE DUE DATE DUE DATE DUE ‘7 ——I __E____J fiI—T—W MSU Is An Attirmetive ActiorVEquel Opportunity lnstttmion chfl-ot A COMPARATIVE STUDY OF THE LINKAGES IN THE DEVELOPMENT AND USE OF SELECTED AGRICULTURAL AND ENERGY RESOURCES OF THE USSR AND THE USA BY Abiodun O. Oriyomi A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Resource Development 1990 (‘4 7" ,3 M" "'. ABSTRACT A COMPARATIVE STUDY OF THE LINKAGES IN THE DEVELOPMENT AND USE OF SELECTED AGRICULTURAL AND ENERGY RESOURCES OF THE USSR AND THE USA BY Abiodun O. Oriyomi The change from human and animal energy use to petroleum, natural gas, coal and electricity energy sources in agriculture has been a phenomenon in both the USSR and the USA. This study was designed to explore this change in several dimensions. In so far as ‘ possible, observations from the literature and personal experiences were advanced to explain the similarities and differences in the use of energy in the crop and livestock sectors of these two countries. . Findings of this study show that the change from human and animal energy to other sources has been spectacular in both countries. About 20% of the labor force in the USSR (2% in the 0.8.) is in agriculture, the USSR in recent years has increasingly used certain of its energy resources in agriculture. Both countries use large amounts of’ natural gas for nitrogen fertilizer Abiodum O. Oriyomi production. The increase in use of energy in most agricultural sectors in the U.S. has reached a peak, but there are still opportunities to increase the use of energy in the USSR. This is true in fertilizers and in more modern fleets of tractors, combines and trucks. It does appear that increases in energy use in agriculture in the USSR is on a trajectory that may bring it close to rates used in agriculture yet this century if certain obstacles and impediments can be removed. Data for more detailed analyses on this topic was not available. More specific data on the machinery inventory in terms of age, horsepower, size, and energy consumption would have been very helpful. As more openness occurs, it may be possible to gain information about why a large percentage of the labor force remains in agriculture, why more fertilizer production is not resulting in significant increases in crop production, and what kinds of obstacles remain in the delivery systems in getting energy to the farms in the USSR. These are truly exciting research opportunities that may become available in the future. DEDICATION To my parents, Mrs. Rachael Simisola Oriyomi and Deacon Abraham Oladunwo Oriyomi who gave me the aspiration to succeed and glorify the name Oriyomi. ACKNOWLEDGMENTS I wish to express my gratitude to Dr. Milton H. Steinmueller for serving as my guidance committee chairman and thesis advisor. He willingly devoted a generous portion of both professional and personal time to discussions concerning this research, for which I am most appreciative. His patience, encouragement, and valuable assistance in directing the course of my study are gratefully acknowledged. I also wish to thank Dr. Darrell Fienup, Dr. Paul Nickel, Dr. George Axinn, and Dr. Daniel Bronstein for serving on my guidance committee and reviewing this thesis, as well as for the many inspiring classes which they provided me as a student. I am truly grateful. I wish to thank my typist, Ms. Nancy Heath, for her conscientious and dedicated preparation of this manuscript. I thank my sisters, my brother, Mrs. Bamgboye and Mr. Aderinola Adewumi for their interest and support of my goals and aspirations. The patience and encouragement shown by my parents through my years away from home eased the burden on my mind. We all earned this. I love you all. iii My work could not have been completed without the selfless support and encouragement from my numerous friends. To you all, I say thanks. Most of all, I give ceaseless praise and thanks to my Creator who has made everything possible by the breath of life. Thank you, God. iv Table of Contents Page LIST OF TABLES. ................................... viii LIST OF FIGURES .................................... xii CHAPTER I . INTRODUCTION ................................. 1 Problem Statement and Study Objectives ..... 3 Brief Literary Precedences and Need for Study ......... . ............... . ...... 5 Research Question .......................... 9 Method of Approach ........................ 10 Organization of the Research Topic ........ 11 Scope and Delimitation .................... 13 II. NATURE OF THE ECONOMIC SYSTEMS .............. 17 General Economic Background. .............. 17 The USSR. 0 0 0 ..... 0 000000 0 00000000000000 0 17 The USA. 0 ....... 0 0 0 0 0 0 0 0 0000000000000000 36 National Goals of the USSR and the USA With Regard to Agriculture and Energy Resources... ................. 49 Electric Output ......... . ............... 56 01100000000000.0000000000 000000000000000 56 Gas00000000 00 0.000000000000000 000000000 57 Coal Industry. ............ .............. 57 Summary--Research Question 1. ........... .. 58 III. RESOURCE DEVELOPMENT.... ....... . ............ 61 Agricultural Resources .................. .. 61 The USSR ................................ 61 The USA00000000. 00000000000000000000 77 Comparing the USA and USSR.. . ........... 89 Chapter Page Fuel and Energy Resources ................ 100 The USSR ............................... 100 Oil Resources .......................... 106 Natural Gas Resources.... .............. 108 Coal Reserves.... ...................... 108 Hydropower Resources ................... 110 The USA..... ............................. 110 011 Resources.............. ............ 112 Natural Gas ....... . .................... 113 Coal. .......................... ....... 114 Nuclear ............................... 115 Comparing the USA and the USSR......... 115 Research and Development. . .. ......... 120 Summary--Research Question 2....... ...... 127 IV. ENERGY UTILIZATION IN AGRICULTURE .......... 130 The USA........................ .......... 132 Energy Use by Fuel.... ... . ............ 134 Crop Production—-Irrigation ........ .... 135 Fertilizer Production and Usage. .......145 Livestock Production....... ............ 157 The USSR........................... ...... 162 Crop Production--Irrigation ............ 163 Energy, Fertilizer, and Grain Production................... ........ 165 Farm Machines: Equipment...... ....... . 177 Livestock Production......... .......... 184 Transportation Constraints....... ..... .190 Summary--Research Question 3....... ...... 195 V. PROSPECTS FOR THE FUTURE ................... 198 Factors Affecting the Future............. 200 Energy and Energy Prices...... ........ .204 Agricultural Production and Harvest Outcomes........... .. ...... . 205 Plausible Forecasts and Propositions..... 208 Forecasting Difficulties...............213 Summary--Research Question 4.............215 VI. GENERAL SUMMARY AND CONCLUSION WITH SUGGESTED FUTURE RESEARCH NEEDS............ 217 General Summary and Conclusions.......... 217 Future Research Needs..... ............... 223 vi Chapter Page APPENDICES I 0 O O O 0 0 O 0 0 0 ...... O 0 0 0 O 0 0 000000000000000 226 A. FACTS AND FIGURES--APPENDIX TO CIIIAPTER II 0 O 0 O O 0 0 O O 0 0 O 0 0 O 0 O O 0 0 0 0000000000 227 B. STATISTICAL APPENDIX TO CHAPTER IV ......... 233 BIBLIOGRAPHY . . ..................................... 238 vii LIST OF TABLES Table Page 1. Basic Industrial and Agricultural Production Figures Between 1913—1926 .......... 21 2. First Five-Year Plan 1928-1932 ................ 27 3. Plan Fulfillment—-Important Components ........ 28 4. Sectoral Distribution of the Labor Force in the State Sector, 1940-87 ..................... 30 5. Percentage Growth Comparisons for Key Sectors of the Economy (USA and USSR)..... ............ 31 6. Indicators of Agricultural Development, USA 1920—1987...OOOOOOOOOOOOOOOOOOOOOO ..... 0.000.044 7. Indices of Production in the United States: 1970-1980 coo-00000000000000.0000 ooooooooooooo 4.8 8. Basic Economic Growth Indicators 1976-85 ...... 51 9. Comparative Indices of USSR and USA Industrial Production............ ............. 52 10. Gross Domestic Product........................53 11. World Balance of Payment on Current Accounts................... ........ ........... 54 12. Collective Farms Compared with State Farms....64 13. Share of Total Investment and Percentage Labor Force in Agriculture in USSR.... ........ 67 14. USA and USSR: Comparison of Selected Crop Production 1965-1985............ ......... 70 15. Livestock Number and Animal Units, USSR ....... 75 viii Table 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. Page Productions of Selected Livestock Products USSR ............... . ................. 76 Productions of Selected Livestock Products by Sector, USSR—-1985 ................ 92 USA and USSR Comparison of Selected Livestock Production .......................... 93 Degree of Mechanization of Livestock Operations in the State and Collective Farms of the USSR 1970-1985 ................... 94 Average Annual Growth Rate of Energy Production and Consumption of Net Trade in the Soviet Union for Selected Periods ..... 101 Energy Production (USSR)--1970-1986 .......... 103 Percentage Change in the Mix of Primary Energy (1960-1987) ........... . ............... 104 USA Energy Production Figures 1970-1986 ...... 117 Number of Research Workers in the USSR ....... 121 U.S. Irrigration Trends from 1900-1988.. ..... 137 Irrigated Acreage with On-Farm Pumped ........... Water (in millions Acres) 1974-1983.. ........ 138 Total and Per Acre Energy Use for On-Farm Pumped Irrigation Water (1974-1983)..........141 Changes in Farm Energy Prices—-USA--1974- 1983.00.00.000000000000 0000000000000 O 00000000 143 Production of Nitrogen Fertilizer by Type.... ......... . ........ . .......... . ....... 147 Total Energy Requirements for Production of Fertilizers in the United States..... ..... 150 Fertilizer Mode of Transportation, and Estimated Average Transport Mileage and Total Energy Consumption.............. ....... 152 ix Table Page 32. Field Application Energy Requirements ........ 153 33. Estimated Energy Used in Fertilizer Application on Selected U.S. Field Crops ........................................ 154 34. U.S. Average Energy Use per 1,000 Birds ...... 161 35. USSR Irrigation Trends from 1970-1988 ........ 168 36. Production and Deliveries of Mineral Fertilizers to Agriculture, USSR ............. 168 37. Comparison of Chemical Fertilizer Production ..... ............ . ................ 173 38. Compariison of Chemical Fertilizer Consumption, Nutrient Content ................ 174 39. Indicators of Inputs and Productivity in ' Soviet Agriculture, 1960-1987 ................ 179 40. Selected Farm Machinery and Equipment and Tractor Horsepower: USSR 1946-1986.. ........ 181 41. Selected Farm Machinery and Equipment and Tractor--United States.......... ......... 182 42. Average Number of Tractors and Tractor Horsepower in Livestock Production: USSR 1985-198700000000000000 ccccc coo. ........ 186 43. Average NUmber of Tractors and Tractor Horsepower in Livestock Production: USA 1985-1987 0 ccccc o o o o o o oooooooooooooooooooo 187 44. Agriculture Energy Consumption in the USSR........... ...... . ..... . ..... . ....... 191 45. USSR Primary Transportation of Petroleum PrOdUCts in1981.00.00.000000000000.0.0.00...194 B-l Acreage Irrigated with On-Farm Pumped Water........................ ......... 234 Table Page Total Energy Expenditures and Annual Percentage Change for On-Farm Pumped Irrigation Water ............................. 235 Mineral Fertilizer Delivered to Agriculture from 1964-1980.. ................. 236 Fertilize Applied for Hectare of Sown Land from 1964 to 1980.......... ............. 237 xi Figure 10. 11. 12. 13. LIST OF FIGURES Map of the USSR..... .......................... 18 USSR Periodic Changes of Economic Production. ....... ............... ............. 33 Map of the Continental USa.... ................ 37 Distribution of Employment in USA and USSR 00000000 0.0.0.000...0...00 000000000000 66 Comparative Yield in Wheat Production in the USSR, USA and Canada......... ...... . ...... 69 Recent Inventories in Cattle and Hog in the USA and USSR.... ..... . ......... .. ......... 91 Crude Oil Production in USSR ................. 107 Expansion of Natural Gas Production in the USSR... ................... . ........... 109 Trends of Coal Production in the USSR ........ 111 Comparison of Natural Gas Production in the USSR and USA...... ..... ....... ........ 118 USA Fertilizer Use Per Acre Increased in the 1970's But Now Levelling Off ............. 157 Use of Energy in U.S. Livestock Production Processes............. ............ 158 Percentage Distribution of Total Energy Used in Livestock Production in the U.S..00.00.00..0.000.0.0.00.0000.00.0. 0000000 159 xii CHAPTER I INTRODUCTION This study is concerned with the question of providing a wide-ranging survey of the past and present situation of the agriculture and energy sectors of the economies of the United States of America (USA) and the Union of Soviet Socialist Republics (USSR). No pretense is made of constructing a complete picture of either the entire Soviet economy or that of the United States. Rather, the concern is primarily looking into the development1 process as related to the agricultural and energy resources,2 and within this process, to focus on the linkages in the development and use of some selective 1As a .normative concept, "development" implies choices about goals. It is often used interchangeably with the concept of progress and growth. 2 According to Randall (Alan. Randall, "Resource Economics," An Economic Approach to Natural Resource and Environmental PoIicy (2nd ed.) (Columbus, Ohio: (Grid Publishing Inc., 1986), a resource is something that is useful and valuable in the condition in which we find it. In its raw or unmodified state, it may be an input into the process of providing something of value, or it may enter consumption process directly and thus be valued as an amenity. agricultural and energy resources of the USSR and the USA. The current pictures of the U.S. and Soviet economies are one of economies that have reached their present position by driving ahead fairly steadily in their distinctive ways. Each national system is at least in some respects, peculiarly distinctive and unlike any other. Each has achieved some combinations of results including those both favorable and unfavorable. Yet Soviet economic performance is not satisfactory in the eyes of the Soviet Authorities, nor is it impressive in comparison with the economic performance of other successful countries, such as the USA. This study will first present economic-historical trends of both economies of the USA and the USSR with regard to their energy and agricultural sectors. Second, the study will probe into the use of selective energy resources in agricultural development and their respective linkages in the development of both economies with emphasis on the Soviet experience, modified where appropriate by the effect of recent occurrences in the Soviet Union, such as "Perestroika," which, on the whole, has brought only minimal improvements thus far. By trying to evaluate the economic systems of the USSR and the USA by isolating the performances of the agriculture and energy sectors, the number of observed unit of analysis are ordinarily too small for the application of statistical analytical methods and also, many of the factors at play are difficult to quantify. Especially in the Soviet Union, it has been shown that performance, itself, is not a clear-cut quantifiable notion.l Problem Statement and Study Objectives It is the task of the field of economics usually called "Comparative Economic Systems" to describe how national systems differ and to explain how and why these differences come to be. Such studies seek to reveal why one system has produced one set of results and another a different set. It attempts to speculate upon how each_ system might be altered, perhaps by making the system more like or less like some other, so as to produce a somewhat more favorable combination of results than those already achieved.2 It also tries to indicate how alterations, if made, may create a less favorable outcome than that presently enjoyed. 1The reader is advised to treat the tables and Inumbers used throughout this study as indicators of ‘trends; for all other purposes, they are best considered approximations and used with caution. 2M. C. Schnitzer and J. N. Nordyke, Comparative laconomic Systems (Chicago: Southwestern Publishing Co., 1983), p. 3. One thing stands clear though, the USA is an economic power and giant in a true sense of the words, much as the Soviet also stand out in an enclave of its own. The U.S. advantage in the past and present has always been in the matter of agriculture. Industry and its growth have shown to be fairly tolerant as to forms of organization. This study is a probe into the imbalances that exist in the past and present development and use of resources in the agricultural and energy sectors of the economies of the USA and the USSR, spanning the time mostly between 1960 and the current period. There is numerous literature attesting to the existence of a number of disparities between the development and use of the agricultural and energy resources of the USA and USSR. Particularly in these two divergent socioeconomic systems, one finds significant differences in the levels of development attained by these principal economies. The energy and agricultural sectors have been chosen for a comparative study because of the significant roles of both sectors in the past and present development of both countries. Primarily, all other developmental efforts and achievements of various economic goals in both countries (USSR and USA) have been related directly or indirectly to the progress made in these two fundamental sectors . To describe and explain these basic national settings with a focus on the extent of energy use in agriculture in the economies of the USA and the USSR, is the overall objective of this study. More specifically, this objective can be subdivided as follows: Objective 1: To identify the differences in the level of development and use of selective agricultural and energy resources of the USSR and the USA with emphasis on the periods from the 1960's until present time. Objective 2: To identify the trends in growth rates and national disparities in their various planning periods with regard to development and use of these selective agricultural and energy resources (contingent (n1 availability of pertinent data). Objective 3: To identify the major problems of the two countries in terms of energy use and efficiencies (or inefficiencies) in selected agricultural production sectors. Okfiective 4: To suggest measures for improving on existing strategies for securing an improvement in current situations in both countries that might generate a better energy use performance. Brief Literary Precedences and Need for Study The history of agricultural development and reasonable indicators of energy development and use in the USA have been highly documented. Relatively, the pattern of resource development in the USSR, though an inchoate field of inquiry, has always attracted a considerable amount of scholarly attention. ~\s \~\\ . \....\‘ u; Already, three principal historiographical trends have emerged: The first strand involves studies of the economic history of the USSR that are included in the general work of development in East Europe, such as the work by Robert Deutsch,l where he looked at a comparative relationship between food and politics in the countries of Eastern Europe with emphasis on the current food revolution as part of the modernization process. The second strand deals with the specialized aspects of the economy, namely, the political system holistically, the marketing trends, and reactions to visible economic changes in this current age of reforms, such as the work of Thane Gustafson,2 where he looked at the politics of Soviet energy under various Soviet leaders and a discussion of the Soviet energy crisis amid plenty. The third strand is directed toward an assessment of the ever-changing performance of the Soviet economy in the current breeze of changes called "Perestroika" or "Restructuring." Detailed discussion on this aspect with 1Robert Deutsch, The Food Revolution in the Soviet Union and Eastern Europe (Boulder, CO: Westview Special Studies, 1986). 2Thane Gustafson, Crisis Amid Plenty--The Elitics of ngietl Energy Under Brezhn_e_v and Gorbachev (Princeton, N.J.: Princeton University Press, 1989). reference to agriculture can be found in the works of Josef C. Brada and Karl Eugen Wadekinl on the Socialist Agriculture in Transition, with numerous other academic contributions by various scholars of Sovietology, evaluating’ the, current reforms and changes being introduced in the USSR. The major focus has been on a comparison of the Soviet experiences with the successes of the Chinese and Hungarian reorganizations and some other reforms in the other socialist countries, such as German Democratic Republic, Vietnam, Yugoslavia etc. (Socialist Agriculture in Transition, 1988). The works of scholars, such as Marshall T. Goldman, Robert Legvold, Milton Friedman, Martin C. Schnitzer and James Nordyke, Alan G. Gruchy, Robert W. Campbell and Thomas Ferguson, to mention a few, provide useful statistics on political histories, economic trends, the coming of age and maturity of both the Soviet and American economies. They also contain detailed information on the mechanisms for doing a thorough comparative analysis of market vs. nonmarket economies, and the impact of government policies on resource development and use. It would, nonetheless, be lJosef G. Brada, and Karl-Eugen Wadekin, eds., §9cialist Agriculture in Transition--Organizational Response of Falling Performance (Boulder, CO: Westview SpecialgStudies, 1988). interesting to know the changes that took place in the patterns of planning prioritizing, and different forms of integration of the networks of the various sectors of the economies and their implications not only for the economy of resources, but the political-economy impact as a whole. Perhaps the most authoritative work on the comparative analysis of the economic history and development of the USA and USSR, engrossing the role of resources in their various stages of development are the work by Wilson Clark (1975),1 concerning the USA, detailing past and current concerns of energy use and changes that ought to be made to survive the pressure of 2 detailing . the future; and the work by Michael Ellman, the historical trends that culminated in the present precarious state of the Soviet Economy and lead to a focus on the changing events in the present stages of "Perestroika" or "Restructuring." Attempts are made at synthesizing eras of planning and developmental stages in both systems, examining’ political trends, capital formation, and the ways in which the systems of 1Wilson Clark, Energy for Survival: The Alternative to Extinction (New York: Anchor Press, 1978). 