Suspension of Grain Sales to Soviet Union:

Monitoring Difficult--Shortfall Substantially Offset

C-CED-81-1: Published: Mar 3, 1981. Publicly Released: Nov 8, 1981.

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On January 4, 1980, the President announced the suspension of grain shipments to the Soviet Union in excess of the 8 million metric tons of wheat and corn which the United States was committed to export by the U.S.-U.S.S.R. Grain Supply agreement. The suspension was directed at the Soviet Union's important feed and livestock sector; improved domestic availability of meat, milk, and eggs has been a major goal of Soviet planners. The Administration estimated that the suspension would have a substantial adverse impact on Soviet feed usage, numbers of livestock, and meat consumption.

In the 1979-80 marketing year, the Soviet Union was able to substantially offset the suspension's impact by increasing grain imports from other countries; drawing down its carryover grain stocks; increasing imports of non-U.S. soybeans, soybean products, and substitute feeds; and increasing meat imports. It may have received some U.S. grain as a result of unauthorized transshipments through Northern European ports. Although the Federal Government has set up a monitoring program to identify illegal grain shipments to the Soviet Union, it is not feasible to closely monitor for possible unauthorized transshipments because of the interchangeability of grain, the relatively widespread availability of transshipment facilities, and limitations in staff resources and U.S. legal jurisdiction. The Department of Agriculture (USDA) estimates that the Soviet Union will import an amount of grain equal to its maximum import capabilities during the 1980-81 marketing year. Thus USDA believes that any decrease in livestock feed usage or meat consumption will be the result of a poor Soviet grain harvest in the 1979-80 marketing year and low carryover grain stocks. Since GAO recognized that the suspension was imposed for foreign policy and national security reasons, it had no comment on the continuation of the suspension.

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