Source: Severin, 1984.

Spending money does not guarantee getting a good return on it. The Soviet authorities appeared to be determined to invest an increasing share of its scarce resources in its socialized agricultural sector, even with the prospect of continually diminishing returns. Keith Severin (1984) discovered that Brezhnev's agricultural accomplishments by the late 1970s were modest when compared with the investments made in agriculture from the start of the period. In relation to capital investment, production was evidently lagging, as Table 9.1. shows.

The slowdown in the growth of agricultural investment efficiency had become obvious by the middle of the 1970s. According to the Economist, 15 January 1977, each extra ruble of agricultural capital stock in 1951 to 1960 added half a ruble to output, but only a third of a ruble in 1961 to 1977. Also, Severin and Carey (1978), analyzing changes in the productivity of Soviet farming, found a striking difference between the performance of Soviet agriculture in the late 1960s and early 1970s. Using three-year moving averages for net agricultural output, the authors found that 1971 to 1975 was marked more by stability than growth; all the growth—6 percent—in farming output was attributable to greater inputs, long relied-on by planners to stimulate output. According to their findings, the 10 percent growth in inputs during the period masks a 4 percent drop in productivity. This means that growth was not proportional to investment. The fall in productivity in the 1970s could partly be explained by the way inputs increased. Fixed capital grew by about 8.5 percent per year in the late 1960s but increased by almost 11.5 percent yearly between 1971 and 1975. Presumably, much of the construction was to support the regime's livestock program and did not immediately result in increases in agricultural production. Some Soviet economists believed that the resulting increasingly negative return on capital would be quickly reversed (ibid.).

Figure 9.1. Growth in investment and agricultural output, percent

Figure 9.1. Growth in investment and agricultural output, percent

Investment —■— Output

Source: calculated on the basis of the report Narodnoe khozyastvo v RSFSR v 1983, 1984.

This suggestion proved to be too optimistic, as the following graph shows (Figure 9.1.). The gap between investments and agricultural output had been widening since 1975. According to official Soviet statistics, from 1980 to 1990 the increase in fixed capital investment had reached 40 percent, the application of mineral fertilizers had increased by 22 percent, and the growth in energy expenditures had been 61 percent. However, total agricultural production had grown by only 12 percent.

Fertilizer application and energy expenditures were the main elements of investment, but they had not had the same stimulating effect on crop production as earlier. For example, an investigation carried out by V. Afanasiev for Soviet Moldova showed that the growth in energy expenditure and the growth in harvests of sugar beet and grain after 1965 were directly linked only during a five-year period (Capcelea, 1996) (Figure 9.2.). Beginning in 1971 to 1974 until the second half of the 1980s, the resources applied were not proportional to the harvest of these crops. It is normal in most developed countries that a 1 percent increase in agricultural production goes along with a 2 to 3 percent increase in energy expenditure. For example, in the United States, the doubling of the harvest was accompanied by a tenfold increase in energy expenditure ("Mechanizatsia i elektrofikatziya", 1982). In Soviet Moldova

Figure 9.2. Energy expenditure dynamics for grain and sugar beet in Soviet Moldova

Energy —■— Grain crop A Sugar-beet expenditures crops

Energy —■— Grain crop A Sugar-beet expenditures crops

Source: Capcelea, 1996.

in the period 1970 to 1985, a 140 percent increase in energy expenditure was accompanied by only 1 percent growth in grain production.

Mineral fertilizers were the other principal source of grain gains in the early Brezhnev era. In the new period the Soviet authorities still relied on increases in fertilizer application. By 1980, it was planned to send 120 million tons to farms, 60 percent more than the amount delivered in 1975. About one-third of the fertilizer delivered to farms in 1975 was applied to grain. By 1980, this amount was to be doubled. Some Western experts pointed out that the impact of planned applications was limited by low quality, improper chemical mixes, transportation and storage losses, and improper application. A CIA report on the prospects for Soviet agriculture for the early 1980s pointed out that the shortcomings of the Soviet fertilizer program resulted in the average nutrient content of fertilizer in 1975 being only 35 percent, which meant high transportation and application costs per unit of nutrient. Moreover, granular fertilizers—easier to apply than powders—accounted for only 40 percent of fertilizer supplies (see Severin and Carey, 1978). A common feature for all countries is that the gains from fertilizer applications do not follow an exponential curve. At some point, different for

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