2 Michael Ellman, The USSR in the 19905-- Sinmggling Out_ of Stagnation, Special Report No. 1152 (London: The Economist Intelligence Unit, 1989). ) " (J. (‘D (u (I) (D government operate. There is a focus at the kind of influence that the different political structures have on the performances of' the alternative ‘political-economic institutions. Indeed, their work is to be welcomed as a pioneering attempt to grapple with the burning issues of economic development and role of resources. It will definitely provide the stimulus for further research on this subject. However, the above-cited works, and numerous others, do not account for the ever changing nature of the energy and agricultural sectors of both economies. Instead, such discussions are entrenched in the massive analysis of the holistic operations of the economic system of the USA and the USSR. Furthermore, there is little information detailing the linkages between the energy and agricultural sectors of both economies that have evolved in recent years, and no detailed empirical analysis of changes in the role of energy in agriculture of both economies is readily available. It is in light of this that the following research questions are raised for examination. Research Questions The following major research questions are sought to be answered: 10 Question 1: What are the objective indications " which show significant disparities in the level of development in both the agricultural and energy sectors of the economies of the USSR and USA? Question 2: How have these inter-country dispari- ties grown over the years and various planning periods in the USSR and the development of the USA? Question 3: What (if any) are the existing - similarities and differences in the levels of energy use and energy efficiencies in agriculture in both the USSR and USA? Question 4: What measures can or should be taken - for closing the existing "performance gaps," toward securing balanced economic development along scientific lines and relaxing of the bureaucracy in the USSR to generate a better performance in the near future? Method of Approach This study employed the historical, descriptive, and empirical methods of research in most parts. The source of information included books, official reports, materials collected from state archives, national libraries, firsthand information from personal experiences, and visits to some administrative offices, such as the USSR Embassy in Washington, D.C.; the offices of the Economics Intelligence Unit in New York, Economic Research Services of the U.S. Department of Agriculture in Washington, D.C. and empirical evidence collected from l"Performance gap" is said to exist when "what ciught to be" differs from "what is" in the expectation of performing a given role. 11 selected nonofficial sources, regarding the various major activities of resource development in both the USSR and USA in past and recent years. Besides the published and unpublished documents available in the United States, various bibliographies, books, periodicals, and newspapers relevant to this study were used as sources of information. A comparative study of the problem with regard to use and development of agricultural and energy resources and the effective linkage of energy use in agriculture in both the USSR and USA were made. Organization of the Research Topic This study is presented in five chapters. Chapter I includes an overall perspective, introductory remarks, the study problem and objectives, brief literary precedences and need for the study, the research questions, method of approach, and the scope and delimitation of the study. Chapter II contains empirical research into the economic-historical trends that shaped the current economic stands of the USA and USSR. An attempt was made to grapple with past developments over time in order to identify differences in the structures, to point out, if any, objective indications that might show any significant disparities in the level of development of 12 the general economies of the USSR and USA. This is done by a comparison of the level of growth of their GNPs and selected indicators, for a better understanding of their general economic orientations, comparison of productivity and growth figures for past and recent years (as available), in an attempt to answer Research Question 1. There is a probe into the various national goals set for the near future with regard. to 'their agriculture and energy sectors. Chapter III is a descriptive analysis of recent achievements in the use of the energy and agriculture resources of the USSR and the USA toward a fulfillment of their various goals, by comparing trends in recent developments, to determine if there exists indicators showing any widening or narrowing of' disparities (as identified in Chapter II above) over their recent periods of economic growth, with regard to development and use of their energy and agriculture resources since the 1960's, in answer to Research Question 2. In Chapter IV an attempt was made to answer Research Question 3 by evaluating the performances of each economic system in the use of the available energy resources with respect to agricultural development, and look at the means that might be used to close any identifiable "performance-gaps" as identifiable in both sectors of the economies in earlier chapters. 13 Chapters V and VI concludes the study topic with a probe into the future, suggested propositions toward securing a balanced economic development with regard to the use of their agricultural and energy resources, in answer to Research Question 4. Suggestion for future research needs are forwarded that could better shed more light on our understanding of the topic in discussion. Scope and Delimitation It was not the purpose of this study to defend any existing school of thought; rather, it intended to unravel the tangled skein of available data and information toward finding a reasonable explanation for the present performances of the delineated socioeconomic system of both the USA and the USSR as related to the energy' and agricultural. sectors and ‘their interaction. There has been, and continues to be, a tremendous change in the political situation in the USSR, having a massive effect on the economic development and, consequently, the agricultural and energy policies, thus further limiting the accuracy of any attempted prediction or prognosis. This study addressed these lacunae from a twofold perspective. 14 First, the relationship between central planning1 and allocative efficiency was examined in the context of the economy of the USSR, trying to achieve the one overriding goal of coming out of a stagnant stage in their economic progress. No pretense was made of constructing a complete theory of a centrally planned economy. Rather, the aim was much more limited. This study was concerned only with the problem of agriculture and energy resource allocation and use in the development process. Selective agriculture and energy resources were examined with more focus on the period from the 1960's to the present. Second, in relation to the above perspective, it is recognized that no economy does a perfect job of allocating resources. The important question is, what type of economy has the least misallocation2 comparing the USA and USSR. lCentral Planning’ is defined as a prospective national account , a representation of a future economic structure whose basic economic flows and inner connections are expressed in a statistical form . The national accounts, understood in the restrictive sense of accounts of independent. material flows (excluding services) are expressed both in physical and in monetary terms. 2In this discussion, misallocation is defined as inappropriate use of available resources and their disposition, apportionment or wrongful assignment of their uses for specific purposes to aid their economic development. Many economists studying the Soviet Union argue that central planning results in both technical and allocative inefficiency. 15 According to Gustafson, Overlapping the problems of systemic structures are those of process. The centrally managed economy generates more targets than managers can meet. The incentive system encourages them to respond by giving priority to the targets that will preserve their jobs and their incomes, which usually means the gross output target or some functional equivalent to it. The result is imbalance, which must be reallocated through constant corrections at all levels of the system, which put still further pressure on managers. The system in theory is planned and predictable; in practice, it is negotiated and fraught with risk and conflict for all the participants. In theory, it concentrates control in the hands of the leaders and planners; in practice, much of the control is dissipated, except or the handful of near-term fargets that the leadership chooses to put first. The author addressed planning mechanism, government policies, and existing conditions of research and development in both institutions in order to determine the extent to which they have contributed to the present performances as related to the delineated sectors and periods of analysis. Apart from problems stemming from the lack and nature of raw data, this empirical study has to contend with the above-stated limitations regarding the scope of the performed calculations. This investigation did not construct input-output tables nor attempt a measure of lThane Gustafson, Crisis Amid Plenty--The Politics of Soviet Energy Under Brezhnev and Gorbachev TRrinceton, NJ: Princeton University Press, 1989), pp. 308-309. 16 the rate of technological change. Appropriate data for this detailed analyses was not available. For instance, it would have been helpful to have disaggregated data at least to the regional level. The study, though, discusses the constraints to the transportation of Soviet energy resources. The purpose is to determine the general pattern of movement for each of the main forms of energy used directly or indirectly in agricultural production (gas, coal, refined products, and electricity), to evaluate the prospects for future development and uses. CHAPTER II NATURE OF THE ECONOMIC SYSTEMS General Economic Background The USSR Any description of the Soviet Union has to start by emphasizing its sheer size. With an area of nearly 816 million square miles, of which less than a quarter lies in Europe and the rest in Asia, it is the largest country in the world in terms of land area and it is larger than the United States and Canada combined. It occupies the main northern continental mass of Europe and Asia, with coastlines on the Black Sea to the Southwest, Baltic Sea to the Northwest, Arctic Ocean to the north, and Sea of Okhotsk, Bering Sea, and Sea of Japan to the east (see Figure 1). Norway, Finland, Poland, Czechoslovakia, and Hungary are to the west, Romania to the southwest, and Turkey, Iran, Afganistan, China, and Mongolia to the south; there is a shorter border with North Korea in the east and Alaska (United States) is to the east across the Bering Strait and Japan to the southeast across the Sea of Japan. In short, it extends from Finland the Baltic Sea in the west to the Pacific Ocean in the east and 17 .mmmo asp «0 an: .H musmflm 18 55.36%. m. <><¥mZOhmw m ...Edoo. o <>§m< m $5.935 m . . $3.99: . <><¥WI¥< xmkmwOm (>885. ...o a k. 8% 8.53%”. 5:308 558 20.23 550w 19 covers approximately one—seventh of the earth's inhabited land area. It stretches over 6,000 miles from west to east and nearly 3,000 miles from north to south, with nearly 40,000 miles of frontiers with 12 countries. The land inhabited by the Russians and national minorities is for the most part flat and cold, and less than half of the land is tillable. In metals and mineral resources, the Soviet Union is considered one of the richest countries in the world. However, its resources have never been put fu1ly to use because of great geographic impediments to transportation. Climate, technology, and availability of necessary capital among other reasons. In population, the Soviet Union is a little larger than the United States. Its population in 1985 was 278.62 million, compared to 239.28 million for the United States. In one respect, though, the population of both countries is similar because each. consists of' a melange of different racial and ethnic groups (Appendix A). Recent happenings and conditions of the Soviet economy are so much a product of the effect and results of the Russian Revolution in 1917. Lenin was reportedly impressed by the planning practices used in the United States and Imperial Germany during World War I, and looked to their experience for ideas to apply to the 20 Soviet Economy.l This technique of the "war-economy" which has been retained in the Soviet-type economies, have come to be the identity of a communist economic system of central planning, although Marx had very little to say about central planning.2 In 1989 the USSR celebrated the 72nd anniversary of the October Revolution; the upheaval which brought the Bolsheviks to power; In this more than, 70 year period, the USSR experienced a number of radically different economic systems. War Communism (1918-21). This time was marked by widespread state ownership, the direction of labor, the attempt to administer the economy centrally. The extent to which this system was forcibly accepted by the Bolsheviks at the time of their Civil War or by the indoctrination of the Marxist teachings is quite controversial. Although this system facilitated the Bolshevik victory in the Civil War, it led to economic collapse on. all fronts, with. very low industrial and agricultural production (Table 1), depopulation of the towns and famine. It is remarkable how rapidly and J”Harry Schwartz, Anglntroduction to Soviet Economy (Columbus, OH: CharIés E. Merrill, 1968), p. 83. 2John M. Montias, Central Planningin Poland (New Haven, CN: Yale University Press, 1962), p. vii. 21 .mowumwumum ucoficuo>oo uoa>om quUHDOw .. «.mm m.nm o.mm m.mm «.mm nu «.mma Amcou coflaawe. owwuumo unawoum Adam m.on m.~s v.am 6.6m m.om o.nm H.6v H.om .mcou coHHHAs. . umm>um= adduo m.oHH m.vo~ H.mm A.Hm h.hn m.om -n moH ..ms coAHHAe. mmmu< CSOm om~.~ mmm.a mom Ham mam moH .: mmm.~ .mmuuoa coAHHAee muwufldw COUUOU HvH.m mma.~ ova.H man man mm“ nu Hm~.v Amcou ooo.. Hooum va.~ mmm.a mmn mom mmfl BAH a: oa~.v .mcou ooo.. couH ohm mom.m mmm.~ Nom.H ova.fl mmn omm u- mvm.H .mnzx coaasfis. suaowuuomsm 0.5m H.mH H.0H n.mH m.m m.m ~.m o.m~ .mcou cowaahe. Hmoo Ammansou nmuonH cowaawsv cadu0500um mmo.HH mmn.p oom.v moo.v m~o.~ eoo.~ oHv.H Hm~.oH .suouomm. HmfiuumsocH owma mmma «man mmma mmmfl Hmma omma mama Emma @NmHIMHmH comzumm monomwh acauosooum Haguasowuuc can Hmwuumsocu Damon .H dang. 22 effectively the vacuum was filled and things were finally called to order and regulated in 1921 by Lenin's New Economic Policy (NEP). New Economic Policy (NEP) Basically, the New Economic Policy was introduced by Lenin in 1921 to encourage peasants to sell in the open market and benefit thereby, subject to a government tax on what they produced. The NEP was a mixed economy, combining a large private sector with state control of the commanding heights of the economy.1 During the period, a majority of the population of the Soviet Union became engaged in subsistence or smallholder agriculture. Throughout the economy, production, distribution, and, allocation of labor were largely left to market forces. cm: the other hand, large-scale industry, transport, and banking were in the hands of the state which also dominated wholesale trade and monopolized foreign trade. It may be useful at this point periodically to indicate how economic growth was developing in the principal sectors of the economy of the USSR. Stalin's Era. In 1929, Lenin's successor, Joseph Stalin, Openly recognized that the October Revolution had 1Michael Ellman, The USSR in the 19905--Strugglin Out of Stagnation, Special Report No. 1152 (London: The iEconomist Intelligence Unit, 1989), p, 5-6. 23 not sparked off the anticipated wave of international socialisml which should bring about international aid and recognition to Russia. In a few years of experimentation, and after undergoing a wave of economic crises in 1931-33, a fairly stable system emerged. This was referred to in the USSR and in UN publications as "Central Planning" and by some others in such derogatory terms such as "the Command Administrative System."2 Stalin, on taking over from Lenin, traumatized the country in the period spanning over thirty years. He intimated to Churchill that "millions of men and women [had been] blotted out or displaced forever, simply because they resisted the process of collectivization."3 Stalin was determined to industrialize the country without regard to sentimentality or due consideration for adverse consequences. His main plan was to produce and build a solid capital industrial base. Agriculture was relegated to the back burner and together with the 1Socialism is defined in Webster's Unabridged Dictionary (1979) as the stage of society coming between the capitalist stage and communist stage, in which private ownership of the means of production and distribution has been eliminated. 2M. S. Schnitzer, and J. N. Nordyke, Comparative Economic Systems (Chicago: Southwestern Publishing Co., 1983), pp. 403-404. 3Marshall Goldman, U.S.S.R. in Crisis: The Failure of an Economic System (lst ed.) (New York? Norton, 1983), p. 23. 24 peasantry were forced to finance the bulk of the capital needed for Stalin's industrialization process. Low prices were paid to the peasants for their agricultural products, and hence, for several years afterwards, many peasants could not make enough from the collectivized sectors to sustain themselves and their families. Upon Stalin's decision to exploit the peasants, the relationship between agriculture and industry became very strained. The peasants tried to hold back, in turn, the planning authorities in Moscow increased their control of agriculture. According to Goldman, "This tended to make the peasant less cooperative and all the less willing to show initiative as the peasants must do to cope with the anticipated changes in the very erratic Soviet weather."1 Not surprisingly, the agricultural potential of the country has not been realized since collectivization. Important features of the Soviet economic system developed under Stalin include: --Collectivization and state control of agricultural production --Growth of Employment --State monopoly of foreign trade 1Marshall I. Goldman, U.S.S.R. in Crisis: The iFailure of an Eggnomic System (lst edT) (New York? .Norton, 1983), p. 75. 25 --Mostly five year plans on national level developed and further broken down into annual production plans. --Shortages of producer and consumer goods --Proliferation of the "black-market" where stolen goods, or goods originally purchased in the state sector, are resold at market determined prices and where production and trade in goods and services1 produced outside the state sector takes place. After the "central-planning" system was adopted in the USSR, it was extensively publicized throughout the world and disseminated internationally. In 1949-53, it was adopted in eastern Europe, in 1953-57 in China and subsequently in countries such as Vietnam and Cuba. It also had some influence in countries such as Germany, Mexico, France, the Netherlands and India, though in a different and not too rigid form. The Soviet Union developed into a bureaucratic state, with no major economic plans made by state officials, planning production based on estimated needs of the system and the populace, with the populace having little or no say in the matter, but to conform to directions and regulations allotted to them. The lMichael Ellman, The USSR in the 19905-- Struagling Out_ of Stagnation, Special Report No. 1152 (Lon on: The Economist In e igence Unit, 1989), p. 8. 26 allocation of resources is in the hands of the planners, who must make decisions concerning what, how much, and for whom to produce, which culminated in the development of the first five—year plan as laid out in Table 2. The figures in Table 2 are a reflection of Stalin's insistence on the expansion of heavy industry regardless of the cost to other sectors of the economy, notably agriculture. It will be noted that it contained two different versions and although it was supposed to operate with effect from October 1928, it was only approved at the Party Conference by April 1929, which also rejected the excessively optimistic first version in favor of the even less realistic "optional one." It has been debated in many publications whether Stalin purposely, for political intentions, secured the adoption of a plan which he knew could never be realized. Table 3 shows that the target of 4.688 million rubles worth of machinery was overshot to 7.362. On the other hand, the gross agricultural production target of 25.8 billion. rubles was 'underfulfilled, with. production of 16.6. The original plans were unrealistic, and this also throws doubt even at the appropriateness of the given figures on plan's fulfillment. In. fulfillment of' Stalin's ambition, the USSR experienced a rapid process of industrialization between 27 7.51. 2. first Five-Yon: Plan 1928-1932 (0553) 1930-3 1932-3 Nigneous 2:3: v3.32“ Inez-4:200 35:22:: Incr:000 unloved 14b“ ‘0!“ billion) 11.3 14.0 30 15.0 39 Invostnont (all) (1926-? put-‘08 billion rubles) 0.2 20.0 151 21.1 220 National Inca-0 (billion roubles). 0.2 «.4 02 49.7 103 Industrial Production (billion roubles) of which: 10.3 30.1 130 43.2 100 Produoozo' podo (billion roublool 6.0 15.5 161 10.1 204 Wo' goodo (billion m1“) . 12 . 3 22 .6 03 25 . 1 , 103 Agricultural production (billion ' m1») 16.6 23.0 44 25.0 55 ' W100: ”agricultural undo!) 100.0 152.0 -- 171.4 - Agricultural population (index) . 100.0 151.6 -- 161.4 - Imttill Outfit 703900.01 lbcttiaity (billion 1001-) 5.0 11.0 236 22.0 335 and 0001 (01111106 tono) 35.4 60.0 02 15.0 111 011 (11411106 6060) 11.1 10.0 62 22.0 00 Iron 0:. (union tom) , 5.1 15.0 163 15.0 233 019 Iron (union m.) 3.3 0.0 142 10.0 203 ’ 06661 (11111166 m) 4.0 0.3 101 10.4 160 010011111027 (11111166 26661661 1,022.0 - ' -- 4,600.0 151 605mm“. (11111166 661101 . 0.1 2.6 16 3.4 22 0°61 01°11: (union -0300) 01.0 102.0 00 210.0 110 80111-00: 0002 Boone-10 landbook by Scrivono: Ronald/Soviet Gown-0n: 8101;101:100. 0000: Ibo Ioviot mania m quito woliablo and obozoctoriood by inroqnoud ' tiquoo to favor political Univ“ and intontiono; lonotholou. zoooonablo doductiono can b0 new“ on buio of who: 10 availablo Iron 0011100 covenant 0000000 and 111-0:000 otbor publionod 9190110. 28 Table 3. Plan Fulfillment--Important Components 1927-8 1932-3 1932 (Actual) (Plan) (Actual) National Income (Billion 1926—7 roubles) 24.4 49.7 45.5 Gross Industrial Production (Billion 1926-7 roubles) 18.3 43.2 43.3 Producers's Good (Billion 1926-7 roubles) 6.0 18.1 23.1 Consumer's Goods (Billion 1926-7 roubles) 13.1 25.8 16.6 Electricity (billion Kth) 5.1 22.0 13.4 Hard Coal (million tons) 35.4 75.0 64.3 Oil (million tons) 11.7 22.0 21.4 Iron Ore (million tons) 5.7 19.0 12.1 Pig Iron (million tons) 3.3 10.0 6.2 Steel (million tons) 4.0. 10.4 5.9 Machinery (million 1926-7 roubles) 1,822.0 4,688.0 7,362.0 Superphosphates (million tons) 0.2 3.4 0.6 WOod Cloth (million metres) 97.0 270.0 93.3 11.3 15.8 22.8 Total Employed labor force (millions) Source: USSR Economic Handbook by Scrivener Ronald/Soviet Government Statistics. 29 the mid-1920's and the mid-1970's (with the exception of the war period 1942-1946). The fuel and energy, iron and steel, and engineering industries grew quickly. According to numerous publications and published figures, whereas in 1914 the USSR was the world's fifth industrial power, in the early 19605 it became the world's largest producer of basic industrial products and even in some sectors (e.g., space exploration), it became the most advanced country in the world.1 With regard to the distribution of the labor force, there has been a tremendous increase in the proportion in industry and services. Over the last half century, as indicated in Table 4, showing sectorial distribution of the labor force, the period between 1940- 87 shows a substantial growth in the state labor force with increasing proportions engaged in industry up until 1970 which was followed by a small decline. It is quite noticeable that there occurred a continuous decline in the proportion working in agriculture and subsequent increase in proportions working in construction, trade, education, and medical care. The indications of this continuous industrialization program over such a prolonged period of 1The Soviet Union has always been self-sufficient in the field of energy. It is the world's leading gas producer and consumer, ahead of the United States. 30 Table 4. Sectoral Distribution of the Labor Force in the State Sector, 1940-87 (\ of Total) (USSR) Sector 1940 1960 1970 1980 1987 Industrya 22.1 28.0 30.1 29 s 29.3 Agricultureb 47.4 31.9 23.0 18.5 18.6 Forestry 0.5 0.5 0.4 0.4 0.3 Construction 3.4 7.8 8.7 9.1 9.1 Transport 5.9 7.8 7.6 8.3 8.0 Communications 0.8 0.9 1.2 1.3 1.2 Trade 5.7 5.8 7.1 7.8 8 0 Information & Computing -- -- -- 0.2 0.3 Other Productivec 0.3 0.6 1.3 1.; 1 3 Housing and other domestic services (e.g., laundries) 2.5 2.4 3.0 3 6 3.9 Medical care, sports a social services 2.5 4.3 4.9 5.0 5.4 Education 4.2 5.3 6.9 7.4 7.9 Culture 0.3 0.6 0.8 1.1 1.1 Art 0.3 0.4 0.4 0.4 0.4 Scientific Research 0.7 2.0 2.9 3.6 3.5; Administration 3.0 1.5 1.7 1.8 1.5“ Total Labor Force (mn) 59.3 80.8 104.9 123.7 131.1 SOURCE: Michael Ellman, The USSR in the 1990s--Struggling out of Stagnation, p. 10. Original figures collected from Narodnoe Khizyaistvo SSSR 3a Folet; Naradnoe Khazaistvo SSR v 19639 with few modifications based on current estimates. aIncludes mining. bIncludes collective farm sector. cIn Soviet national income accounting the economy is divided into “productive" and "nonproductive" sectors. The rows above this line comprise the "productive" sector,belm it the "unproductive" SGCtOt . d . . . . After reclaSSification. this category was designed to produce successes for the ”reduce bureaucracy" campaign. 31 Table 5. Percentage Growth Comparisons for Key Sectors of the Economy (USA and USSR) Growth % p.a. 1970-80 1980-85 USA USSR USA USSR Agricultural Production (Aggregated) 2.3 1.1 2.3 2.1 Industrial Growth 3.3 6.0 2.7 3.7 Coal Productiona 2.6 1.3 0.9 N.A. Crude Oil Production -1.1 5.5 0.7 -0.3 Petroleum Products Productionb 2.0 5.0 -1.7 -0.3 Natural Gas Productionc -o.8 8.2 -3.3 8.1 Electricity Production 3.7 5.7 1.0 3.6 SOURCE: The world in Figures--A publication by the Economist, London. NOTE: Comparing rates of growth is inevitably a tricky exercise. The problem is the selection of appropriate periods of comparison. aCoal production refers to the mining of anthracite,bituminous and semibituminous coal with a gross calorific value of more than 5700 calories per gram on an ash-free and moist basis. Peat, brown coal, and lignite are generally excluded. bPetroleum products production refers to crude petroleum including shale oil, but excluding natural gas liquids. Original units of volume have been converted to metric tons for comparison by use of specific gravities. cProduction data for natural gas refer, as far as possible, to natural gas (consisting primarily of hydrocarbons) actually collected and utilized as a fuel or as a raw material and obtained from gas fields, petroleum fields, and coal mines. Generally, the series excludes gas used to reestablish pressure in the fields, gas vented .and flared, and shrinkage resulting from the removal of natural gas liquids. 32 time is shown in Table 5 in comparison with the USA growth of some selected sectors of the economy. As can be seen from Table 5, using 1970 as the base year, the USSR had significantly tangible percentage growth in the production of a number of basic industrial products and raw materials, e.g., oil and natural gas (for all of which the USSR is the world's largest producer). These figures are in no way indicative of the efficiency with which these inputs are used to produce final products or the volume of consumer goods produced with them. Economic stagnation: Crisis. Recent economic, policy in the Soviet Union regarding use of resources at their disposal to forge a path toward growth can only be understood in a context of what transpired in preceding periods to this current stage. One is reminded mostly of two phenomena that were characteristic of the late 1970s and early 19805, namely, period of economic stagnation and shortages of consumer goods. The period of high economic growth in the 1950's, led to rapid economic development in the Soviet Union. According to many publications, this led to Khrushchev's statement at a meeting with John Kennedy, referring to surpassed growth of the USSR economy relative to the USA, and the felt need as of that time to accelerate their 33 economic growth so as to meet the Soviet challenge.l Surprisingly, however, by the late 1970's, the Soviet economy went into "recession" or what in many today term "perpetual stagnation." The indication of this stagnation or decline in growth (retardation) is set out in Figure 2, which shows the periodic changes of Soviet economic production in general between the periods 1953- 1987. Soviets devoted major resources to military expenditure during the "Cold War" and this adversely affected the availability of such resources for use in other parts of the economy. Declining economic production, such as indicated in Figure 2, means serious repercussions for the USSR. As rightly pointed out by Michael Ellman, macroeconomic stagnation has serious consequences for the USSR. Internally, it deprived the party- state apparatus of an important function, that of distributing surpluses . . . it turned economic policy into a zero sum game, that is into a situation in which gains for some groups were only possible at the expense of others. Externally, it meant that the USSR was no longer able to compete against other countries in economic development. lMarshall Goldman, USSLin Crisis: The Failure of an Economic System (1st Ed.), (New York: Norton, 1983), p. 27. 2 Michael Ellman, The USSR in the 19905-- Struggling_ Out; of Stagnation, Special Report No. 1152 (London: The Economist Intelligence Unit, 1989), p. 13. 34 .mHMON MQOHHMNV emUHHMflHMHm HGO§H0>8 mmma «OOHflom ...m.a w. cowuusooum oweocoom mo momcmsu ow00wuom «mm: .m musmfim m hm. mm. mm. ..m. wk. sh. on. 05. :1 m0. km. mm. mm. ..m. mm. Mm. mm. mm. a _ _ _ n _ _ .1. J a x. _ n a n i e O 1 N , ., .\.n./ 1.,,. ix. V w /,i\ / \/ J .._I , / e \ , < // / E J .\ . 1 w / \\ /./ I / ... //\\\h |.m >> / o , m .. OF .0 xi ...x/ \.\ 1 NF 35 In the 1970's and early 1980's, coupled with declining output in agricultural production, economic stagnation and reported increases in budget deficits in the USSR, there resulted an increase in shortages of vital consumer goods. Queues and shortages in the Soviet consumer reports became a "sad-music" to the ears of people. Relevantly, these shortages led to a fall in the real incomes of the population, constituting a factor in major inflationary pressures, as excess demand drove up prices and leading to a "proliferation" of the "second- economy" or "black-market," described earlier in this chapter. Hence, a decline in labor morale in the state sector set in with realization of the high incomes that is obtainable in the "black-market," relative to the declining real incomes in the state sector. This and numerous other factors that are obviously beyond the scope of this dissertation, namely political instability, increasing environmental degradation, unstable world market, and increasing technological retardation, are very disquieting thoughts on the minds of Soviet leaders right now, and means and solutions are being sought to correct the ills that plague this gigantic economy. We shall later take a look at some of these questions posed by this dilemma in the Soviet economy for now and the near future. 36 The USA There exists numerous literature on the economic history of the United States of America, which spans decades of changes in the economic structures, problems, and progresses made in the US economy. No single intelligent person can purport to combine adequately in one text or even textbook, these details. Hence, all the writers have made attempts to afford only "piecemeal" analysis of the economy as could be carried by their capabilities. It is futile trying to construct a detailed analysis of the economy of the USA or as a matter of fact any detailed economy of a nation as gigantic as the USA or USSR in a single study of this nature. But as with the case in the previous segment of this chapter, concerning the economy of the USSR, one can attempt at least to draw a picture of the developmental processes and economic growth of the USA. using some objective indicators for a uniform analysis. The economy is immensely powerful, and it offers a wide combination of results, hence it is ranked as one of the wonders of the world. As a subject for intellectual study, it is very fascinating, and it offers a fair share of complexity even when one tries to forge a description. Any effort to comprehend the US economic system must ‘begin with a description of its size, and the 37 #3” .Q 59: Juan: .mlmmmHom* coflunowansm mount-How noummmmm owsocoom «Om: "mousom .de use no mcoammm cowuosoowm Such .m ousmwm 393030091050 38 constitution of the characters that make up its principal fabrics. It spans over an area of approximately 3.6 million square miles, about one third the size of the USSR. The North America and Pacific Ocean continental United States has Canada on the northern boundary and Mexico on the southern. Alaska is bounded to the southeast by Canada and to the west by the Soviet Union. Hawaii is in the Central Pacific (2,400 miles) to the west of the mainland. The climate is mainly temperate; with subtropical conditions in the south. In population, the US is a little smaller than the Soviet Union. Its population in 1985 was 239.28‘million compared to 278.62 million for the Soviet Union. In the American economic system, there is primary reliance on the market mechanism to allocate resources. This mechanism has been modified and redefined over time as individuals and groups demanded for alternate results as to that obtainable under the dictates of completely " free-enterprise . " For example , farmers receive protection through government subsidies, and some automobile companies negotiated acceptable quotas on influx of the products of their foreign competitors into the USA. Such clamors have brought many changes and modifications of the market mechanisms over time so that 39 the results are modified from what they would be with complete "free-enterprise." Hence many authoritative sources have come to refer in numerous literature to the American economy as a modified market economy1 in which the government. plays a relatively important role ‘than would have been called for in a total market economy. Nonetheless, the American economy can still be said to be reliant on the market mechanism for allocating its resources for appropriate uses in the economy. A major production and distribution decision still take place in enterprises with many direct information from the government such as obtainable in the Soviet Union. The American household still plays a basic role in the goods and services demanded and supplied, on the basis of the information available to them by mode of the pricing systems and the: dictates of incomes from their labor. Economic milestones. A good part of the 19th century saw tremendous progress in the American economic system. There was growth of the economic system, riding mostly on the back of the agricultural successes of the early settlers. The later part of the 19th century 1M. C. Schnitzer and J. N. Nordyke, Comparative Economic Systems (3rd Ed.), (Cincinnati: Southwestern Publishing Co., 1983), p. 50. 40 witnessed rapid industrialization and by the turn of the century, the United States attained a position as l undisputed world leader among other leading industrial nations. These results were achieved during the better part of this progress without much intervention from the government. With time though, as the economic situation became more complex, the larger role of the government in promoting fair play became inevitable and hence there came more government restrictions on the economic activities of individuals. There exists tremendous economic-historical trends, detailing these step-by-step progresses in explaining this rapid development. According to Rolf Eidem and Staffan Viotti,2 production during this period was mostly organized in a great .number of competing enterprises, which were typically owned and controlled by individuals. All the enterprises had to fight for their existence and only the best ones survived, without growing so large as to be able to maneuver their competitors out of the market to stave off competition. g 1.There is debate and different ideas about this, since Great Britain as of then or thereabout was still laying claim to being the "economic giant" of the world. 2Rolf Eidem, and Staffam Viott, Economic Systems--Comparative Economics (New York: Wiley, 1978), p. 17. 41 According to the basis of this arrangement in a production alternative that frees the enterprise of restrictive or dictates of government's total control, most Americans have shaped their ideas and accepted this strongly decentralized allocation system to be the best. The view and conviction of most as regards this notion of "free-competition," is that goods are produced better and as cheaply as possible with due consideration to consumers' tastes and preferences. Role of Agriculture. An abundant supply of agricultural products has contributed greatly to economic growth in the U.S. Throughout American history, agricultural output has increased more rapidly than population. Overall, productivity in agriculture has gone up rapidly, doubling in the last century. Real costs per unit of agricultural output decreased by one-half.l Rising productivity in agriculture has contributed to economic development of nonagricultural sectors in several ways. It has supplied increasing amounts of food and other farm products at relatively low costs. It has freed workers for employment in nonfarm 1How the United States Improved its Agriculture (Washington, D.C.: ERLS Foreign--‘76, March, 1964), p. 1. 42 industries, served as a source of capital for nonfarm industries, and earned foreign exchange that helped finance imports of scarce capital goods. Also, it has provided a major market for industrial goods and services. Expansion in land area under cultivation was a major means of increasing production up to about 1920. Overall productivity of agriculture went up gradually. After 1920, increases in production resulted from increased use of capital inputs and labor as well as some land. Foundations for later increases in agricultural productivity were built with establishment of family operated farms, free public schools, agricultural research and extension services, credit facilities,. farmer cooperatives, rural electrification, and improved "farm-to-market" roads, and other transportation and communication facilities. Agricultural output increased slowly in the 1920- 1935 period.1 Strong economic incentives for expanding farm products declined relative to those of production inputs. Total labor force on farms began to decline as many farm people transferred to nonfarm jobs. Agricultural productivity went up rapidly beginning to the late 1930's and continuing to the lIbid., p. 111. 43 present. In fact, total agricultural output has increased as much or more in the last 40 years as it did in the preceding 75 years. Higher prices and larger markets for farm products made it profitable for farmer to apply improved agricultural technology, developed through years of research. Additional capital inputs were used to improve production methods, but labor force in agriculture declined with corresponding industrial growth. Increased productivity has been and remains the source of most of the agricultural output expansion in the USA. A look at the structure of agriculture in American economy in the past relative to recent times, as shown in Table 6, shows it as being differently structured from what it used to be in the past. This does not mean that agricultural production has fallen in any way, on the contrary, there exists numerous indications (subject of later discussion), showing an increase in output. Industry. Industries in the United States are concentrated in the hands of a few firms and ownerships of factors of production, consequently, in a few hands. This fact is not peculiar to the USA, but it is the same 44 .mmaH .mmumum omuace 0:» mo muomuumne Hmoaumaumum ca condoms can .vw .Q .momH .0 cmaad >£osuo >n meoumam anocoom m>fiumummeoo «mmumaom 06H In Ham.m Hoe mmH.~ moo.a o.~ hmmH mMH Hmfi vom.m omv NHN.N hoo.H m.m ommH mma mmH Ohm.m owe vhm.m vHo.H m.m mama ems mmH omn.m mme mum.~ mHo.H e.~ «mma mmH mmH mvo.v mwv oov.~ hNo.H o.m mama moH MHH mon.m awe mme.m mmo.a m.m omma ooH OOH moH.v hmv omv.m hvo.H m.m puma om om mem.v owe mmm.m mmo.H H.e whoa mm mm mmm.v owe mvm.m Hoo.a m.v moma mm me 666.6 1. 1: :1 H.> moms mm mm omH.m 1: I: u: 6.5 Nome on so 6mm.m mom Hflb.m mNH.H v.6 mmma Ho Ho hom.h mam mmm.m HmH.H m.mH ommH mm mm oem.m vha moa.m moo.H «.mN ovma mm mm cem.ofl Hmfi mem.o hem m.e~ ones 11 I: II med mam.o 0mm o H.om omma Moonlsmz OOH mom "whoa anemone usmuso usmuso Am.oooav Bunk Am.oooav A.mmuo¢ .Hflzv coaumasmom H00» Suns Such ucoSSOHmEm mo ouwm msumm manna ca Hmuoa «0 a no mo xmocH mo xoocH HomopHsOHuma oomuo>¢ mo .02 cont tang cowumdomom Such hmmHIONmH .mm: .usmfim0H0>0O Housuasowuo< mo muoumowtsH .0 mHnma 45 for most other major industrial countries regardless of the proclaimed political ideology.1 The changes that took place in the first half of the twentieth century, namely the mass production of automobiles, scale development and production of home appliances and the influence of the mass media, saw the concentration of American industry more fewer firms. According to Schnitzer, size played a big role and there was a big advantage to size from the standpoint of the use of modern marketing and production methods.2 Wars, economic depressions and booms do not come and go as if nothing ever happened. They tend to make their effects linger around, by rearranging the way people do things and reshaping the ways in which significant policies are formulated and reformulated. They have tremendous ways of helping to restructure and reorganize economic systems and thus producing economic experiences that are. quite complicated to 'understand, with or without references to them. 1In this regard, the industrialized countries under the central-command, such as the Soviet Union, only have their governments as monopolizing all means of production and functioning as a central control. 2M. C. Schnitzer, and J. N. Nordyke, Comparative Economic Systems (Chicago: Southwestern Publishing Co., 1983), p. 88). 46 Such were the effects of the events of World War II--events of almost fifty years ago, still shaping the way things are done today. Large corporations were the producers of the fighter planes and tanks that were used by the Allied groups in the decisive victory over the Axis forces. More so the United States emerged with unsurpassed dominance of international, economic, and technological power over the rest of the world. The 1960's and 1970's witnessed the emergence of tremendous mergers and "swallowing of the little by the big" as a representation of the coming together of the loser with the winner and the amalgamation of disparate businesses. The USA had a trade surplus in every postwar year until the early 1970s and then eventually historical redistribution of global monetary riches through the advent of the oil cartel and the subsequent energy crisis in the U.S. The net investment income eventually peaked in 1981 and until present day, the economy, though stable, still looms in muddy waters and at best, attitude towards debt and risk are uncharacterizeable, and to say the least, beyond the scope of this study. There has been a shift in emphasis from market to political decision in the American economy in recent 47 years in great measures in response to increase demands from a wide variety of special interest groups.1 The high standard of living attained in the USA at present has been made possible by various economic events of the past, which had been continuous through high and rising level of employment. The size of the labor force is constantly expanding and there are shortages of employment opportunities. The performance of the economy in recent years have not been totally impressive. Unfortunately, the productivity of the United States has fallen to the point where it may be eventually in the position of being replaced by Japan as the world's number one economic power.2 There has been tremendous decreases in the growth ' in output per worker, by a measure of productivity. As shown in Table 7 for the period 1970-80, using 1977 as the base year, there is a slowdown in the 1970's, contributing to a deteriorating tendency in the competitiveness of American industry relative to the world economy. Hence without much saying, the primary goal of the U.S. for the near future ahead, would be to J”M. C. Schnitzer, and J. N. Nordyke, Comparative Economic Systems (Southwestern Publishing Co., 1983, pp. 98-99. 2Ibid., p. 113. 48 Table 7. Indices of Production in the United States: 1970-1980 (1977 = 100) Year Real Output per Worker 1970 86.1 1971 89.3 1972 91.4 1973 94.4 1974 93.0 1975 84.8 1976 92.6 1977 100.0 1978 106.5 1979 110.6 1980 108.6 1981 111.0 1982 103.1 1983 109.2 1984 121.4 1985 123.7 1986 125.1 1987 129.8 Source: U.N., Department of Economic and Social Affairs Survey (New York: UN Publishing Division, 1988). 49 restore competence toward competitiveness through adequate designs of policies to reduce inflation, increase productivity, and strive to achieve more economic growth. National Goals of the USSR and the USA With Regard to Agriculture and Energy Resources It is obvious that agriculture and energy play a principal role in these economies, more in the past of the US economy relative to that of the USSR in terms of employment and general contribution. This fact will continue to hold as needs of people continue to grow in terms of food demand and production of other consumable goods. Each national system is, at least in some respects, peculiarly distinctive and unlike any other. Each has achieved some combination of results, including those both favorable and unfavorable. Nonetheless, economic growth, it is generally agreed, serves as the best path known to mankind to a better life. There have been numerous trials over changing times, some ‘with relatively better successes compared to others. Questions herein posted are not to serve as fright mechanisms, but as reflections on the past so as to determine what our expectations should be into the future. We know the past, we know where we are, 50 and where we want to be. The key question, then, is: How do we get there from here? 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The wheat producing regions of Canada are also known to lie more to the northern portion relative to the USA. Hence, one can assume that the relatively poor wheat yield obtainable in the Soviet Union cannot be entirely attributed to adverse or unfavorable weather conditions only, but also some other factors as well, such as the farm management practices, technology innovation and use. Livestock. Soviet livestock productivity is plagued by its own problems too. The feed that go into producing livestock products and the products themselves account for almost 70% of gross agricultural output value in the Soviet Union.1 The pattern of developments in the Soviet feed-livestock sector can throw much light on the growth of Soviet grain imports since the early 1970‘s. Most of the devoted resources and investments in Soviet agriculture is due to an attempt to increase livestock production, either directly through raising livestock, producing feed, or performing other support operations. 1Livestock and Poultry, Situation and Outlook Series (Washington, D.C.: USDA, Econ. Res. Serv., Report fiLPS40) (February 1990), p. 25. 73 The main Soviet strategy of increasing livestock production has been focused on the modernization of livestock operations on both their state and collective farms. As observed by Edward Cook, a major feature of this modernization has been in the development of industrial livestock facilities, primarily for poultry and pork production.1 There have been mixed results attained through the Soviet modernization strategy. Most increases in livestock production have been achieved through costly increases in the number of low productivity animals.2 In spite of sizeable investments in the past on improved housing, machinery, and other inputs, productivity indicators in the Soviet Union are not too encouraging and they have failed to be as competitive as their Western counterparts in performance. Production in the last 20 years has fallen behind demand. Between 1966 and 1985, meat production increased lEdward C. Cook, The Soviet Livestock Secgru Performance and Prospectus, (Washington, D.C.: Publication of the USDA, Foreign Agricultural Economic Report #235, 1988), p. 1 2Increases have been achieved by merely increasing the number of animal heads. Compared to the United States, the USSR produces nearly 60 percent less of beef and veal per head of cattle and nearly 70 percent less pork per hog. Livestock and Poultry, Situation and Outlook Report Series (Washington, D.C.: USDA, Econ. Res. Serv. Report #LSP 37, February, 1989), p. 16. '74 a meagre 2.75% annually (Table 16) and milk production by 1.5%, but despite these increases production has failed to meet the demand for livestock products such as meat, milk, and milk products. Population growth and a high income elasticity of demand for livestock products has resulted in a rate of demand increase that is greater than the increased rate of production.1 Major productivity gains in livestock products in 1986 were largely consolidated in 1987 with little or very modest improvements. Figures in Table 16 indicate that meat production in the USSR in 1987 increased 3%, milk 1%, and eggs 2%. Most of the increase in meat production was due to more cattle and hog slaughtered as indicated in the decreasing figures of livestock herds in 1987 and 1988 compared to 1985 figures in. Table 15. Nonetheless, the share of livestock production in the "market basket" continues to grow. Production growth rates have revived in comparison with those of 1976-81, and improvement in animal productivity has resumed. 1Marshall Goldman, USSR in Crisis--The Failure of an _E_conomic System (lst ed.) (New York: Norton, 1983), p. 77. '75 . Asa-«alto nan 3.0.0393... ...-cone... 2.: 50.93... 330» 302. one; 2.3....» .3 coauoavduu ...-Soon Sun-guru ... 3.33 (E. .0053 o:.n...n=m z: .3... 53...... o... 5.. ...-.9. ...o 3.100 coo mmmzm .n.o mac: .o.o .mzco :ozu nonuo. 0.9900 .ulcuAOu no noduou codauo>coo .0300 no thou and a.oo 2.... ..om. ..o«. o.... o.o.. ..o«. ...«. o.o«. ..o.. «.... «.o.. ...co . . ..I.:< ...uoa o..c. c.«o... o...... m...... o...... «.... ....... ,«..o... «..oo.. ....o.. ....n ...«o ....soa 0.2.. 5.... m... 06 0.... 0.2. ...... 06 a...“ 0.... 1.0 v... 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Ufihuvz OAVAV. v Imunn- I. «.‘V-auvabhnu VauUAUUMNMU>fiQH MVMO‘NUAVN cm ‘0 “ECWuuahvfithh .AUN. aqfiqflvfi .Ammma .co«mw>wo acanmwansm z: uxuo» 302v mumm> msofium> new mofiumfiumum UflEocoom zalluouamfih a. vane: 0:9 «mmumoom 76 OOH.Nm ovu.om mm~.hb va.oh OHH.mh mov.~n mmm.o> mma.mo hN¢.Hm ovm.mm Am:0fldaflfiv mwmm mmv owe nve mow Nov «me one new mmv .«.z ..ooz oov.mo. mp..~o. moo.ma oom.sm mov.om vec..m c.m.mm «mm.~m ovv.hm mmm.om . x..: can cum mom mom me. on. ..m~ emu m.m e- umzuo cmo.m mmm.~ m.m.~ omo.~ mam.~ m.v.~ mm~.~ mmm.. mm... mmm >uu.:om 0mm «mm hmm mom hmm w.m ova «mm mum «mm . umoo new. .couusz oom.m moo.m mmm.m nmm.m oon.m mn~.m o-.m moo.m cam.m sum.v xuom oo~.m ovm.h on... «V... ..o.» m.m.o hnm.m pmm.m mom.m um..m .ma¢ a moon no.5: mo ooo.m. nmo.m. .m..h. mmm.m. mvv.o. mom.m. ma..m. mqm.¢. coo.v.. mam... use: .ouoa ..m>¢v ..m>¢v hmma mmmH mama vmmH mmmH mama Hmmd ommH mhma Ohma . Imbmfi IHhmH Iooma ..nmmanmomHV .mcos oauumz ooo.v «mm: muoaooum xooumo>wn couooaom mo acowuosvoum .oa magma ‘ C Fl‘ G\... .M Q.\: s A} Qv if ‘9‘ AV 1:4 77 However, production cost is known and estimated to be on an increase.1 As can be seen, improvement in the Soviet livestock sector was particularly strong in 1986-87. This recent upturn coincided with General Secretary Gorbachev's emphasis 2on implementing economic reform in agriculture. The USA Abundant supply of agricultural products has contributed greatly to economic growth in the United States. All through the history of the USA, increases in agricultural output has been known to be greater than comparative figures of’ population increases. Overall productivity in agriculture has gone up rapidly. Rising productivity in agriculture has contributed to economic development. of .nonagricultural sectors in. several ways. It. has supplied increasing amounts of food and other farm products at relatively low costs. It has been known to free workers for employment in nonfarm industries, served as a source of capital for J"'I.ivestock and Poultry," Situation and Outlook Series (Washington, D.C.: USDA Econ. Res. Serv., Report #LPS 40, February 1990), p. 28). 2Edward C. Cook, The Soviet Lilvestocjk Sector-- Perfbrmance angProspects, (Washington, D.C.: Publication fi'the USDA, Foreign Agricultural Economic Report #235, 88). p. 3 78 nonfarm industries, and earned foreign exchange that helped finance imports of scarce capital goods. Also, it has provided major markets for industrial goods and services.1 Numerous interrelated factors have contributed to the large output and high productivity of American agriculture. They include: 1. Large supply of land and water resources 2. Large investments for education that improve human skills and managerial abilities 3. Development and diffusion of new knowledge about agricultural technology 4. Complementary industrial development that supplies capital inputs for agriculture 5. A structural organization of farm production and marketing that provides powerful economic incentives for farmers and marketing firms to increase output and productivity 6. Public and private complementary institu- tional services2 1"How the United States Improved Its Agriculture," USDA Publication (Washington, D.C.: Econ. Res. Div., Report #ERS Foreign 76, March 1964), pp. iii- iv. 21bid., p. v. 79 In order to explain some of the changes in U.S. agricultural system, it is necessary to understand the structure of some selective major agricultural products in recent times, as pertain to both the crop production and livestock sectors. 995g. Corn is the leading U.S. crop, both in volume and in value. In 1987, farmers planted about 65 million acres in corn, accounting for about 22 percent of the 304 million acres planted to principal crops. About 90 percent of the acreage was harvested for grain and the balance for silage and forage, or abandoned. With an average yield of 119.4 bushels per acre, U.S. corn production for grain reached 7.1 billion bushels in 1987.1 Corn, soybeans, and cotton compete for the same land in various areas of the country. The primary demand of corn and soybeans is derived from the market for livestock products here and abroad. Corn is the most important grain used in feed rations. In the 1987 crop year, corn accounted for 77 percent of all grains fed to 1Stephanie Mercier, Background for 1990 Farm Legislation (Washington, D.C.: USDAfPublication, Econ., Res. Serv. September 1989), p. 1. 80 livestock. Corn programs have substantial effect on the livestock sectors.l Total U.S. corn production has trended upward since the 1930's. Production has more than doubled since 1965, peaking at 8.9 billion bushels in 1985. Year-to— year fluctuations in production occur, however, because of such factors as the ‘weather and federal policies. Drought in 1988 for example, reduced production by more than 30 percent from previous years.2 Harvested acreage has remained fairly constant indicating that increased yields are responsible for most of the gains in corn production. The general increase in yields over time is due mainly to changes in technology and production practices, including development of. improved high yielding hybrid varieties, increased rates of fertilization, increased irrigation, higher seeding rates, improved control of weeds, insects, and disease, and diversion of less productive acreage. The number of farms growing corn declined from 1.5 million in 1964 to 713,700 in 1982, while the average acreage harvested rose form 39 to 100 acres per farm. The 21 largest corn-producing states (mostly the 1Ibid., p. 3. 21bid., p. 2. 81 cornbelts of the Midwest, the Southeastern States, the Delta States, Pacific and Southern Plains (see Figure 3)) accounted for nearly 84 percent of the farm growing corn in that year. The farms growing corn averaged more than 240 acres of cropland. Farms with 500 acres of cropland or more accounted for 15.6 percent of farms growing corn but 45 percent of corn production.1 Wheat. Wheat is the third leading field crop produced in the United States in terms of value of production. Only corn and soybeans are more important.2 According to a USDA report, about 383,000 farms harvested wheat. On average, these farms harvested 142 acres of wheat. About 17 percent of these farms harvested 250 or more acres of wheat, while 65 percent harvested less than 100 acres, indicating that wheat is often a supplementary enterprise.3 Of the farms producing wheat in 1978, 80 percent were located in the 16 leading wheat-producing states. lIbid., pp. 3-4. 2"Wheat—-Background for 1985 Farm Legislation" (Washington, D.C.: USDA Publication, Econ. Res. Serv., Agriculture Information Bulletin #467, September 1984), p. l. 3The wheat program would not be as important to a farmer for whom wheat is a supplementary crop as it would be a farmer for whom wheat is the main enterprise. Ibid., p. 2. 82 Farms with 500 acres of cropland or more accounted for 35 percent of wheat farms; those with less than 100 acres accounted for about 15 percent. Soybeans. The soybean industry is one of the fastest growing agricultural sectors. Domestic production increased more than 300 percent during the last 25 years. Soybeans are second only to corn in production value in the United States.1 It is a main source of protein for non-ruminants. The importance of soybeans in the United States declined during the 1980's. U.S. dominance of world exports eroded as well. Soybean acreage dropped about 20 percent between 1979 (71.4 million acres) and 1987 (57.4 million acres).2 Production declined by a smaller percentage because of higher average yields. Much of the growth in U.S. soybean use has come from export demand. The downward trend in U.S. Soybean acreage (Table 14 reversed in 1988. Continued short supplies, high prices, and production incentive provisions in the Disaster Assistance Act of 1988 contributed to an l"Soybeans--Background for 1990 Farm Legislation" (Washington, D.C.: USDA Publication, Econ. Res. Serv., Agricultural Information Bulletin, September, 1989), p. l. 21bid., p. 2. 83 expansion in 1989 soybean production, with planted acreage reaching 60.5 million acres.1 The number and size of U.S. soybean farms varies among farm production regions. ‘Farms with fewer than 100 harvested acres of soybean accounted for 62 percent of the 511,000 soybean farms in 1982, ranging from 39 percent of the farms in the Delta to 75 percent of the farms in the Appalachia. The average harvested soybean acreage per farm increased from 114 acres to 127 acres from 1978 to 1982.2 Cotton. Cotton is the single most important textile fiber in the world, accounting for about 67 percent of all fibers used. Cotton in grown in about 75 countries. China, the Soviet Union, and the United States account for about 60 percent of world production.3 During 1986-88, the United States produced about 20 percent of the world's cotton and used 10 percent. Cotton has been a major cash crop and an important source lIbid., pp. 1-4. 2Ibid., p. 2. 3Harold Stutts, et al., "Cotton--—Background for 1990 Farm Legislation" (Washington, D.C.: USDA Publication, Econ. Res. Serv., September 1989), p. 2. 84 of foreign exchange in the United States for nearly 200 years.1 In 1982, cotton ranked fifth among the major field crops in value of U.S. farm production, following corn, soybeans, wheat, and harvested hay. Cotton lint is used chiefly in clothing and home furnishings, with lesser amounts used in industrial products. The seeds are crushed for oil and the remaining meal is fed to livestock as a protein meal.2 Cotton is currently produced in 17 states from California to Virginia, with major concentrations in the Delta areas of Mississippi, Arkansas, and Louisiana; the Texas High Plains and Rolling Plains; Central Arizona, and the San Joaquin Valley of California. Soils, topography, elevation, temperature, and water availability are important determinants of where and how well cotton can be produced.3 Cotton acreage in. the United States increased from less than 8 million acres at the end of the Civil War to more than 44 million acres in the mid-1920's. Production over that period ranged from about 2 million bales in 1866 to about 18 million bales in 1926. Cotton 1Ibid., p. 13. 21bid., p. 2. 31bid., p. 3. 85 yields averaged about 180 pounds per harvested acre and rarely exceeded 200 pounds during the 1866-1930 period.1 From 1930 to the mid-1960's, acreage trended down, but yields moved upward. Yields increased from 268 pounds per harvested acre in 1950 to 527 pounds in 1965, about 4.5 percent per year. Since 1965, yields have shown considerable fluctuation, but no obvious trend until the 1980's, when average yield began to climb. While various government programs and prices of cotton and competing crops have influenced acreage, weather has been the chief determinant of year-to-year variability in yields. U.S. production has averaged more than 12 million bales year during the past decade, fluctuating from a low of 7.8 million bales in 1983 to a high of 15.6 I million bales in 1981.2 Dairy. Dairy products account for about 13 percent of total cash receipts from all farm commodities. Although milk is produced and processed. in every state, over half of total 1988 U.S. milk production came from Wisconsin, California, New York, Minnesota, and lIbid. 21bid.. pp. 4-5. 86 Pennsylvania. Over two-thirds of the total milk supply was produced in 10 states.1 The number of farms with milk cows declined from 2.8 million in 1955 to about 205,000 in 1989. The number of milk cows declined from 21 million in 1955 to 11.1 million in 1975, and 10.1 million in 1989. A 144 percent increase in milk production per cow enabled production to more than keep pace with commercial needs over the 1955 to 1989 period.2 The size distribution of dairy farms has changed over the last three decades. In 1959, 86 percent of the farms with milk cows had fewer than 20 cows. By 1987, only 33 percent fell in this category and they had only 3 percent of the milk cows. In contrast, only 7,172 farms (0.4 percent) had 100 or more cows in 1959, but in 1987, about 10 percent of the herds were in this category and had 42 percent of the milk cows. The average herd size3 1Richard F. Fallert et al., "Dairy--Background or 1990 Farm. Legislation" (Washington, D.C.: USDA Publication, Econ. Res. Serv., March 1990), p. 2. 2Ibid., p. 3. 3Hard size reflects only the size of the dairy enterprise, not the size of the whole farm's operation. 87 on all farms with milk cows was 50 in 1987. The average herd size on farms with five or more cows was 63.1 Broiler industry. The broiler2 industry is a dynamic segment of U.S. agriculture. Production increased from 34 million head in 1934 to more than five billion head in 1987, passing the four billion mark in 1981.3 Advances in production technologies through genetic research, equipment development, improved nutrition, and better management practices enabled the industry to produce meat faster with less feed. A 3.5 to 4.5 pound broiler can now be produced in 7 to 8 weeks, in sharp contrast to 12 to 14 weeks 40 years ago.4 Although. .new technologies are still being developed, their potential effect on the broiler industry is likely to be less dramatic than those of the past 30 years. The most promising development appear to be the use of poultry waste as a feed product, new equipment to 1Richard F. Fallert et al., "Dairy--Background or 1990 Farm Legislation" (Washington, D.C.: USDA Publication, Econ. Res. Serv., March 1990), p. 2. 2Young chicken produced for meat. Broilers usually are 3-5 pounds liveweight and 6-8 weeks old. The terms broilers, fryers, and young chickens are interchangeable. 3Floyd A. Lasley et al. "The U.S. Broiler Industry" (Washington, D.C.: USDA Publication, Econ. Res. Serv., Research Report #591, November 1988), p. 7. 4Ibid., p. 9. 88 conserve energy, better meet preserving methods, genetic improvement, and more effective disease control techniques.1 The major production areas are northwestern Arkansas, northern Georgia and Alabama, central Mississippi, eastern Texas, the Delmarya (Delaware, Maryland, and Virginia) Peninsula, Virginia's Shenandoah Valley, North Carolina, and central California. The numbers of U.S. farms producing broiler and other meat-type chickens dropped from 42,185 in 1959 to 32,348 in 1969, and then declined more slowly to 30,100 farms in 1982.2 Poultry farms are becoming more specialized and production more concentrated. The 19,158 farms selling more than 16,000 birds per year in 1982 sold virtually all the broilers. Of these farms, the 13,214 in the sales group of 100,000 birds and over captured 89 percent of the total sales, averaging 237,000 birds, or 500 tons liveweight, per farm. Although the total number of farms selling broilers has declined since 1959, the number of farms producing at a commercial level has increased. Farms raising at least 100,000 birds 1Ibid., p. 10. 2Floyd A. Lasley, et al., "The U.S. Broiler Industry" (Washington, D.C.: USDA Publication. Econ. Res. Serv., Research Report #591, November 1988), p. 7. 89 increased from 2,254 in 1959 to 7,634 in 1969, and to 13,214 in 1982.1 Comparing the USA and USSR Soviet livestock production is centered around two principal types of producers: the state and collective farms and the small-scale household or private operators. Although there has been enormous investment in the livestock sectors of the state and collective farms over the years, and account for almost 70% of Soviet livestock production, the returns on the investments have been poor relative to their Western counterparts.2 In the context of enormous resource availability and the continued large share of labor in agriculture, the Soviets have constantly pursued the extensive system (numbers of animals vs. productivity per animal unit) as their growth strategy, which is very varied from that obtainable in the intensive system employed by most Western countries, U.S. inclusive. The failure of livestock productivity to respond to the large investments has been a key factor behind the lIbid., p. 18. 2Edward C. Cook, The Soviet Livestoc_k Sector-- Performance and Prospect (Washington, D.C.: Publication Ff the USDA, Foreign Agricultural Economic Report #235, 1988), p. 5. 90 rapid growth in Soviet livestock production cost since 1965.1 Soviet livestock productivity is largely plagued by problems in feed quality,2 solution of' which has evaded the Soviet agricultural scientists and policy makers for several years. There are a number of similarities and differences in the U.S. and Soviet livestock sectors. They both have vast livestock holdings, with Soviet inventories of cattle and hog exceeding that of the United States since 1971 on. the average as shown. in Figure 6. In their composition of livestock production, both the USA and USSR produce beef more than any other type of meat, followed by pork, and thirdly poultry with. the highest growth rate in recent times as shown in Table 17. The USSR is first in world milk and egg production in quantity produced, followed by the United States. As earlier stated, the Soviet socialized sector which consists of the state and collective farms are responsible for almost 70% of Soviet livestock production 11bid., p. 3. 2By a measure of the percentage of protein and other necessary concentrated additives in animal rations. Investment in storage and processing procedure can help to steadily increase the feed quality. 91 .000. .H mmwumm mowumwumum nonemooum Odm "mousom ..Ummm 000.0 mmms cam 00: 0:0 ca mom can mauumu a. mmfluoucm>GH ucmomm .0 musmwm 7.32:! 33¢ 56. u. no. 8 a”. 0.... k. vs. vs. 0h. :: 00. 80 n9 . . o . . . o c c 0 u 0 JO 009 ./\.. EE> u” a. no. a. as. t. on. ch. 2.. K 8. so. oo o e . . o o . o . o o o J O ooN as -0". 0?. wok $0 92 Table 17. Production of Selected Livestock Products by Sector, USSR-—1985 (%) Poultry/ Sector Pork Beef Milk Meat Eggs Socialized Sector 65.0 83.3 77.1 65.0 71.9 (Industrialized Complexes) (19.5) (4.7) (4.8) (57.2) (62.6) (Other Farms) (45.5) (78.6) (72.3) (7.8) (9.3) Private Plots 35.0 16.7 22.9 35.0 28.1 Source: Edward C. Cook, The Soviet Livestock Sector-- Performance and Prospects (1988), p. 11. with the remaining 30% coming from private-plot livestock producers or households as shown in Table 17. Soviets have invested billions of "new rubles" in livestock housing and equipment, almost 4% of total economic investment since 1965, and this does not include investment in feed production and other activities related to livestock production. Figures in Tables 19 indicate that officially significant progress is being made in the effort to increase the level of mechanization. State farms are known to benefit more at the expense of collective farms in procurement of much needed farm inputs for major agricultural production. Figures in Table 19 show the degree of mechanization of 913 .000. xoonuuou ~000un.uuum 2: .H QQHHOW OUHUNMUQUW CONOOOOHQ Q‘h ”NOOH50M .ucou 0.uuafi :Hm 0.0.. 000 00 000 00 0.000 0.0 00 0.0 00 0.00. 000 00. .oo: 0.00 00. 00. .0. .0. 00 00. 00. 00 .0. 0.00 00 00. .00.:00 mu.mmo me 0.00. 000.0 «00.0 000.. 00..0 0.00 00..0 0.0.. 000.0 000.0 0..0 000.. 000.0 ...0. noon :0: 0.00. 00.0 00.0 00. .0. 00. 00. 00. 00.0 00.0 0.. 00.0 00.0 .00.000 Mum 0..0. 000.00 00..00 000.00 000.00 0.00. 000.00 000.00 000.00 000.00 0.00. 000.00 000.00 x..z 0.00 00. ...0 00.0 ...0 0.00 00.0 ...0 00.0 0..0 0.00 00.0 00.0 «00.000 Mom 0.00 .m..0. mm..0~ 000.0. 0.0.00 0.00 000.0. 0.0..0 000.0. 000.00 0.00 000.0 000.0. .0000 000: 000. 000. 000. 000 0000 000 0000 000 000 0000 000 0000 000 000 0000 000 0o a 00 0 00 o no 0000 000. 000. no 0000 000. 000. no 0000 000. .mcou o.uuofi 000.0 00.9000 00.000 000.0%:0:0000500um xooumo>wn amuUOHGm no comwummaoo «mm: 0:0 cm: .0. 0.008 94 Table 19. Degree of Mechanization of Livestock Operations in the State and Collective Farms of the USSR (%) 1970-1985. Operation 1970 1975 1980 1985 Cow Milking 56 73 9O 94 Feeding: Cattle 12 29 45 58 Hogs 28 6O 66 74 Poultry 38 73 85 91 Watering: Cattle 68 81 89 92 Hogs 81 95 94 96 Poultry 77 94 95 96 Stall Cleaning: Cattle - 30 56 75 94 Hogs 42 80 86 93 Poultry 38 78 86 91 "Complex" Mechanizationa Cattle 9 25 42 56 Hogs 23 56 63 72 Poultry 23 59 72 84 aCombination production and processing operations. Source: Narodnoe Khazyaistvo SSSR, Soviet Government Publication, Moscow, USSR various years. 95 livestock operations on Soviet farms. The state and collective farms are either almost fully mechanized with few still operating the traditional mode of farming, and are less specialized and with most of the operations unmechanized. A noted Soviet academician stated that: Soviet farms are plagued by the low quality of installed machinery, an inappropriate mix of available machinery. A shortage of spare parts for repair, poor quality of supplied feeds and an irregular supplly of electricity from the state power network. Much of American mechanization and relative investment figures are difficult to 'unravel from the extant materials. The difficulty lies partly in the immense regional differences, the complex technology, and the vast number of enterprises involved in the various aspects of livestock production. Accompanying this is a lack of coordinated data. There exist numerous farm documents on regional production data and reports of various states and of the U.S. government. Americans are more into highly mechanized system livestock production with an almost 100% mechanized procedure. U.S. farmers have over a long period of time tinkered with implements and equipment relative to their Soviet counterparts. lShmelyov Nikolai, Perestroika as Seen by an Economist, (Novosti Press Agency Pub., 1989), p. 21. 96 Overall, because of the organizational structure of Soviet agriculture, which is so different from that of the United States, one should not expect to find any resemblance in the investment profiles. The Soviet pattern is almost the exact opposite of the United States. The United States possesses great agricultural reserves in human and natural resources, knowledge machinery, and other capital. These are used by American farmers to satisfy their immediate needs most Iefficiently, and at times they remain unused. For example, on an American farm, it is not uncommon to find tractors and different types of machinery which may stand, idle during parts of the year. But they can be and are mobilized at peak periods of production and when extra efforts are required. The same is true of land. Over the last few decades a considerable amount of land has been taken out of production in the United States because farmers are paid by the government to idle land and also more is produced on less land, concentrating their efforts on the most productive land with increased use of farm machinery. If the demand warrants, much of this unused land can be quickly brought into production. Due to the system of private farming in the U.S., the major share of agricultural investment is carried out 97 by the farmers themselves, and hence, they always seek to maximize returns on their own and borrowed funds. In the Soviet Union, however, agricultural production, like all production, is planned by the government. Goals are established in physical terms—-so many tons of this and so many tons of that-—and these plans have to be taken as the major component of the "demand" of the economy for agricultural products. Thus the measure of success of Soviet agriculture is its ability to fulfill government plans. The fact of the matter is that Soviet agriculture often does not fulfill the goals set for it. For example, according to official Soviet figures, meat production goals that were planned to result in increase in several million metric tons, usually produced a minute increase in thousands of tons which is not due mainly to increased productivity per animal head, but in reality to actual increases in the number of animals as a whole. Since the late 1950s, Soviet agriculture has consistently failed to meet planned production goals for almost all commodities. According to CIA estimates, approximately 7596 of the money invested in American agriculture outside of land is used for increasing the stock of machinery. In the Soviet Union, the comparable figure is about 50%. At the same time, about 40% of Soviet agricultural 98 construction, compared to only about 25% directed to construction in the United States.1 According to Goldman,2 because of the passion of the Soviets for major construction efforts, Soviet planners tend to ignore more specific needs such as barns and auxiliary facilities on the farm. In confirmation, during the author's stay in Odessa, Ukraine between 1979— 1985, the absence of barn-like shelters on Soviet farms were quite noticeable in direct contrast to what one finds on American farms. Generally speaking, it is interesting to note that while grain production has been inadequate in the Soviet Union, meat and livestock production over the same period of time has been relatively more successful. As was mentioned earlier, increases in livestock production resulted from a determined effort to "industrialize" production in several livestock sectors. This raises the interesting question of why similar determined efforts were not used in other agricultural sectors. Some authors have advanced the explanation that the large share of labor that remain in agriculture has made it 1Marshall I. Goldman, U.S.S.R. in Crisis: The Failure of an Economic System, lst ed. (New York: Norton, 1983), pp. 79-81. 21bid., p. 92. 99 appropriate to allow ‘those. sectors that, can, absorb a large amount of labor (i.e., grain production) to continue to do so because of the absence of alternative nonagricultural work opportunities.1 This strategy differs significantly from the emphasis since World War II in most Western economies. The government has since recognized problems in agricultural production, but the attempted solutions put too much emphasis on addressing natural or climatic variables. For instance, over 1971-80, a large amount of money was devoted especially to irrigation and water control, unfortunately with poor results. By 1985, salinization and bog formation had claimed 30% of this irrigated land.2 Perhaps due to improper planning, foresight and management, with this poor return on investments and high percentage of labor usage, Soviet agricultural production costs and use of the enormous resources have continued to soar. lUSSR, _griculture and Trade Reports. Situation and Outlook Series (Washington, D. C. USDA Publication, Econ. Res. Serv., Report #RSBB- 2, May 1988), pp. 13- 15. 2Ibid., p. 17. 100 Fuel and Energy Resources The USSR There is a considerable amount of energy reserves and resources in the Soviet Union. The Soviet Union is the world's largest producer of oil and the second largest producer of fuels and energy in the world today (the largest is the United States). "Energy, along with other abundant natural resources, has historically been an important component of the material foundation of Soviet economic, political, and military power."1 Energy in the Soviet Union is very abundant relative to other natural resource endowments. Soviet planners have been able to meet the expanding domestic needs and also generate considerable exports of oil and natural gas. The Soviet economic system excels in the production of energy supplies. Energy includes commodities that Soviet. Central planning can control with relative ease. They are produced in. bulk, are relatively' homogeneous, and are easy to count. Furthermore, they are key inputs into the entire industrial process and are easy to sell on world markets in exchange for manufactured goods which 2the system finds it more difficult to produce. 1Ed. A. Hewett, Energy, Economics, and Foreign Policy in the Soviet Union (Washington, D.C.: The Brookings Institution, 1984), p. 1. 21bid., p. 24. 101 Table 20. Average Annual Growth Rate of Energy Production and Consumption and Net Trade in the Soviet Union for Selected Periods (1961- 82). 1961-70 1971—75 1976-82 1961-82 Energy Production 5.7 5.0 3.5 4.8 Energy Consumption 5.1 4.6 3.0 4.4 Net Export 12.0 5.7 6.7 8.9 Sources: Narodnoe Khozyaistvo SSSR, Soviet Government Publication, Moscow, USSR, various years. Special attention has always been. paid to the development and improvement of the energy economy in the Soviet Union. The Soviet economy today is structured basically the way it was structured by Joseph Stalin a half-century ago, geared toward industrialization through central command, and hence the Soviet energy sector are key inputs into the entire industrial process thus designed. The country has a powerful fuel and energy complex, accounting for nearly one-fifth of world production of fuel and energy resources with a high average growth rate. The energy economy of the Soviet Union is based on its own fuel and energy resources. In fact, the Soviet Union is a net exporter of energy. It ranks first in the 102 world as a producer of coal and oil, and second as a producer of’ natural gas and electricity. Production figures are set out in Table 21. The Soviet policy for the development of the fuel and energy complex are outlined in five-year plans and long-term comprehensive forecasts covering ten to twenty years at a time, details of which are worked out by state planning and economic agencies in collaboration with the scientific institutions of the USSR Academy of Sciences. Apart from the development of various traditional types of fuel (oil, coal, natural gas, nuclear energy, shales, hydro-energy, etc.), there is a growing contribution of alternative sources of’ energy sources such as solar and geothermal, to the Soviet fuel and energy balance. Most of Soviet exports of energy are to countries of the COMECON, and to some industrially developed Western countries (e.g., France, Finland, West Germany) and some developing countries (Cuba, Nicaragua, and Nambia). Production figures for the energy sector of the USSR are presented in Table 21 with estimates of the average annual percentage growth rates. In recent years, the fuel and energy complex of the USSR has come a full circle in development. There has been tremendous improvement, owning primarily to the advent of some imported Western technology. This is ..mux o. 00 600.000 0. ucoam>wswo ..0 mo c086 .0002 0003o_.x 000 :0: 0.0.0 u ucoHQ>00Uo ..0 00 0:0» mew. 0 103 .00000000 00.00.0000 000000 000. 0:0 .00.aocoom 000. 00000.0 0. 0.00: 000 “000000 0.00 0.00 0.00 ..00 .0.: .0.: 000.00. 000.00. 000.00 000.00 000.00 000.0 .00: :0. 000.00: 0.0 0.0 0.0 0.0 .0.: .0.: 000.000 000.00. 000.00. 000.00. 000.00. 000.00. .03: 0:0 Cuba: 00.00 00 0.0 0.0 0.0 0.0 000.00. 000.000.. 000.000.. 000.0.0.. 000.000.. 000.000.. 000.000.. 000.000 .032 :0. 00.0.00uo.0 ..0 0.0 0.. 0.. 000.00 000.00 000.00 000.00 000.00 000.00 000.00 000.00 A a as. 000 com0000uscuz ..0 0.0 0.0 0.0 000.000 000.000 000.000 000.000 000.000 0.0.000 000.000 000.00. .0: as. 000 Announz 0.0 ..0 0.0 0.0 0.0.000 .c.c 000.000 000..00 000.000 000.000 .0..000 000.000 00000o00 Esoaouuom 0.0- 0.0 0.0 0.0 000.000 000.000 000.0.0 000.0.0 .00.0.0 000.000 .00.000 000.000 ..0 00000 0..- 0.0 0.0 0.. 000.00. 000.00. 000.00. 00..00. 000.00. 000.00. 0.0.00. 000.00. 00.00.. 0.0 0.0 0.0 0.. 0.0.000 000.000 000.000 0.0.000 000.000 000.000 000.000 0.0.000 .moo 0.0900000 0.0 0.0 0.0 0.0 u- .0.: 000..0..0 ..0.000.0 000.000.0 .00.000.. 0.0.000.. 000.0.0.. 000000 .0000 000. 000. 000. 000. -000 - 0 u u . 0 0. 000. 000. 000. 000. 000. 000. 000. 000. 000. 000. ..0.0. 0 003o00 ItVIrE. ..ommdlohmav .mmma. co.000coum >0000m .HN OHDGB 104 evident above all in the improvement of all phases of primary fuel and energy resource development. Due to the discovery and development of rich oil and gas deposits, the share of oil and gas in the structure of production of energy resources in the USSR as shown in Table 22, has increased tremendously, Table 22. Percentage Change in the Mix of Primary Energy (1960-1987) (USSR) 1960 1970 1975 1978 1980 1985 1986/7 In Percent 011 30.2 35.5 44.2 45.0 46.4 48.5 50.1 Gas 7.8 15.3 21.6 24.3 30.1 32.6 33.6 Coal 53.4 42.2 29.7 26.8 18.9 15.2 13.0 Peata 2.9 1.7 1.2 0.5 n.a. n.a. n.a. Hydropower 1.0 1.0 1.1 1.4 1.8 2.2 2.8 Other 4.7 4.3 2.2 2.0 2.4 1.5 0.5 aRefers to partly decayed moisture absorbing plant matter found in ancient bogs and swamps, used as a plant covering or fuel. That is, solid fuel formed from the partial decomposition of dead vegetation under conditions of high humidity and limited air access (initial stage of coalification). Included is only that portion of peat used as a fuel. Source: Narodnoe Khozyaistvo SSSR, Soviet Government Publication Moscow, USSR various years. 105 especially gas production rising from 7.895 in 1960 to over 30% in 1986 and oil from 30% to 50% in the same period. The low quality sources such as peat are gradually being phased out. The increased share of better quality fuels are supposed to have had a beneficial effect on accelerated growth of the entire economy, agricultural production inclusive, because it made possible: mechanization process. The rapid increase of the share of oil and natural gas also has considerably weakened the efforts of the state to develop and streamline the output of coal and shales, which in turn, are also becoming more uneconomical to produce or further develop. An important part of the energy complex of the USSR is extensive construction and commissioning of nuclear and hydropower stations. There are large hydropower resources in the Soviet Union with enormous availability of untapped potential sources in this vast expanse of land and water. The gigantic ventures of the hydroelectric and nuclear' generative: capabilities were curtailed by the advent of the great Chernobyl disaster of 1986. Much attention is being devoted in long-range planning to raising the effectiveness of fuel and energy use. 106 In the account of a Soviet Delegation to an international conference sponsored by UNITAR (United Nations Institute for Training and Research) in 1981, the following very accurate statement about the predicament of Soviet energy distribution were made: The main fuel and hydroenergy resources (about 90 percent of the total) are located in the eastern regions of the country, while the main fuel and energy consumers are concentrated in the European part of the USSR. This discordance in the distribution of energy resources and consumers creates a certain difficulty and calls for the creation of powerful systems of transportation of fuel and electric power from the eastern to the western regions of the country. 011 Resources In recent times, progress is continuously being made in developing raw material base of the oil industry. Oil production has increased tremendously over the past two decades, which are set out in Figure 7, due to intensive prospecting in new regions of the country, especially western Siberia which has been determined to hold great reserves. The depths of the reserves in eastern Siberia and the European parts, still makes it questionable how to factor the availability of oil in these regions into the overall reserves of the USSR, but lReports of the Soviet Delegation, Long-Term Ener Resources (Ontario, Canada, UNTIAR Internationgf Conference, 1981), p. 2040. 107 .HN wanna “mousom ..moe ooo.. «mm: as coauosuoua Hfio mango .e museum m momp «map mom. «map oomv msm— onw— . . q A . . _O .oop .OON com 1 . GOV P'£: vamp owe Nmmp com 02% Cum— OC— cow com 00? - com com .OON "mousom .m ousmah l-coamcaczam 110 Bordtin depositsf1 Production figures for coal are set out in Figure 9. Currently the use of coal is declining and is being replaced by natural gas because of the increased emphasis on air quality and because natural gas is much easier and cheaper to produce and transport. Hydropower Resources The hydropower potential of the USSR is estimated at 3.9 trillion KWh average annual power generation. Of the reserves, 85% are concentrated in the rivers of Siberia, Central Asia, and the Far East. The hydropower potential that are economically profitable to develop at present is claimed to be in the range of 1-2 trillion KWh.2 However, there is no definite account available of the process by which planners decide on the allocation of investment funds between energy and the remainder of the economy and allocation among the various energy carriers. The USA The USA is a country with abundant energy resources, but constantly haunted by the spectre of energy scarcity. It is, in most instances, assumed that 1USSR, Agriculture and Trade Reports. Situation and Outlook Series, 1987-1989 (WaShington, D.C.: Publication of the United States Department of Agriculture, Economic Research Service, 1981), p. 2040. 2 Soviet Government Statistics (various years). 111 .Aommfilonmfiv mmmD 0:» ca COMHODOOHQ HmOU mo mUcmHB ”... _ : 2 ._ a. ma: :< 3. -..whgweii ---...mmg 1:99 .HN manna a. ILJ re CD ORE. tJ “mousom .m ousmam OO _. DON com. Gov OS 0 COO CDCUCITDCD O z e 112 the U.S. does not indeed have an overall energy policy that encompasses all spheres of energy production and use as exists in the USSR. Each piece of the energy policies of the United States was conceived in isolation, unrelated to any broad concept of natural need, and each piece was implemented independently of the conflicts and contradictions among the several pieces. Oil Resources The U.S. was once the paramount oil producer in the world, but it is currently ranked third after the USSR and Saudi Arabia. In most cases, it is generally believed that U.S. oil import levels are understated, and understated seriously.1 The shale oil deposits of the American West contain well over 600 billion barrels of potentially recoverable oil, which are equivalent to some three times the known reserves of Saudi Arabia.2 A massive program would be required to make a significant contribution from unconventional oil sources to the U.S. energy resources. However, in the U.S. these unconventional sources lie far beyond the planning horizon possible with today's political and economic 1Robert Mabro, ed., World Energy Issues and Policies—-Progeeding§ of the First Oxford Ener Seminar September 1979 (Worcester: Oxfbrd Universi y Press. 1980). PP. 228-229. 2Ibid., p. 230. 113 environment and could well be the reason for the vast discounting of these enormous energy resources. Natural Gas Natural gas is a very important part of U.S. energy supply. Under the U.S. system of natural gas pricing, each source of gas if flagged and assigned a particular price, which remains fixed, irrespective of what happens subsequently in the market. Gradually, these regulations are being removed. At the present time, the gas discovery rate in the U.S. is less than half of the production rate,1 so today's production is not self-sustaining; rather, it is production out of a dwindling inventory of proven reserves. There has been no real success in making additions to proven reserves since the late 19705, in spite of the dramatic rise in activities, and the reserve-to-production ratio is still falling.2 It has been determined that there is a tremendously large potential gas resource in the U.S. This resource occurs in unconventional deposits, among the most widely publicized of which are the gas pressured lIbid., p. 231. 2Oil and Gas Journal, International Petroleum News and Technology . A Pennwell Publication , March 26 , l 9 90 I P o 3 3 o 114 brine: deposits of' the Texas Gulf’ costs with. possibly 1 , GOO-trill ion cubic feet of gas in such deposits , at depths which are within the compass of conventional production technology.1 Coal The U.S. is amply endowed with coal resources. Known deposits exceed 1,000—billion tons which have been reasonably precisely delineated in numerous publications. That is equivalent to 1,500 years of' consumption at current U.S. levels. The route to coal-based plenty is beset with obstacles, the most widely-publicized of which is the environmental hazards associated with the direct combustion of coal. The problem with coal in the U.S. is not production, but in sharp contrast with oil and gas, utilization is the bottleneck critically dominating coal as an energy source. Currently, the U.S. has surplus coal-producing capacity, in spite of an overall energy shortage, but there are In: satisfactory' capability' to consume it. For an economy, such as that of the U.S., the expansion of coal use will lead to a creation of a lRobert Mabro, ed., World Energy_ Issues and Policies--Progeedings of the First Oxford Energy Seminar September 1979 (Worcester: Oxford University Press. 1980), p. 230. 115 synthetic fuels program. The key question is how the U.S. can use an old-fashioned fuel like coal and turn it into the forms of fuel which a modern industrial society is structured to use, namely gas or liquids. Nuclear The U.S. has very large deposits of low- and medium-cost uranium, large enough that they could serve even the earlier, larger-scale nuclear program for a period of at least 30 years.1 At the present time, U.S. policy toward nuclear power to say the least, is not a high priority. The administration has chosen not to promote nuclear power actively as a transition to some more remote policy based on renewables, such as solar or wind power. The momentum of the U.S. nuclear program has been lost. Construction is slowing down; some plans have been cancelled, and other have been deferred. Less nuclear power translates into more gas consumption, and hence, more oil imports via substitution. Comparingthe USA and the USSR Soviet political and economic journalists show a regrettable prediction for illustrating comparative rates 1Robert Mabro, ed., World Energy Issues and Policies--Progeedings of the Firs Ox or Energy Seminar September 1979 (Worcester: oxford Universi y Press. 1980), p. 230. 116 of growth in branches of Soviet and American industry by the use of graphs based on percentage increases.1 A more balanced and alternative view of the progress made by both countries in natural gas production in the 1970's and first half of the 1980's is given by the comparative production figures in Tables 21 and 23, and set out in Figure 10. The USSR, until the early 1980's, was second only to the United States in the production of natural gas. The yearly production during these periods was greater in the United States than in the USSR, but during the 1980's until present, the set out indications in. Figure 10, shows that the average quantitative increase each year has been higher in the USSR relative to the USA. This would imply that the disparity between the two powers is drastically changed in opposite directions with the USSR producing more natural gas than the USA. The USSR is in a much stronger position with regard to the ratio of consumption. to reserves. In 1982, the United States had sufficient proven reserves for only ten 3Ian F. Elliot, The Soviet Ener y Balance: Natural Gas, Other Fossil Fuels, and Alternat ve Power (New York: Praeger, 1974), p. 37. 11L7 . ...0; a. 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I ).-\\,V_1 ‘ \“u‘ uy“ TI'WT' :" Y "W." h V- ,th ... n" ~ \,» an". 'fia“ I": (7‘ u t I‘.'..‘ 1 |. u x‘ ' ' - .A > . ‘ ‘ I.‘ . ' * ‘ ~ ‘ ' ‘ ‘ ‘ ‘ ' .‘ “9““. '(\.‘\"-‘.‘.‘.n\c u) t“? '3‘ v‘u‘t. (fishy; ‘ I... .1 u "‘1““' _: .. . ..., .n_ \ . . \~ V, _ . ‘ . _ ~ ‘ ‘ ‘ ‘ ‘ .‘u‘. L I ' V14 . . ~.. . . 1‘“ \‘u R‘ ‘K n ' ' “ ““ {I V" ‘ X‘ ‘ . ' ‘ U' |\' ""n ' "I 3|» ‘ .‘n‘ | ‘l" ,. ‘ ’- 1 ' . -‘m .-.... 1980 I. . uh!" 'u‘u \ . ,nh‘z ‘ rv v ‘7‘ ‘-‘ > ‘ V ‘ ",v‘“ ._\ ""f “n ”‘u. . J. ...... . J. 1‘ w H I‘ ”3. . .. . ...... .. -. "-’-.‘v>-'-"t- ... .... \.x\.‘{ 1“ "'«“‘“ \‘u .. | y. \ I 3"“, . ’ “a“; ..‘h. ‘ .. n. \I ‘A““\‘\\" ‘\ ‘2 i“ . 'lM' . ._ , .. .- wl‘ .A‘). u. . ..- ... . . . ,, . . .. - w - .. ',. ~ “(\‘fi\\““\ . ,"\‘.\'a\\\“'.\\33.97:: v3.1.1 - . "'.‘\‘.\“-\"3"""' ‘\..'. Er: "'3“ .\i§\‘\-‘u\\\‘\¥\\~ ‘-‘~‘.‘-‘ ‘35" '.' -1‘. -.1 . 1970 T 500 — o o 200 100 SOSmNC'UO) 1983 1984 1985 1982 1975 the USSR and USA 11'! 10!] f Natural Gas Product parison o 3) Com (mn m Tables 21 and 23. Figure 10. Source: 119 years, while the USSR could continue to extract gas at the 1982 level for about fifty years.1 Also, the Soviet Union is in a stronger position than the United States as regards domestic oil reserves. Up until 1971, the total world production of crude oil was 2,465 million metric tons. The major oil-producing nation was the United States, and the USSR came second. Over recent years, however, the rate of extraction in the USSR has been rising steadily at about 6-7% compared with the world average increase of about 2-3% with a net drop in production in the United States in the early 1970's. Even allowing for factors such as conservation during the world glut of oil, output of oil in the Unites States is unlikely to expand at the same speed as in the USSR, which was certainly the major producer in the 1980's. Production per capita in the United States is expected to remain high, in view of its smaller population. It is also worth noting that while the USSR exports large quantities of its crude oil, the United States refines and consumes far more than it produces. Overall, the general trend in the production of energy in the United States tends to have flattened out or on the lIbid., p. 38. 120 decrease when one considers its total energy production, relative to an almost steady growth in the production of energy in the Soviet Union. This trend is likely to continue into the far future in a general framework of total energy production, if for nothing else, but the sheer size of the USSR land mass and the reserves of resources at their disposal, coupled with population size relative to the USA. Research and Development Despite considerable input of resources into the Research and Development (R&D),1 sector by the more than 5,000 scientific institutions and 1.5 million researchers in the Soviet Union (1987) indicated in Table 24, the output was disappointing. The goal of catching up scientifically with the United States, in the 1960's, has now been replaced by a struggle not to lag further behind. Primarily, the Soviet bureaucracy which fostered poor decision making, perverse personnel policies, 1At this level of generality, Soviet discussions of energy and agricultural policy and the associated Agro-Energy R&D jpolicy seem. eminently sensible. 'The planners are fully appreciative of the problem of uncertainty, the need for revisions of forecasts, the importance of creating a backlog of information that can improve decisions as time passes. 121 .mofiumaumum unassum>oo ammo «mompom ~.om m.mh b.0ma o.mm v.mmv H.hv m.mHmH puma ¢.mm o.mn H.va m.Hm m.~>v h.mv m.oomn mama h.mm m.hh m.HMH o.Hm m.mmv m.ve n.amva moms H.Hv 0.00 5.0aa v.>~ m.mmm >.hm m.m>ma ommH m.mv o.mm m.mo H.mH m.v~m o.m~ h.th onma n.0m m.o~ N.om m.m m.mm m.oH N.v0m coma o.m~ w.HH m.Hm m.m m.mv m.m m.~oa ommH unnumwmmc 0cm .mOum .>Emcmo¢ uoxuoz uoxuoz on» no umnfioz noumomom soummmmm mumHUOmmc mocowom mo oocowom Amcwcumoq magma: MOwcsn qucom .cmwowamomoc oumowccmo no nouooo mo mcoauauwumcu mo muoumoaofl mcwusdoch Ham» mo xcmm UHEovmoc mo omumoo uuoxuo3 schoonum ocfloaom omosa mumxuoz noncommm Had No ocapaom 80:3 no no nonaaz Hmuos Adamoom mo ocmmsocu “mmusmfiwlumomleIccmv mmm: any cw mnoxuoz noumomom mo Hones: .vm manna 122 disastrous information policies and a misguided system for financing scientific research, bore responsibility for the low efficiency of Soviet science. The party and bureaucracy interfered in and greatly retarded progress of scientific work. As a result of personnel policies riddled with party favoritism, incompetent people were often appointed and promoted to positions with the results too frequently being poor and misguided decisions. People with favorable KGB files were more apt to being given responsibilities than those with keen scientific abilities.1 This no doubt resulted in a degradation of the standards of professional thoroughness. In order to progress through the hierarchy of scientific bodies, it became impelling to practice obedience to the party. This facilitated access to power, money, and privileges. A society restricted by the Soviet form of government had little or no access to necessary information. The scientific community suffered from this deprivation of information that could have been used to advance Soviet Science. Special permission was often required to consult foreign scientific journals, when 1Michael Ellman, The USSR 19 the 19905-- Stru lin Out of Staggation Special Report No. 1152 (Longon: The Economist Intelligence Unit, 1989, pp. 33- 39. 123 available. It was even much more difficult to attend international conferences or have foreign study leave. Allocation of funding for research is done through the .Academy of Sciences and other government bodies. Bodies which have been implicated in favoritism and consequent incompetence. People with inadequate knowledge and judgment of science are in positions to evaluate, select, and fund scientific projects. Invariably potentially beneficial projects are insufficiently funded or rejected while more absurd projects get adequate funding. In view of these seeming fundamental problems of decision making, personnel, information and finance, it is scarcely surprisingly that there is an enormous "performance gap" between the huge Soviet inputs into scientific research and the meagre results. Professor Frank-Kamenetski, head of a laboratory of the institute of Molecular Genetic of the USSR Academy of Sciences believes1 that a system patterned after the U.S. or West Germany, in which individual project leaders make grant applications which are judged on merit, would aid USSR scientific development. Perestroika has initiated efforts to remove the discrepancies between input into, and results from Soviet 1Literaturnaya Gazeta, 1988. 124 sciences. Progress in this direction has been slow and the directions have been misused in cases. Personnel evaluation, for instance, has resulted in the removal of independent scientists rather than the gifted being promoted and the incompetent weeded out. Unless such injustice is removed and corrective: measures properly applied, the Soviet Union will continue to lag behind the U.S. and the other Western countries scientifically. The need for innovation in the USSR is poorly placed. It is often in order to overcome supply difficulties and hardly to expand the market. The industry is reactionary simply because the economy is saddled with shortages of input and process limitations. Market limitations or product innovations are not the problem. It is evident though that the financial incentives for innovation are poor because of the long time it takes inventions and processes to reach the market. Martens and Young1 found that it took the USSR three times as much investment time as the U.S. or West Germany to implement 50% of their inventions. The transition to oxygen converter process for steel has lagged far behind in the USSR even though the introduction was at a similar time as in the US, West lMartens and Young, Soviet Economp in a Time of Change (Washington, D.C., 1979), pp. 505-506. 125 Germany, and Japan.1 This apparent lukewarm attitude toward change and innovation is primarily a result of state interferences, policies, and attitudes. The Soviet system of investment encourages long construction periods. The result is that by the time Soviet industrial plants are completed , rapid technological progress in the West makes them obsolete for the period they are completed. Nonetheless, firms in the USSR have little incentive to develop new products because of a centrally planned economy that lacks competition and has a guaranteed market. Soviet economic growth has been supported by the duplication of new ideas and projects from abroad because of the slow developments of domestic inventions. Technology transfer in the civilian sector has not succeeded in advancing the technical level of the USSR since the technology or parts are usually not reproduced before they become outdated. The military sector has fared better because of the emphasis placed on military competitiveness in the past. Obsolete equipment contributes to the low quality of Soviet consumer goods. Equipment in rarely modernized or factories re-equipped over a period spanning 15-20 1Michael Ellman, The USSR 13 the 1990s-- Stru ling_ Out of Staggation, Special Report No. 1f5_2 (Lon on: The Economist Intelligence Unit, 1989), p. 24. 126 according to A. P. Biryukoval who observed that over 1971—85, light industry which accounted for 14% of total industrial output only received 4% of total industrial investment. The government has set out to increase investment in light industry such that by the late 1990's, investments would mature. At this time, it is hoped that the quality and quantity of light industry output and consumer durables should increase. Gorbachev has taken steps in the hope of productively restructuring the infrastructure. Quality control and investments have been introduced in order to raise short—term and long- term project quality, respectively. The state monopoly on trade is being removed and joint ventures with Western. firms allowed, especially in the energy sector, such as the joint venture of the natural gas production with France and some other industrialized western countries. This helps to accelerate technical progress. It has been found necessary, however, to continue with a large-scale centralized Research and Development program in the areas of new materials, computer technology, and biotechnology. It seems inevitable that the success of these reforms are dependent upon the success of the radical economic reform in the USSR. The 1Pravda, 4 March 1988. 127 author does not foresee significant results before the mid-1990's. Summary3—Research Question 2 The goals of the Soviet agricultural policy are to) maximize domestic agricultural output, to maintain stability in production growth, and to increase efficiency of resource 'use in agriculture, while remaining consistent with communist ideology. Thus the Soviet Union still tolerates devoting almost 35% of the state expenditures and retains a large agricultural labor force still insufficient to meet agriculture's needs1 and also unavailable for use by other labor-short sectors of the economy. The specific empirical question examined is whether, from the point of view of a comparative analysis, there has been a widening of inter-country disparities over recent years and various planning periods and process as pertain to the economies of the 1Migration from farms involves primarily the young and the more skilled, leaving behind people largely outside of working age. Available demographic data suggest the migration is on an increase now. The loss of trained personnel is having a great deal of strain on Soviet agricultural production. Official statistics suggest that fewer than half of the Soviet graduates from agricultural institutions return to work on the land. 128 USA and USSR, mostly in the agriculture and energy sectors, as posed by Research Question 2. It is conclusive by evidences shown that over the span of various planning periods, especially in the emphasized recent decades, from the 1960's to 1980's, there occurred numerous changes in the performances of both sectors (agriculture and energy) in the economies of the USA and USSR and a great widening of these differences in the agriculture and energy sectors of both economies. The Soviet grain production situation has grown worse, becoming a source of "leakage" in the entire economy. Progress has been made and more energy resources brought into use in very large quantities surpassing the lead that the USA had in this sector in the past. Nonetheless, varied indicators show that the USSR is still far from maximizing its potentials in improving agriculture and energy productivity, to surpass or be at par with the U.S.A. There is a great reliance on oil and gas almost exclusively as the means to satisfy the growing energy demand in the Soviet Union. Summing up general results of the state of explored fuel and energy resources, one can say that there has been a great leap in the use of these resources, especially natural gas, in the USSR relative to the USA. 129 Nonetheless, Soviet sciences is marred by big inputs and meagre outputs. This discrepancy is caused by poor decision-making processes, perverse personnel policies, disastrous information policies and an ineffective system for financing scientific research,1 and this, though not in itself conclusive, is a major contribution to the reason why they lag behind the USA and many industrial countries in the West and a cause of the widening of the "performance gap." lMichael Ellman, The gussa 19 the 1990's: Struggling Out _of Stagnation, Special Report No. 1152, 1989 (London: The Economist Intelligence Unit), pp. 36- 38. CHAPTER IV ENERGY UTILIZATION IN AGRICULTURE Energy is an important input in the agricultural production process of both the USA and the USSR. Many decisions affecting the current structure of agriculture and use of energy in agriculture were made during an era of inexpensive energy.1 Prices for oil, natural gas, and liquid petroleum gas (LPG) have risen substantially over the past ten to fifteen years. Since 1972 the world economy has faced two severe shocks: food production and petroleum. Both commodities are basic to the economic well being of all countries, hence shortages and rapid price increases for both energy and food have had serious impacts on the world economy. Fossil fuel is one of the major inputs in agricultural production. Currently the high yields with relatively small inputs of manpower are associated with 1Anthony F. Turhollow Jr. et al. Potential Impacts of Future Energy Price Increases ' on U . S . Agricultural Production. Ames, IA: Center for Agricultural and Rural Development (CARD Report #116), Iowa State University, April 1983, p. 1. 130 131 mechanized agriculture and are due essentially to ample supplies of inexpensive fossil energy. In. agriculture jproduction, fossil energy' has a twofold use, that is to increase crop, livestock, and forestry yields and also to replace labor.1 The major inputs that increase crop yields include energy used in fertilizers, pesticides, herbicides and irrigation. The major inputs for livestock production are forage and grains used for feed. Though energy used to reduce human labor input in crop production has less effect on crop yield, it nonetheless, helps to facilitate the timing and operations of most farm processes.2 Hence, machinery has greatly reduced the labor input into agricultural production. . There has been a significant increase in yield in agricultural production in the U.S.A. and USSR since the 19403 and 19505. This has been as a direct result of improved livestock breeding and development of high yielding crop varieties, coupled with improved and organized farm management. There has been increased use of fertilizers, pesticides, irrigation, and rising use of lDavid Pimentel , Ed . , Handbpokj of Energy Utilization in .Agriculture (Florida: CRC Press, Inc., 1980). P. 3. 2Ibid., p. 4. 131 132 farm machinery, all of which depend primarily on fossil energy to operate. There is no precise way to account for the energy used indirectly in agricultural production. This would be the energy that goes into the production of machinery, equipment, buildings, and other nonland resources that contribute to food and fiber production over the long team and are normally treated as capital assets, one of the most important of which is farm machinery. The USA Since the turn of the century, energy use in U.S. agriculture has changed dramatically, although the amount of harvested land has remained relatively constant. Since 1920 with a possible slightly downward trend in the rate of increase, the average index of farm output in the U.S. has increased two and a half times between the 1915 to 1920 period and the decade of 1977—1986. (See Table 6). Most of this increase is accounted for by energy- intensive technology. Research suggests that about half of the increase in energy inputs has gone to improve productivity (with such inputs as fertilizer and chemicals). Complete data on energy consumption in agriculture are not available for recent years. The 133 available data base in most research reports date back to 1974 during the period of the energy crisis with a revision in 1981. However, one important study published in 1984 as an update to the available 1974 data base estimated that approximately 3% of all the energy consumed in the United States is used on farms. Gasoline, diesel fuel, heating oil, and liquefied propane (LP) gas constitute nearly half the energy used in agriculture in 1981.1 Stanhill also indicated that the entire U.S. food system, including all operations from field production to the kitchen table, uses about 16.5% of the nation's energy: 2.9% in production agriculture, 4.8% in processing, 1.7% in distribution and transportation, and 7.1% in food preparation and rural living. Production agriculture in the United States used approximately 28.8 billion .liters (7.6 x 109 2 gal) of liquid fuel in 1980. Most of this is used in mobile and stationary combustion engines. Indirect energy use in 1G. Stanhill, Energy and Agriculture (New York: Springer-Verlag-Berlin Heidelberg, 1984), p. 169. 2Randall E. Torgenson and Gene Ingalsbe, "The Future of Farmer Cooperatives" (East Lansing, MI: Cooperative Extension Service, Michigan State University, 1984). 134 the form of agricultural chemicals (fertilizer and pesticides) increased about 11%.1 Energy Use by Fuel In clarifying energy use by the type of fuel, there are wide variations in which the four types of fuel are used for agricultural purposes. Diesel used for machinery constitutes about 80 percent of total machinery energy use and between 44 and 53 percent of total energy. Most of the diesel not used for machinery is used for the interregional transportation of crops.2 The bulk of natural gas required by agriculture is used in the production of nitrogen fertilizers. The amount of energy used in nitrogen fertilizer production is fixed in proportion to the amount of nitrogen fertilizer used. So, changes in total natural gas use closely follow changes in nitrogen fertilizer use.3 lG. Stanhill, Energy and Agriculture (New York: Springer-Verlag-Berlin Heidelberg, 1984), p. 169. 2Anthony F. Turhollow Jr., et al., Potential Impacts of Fugure Energy Prices Increases on U.S. Agricultural Production (Ames, IA: Center for Agricultural and Rural Development , Card Report it 1 16 ) , Iowa State University, April 1983), p. 37. 3Ibid., pp. 37-38. 135 LPG is used either for irrigation purposes or for crop drying which accounts for more than 85 percent of total LPG use.1 The use of electricity in irrigation makes up a significant portion of total electricity use. Irrigation does not account for a significant portion of total fuel use for the other three fuels.2 Electricity is quite inexpensive in the Northwest, and due to the predominance of surface water irrigation in the Northwest and Southwest, the energy required to obtain and apply an acre-foot of water is generally less than in other important irrigation areas in the Great Plains and the South Central states.3 Crop Production-—Irrigation Production alternatives within the producing areas are represented by more than 15,000 rotations which allow for producing crops in various combinations with varying tillage practices and varying levels of fertilizer and irrigation water utilization.4 1Ibid., p. 38. 2Ibid., p. 39. 3Ibid., p. 42. 4Ibid., p. 11. 136 Much energy is needed to get water onto irrigated cropland and such needs are very demanding on existing energy sources. The importance of crop production in the U.S. through irrigated fields focuses attention on energy quantities, prices, and expenditures. Irrigated crop acres in the U.S. have increased from 7.5 million in 1900 to 48 million in 1988.1 These acres account for 15 percent of harvested cropland (Table 25). Any effort to intelligently' discuss irrigation with regand to the U.S. cropland will be futile without putting it in a regional perspective. Much of the cropland in the Western section of the country would not be of any agricultural significance without irrigationfl For example, California, a leading state in the value of farm products sold, cultivates almost 98% of such produce 2 on irrigated farms. The arid Southwest has lost irrigated cropland in states experiencing declining lJohn Hostetler & Gordon Sloggett, "Energy and Irrigation," in Inputs Outlook and Situation ISO-3 (Washington, D.C.: U.S. Department of Agriculture, Econ. Res. Serv., August 1984), p. 23 and "Agricultural Resources--Cropland, Water, and Conservation," in Situation and Outlook Report AR12 (Washington, D.C.: U.S. Department of Agriculture, Econ. Res. Serv., September 1988), p. 27. 2 U.S., Department of Commerce, Bureau of Census, Census of Agriculture, volumes of various year. -: Washington,lD.C.: U.S. Government Printing Office. 137 Table 25. U.S. Irrigation Trends from 1900-1988. Year Harvested Acreage Irrigated Acreage Percent (Million Acres) (Million Acres) Share Irrigated 1900 415 7.5 2 1930 359 19.5 5 1950 344 27.9 8 1978 320 50.3 16 1982 326 49.0 15 1983 380.5 44.3 12 1984 373.5 45.5 12 1985 367.2 47.2 13 1986 356.3 46.9 13 1987 331 45.7 14 1988 328.2 47.9 15 Source: USDA Agricultural Statistics, Various Issues and "Agricultural Resources--Cropland, Water, and Conservation," in Sitpation and Ogtlook Report AR12 (Washington, D.C.: U.S. Department of Agriculture, Econ. Res. Serv., September 1988), p. 27. 138 groundwater levels.1 In parts of the humid Eastern states, supplemental irrigation. has ‘been. increasing’ as farmers attempt to raise returns per acre and reduce weather risks. Supplemental irrigation has increased in the Lake states, most of the Corn Belt, and especially the Southeast. Pump irrigated acreage in the United States increased over 27% from 1974 to 1983 with groundwater being the major source (Table 26). Electricity, diesel, Table 26. Irrigated Acreage with On-Farm pumped water (in millions AcreS) 1974-1983. Water ’ Acreage Change Source 1974 1988 1980 1983 Change 1974-83 1974-83 Ground Water 25.6 30.0 31.6 33.1 7.5 29.0 Surface Water 7.3 8.0 7.9 8.2 .9 12.0 Both Sources 2.2 2.3 3.1 3.3 1.1 50.0 Total 35.1 40.3 42.6 44.6 9.5 27.0 Source: Agricultural Statistics (USDA), Vols. 1974-1983. 139 gasoline, natural gas, and liquefied petroleum gas (LP gas) are used for pumping irrigation water. Electricity is the energy source most widely used. The Mountain and Pacific regions accounted for more than half of all acreage irrigated with electricity in 1983 (Appendix Table B-1). Annual rates of electricity use for irrigation pumping increased 5% between 1974 and 1980. Between 1974 and 1980, rates of growth in electricity use were highest in the Corn Belt and Delta States, but dropped in Appalachia, where North Carolina accounted for most of the change (Appendix Table B-l). Natural gas is also widely used; in 1983, about 11 million acres were irrigated using natural gas-powered pumps, mainly in the petroleum-producing Plains and Mountain regions. There was an increase in annual growth rate in natural gas use in the Northern Plains from 1974 to 1980, and a decrease in the Southern Plains use during the same period, which may have been due primarily to the overall decline in irrigated acres and the increase in natural gas prices. There has been an increase in the acreage irrigated under diesel fuel pumping from 3.9 ndllion in 1974 to almost 8.6 million in 1983. The use of such fuels are mainly concentrated in the Northern Plains, Southeast, and Delta States, where electricity and 140 natural gas prices are higher and installation costs for these energy sources are substantial. The use of liquid petroleum and gasoline are on the decline. These two energy sources are used in localized situations where smaller, more mobile irrigation systems are ‘used, and other, cheaper alternative fuels are unavailable. According to Hostetler and Sloggett, energy use per acre for on—farm irrigation pumping depends on three factors:1 1. distance the water must be lifted from its source to the field 2. the type of application system used, and 3. the quantity of water applied. The desert areas of Arizona, California, and Nevada and the dry plains of the Pacific Northwest require more water per acre, and hence, greater amounts of energy for irrigation than does acreage in the more humid East. This is also influenced by the kind of crops grown in these regions. Per acre energy use for almost all types of fuel rose between 1974 and 1983 as shown in Table 27. Use of electricity increased by 4%; diesel, gasoline, and LP gas 1John Hostetler and Gordon Sloggett, "Energy and Irrigation," in InputsJeOutlook and Situation ISO-5 (Washington, D.C.: U.S. Department of Agriculture, Econ. Res. Serv., August 1984. 141 .mumo» msofium> now gamma. mOflumwumum Housuasofluma “mousom m.o 0.0 mm mm ma mm Hmo mmo on 0.0 o.H mu mu mu NH mo: mmo Hmuzumz o.H o.e no He or me are mcedommo o.v o.m mm mm mm be How Hommflo m.o m.o mmo.H mmo.H eeo.a m~o.~ sax aufiowuuooam OmD OHUANIHOA v.0 o.H emm «mm «mm mmm Hmo mum on m.o- o.~ sea meu med emu mos He: mmo Hmuaumz o.~n o.~- em do me em fine He: mewHOmmo o.m o.m~ omm mme com emu are He: Hmmmwo o.m o.m mm Hm mu ed ass HA: xufloeueomum “mm: Hmuoa mm-ommH omueeeu Awe mmcmro mama ommfi Beau eemfl Dec: moxe Hmsm mmmuo>< Hmscca umumz coflummfluuH pmoEuo Eumuuco MOM mm: mmumcm muodlumm 0cm Hmuos .i Ilultl 1i. IIU. ..mmmfluqhepa .hm manna 142 use per acre increased by more than 30% from 1974 to 1983, but the use of natural gas remained fairly constant. The increase in use of energy per acre were attributed to three main reasons: --79% of the increase in irrigated area relied on groundwater rather than surface water supplies, i.e., 7.5 million of the 9.5 million-acre increase was in groundwater irrigation --Groundwater levels are declining in some areas of the Plains and Mountain regions, making the lifts greater --Of the newly irrigated land, sprinkler systems were utilized on 86 percent of the acreage, rather than. gravity—flow systems. A significant share of these systems relied on diesel fuel for pumping.1 Total energy use for on-farm pumped irrigation increased for all fuel sources except.igasoline Crable 27). The largest increase was diesel that almost tripled in use between 1974-1983. Electricity use expanded by almost 5 percent per year, primarily due to groundwater pumping. lMaurice Levy, and John L. Robinson, Eds. Ener and Agriculture; Their Interacting Futures--Policy Implications of Global Models (1984), p. 130. 143 Table 28. Changes in Farm Energy Prices--USA—-1974-1983 $ Per Unit Average Annual Changes (%) 1974 1977 1980 1983 74—80 80-83 Electricity (kwh) 0.027 0.035 0.055 0.065 17 7 Diesel (gal) 0.37 0.45 1.00 0.99 28 -0.3 Gasoline (gal) 0.47 0.57 1.15 1.18 24 1 Natural gas (MCF) 1.00 1.50 2.50 4.00 25 20 LP Gas . (gal) 0.30 0.39 0.62 0.77 18 8 Source: U.S. Department of Commerce, Census of Agriculture. Vols. for various years (Washington, D.C.: U.S. Government Printing Office. 144 There has been a tremendous change in energy prices (Table 28) and, consequently, the cost of irrigation. Electricity expenditures accounted for about 46% of all energy costs incurred for irrigation in 1983. Natural gas has been the. cheapest fuel for internal- combustion engines, and it is used extensively for pumping irrigation water in the Great Plains and Mountain regions. Irrigators close to natural gas distribution systems in these areas enjoy a cost advantage over users of diesel, gasoline, LP gas, and electricity. However, recent increases in energy prices are changing the price relationships. From 1974 to 1980, electricity and LP gas prices rose annually by 17 percent and 18%, while gasoline, natural gas, and diesel increased 25 percent or more. Significantly, between 1980 and 1983 diesel prices actually declined while all other energy sources, except natural gas, increased 3 to 8% annually. Natural gas prices rose by 20% a year. Pumped irrigation energy expenditures in the major producing regions of the Lake States, Southeast, and Corn Belt grew much faster than in other regions from 1974 to 1983, but in the Delta States prices rose faster between 1989 and 1983 than during 1980-84 (Appendix, Table B.2). 145 Fertilizer Production and Usage Fertilizer, which requires enormous energy for its production, is the largest energy input in producing field crops. On the average, about 35 percent of the energy used in growing crops is required to produce fertilizer.l Thus, efforts to use fertilizer more efficiently by soil testing will save both energy and money. Research has shown that as much as $43 per acre and 1,800 BTU's per bushel annually can be saved by applying the correct amount of fertilizer to grain 2 production. Fertilizer production technology that is typical of current U.S. practice was used as basis for estimating energy required for processing and eventual production of fertilizers used in the agriculture production processes. Papers by Blouin and Davis3 give detailed breakdowns of the energy required for fertilizer production operations which can be summarized as follows. 1G. M. Blouin, and C. H. Davis, "Energy Requirements for the Production and Distribution of Chemical Fertilizers in the United States." Paper presented at Southern Regional Education Board Meeting, Atlanta, Georgia, October 1975), p. 320. 2Marvin Duncan, and Kerry Webb, Energy and Americen Agriculture (Federal Reserve Bank of Kansas City, Research Division, 1980), p. 29. 3G. M. Blouin and C. 1H. Davis, "Energy Requirements for the Production and Distribution of Chemical Fertilizers in the United States," (Paper presented at Southern Regional Education Board Meeting, Atlanta, Georgia, October 1975), p. 321. 146 Nitrogen fertilizers. Nitrogen fertilizers have embodied in them a substantial portion of all energy used in agriculture, between 25 and 30 percent in all solutions. Nitrogen fertilizer can serve as a substitute input for land and irrigation water. As the level of demand increases, so does the intensity with which nitrogen fertilizer is used.1 Essentially, all nitrogen fertilizer is derived from ammonia. A substantial proportion of the ammonia (37%) is directly applied, and almost all of the remaining is used to produce urea, ammonium nitrate, or compound fertilizers. An approximation of the total nitrogen requirement for each is given in Table 29. Ammonia. About 95% of the U.S. ammonia production is based on natural gas with about 38,000 standard cu. ft. of gas (at 900 BTU/cu. ft.) required per ton of ammonia. Total energy consumption is about 42 million BTU/ton N. About 99% of the energy is supplied by gas and the remainder by electricity. Ammonium nitrate. Oxidation of ammonia to nitric acid and then neutralization of the nitric acid with 1Anthony F. Turhollow Jr. et al., Potential Impacts of Fugure Energy Price Increases on U.S. Agricultural Production (Ames, IA: Center for Agricultural and Rural Development, Card Report #116, Iowa State University, April 1983), p. 29. 147 Table 29. Production of Nitrogen Fertilizer, by Type Type Amount 6 Percent (Tons N x 10 ) of Total Anhydrous Ammonia 3.4 37 Ammonium nitrate 2.0 22 Urea 1.4 15 Ammonium sulfate 0.2 2 Mixtures 2.1. _23 TOTAL 9.1 100 Source: G. M. Blouin, and C. H. Davis, "Energy Requirements for the Production and Distribution of Chemical Fertilizers in the United States" (Paper presented at Southern Regional Education Board Meeting , Atlanta , Georgia, October 1975), p. 321. 148 additional ammonia produces ammonium nitrate fertilizer. Production. of' ammonium .nitrate (pills requires about 8 million BTU/ton N in addition to the energy required to produce the ammonia (total of 50 million BTU/ton N). For the ammonium nitrate solution, about 4 million BTU are consumed, not including ammonia preparation (total of 46 million BTU/ton N). Ugee. Urea is produced by reacting ammonia and carbon. dioxide at Jhigh temperature and pressure. Conversion of ammonia to pilled urea requires about 7 million BTU/ton N, resulting in a ‘total energy consumption of about 49 million. BTU/ton. Nu .About 3 million BTU/ton N are required to covert ammonia to urea solution, giving a total of about 45 million BTU/ton N. It is estimated that the 5.2 million tons of P205 consumed in 1974 consisted of about 3.2 million tons as ammonium phosphate and about 1.7 million tons as triple superphosphate, plus other mixtures used in the composition. Potassium fertilizers. About 90% of the potash fertilizer consumed in the United States is derived from potassium chloride. About 40% of the potash is directly applied and about 60% is used in mixtures. About 4 million BTU is required per ton of K20 for mining and processing of fertilizer grade potassium chloride. 149 Total energy consumption for the production of fertilizers. The total energy required for production of fertilizer in the U.S. is summarized in Table 30. The figures presented are the most recent available for actual measurements made in a comprehensive investigation of energy use in agricultural production undertaken by the Economic Research Services of the USDA in cooperation with the Federal Energy Administration, results of which were published as the 1974 Agricultural Energy Data Base (FEA/USDA, 1976). It is the author's opinion that improvements and technological progresses through better and greater machine efficiency, production management, and numerous conservative practices that have emerged in recent times, could have greatly altered the structure of the presented figures, but there is no available research or data to support such opinions. The total requirement is about 40 x 1012 BTU. Nitrogen materials and intermediates consume about 85% of the total energy required for production of U.S. chemical fertilizers. Energy requirements for transportation and distribution. Blouin and Davis1 have estimated energy 1G. M. Blouin, and C. H. Davis, "Energy Requirement for the Production and Distribution of Chemical Fertilizers in the United States" (Paper presented at Southern Regional Education Board Meeting, Atlanta, Georgia, October 1975), p. 98. 150 Table 30. Total Energy Requirements for Production of Fertilizers in the United States Quantity Energy Requirements (tons x 106) (BTU x 106) (BTU x 1012) Materials and Intermediates Nitrogena Ammonia b 9.1 42 382.2 Solid Urea (0.7) 7 4.9 Urea Solution (0.7) 3 2.1 Solid a onium nitrate (1.3) 8 10.4 Ammonium gitrate Solution (0.7) 4 2.8 Subtotal, Nitrogen 9.1 402.4 Phosphatea Wet-process acid 4.4 10 44.0 Triple b superphosphate 1.7 1 1.7 Granular ammonium phosphate 2.7 1 2.7 Ammonium polyphog- phate solution 0.5 5 2.5 Normal Superphosphate 0.3 2 0.6 Subtotal, Phosphate 5.2 51.5 Potassiuma Potassium Chloride 2.5 4 10.0 Subtotal, Materials and Intermediates 463.9 a Per ton N, P205, or K20. bDoes not include the energy required to produce the intermediates. Source: G. M. Blouin, and C. H. Davis, "Energy requirements for the Production and Distribution. of' Chemical Fertilizers in ‘the United States." Presented at Southern Regional Education Board Meeting, Atlanta, Georgia, October 1975, P. 324. 151 required for transportation of fertilizer raw materials and intermediates and distribution of products. The energy requirements for different modes of transportation in BTU/ton material are: truck, 2400; rail, 670; barge, 550; pipeline, 450. The estimated total annual energy requirement for transportation of raw materials for fertilizer manufacture is 5.3 x 1012 BTU, of which nitrogen and 12 phosphate account for 0.7 and 4.6 x 10 , respectively. Estimates of the energy required for transportation of fertilizers are given in Table 31. The total for all products and all forms of transportation is 30.2 x 101:2 BTU. Of this total, truck and barge transportation account for 11.9 and 10.8 x 1012 BTU, respectively. Field application. The estimated energy required for field application, which is summarized in Table 32, totals 9.4 X 1012 BTU per year. From the estimates given in Table 32, there is an attempt to then estimate the approximate energy usage in fertilizer application for selected crops (Table 33) as follows: Estimates of energy requirements: N: (a) Production of N/ton - 64 BTU x 106 (b) Transportation of N/ton - 0.63 BTU x 106 (c) Field Application of N/ton = 0.9 BTU x 106 152 60302:" saga—30013950.. no unsal- vocufluouQ—xa :1 a.“ 805 3.43305. .3093 F scuuacwuuoo 308.31. uuw coach was! 3.3093 no .0935. Juan an octane—3....» handgun and anuoouuoaumd . 3.333354 5 50.3.3 .tama\:o«uaww3ua >935 uo 3030.3: “cannon «Dan «Hod. o.HH n.o 0.6” . «.e suave-eneoo sauna» noun-av." coded: moH com com com anon-ecu» coon-«u.» ~.ev H.H m.vu v.- “.Av waves warm I: «mm a dim". «axle... m... -u ....H o.n m4 538 o.n .. m.” n.« o.« coo-aaeoae ~.e .. m.~ A." «.4 uaauo avenue: sauce-I: H.A .. m.o u.o a.“ added can: n.v u: m.~ «.n h.¢ ceausuoa z m.m A.“ ~.~ o.o a.n canon-u escapees: 33.32.: e333”; 0309.8. 0:323“— 003 H3 good I 23.3 ...-09098 no é .00" x 9.0.5 00930933. undue—9.5 auauaasa song-:00 auuofi fleece one ounce“: uuoounana coca-a: noun-«an» can .aoauauuoo-caua no can: uoaaaauuou .an canes 153 Table 32. Field Application Energy Requirementsa Type of 6 12 Material BTU x 10 /Ton Product Total (BTU x 10 ) Anhydrous ammonia 0.7 2.5 Nitrogen solutions 0.2 0.9 Fluid Mixtures 0.2 0.7 Solid Products 0.2 5.3 TOTAL 9.4 aEstimated figures from USA energy use database compiled mostly in 1974-1979. Source David Pinentel (Ed.), Handbook of Energy Utilization Agriculture (Florida: CRC Press Inc., 1980). 154 «.5 H.H «.0 v.0 m.0 «b we «H «m on 0« H.00 v00« «.0 H.H «.0 0.0 m.0 or me 0H «m on 0« m.«m mama 0.5 H.a «.0 v.0 m.0 mm mv «a m« h« «H «.00 «00H m.n H.H «.0 v.0 m.0 on we 0H mm mm H« «.00 Homa v.> H.a «.0 v.0 m.0 on me ha mm mm m« 0.hm 000a msmonxom 0.m m.« «.0 v.0 ¢.« mm mv Hm «m we on n.0H «00H H.« m.« «.0 «.0 v.« «m mv «a 0m vc mo «.5 «00H m.« m.« «.0 v.0 v.« mm we «0 on «c an «.0 «00H m.m m.« H.0 «.0 H.« me 0v «5 on «m m5 0.na Hmma m.m m.« «.0 v.0 a.« we 0v «h on me an «.m« 000a :ouuoo a.mn m.v «.0 0.0 «.9 no mo 00H «0 hm hm m.Hh vomn «.m« m.v «.0 0.0 H.v no we find mm mm mm n.am moon m.vn m.v «.0 0.0 0.v mm mm mma v0 00 «m «.«h «moa m.om m.v «.0 0.0 H.v 00 no «nu v0 00. «m m.vh Hood v.mm 0.0 «.0 0.0 0.0 mm 00 0ma «a «0 mm 0.nh 000a nacho How :uoo « m « « m « « m « .nouo4 so OahoH x :95 named an Dem: O x O m z o M O m z 0 M o m z OMMMMHW mama» pom: ouo¢ pom pom: maooa x Damv .0H00\nav moumm “av mcw>fiooom coumu>umm .mouo wmuocm Hmuoe Hmuoa ooumaflumm ouom mom coaamo Hoot mound «duos pom: avuosm . A coumo>uom moouu oaowm .m.0 wouooamm so :OAHoOfiHomd woufiawuuom cw coma >muocm nouaaauum .mm oanoa .ooumouu mmmouom «ouou a «non you now: «anon couoa«uom I pom: «muosm «nuoa nouua«ummo oms now «000:0 + moN o How «macaw + z How «muocm I uou«««uuom How whom Hon com: «human wouuaduum n .oo>«o>c« «muoso any ««n uoc m« .9005 oesmsoo can coon: uoN«««uuom «no >u0>0. mo unocooaoo «um«o:«um on» own :o«uua«uuo How uuou«««uuom vo«w«ucoc« 0:» van» uomm on» so @0000 0nd n:o«uu«oo«uo 0:9 >«u:mo«u«:m«m >um> :00 m:0«uo:u«u o«u«oomm :« :o«umabocoo «macaw «0:900 cam :o«un:u«u oou««mu0:om uo ounu0>n on» usououmou ooucououm mucoaouflswou «mango one .xusum u«:u :« n:o«ao«ao«ao on» scum c ”#63006 >«nm«£ no: own .ouowouonu can .n:o«umaaa¢d «one c«nu:oo u:0«ua«5o«no «whose nacho one. «@802 5 m3 1 «.v« «.« «.0 «.0 m.« 0v «n «o h« me Oh 0.00 vmm« m.m« «.« «.0 v.0 «.« av mm 00 0« me «p «.«m «@0« «.h« «.« «.0 v.0 «.« «v «m an m« we on 0.55 «mm« «.«« «.« «.0 v.0 «.« «v mm mm 0« «v Oh 0.00 «om« m.m« «.« «.0 v.0 «.« 0v mm mm 0« me so «.«h 000« anon: ««t ero« x new. .wooa x same oux «one 2 one moum z cum, none 2 ..000: can: on ¢ Mom coma co««««x~ undo» >00 4 0 am «mace «mace oouosaumm maoowuw name “annexed. means ..0 oce>wooos ooaouua mono c woo mound. oouuo>uuz :o«uoo««om¢ con: amuocm couuo>uo= «nuns oosc«uaoo .mm o«nue 156 Total for N/ton = a + b + c = 65.53 x 106 BTU P205: Production of P205/ton = 19 BTU x 106 0.63 BTU x 106 6 Transportation of PZOS/ton 0.2 BTU X 10 6 Field Application PZOS/ton Total for PZOS/ton = 19.83 BTU x 10 K 0: Production of KZO/Ton a 4 BTU x 106 Transportation of KZO/ton s 0.63 BTU x 106 Field Application of KZO/ton a 0.2 BTU x 106 Total for KZO/ton =4.83 BTU x 106 The use of energy in procuring and usage of fertilizer for crop production in the U.S._is about levelling off after a notable rise in the trend of use for recent years (Table 33). Most especially, for the selected crops, energy use per acre has relatively levelled off despite increased acreage being fertilized and harvested. There was an increase in fertilizer use in the past relative to the growth rate of use in recent years which are now leveling off (Figure 114. Nonetheless, there are still needs for improvements in fertilizer usage and conservation of energy, through use of more efficient technology and techniques. More than 45% of the total energy needed on farms is for fertilizer production and delivery, hence total energy savings on farms, depend on proper fertilizer application and efficient use. 157 140- :20- 100- 80‘ (0 C123 CZC) 13 Year Figure 11. USA Fertilizer Use Per Acre Increased in the 1970's But Now Levelling Off Source: USDA——Agriculture Statistics, Various Years. Livestock Production Livestock production in the United states uses over 13,400 BTU of direct energy each year, and the figure does not include indirect energy inputs such as the energy required to make fertilizers and pesticides used in feed production.l Although livestock production is not a net energy producer as some crops, such as corn, it plays an important role in agriculture and it will 1B. A. Stout, et al., Ener Use and Mana ement in Agriculture (North Scituate, MA: Breton PuEIisEers, 1984). 158 continue to play such a role as long as consumers demand meat products. The average energy use for U.S. livestock operations, including dairy, is displayed in Figure 12. The major energy inputs are feed handling with 29%, feed processing and distribution (21%), farm travel (20%), and waste disposal (11%). However, there could be a variation in such breakdown of energy use, depending on the type of operation under discussion. For example, feed processing and distribution can account for almost 50% of the energy requirements for a beef cow/calf Farm Travel 20 My \ ‘ I\‘\\\\\\\‘\u.\ ’ ‘WmWMWmM \ ‘ “W Feed Processl'ngaoist ,7 ’ 21 Waste Disposal 11 MilkingaMllk Cooling 3 Water Heating 4 Heat& Ventuahon 6 F ' Water SLIP eed ggnmnng 4 Figure 12. Use of Energy in U.S. Livestock Production Processes Source: B. A. Stout, et al., Energy Use and Management in Agriculture (North‘78cituate, MA: Breton Pu is ers, 1984). 159 operation, and as little as 10% for a hog farrow—to- finish operation.1 The percentage total energy consumption of various energy sources for all U.S. livestock operation is shown in Figure 13. As can be seen, gasoline is used most, followed by diesel fuel, LP gas, and electricity, because it takes almost three units of primary energy of all other energy sources to make one unit of electricity, Eiectrlcity 152 ///:/: //2,'//// /;/: :mumchImo “mouaom "Ah .coumm mommy muduasowumfi cw m.mo~ o.Ho nu m.me mo.o e.em m.oHv auuasom guano e.mflm H.om e.HH m.me No.0 m.mH m.mm mcmxoflno v.eo H.mmm~ e.m~ m.Hm .. 0.9 m.e~ new: m.-NH m.mom m.oe H.mmH «0.0 m.eH m.om~ msoxusa m.va m.moH .. mm.e moo.o H.m ~.H~ mumaeoum ocwwwum huflwmnuwmam Aawmwwmm «cwwwwmw HMMW AHVHMMW AmMWSMMw huuaaom mo mmwa mpuflm ooo.H Hum mm: amumcm womum>¢ .m.D .vm manna 162 modified by housing design, types of equipment, and alternative management practice. There is considerable room for improvement in the use of energy in the poultry industry. It is not unusual, as given in many literature sources and in reports of regional analysis of energy uses, to find some producers using twice as much energy per 1000 birds as other producers.l These variations may be due to types of housing, mechanization, elevation, windbreaks, management, and perhaps other factors. Better insulation by use of new types of insulating .materials, better control of ventilation, reuse of heat dissipated from ventilation and processing, a movement back to more basic foods with less further processing, a reexamination of. irradiation preservation, newer shipping and transportation procedures to improve shelf-life, and changes in retail marketing procedures could possibly save large amounts of energy. The USSR Though the importance of both the agricultural and energy sectors of the Soviet Union is well recognized in the overall picture of the economy as a whole, the 1G. Stanhill, Energy and Agriculture (New York: Springer-Verlage-Beslin-Heidelberg, 1984); and most general other USDA technical reports and publications. 163 critical linkages between these two sectors are not often analyzed in existing literature or research efforts. Soviet energy and agriculture have individually on their own merits received a great deal of attention from Western analysts in recent years. Despite the heightened attention paid to the individual sectors of energy and agriculture, little discussion has been made of the full range of relationships between the two sectors. CrOp Production--Irrigation The amount of irrigated land brought into production has increased for several years (Table 35). Investment funds in agriculture is on the decrease, so for such capital outlay as irrigation, it could well continue to decrease. The investment decline in 1989 was to decrease land improvement's share of total capital investment to 15 percent, from 17 percent in 1988.1 Compared to 1987, 1988's irrigated land commissioned dropped 27 percent.2 Soviet figures illustrate the need for improvement. On 15 percent of the farms, irrigating grain, the yields are less than 1.5 tons per hectare.3 lUSSR, Agriculture and Trade IReport, Situation 3nd Outlpok Series (Washington, D.C.: USDA Publication, Report #RS-909-l May 1990), pp. 14—15. 2Ibid, p. 15. 3Ibid., p. 16. 164 Table 35. USSR Irrigation Trends from 1970—1988. Harvested Irrigated Percent Year Acreage Acreage Share (Million (Million Irrigated Acres) Acres) 1970 560 16.4 3 1975 565 36.1 1 1980 567 43.2 8 1981 567 45.0 8 1982 567 46.5 8 1983 569 47.8 8 1984 569 48.2 8 1985 569 50.0 8 1986 570 51.3 8 1987 570 51.3 9 1988 570 52.0 9 Source: Soviet Government Statistics. 165 This yield is 15-30 percent less than what rnight be expected on irrigated land in California, depending on whether output is small grains or corn. Soviet yields on irrigated land were less than 7.5 tons per hectare on a fourth of farms growing potatoes and on a third of the farms producing vegetables.l California yields are 40- plus tons per hectare. Energy, Fertilizer, and Grain Production In the Soviet Union, 95% of nitrogen fertilizer is manufactured from natural gas.2 One of the most important inputs in Soviet agricultural production is nitrogen fertilizer, but in recent years, there has been a major problem with that. The agricultural sector has been plagued with chronic fertilizer shortages, lateness in delivery of available supplies. According to the USDA, serious production difficulties arose in the chemical industry in 1979 which marked the first in 25 lIbid., p. 15. 2J. S. Auburn, and B. Young, Energy, Fertilizer, and Grain Production in the U.S.S.R.: Key Linkages (Boulder, CO: Westview Special Studies, 1983), p. 145. 166 years that. Soviet fertilizer“ production. was *unable ‘to record an increase.1 The Soviet Union is one of the world's leading exporters of ammonia, the most important ingredient in production of hfltrogen fertilizer, which makes it surprising why Soviet agriculture should suffer from shortages of fertilizer. According to Auburn and Young, Soviet sales of ammonia to the United States have generated considerable controversy as, of course, have U.S. sales of grain to the Soviet Union.2 In 1988, Soviet mineral fertilizer output exceeded the production of the United States, France, West Germany, and Great Britain combined.3 A large amount of this production is exported, but partly because of continued flaws in the fertilizers' quality, composition, and allocation, farm production continued to respond disappointingly. Soviet mineral fertilizer output reached 37.1 million tons in 1988, although the growth rate was the lUSSR, Agriculture and Trade _Rgport, Situation and Outlook Series (Washington, D.C.: Publication of tHé U.S. Department of Agriculture, August 1989), p. 35. 2J. S. Auburn and 8. Young, Energy, Fertilizer, and Grain Production in the g,S.S.R.: Key Linkages (Boulder, CO: Westview Special Studies, 1983), p. 145. 3 USSR, Agriculture and Jggade IReport, Situation and Outlook Series (Washington, D.C.: Publication of the U.S. Department of Agriculture, August 1989), p. 13 167 lowest in several years (Table 36). .At the same time, deliveries of mineral fertilizers to farms declined by 1.1% (312,000 tonS) reducing the ratio of deliveries to fertilizer production as earlier pointed out. Overall, the use of mineral fertilizers increased 2.6 times from 1970 to 1987. Application rates per acre of sown area approached 642 pounds in 1986, compared to the U.S. rate of 500 pounds approximately. The average Soviet application rate first exceeded the U.S. rate in 1983.1 The economic effectiveness of agricultural chemical has been disappointing and their increased application has been subject to rapidly diminishing returns as evidenced in production figures from Tables 14' and 15. Although there have been advances in several areas, there are many complaints about the Soviet fertilizer industry's production. Grain production is chosen for discussion and analysis in this study, based on the importance of grain in Soviet agricultural production and trade. The role of grain cannot be overemphasized as far as the Soviet Economy is concerned, and it is referred to as the "Achilles Heel” of the Soviet economy. The result of majority of total crop production is a direct reflection 1Ibid., p. 15. 168 oweocoom .domo mo codvmoaansm .mmmH ..mow>uom noncommm u.U.o .coumcwnmmzv mama» uncanm> .mmfiumm xooHuso 0cm cowumauwm .muuommm mumua can unauanowumd mmmaldoma «ouuaom a com.m ewe can.“ oop.- oo~.e~ mama a mmo.e eon ooe.e eee.- ~H¢.h~ poo“ e see.e nee aem.e mee.~H cam.e~ Gama a asa.m esp ae.m oae.m omH.- omnum>4 nausea“ e ema.m ewe oae.v «no.5 moc.o~ omuuo>¢ ooumnma a moe.m «om mem.~ mc~.o ~oe.n~ omnuo>a mpuapmfi a H-.~ 5mm pea.“ omm.n ~me.¢ umuum>a oeuooaa afldumxfinnmn a omH.H~ Hoe ooH.m oco.e~ eo~.pn one” a oom.o~ see com.» ooe.md ocm.on scan a oom.cH can o.m.o oo~.mfi sne.en mom“ a mmfi.m «he ea~.m mem.~H vm~.a~ omnuu>¢ mounama e osa.e «we oom.m ma~.m .owm.m~ omuuo>< acumen” a mm~.e ~mo.~ Mme.n mam.» nem.efl omnuo>< «pushed a eefi.m mma one.“ oH~.¢ men.ofl amoua>¢ apnoea” :OHuUSQOHfi mucoewam zoom . m oomue ammuom mumnmmozm mumzmmozm cm ouuflz Hmuoa you» vascuc . lu-’ lll'la'illll- .... D... 1‘ ! 1| u..l-|'|nllllllll‘«lnlailllll.ll.lll .‘|Illn.1|lll Annoy owuuwe coca. «was .musuH50flum4 ou muouwawuumm Hmumcwz mo mmwum>wamn cam.20wuosvoum .wm manna 169 of the performance of grain production, and also, the critical stages of livestock production, feeding, is dependent on the grain output and procurement for the livestock sector to function properly. Additionally if one can paint a clear picture of the effect of fertilizer use on grain production in the USSR, a case could be made that the output of other Soviet crops would respond similarly to similar fertilizer inputs at the margin as would grain. In most cases, one would refer to a crop type, mostly wheat, since it accounts for almost half of Soviet grain production, or barley, a feed grain of increasing importance in recent years. Together, wheat and barley generally account for three-quarters of Soviet grain production.1 The available Soviet data are often in terms of total fertilizer and not disaggregated by nutrient type. Any attempt at estimating Soviet energy usage with regard to fertilizer production must, of necessity, be based upon limited data and simplifying assumptions. Several Soviet, as well as Western sources, have made reference to the deteriorating Soviet fertilizer situation, yet no systematic analysis of fertilizer production and supply to agriculture is available. lIbid., p. 23. 170 The analysis of Soviet fertilizer delivered to agriculture and applied to grain is further compounded by the absence of data on specific application rates to certain crops, such as wheat, barley, etc. Figures for fertilizer applied specifically to grain crops have been made available only in recent years. Interestingly, though, from the point of analyzing the linkage between the agriculture and energy sector, ammonia fertilizer plays a vital role. It is manufactured primarily from natural gas both in the USSR and the USA. Ammonia is the general starting point in the production of most nitrogen fertilizers. The situation with natural gas production in the USSR has been discussed earlier. While future production will depend heavily on the development of sufficient infrastructure (vis-a—viz, production of most nitrogen fertilizers), natural gas that might be converted to ammonia represents a small fraction of Soviet total gas production, may be in the order of 4 to 5%.1 It may be that problems in natural gas distribution are responsible for some of the shortfalls in fertilizer production and 1J. S. Auburn, and B. Young, Energy, Fertilizer, and Grain Production in the U.S.S.R.: Key Linkages (Boulder, CO: Westview Special Studies, 1983), p. 163. 171 usage in the USSR, due to feedstock delivery problems as mentioned by the USDA in their various situation reports on Soviet agriculture. Although there have been advances in several areas, there are a lot of complaints about the Soviet fertilizer industry's production. About 90% of production is now compounded and concentrated and 60% is granulated. The average nutrient content in manufactured fertilizer, which was only 38.4% in 1980, had risen to 42% in 1987.1 Practically all soluble nitrogen and phosphorus fertilizers are supplied to farms in granulated form. However, farmers complained about their moisture content, caking, and granular strength. A report written in 1988 noted that nitrogen fertilizer caked badly in storage, and that granules of carbomide and ammonium nitrate and various compounds were weak and nonuniform.2 A waste in the production procedure or wasteful transportation or application of fertilizer constitute a direct and indirect waste of the energy resources inputted into these processes. Effective levels of waste 1USSR, Agriculture and Trade Re ort, Situation and Outlook Series (Washington, D.C.: Puglication of the USDA, ERS, 1989), p. 17. thimicheskaya Pr_omyshlenost (USSR Government Publication, 1988), pp. 2-5. 172 in energy would have been estimated, but there is no available breakdown of Soviet energy use in different stages of either production, transportation, or application of fertilizers. Nonetheless, a comparison of the production figures in Table 37 of the USSR and the USA shows that the Soviets, in spite of their enormous potentials for chemical fertilizer production and relatively higher need for its use, lagged behind the USA for many years, but are currently producing on the average, almost double the production figures for the USA (Table 37). The production of Potash and Nitrogen fertilizers have risen very sharply in recent years to surpass the U.S.A., and it is still on a steady. increase of about 5 to 8% ' annually estimated from by records of the 19805. In the past, it is evident from Table 38 that the U.S. farmers started early to adopt fertilizer faster than their Soviet counterparts. The level of consumption of chemical fertilizers as shown in Table 38 by nutrient content is almost stable in the U.S. now and levelling off after a sharp increase in the 19605 and 19705. Consumption in the Soviet Union is also rapidly catching up to the U.S.A. level after a very slow start and in some cases, level of usage of various chemical fertilizers tend to surpass that of the U.S.A. (Table 38). Overall, the use of chemical fertilizers increased 173 apocaumcamucH oasmumo< Hmsccm .ma .ao> .ammma .mmwam "Am .mummam MHSUV mmaamam w muomm mmmD ..vm .pumHHom .m cma< "moafiom .. aaa qaa ama mma em mm me an amp no a ma ammo oom.ma m-.va mam.ma eao.ma aem.aa av~.oa mam.m mmv.m moo.a ammo az vom.m woo.aa ome.oa amo.m mmm.aa amm.m aoa.m mm5.m am: az. cumoauaz .. «em amp mmo mmv man man ama mm amo «o a ma ammo oov.oa nom.oa one.m em~.m meo.o eoo.m evm.e emo.v «mo.a mom: «2 moo.a eae.a oev.a mmo.a «mo.~ moo.~ mm~.~ meo.~ am: oNxv ammaom .. oma mm om aaa moa am no me am: no a ma ammo ooa.m omm.m mm©.e saw.» emo.e mmv.o oom.m mom.m mma.a ammo <2 omo.o oov.m vme.e mom.o mo~.o amm.o mom.m muo.~ «mo amowm. mumnmmoga .. oma. mea ova ama ooa - ama no we am: no a mm «mm: ooe.vm «ma.mm mom.om mme.mm one.o~ Noe.vm mmm.a~ mmo.ma am~.m «mm: 42 mov.ea mom.a~ mmm.ma mmo.ea ehm.m~ a-.ma mme.ma oav.e amp cowuoscoam amuaaaaamm amanmao omma mama amma mmma mama omma mama oema coma .aommauoomav Amcou panama ooo.v Aommauooma ucmucou ucmaauszv coauospoam amuaaauamm Hmanan mo comaummaou .hm wanna 174 .ma .ao> ..mmma .mmmam HoseaumcamucH anmumo¢ amoeba "am .mumoam wasuv mmazmwm a muomm mmma ..pw .uamaaom.m swam "meadow mmm.o hma.© oom.m amm.v mom.v vom.v wha.m vnm.m moo mmm: aom.v mom.v mm~.m mmm.e moa.m mme.m oae.v mam.m nom.a «mo N o x. :mmaom mao.n mmo.o vmv.o maa.o mom.m 0mm.m mmh.v mma.m mmo.H ammo oun.m oH~.v mvv.v vm>.m hom.v 0mm.v Nvo.v mmm.v mmv.~ «ma amomm. mumnomonm 0mm.oH mom.oa NmN.oH mmo.m mmm.m ~m~.m mmm.o moo.v mow ammo mov.m omv.oH moo.oH om~.m vom.m ham.OH mvv.m mum.h mvfi.~ 4m: AZ. comoauwz m.mo~ a.mm o.mm n.0m o.mm m.om o.vh m.vv ~.HH «mm: a.vm m.moa m.60a 5.0m o.moa >.maa 0.0m m.om m.mm cm: amNflHauawm amoasmno mama mmma mmma mmma amma amma mnma coma coma Avcma magnum mo mumuomn Hum EmamoHan acoucou ucoauusz .COaumEJmcoU mouaaauaom HmOHEQLU no comaammsou .mm manna 175 2.5 times from 1970 to 1985 in the USSR as noted in Table 38. Application rates per hectare of arable land approached 109 kilograms in 1985, compared to the U.S. rate of 94. The average Soviet application rate first exceeded the U.S. rate in 1985. Fertilizer application rates tend to be higher in Western Europe, where fertilizer is more effective because of the climate than in the U.S.S.R.1 More than 80% of Soviet plowland is poor in phosphates. Still, Soviet commentators note that only an average of 30 kilograms of phosphorus fertilizers is applied per hectare, whereas West European countries use two to three times that amount.2 The USSR is not known to have a good natural endowment of phosphate ores. Most phosphates ore now come from deposits whose facilities still lack sophisticated ore—enriching equipment. After encouraging industry to produce, complex mixed fertilizers in the past, plans now call for production increase over the next few years to consists entirely of single-element fertilizers. This is due to the preference to custom mix lUSSR, Agriculture and Trade Reporfits, Situation and Outlook Series (Washington, D.C.: Publication of USDA ERS, 1989, p. 12. 2 Vestnik, Soviet Annual Publication (Moscow, USSR, 1987, p. 53. 176 fertilizers in the field for more exact specifications and needs.1 Soviet publications continue to emphasize a number of problems. Liming is acknowledged to improve the efficiency of Chemical fertilizers by 30 to 4095,2 yet the transportation, storage, and application of lime are very inadequate. The inadequate supply of chemicals and the means to store and apply them hamper modernization as evident in most reports. Even the high priority fields are not well supplied. As noted in Pravda, a Soviet newspaper publication, In accomplishing all tasks for increasing the productivity and stability of grain farming, the Ukraine counts on assistance on the part of the USSR Gosagroprom which has thus far been assigning absolutely insufficient equipment and chemical preparations fven for the area under intensive technologies. The implication for this rise in trend in fertilizer needs and demand relative to the U.S.A. implies that more energy usage will be needed to procure and fulfill such rising needs. Since natural gas is the main energy source for usage, one does not foresee much 1USSR, Agriculture and Trade fiport, Situation and Outlook Series (Washington, D.C.: Publication of the USDA, ERS, 1989), p. 13. 21bid.. PP- 22-23. 3Pravda, 4 March 1987. 177 of any immediate problem in meeting these needs in energy usage as far as the USSR natural gas supply is concerned. Nonetheless, there is a need to attempt at conserving fertilizer wastage jper hectare and hence bring it to reasonable level or par with the U.S.A. This can be accomplished through better technology usage.l Energy savings on Soviet farms, in major part, depend on proper fertilizer application and efficient use. Farm Machines and Equipment Perhaps the most amazing gap in all the input- output data with respect to energy use in Soviet agriculture is the lack of information from surveys of the stock and type of farm machinery available. Regional. availability of some very important data on major kinds of machinery and the time of their manufacture would have enabled one to do an estimate of the power consumption relative to Western standards, and consequently, provide a useful estimate of the energy needs of such machines. These data may help construct a benchmark, but. more detailed data are necessary, such as the efficiency of tractors and capacity of combines. Even such data are not currently compiled in the Soviet Government 1Energy "savings" can be made both before the fertilizer is applied (during production, transportation, etc.), and if applied correctly. 178 Statistical series, and past available data are too old for use in making reasonable estimate of current trends. Tractors and combine deliveries declined for four consecutive years (Table 39). Tractors, combines, and other agricultural equipment are known to spend more time in repair shops than in the fields.1 In 1989, 15-20 percent of the tractors and trucks in agriculture were 2 out of service. The standard life span of Soviet tractors is only 8 to 10 years; according to the Soviets, this is at least one and a half times less than in the 3 U.S. .About 300,000 tractors are written off annually, 25 percent of them before expiration of the standard life cycle.4 Problems with on- and off-farm transportation of agricultural products worsened in recent times. The Soviets reported that 1.5 million tons of gasoline and 0.6 million tons of diesel exports were foregone in the 5 third quarter of 1985, and instead, transferred to O 1Vestnik Afropama, No. 31 (1989). 2 26, 1989. 3USSR, Agriculture and Trade Report--Situation and Outlgpk Series (Washington, D.C.: USDA Publication, Report # RS-90-1, May 1990), p. 13. USSR Goskomstat, Press Release No. 604, December 4Ibid., p. 14 5Ibid, pp. 14-15. 179 .mwsmma msoaam> .mmmm o>umdmauonx mocooumz "mmouaom .vea .m .mmma uoaxmumz .amauoma .mm .mmma Nonxamz 0mm .mmma pom .mmmalamma mcaasp momam>m amused Mom .usmuao Hmazuaaowamm macaw Mom cm>am mw.o mo unmaoammooo 50ama0>coo nua3 .mooaam mama 02am: pm>wawv can vmumanpm mooaam mumd cw uaaao>o .waco uouoom vmuaafiaoomn .oma Hmaauasowumm Home oo.OVH m.N¢H Om.NvH N.mMH o.NNH v.mOH h.mh mwannu moa unmvflo HMMSUHaOHHmfl mmouw O.HN m.HN O.NN «.NN m.NN H.9N m.mN OHQOOQ moa QHOQMH HMHDUHDOAHOfl H.mm v.vm m.mm n.am w.mN 0.0H H.m mOHQDH mod UGOBUmm>GH m.va m.¢H m.¢H o.vH ®.NH v.5 m.h m: 00H QGGMA GOGHmHD m.om H.0N N.ON h.mH ~.hH m.OH ¢.m m: 00H mucwn manmmflHHH N.bm w.hN m.mN v.mN m.mH m.OH m.m mGOB @OH moaum>flaon HONflHfiUHOm m.®oa v.00H H.NmH h.mvH m.OHH ®.mm 0.0H £\Bzxmoa Hw3om OHHuomHm vmma omma mvma NNMH thH 00m Hmo mOH mxosufi Hmb v55 mom vow mmo 0mm 05¢ MOH mocwnfiou :Hmuu Nmom mth vva Ommm mvmm vvmfi mmOH MOH mHOUOMHB mmma mmma omma mmma omma oema ooma acmaoaammoz mo muaao hmmalooma .masuasoauma uma>om :« muw>wuosooam can muamcH mo muoumofiocH .mm manna 180 domestic agricultural use. Still, deliveries of fuels and lubricants to agriculture apparently were curtailed, which hampered the harvest. It is officially estimated that gasoline supplies for agriculture will remain stable in 1990.1 In comparing technology, one will assume that fann machinery and equipment demand a great deal of the total farm energy usage. The figures shown in Tables 40 and 41 indicate that more tractors and lorries (truck5) are used on the average on U.S. farms with greater engine capacity. This, in turn, demands more and greater energy usage. Ifll considering the figures for relative tractor usage and power demand per acreage of harvested crop area (Tables 40 and 41), there is an indication that more energy is used in the USA per harvested acreage. The output figures for crop production is also more in the USA on a relatively smaller acreage of crop harvested. This is an indication of the degree of mechanized farming in the USA relatives to the USSR where more human labor is still being used in agricultural production instead of the machines. Relatively lower energy usage in grain production as indicated in the smaller number of grain combines used per thousand acres of harvested grain areas (Tables 40 and 41) in the USA as compared to the USSR, is 1Ibid., p. 13. 181 Table 40. Selected Farm Machinery and Equipment and Tractor Horspower: USSR 1940-1986 (End of Year Figures) 1940 1960 1970 1980 1985 1986 Tractors ('000 unit5) 530 1122 1977 2462 2798 2854 Aggregate Capacity of Tractor Engines (mn horsepower) 18 48 112 191 232 239 Grain Combines ('000 units) 182 497 623 722 832 849 Lorries ('000 units) 228 760 1136 1596 1851 1908 Aggregate load carrying capacity ('000 tons) 479 1978 3327 5828 8048 8530 No. of Tractors per '000 acre harvested crop area (units) 0.09 0.20 0.35 0.50 0.55 0.55 Average Tractor Horse- power per '000 harvested crop area (mn horsepower) 1.62 9.6 39.2 95.5 127.6 131.5 No. of Grain Combines per '000 acre Harvested Grain Area (units) 0.61 1.65 2.03 2.28 2.77 2.95 Source: Soviet Government Statistics, Various Years. Note: Data in this table differs slightly from data in Table 39 due to different methods of enumeration by different authors. 182 Table 41. Selected Farm Machinery and Equipment and Tractor Horsepower, United States: 1973-1986 (End of Year Figures). 1975 1980 1985 1986 Tractors (exclusive of steam and garden) ('000 units) 4469 4752 4676 4670 Aggregate capacity of tractor engines (mm horsepower) 222 304 311 311 Motor Trucks ('000 units) 3032 3344 3380 3380 Grain Combines ('000 units) 524 652 643 640 No. of tractors per '000 acres harvested crop area (units) 1.33 1.35 1.37 1.44 Average Tractor Horsepower per '000 harvested crop area (mm horsepower) 295.3 410 426 447 No. of Grain Combines per '000 acre harvested grain area (unit) 1.62 1.94 1.95 2.06 Source: USDA, Agricultural Statistics for various years. 183 an indication of perhaps better farm machinery and equipment ‘usage and energy conservation toward better machine efficiency. The Soviets could further close this indication of a "performance gap" by modernizing their fleet of farm machinery and equipment to increase the energy efficiency of the machines and consequent usage for crop production. In general, if one compares procedures with the situation in the U.S.A. and the USSR and assume energy usage to be at least similar, the deduction will be in this general frame: It is known that more than 45 percent of the total energy needed on farms is for fertilizer production and delivery. Hence without much emphasis, it is only correct at this juncture to reiterate the fact that total energy savings on farms, depend on proper fertilizer production, efficient delivery systems, proper application and efficient use. Coupled with these needs for efficient fertilizer production and usage are the need to adequately control for other factors that could greatly enhance better farm production and efficiency. Some of these factors include use of appropriate and improved crop ‘varieties, weed 184 control, better farm management, and organization. These will help to reduce further wastages of farm resources and, consequently, energy savings. Fertilizer production and usage, irrigation, and use of farm machines and equipment have been singled out for analysis because they require a great percentage of the energy used on farms relative to these other stated factors. Consequently, anything that affects crop production level in general is bound to eventually affect livestock production and its overall input/output ratios. Livestock Production The strategy in USSR livestock sector focuses on achieving growth through greater output per head, and on improvements in production efficiency. This approach makes sense considering that the average daily rate of gain for Soviet cattle and hogs is only about 50 to 60% of the U.S. level and that Soviet milk yields per cow are less than half those in the U.S.l There has been some improvement in these areas in recent years. These improvements are the results of increased feed available per animal, some increases in feed quality and breed 1Edward C. Cook, The Soviet Livestock Sector-- Performance and Prospectus (Washington, D. C.: Publication of the Unitéd States Department of Agriculture, Foreign Agricultural Economic Report #235, 1988). P. 3. 185 l The rise in improvement work, particularly for cows. animal productivity has, at least temporarily, halted the longer term trends of increasing costs of production for major livestock products in general. After significant gains in 1986, there has been virtually no improvement in feeding efficiency in 1987, except for broilers according to USDA reports.2 There are no breakdowns of estimated energy 'uses in. livestock production. procedures in. the USSR, but indications of production levels and efficiency of production, relative to the USA, still leaves much to be desired on the part of the USSR. Nonetheless, just like in the USA, livestock production in the USSR uses a large amount of energy both in indirect energy inputs, such as the energy required to make fertilizers, herbicides and pesticides used in crop production and plant harvest, feed production and storage as well as in use of farm machinery and equipment. The availability of machines in Soviet livestock production on the average is low compared to the USA. Figures in Tables 42 and 43 indicate that there are more tractors available per thousand pounds production of livestock and livestock products in the USA compared to lUSSR, Agriculture and Tr_ade Report, Situation and Outlook Series (Washington, D.C.: fiblication of USDA, ERS, 1989), p. 30. 2Ibid., p. 37. 186 Table 42. Average Number of Tractors and Tractor Horsepower in Livestock Production: USSR 1985-1987. Average Number of Average Capacity Livestock and Tractors per '030 of Tractor Livestock Product Lbs. Production Engines per '008 (Units) Lbs. Production (mn. Horsepower) 1985 1986 1987 1985 1986 1987 Cattle 0.03 0.03 0.03 7.84 7.84 7.84 Hogs 0.16 0.16 0.16 37.12 38.24 38.25 Poultry 0.45 0.42 0.40 104.4 100.4 100.2 Milk 0.02 0.02 0.02 4.64 4.78 4.79 Eggs ('000) 0.05 0.04 0.04 11.60 9.56 9.56 aFor cattle and hogs, the quantity of net production is the slaughter weight reported during the year, with adjustments for number of animal head in inventory. bAverage number of tractors used per 1,000 lbs. production x aggregate capacity of tractors engines from Table 40. Source: USSR Government Statistics, various years. Calculated from Vesnik Statistiki, various issues. 187 Table 43. Number of Tractors and Tractor Horsepower in Livestock Production--USA 1985-1987 Average Number of Tractors per 'ogo Average Capacity Livestock and of Tractor Livestock Lbs. Production Engines per '008 Product (units) Lbs. Production (mn. Horsepower) 1985 1986 1987 1985 1986 1987 Cattle 0.12 0.12 0.13 37.32 37.32 37.30 Hogs 0.23 0.24 0.24 71.52 74.64 74.60 Chickenc 0.24 0.25 0.25 74.64 77.75 77.75 Milk 0.03 0.03 0.03 9.33 9.33 9.33 Eggs ('000) 0.07 0.07 0.07 21.77 21.77 21.77 aFor cattle and hogs, the quantity of net production is the live weight actually produced during the year, adjustments having been made for animals shipped in and changes in inventory. bAverage number of tractors used per 1,000 lbs. production x aggregate capacity of tractors engines from Table 41. CIncluding commercial broiler production. sold replace production of chickens, beginning 1985. Pounds Source: USDA Agricultural Statistics, various years. 188 the USSR. This again points to the fact that production processes in the USA are better' mechanized and less human—labor consuming than in the USSR. When the indirect energy inputs are added to the direct energy requirements, the energy inputzoutput ratio in calories equivalent of livesrock production in general can be very high in favor of the input, reaching up to 12:1 even in the USA. The long-term trend in energy prices is generally agreed to be upward even though energy is relatively cheaper and abundant in the USSR compared to most parts of the world, nonetheless, reducing energy' waste and eliminating energy-inefficient practices is necessary and makes good economic sense. Proper management and conservation techniques are known to greatly reduce the energy requirements for livestock production very rapidly. Such efficient measures should be adapted to processes such as in the following. Dairyqoperations. Water heating, which in the case of USA, accounts for almost 16 to 18% of the ‘purchased energy on an average dairy farm.1 1'B. A. Stout, et al., Energy Use and Management in Agriculture (North Scituate, MA: Breton Publishers, 1984), p. 99. Moreso from personal observations of the 189 Ventilation and supplemental heat, energy costs which can be reduced by conserving power used to ventilate or heat space. In the USSR on the average, temperatures are lower in most farm regions than in the U.S., thus more heat is needed, and consequently there is greater energy consumption. Milk cooling, which. normally requires a great proportion of total energy used in, dairy operations. Even in cases where it does not take a major proportion, milk cooling deserves close attention because it uses the most expensive energy form——electricity. Vacuum pumps, are universally used for milking on state and collective farms. In the U.S. milking accounts for 10 to 12 percent of all energy normally used on a I dairy farm. If the same ratio applies in the USSR, this represents a significant amount of energy. It is also noted that, on the majority of private farms and some collective and state farms, milking is done manually. water heating system on some farms in the USSR, water heating for dairy operations is still done through bowl- boiling (boiling from basin5) as compared to boiler-usage on observed U.S. farms, which is an indication of enormous energy wastage through this one operation alone by the use of obsolete and inefficient method. 1Ibid., p. 97. 190 In general cases, energy can be conserved, especially costly electrical energy in the grinding and feed preparation processes and brooding in poultry. It would have been more interesting to examine in detail the figures for energy use in each phase of livestock production mentioned above, but there are no readily available data to embark on such analysis. An overall trend of energy consumption in the Soviet agricultural sector is presented in. Table 44. There has been a move away from coal usage from the past to a very low level in recent times with a cutback of as much as 70% in 1987 relative to 1971 figures. Oil is still very much in demand as a source of energy for farm operation in proportion which seems to have leveled out in recent times. Obviously, the diminishing use of coal as a source of energy is rapidly being made up for by an increase in the use of gas and electricity. Use of gas as an energy source for farm operations rose astronomically in recent times, mainly due to the abundant quantity of that energy source in the Soviet Union and the trend in usage is still upward. Transportationjgonstraints to Fuel Usage on Soviet Farms A. major aspect of current Soviet energy difficulties lies in the problem of transporting energy. .maamw mzoauw> .mmocaaam hmumcmllmowumauaum acmecuo>oo mmmD “mousom ado: pum3O~MM Mom Dem mav.m u oou mam. .mmmum>m cm com 191 maa van mma oaa . an Laws aama «0 a an mama ama.am mom.ma ooo.m aaa.mm oaa.a mama oma.am aao.ma oom.a ma~.mm ooa.a aama ~ma.mm omm.ma ooo.v aao.mm oom.~ mama moo.mm ama.aa oom.m ama.am ooo.m aama ama.mm aaa.oa ooo.m aaa.am oom.m mama aaa.~m mam.oa oom.~ mao.am ooa.m mama mam.am mmm.m ooo.m am~.mm oom.v oama «ma.ma ama.a oom.a mam.mm ooo.m mama mmo.av moa.a ooa.a Nmm.am ooa.m mama amm.aa aam.a oom.a oma.a~ ooo.m mama mam.mm amm.a oo~.a omv.m~ ooa.a mama vam.am ~mm.a ooa mma.m~ ooa.a aama aauoe aaaoaaaoaaa mao aao aaoo aama . Ammmanammav aama. coo; mmma an... :a :Oaumasmcoo gumcm «guasoaumé .Qv OHQMB 192 This is because of the USSR's large size (one-sixth of the world's land surface) and the spatial disparity between energy sources and points of’ demand" A. key dichotomy exists between the industrialized and densely settled "European" portion of the USSR and the thinly populated, but energy rich, eastern portion (Siberia). Most of the demand for energy originates in the European portion as it contains 70 to 80 percent of the Soviet population,l industry, and social infrastructure. In trying to determine the general pattern of movement for each of the main forms of energy (gas, crude petroleum, refined products, coal, and electricity) as related to Soviet Agriculture, it is necessary to identify constraints in the transportation system that inhibit efficient flows and causes enormous wastage. Constraints Natural Gas: Little is known about actual flows and detailed distribution to sectors. Addition of large pipelines increases efficiency and help alleviate the most serious constraints regarding wastage in the system. The question with regard to natural gas is not one of supply and demand, but the real problem of distribution. 1Matthew J. Sagers and Milford B. Green, The Transportation of Soviet Energy Resources (New Jersey: Rowland and Littlefield} 1986), p. xiii. 193 Seasonal flow fluctuations and expansion of underground storage facilities, coupled with construction delays, also make it difficult to rationally estimate energy usage in a sector as diversified as agricultural production. Petroleum. Except for some flows in the Caucasus and Caspian Sea, the pattern of movement in Soviet petroleum shows that little information exists on actual Soviet petroleum flow and use in agriculture. Total transportion costs for petroleum alone accounted for are 90 percent of the actual total energy transportation costs for the USSR in 1980. First the main transport constraints in the system from source of production to use, were in the European USSR, in the older oil producing areas, rather than in the east at the origin of most of the USSR's petroleum. 9:31. The massive flows of coal from the east are of magnitudes that must be straining railroad facilities to the limit. There are expansions in Soviet railroad systems, but there continues to be a reported shortage of rail cars. Because the railroad cannot handle any additional freight, it is planned for further increments in mined coal to be consumed at large electrical power stations, with. electricity being transmitted to consumers over a great distance and increased costs. 194 Table 45. USSR Primary Transportation of Petroleum Products in 1981.* Shipment Average Length Mode (%) of Haul (MI) Railroad 79.2 605 Pipeline 11.3 440 River Tanker 6.8 768 Seagoing Tankers 2.7 745 All Modes 100.0 600 *These data refer only to shipments within the country. ' Source: Grigor'yev, Ain et al., lOptimizatisiya perevozok nefteproduktov," Zheleznodorozyniy Transport, 2 (1984), p. 61. Electricity. The main problem in Soviet electrical network is the lack of transmission capacity, and in most cases, the rural areas of the country are neglected or undersupplied, resulting in an increased cost to agriculture when this occurs. In general, most USSR farm energy (e.g., petroleum, natural gas) are transported by railroads. This is more energy consuming compared to use of barges that are used to transport such in the USA. The USSR 195 rivers flow North to South, instead of East to West, making it very difficult to transport energy by barge in the USSR. The distances travelled by railroad from point of fossil energy production principally in the Eastern section of Soviet Union to the main farm producing regions of the West (mostly the Ukraine, Byellorussia), are very great. This results in enormous wastage during transportation and untimely deliveries that greatly delay or totally disrupt agricultural production in some cases. Summary-~Research Question 3 Linkages between the agricultural and energy sectors of the Soviet economy cannot be overemphasized. Uninhibited energy supply to Soviet agriculture operation system is paramount to the continued growth in all phases of agricultural production in the USSR. As part of the production intensification efforts now sweeping the system as a whole, there is greater need for a better management and more rigorous conservation drives in both the agriculture and energy sectors and mostly in the use of energy to further enhance agricultural production. Necessary data needed for a reasonable comparative analysis on the degree and level of efficiency in energy utilization in agriculture of both the USA and USSR are lacking, mostly due to unavailability of a quantitative 196 and qualitative breakdown in Soviet energy usage with regard to agriculture. The available data are aggregated into a lump under general energy usage in agriculture. Nonetheless, reasonable indicators show that the USA is ahead in adapting crucial conservation measures to better use the available energy for farm operations. The Soviet, on the other hand, in spite of abundant production resources, and potentials for self-sufficiency in energy requirement for their agricultural needs, are observed to lag behind the USA in terms of productivity and efficient use of such abundant energy resources. There is an improvement in recent years in the procurement of necessary energy inputs to boost agricultural production in both countries. The USA is still performing better in terms of the examined input into agricultural production and relative output both in crop and livestock production. This might be as a result of' the availability' of' superior ‘technology' and. better trained personnel over the years that are better geared toward more efficient resource management. The Soviet production system is still plagued by use of crude and obsolete technologies which are neither energy efficient nor conserving. This is a principal source of the continued existence and in some cases, such as in grain production, widening' of' the "performance-gaps" in production figures for the USSR relative to the USA. 197 To conclude in response to Research Question 3, there exists some similarities and au Nmaa .m .aamma. aorxaaz eopa aama you mauemaa amm>amu 1mam .m .Aaamac aoaxaaz scum aama you mausmaa aama>aa “man .6 ..mama. aama are aama mo>aaaaaa aama mraasaoxa maasmaa aama>ap Nmam .o .ammma. uoaxuaz scam maasmaa aama .aaa .m ..mmma. 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Amoa . . maa vaa «om mam aaa mam macromormxooa .oam.e c aamm.v c .aao.e . .aa~.a . .aaa.~ . .oaa.~ c aom.v maa.m ama.~ aa~.~ avm.a aa~.a auarmmonm imam.a c aama.a c .~m~.a c .ama.a c .aoa.m c omm.m ava.a «Na.m moa.e ama.a mmm.a ramoaaaz .mam.aa. aomv.aa. imam.mac .mmm.aa. .man.~a. aaam.oac mm~.aa amm.va oam.~a aam.oa ma~.a ovo.m armaar garages: aaaa.aa. imam.~ac mov.aa eam.a vam.m maa.a am~.m aav.a rmaaoa Imam.v . aam~.v c mmm.e oma.a ama.v -a.m ~aa.v ~mm.~ macromoroxooa iamv.m~c .emm.e~c .amm.a~. loam.mac aaam.ma. .amm.aac amo.e~ o-.ma ava.ea aaa.aa amn.m maa.a manganese .aoa.oe. aamm.amc aamm.mm. .maa.~mc .aea.m~. amm.mm aom.~m amv.m~ mav.- maa.aa aam.a camouuaz aamm.aa. .noo.mmc aoao.mm. lava.mac imam.mmc aammm.mvc mam.mm eaa.ma mma.am maa.ma aoa.am aam.a~ armaae camaraua oama aama aama aama mama omma aama aama Ancou mo mucamsonu cav owed on vama scum ousuasoauoc ou Ooao>aaoo amnaaauuom aauocaz '1‘ .mam QAQMB .ama .m .aoamac norxamz aoaa aaaamau oama umam .m .laamac Nozxamz scam manomaa aama 1mam .o .amamac uoaxaaz aoaa mauamaa aama .mam .m .amamac accruaz saga newsman aama ammo .m .Ammmav nocxuez Baum nouomaw Nmma «men .9 .Aommav nocxuaz eouu mousmam omma Namm .m .amama. uoaxuaz spam maaamaa aama .aem .a ..vamac uoaxuaz scum moaamaa aama ”moasoa .nocxuoz mama mo.na nona>ou one oomocucoaam ca newsman 237 a m.a~ a.ma m.ma m.ma a.ea m.aa a.m e.a rmauom m.m o.a a.m o.a a.e «.« o.a o.a macromoroxooa .a.m . n.am v.o~ m.ma m.aa a.aa o.oa o.a a.m marrouorm m.ma n.6a m.ma a.om a.ma m.o~ m.ma o.a aamopuaz Aa.oq v m.ma m.ma a.ma m.ma m.mm a.ma m.ma a.ma armaoz aeoaauaz m.mm o.am ~.oa a.ov a.ma a.ma m.ma a.ma rmauom m.ma a.ma m.ma m.o~ m.a~ . a.ma ~.a~ a.ma aaarmmonmxooa av.~m v a.maa m.moa o.am a.ma a.ma a.mm a.ma a.am auarmmoam a.oaa m.maa o.ama m.mva a.maa m.aoa m.am a.ma camoauaz a.m.mo~. m.mam a.mmm o.amm a.maa m.maa a.ao~ ~.vaa m.mm armamz aaaacaua oama aama aama aama mama omma aama aama areaamoaaa ca. aama 6» aama scum aama area 06 career: nae aoaamma nouaaauuoa .eua manna BIBLIOGRAPHY 238 BIBLIOGRAPHY "Agricultural Resources--Corpland, Water, and Conservation," in Situation and Outlook Report AR12. 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