Economic Staff East, Agricultural Group.
23 May 1941
Economic Policy Directives for Economic Organization, East, Agricultural Group
Prior to World War I, Russia was the country with the largest surplus of agricultural products in the world. Situated in the zone of extensive cultivation and extensive cattle production, Russia produced a yearly average during the years 1909-1913 for the world market of: approximately 11 million tons of grain, about 1/3 of the total amount of grain in world markets; 228,000 tons of oil seeds; 660,000 tons of oil cake; 266,000 tons of sugar; 68,000 tons of butter; and 218,000 tons=5 billion eggs. Today, Russia exports only very small percentages thereof, i.e. annual grain export averaging approximately from 1 to not more than 2 million. At the same time, the territory cultivated in Rus-
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sia, however, according to their statistics, has increased considerably. For example:—
For From 1913 To 1938
Grain 94,4 Mill, ha 102,4 Mill.' ha
Potatoes 3,1 Mill, ha 7,4 Mill, ha
Sugar beet 0,6 Mill, ha 1,2 Mill, ha
Sun flowers 1,0 Mill, ha 3,1 Mill, ha
(1928/32 even 4,2 Mill.)
Linseed 0,4 Mill, ha 0,4 Mill, ha
Soya — 0,2 Mill, ha
Fodder 2,0 Mill, ha 9,1 Mill, ha
Flax 1,0 Mill, ha 1,9 Mill, ha
Cotton 0,7 Mill, ha 2,1 Mill, ha
Hemp 0,6 Mill, ha 0,9 Mill, ha
(1928/32)
Accordingly, the crops have increased according to the Russian statistics. 1909/13 1937 1938
Grain 70,0 Mill.t. 120,3 Mill.t. 95,0 Mill.t.
thereof (1940: 112,0)
Wheat 20,6 46,9
Rye 18,9 29,2
Oats 13,4 21,9
Barley 9,0 10,6
Maize 1,3 4,8 (1933)
Potatoes 20,2 65,6
Sugar beet 9,9 21,9
Flax 0,5 0,6 0,6
Cotton 0,23 0,82 0,84
Hemp 0,33 0,27
The explanation for these figures is to be seen in the following:
i. The total population has increased from 140 million in 1914 to 170 and a half million in 1939. In particular, the city population has increased from approximately 10% to approximately 30% of the total population.
ii. The number of pigs has increased from 14.2 million in 1913 to 30.6 million in 1938, and with it the requirement for fodder.
iii. The number of sheep and goats has increased from 74 million in 1913 to 102.5 million in 1938.
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It can be assumed that the present crops are not greater than in the pre-World War I period, despite an expansion of the cultivated areas * * * The grain surplus of Russia is decisively determined not by the size of the crop but by the level of domestic consumption. Even a small decrease of 30 kgms. per person of the population (220 kgms. instead of 250 kgms.) and a decrease of the ration for horses of 25% will create an export surplus equalling almost the amount prevailing in peace-time.
This fact is the key upon which our actions and our economic policy must be based.
For:—
a. Doubtless, war activities will decrease production in the
beginning and possibly—depending upon the amount of destruction—for many years. An increase in production will require years. '
b. Since Germany and Europe, respectively, require surplus under all circumstances, the consumption must be decreased correspondingly. The examples given above show the extent to which the amount of surplus can be increased by a limitation of consumption.
c. Such a decrease of consumption, contrary to the territories so far occupied, is feasible here because the principal food surplus area is clearly separated from the principal deficit area. Contrary to territory under the General Gouvernement, the Protectorate, France and Belgium, here no mixture of deficit and surplus areas such as would prevent a seizure due to black market, or direct contacts between producer and consumer.
The surplus territories are situated in the black soil district (that is, in the south & south-east) and in the Caucasus. The deficit areas are principally located in the forest zone of the north.
Therefore, an isolation of the black soil areas must in any case place greater or lesser surpluses in these regions at our disposal. The consequences will be cessation of supplies to the entire forest zone, including the essential industrial centers of Moscow and St. Petersburg.
* * * * * * *
This means:
1. All industry in the deficit area, particularly the manufacturing industries in the Moscow and Petersburg regions as well as the Ural industrial region, will be abandoned. It may be assumed that these regions today absorb an annual 5-10 million tons from the food production zone.
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2. The Trans-Caucasian oil district will have to be excepted, although it is a deficit area. This source of oil, cotton, manganese, copper, silk and tea must continue to be supplied with food in any case, for special political and economic reasons.
3. No further exceptions with a view to preserving one or the other industrial region or industrial enterprise must be permitted.
4. Industry can only be preserved insofar as it is located in the surplus region. This applies, apart from the above-mentioned oilfield regions in the Caucasus, particularly to the heavy industries in the Donets district (Ukraine). Only the future will show to what extent it will prove possible to maintain in full these industries, and in particular the Ukrainian manufacturing industries, after the withdrawal of the food surpluses required by Germany.
The following consequences result from this situation, which has received the approval of the highest authorities, since it is in accord with the political tendencies (preservation of the "small" Russians, preservation of the Caucasus, of the Baltic provinces, of White Russia to the prejudice of the Great Russians):
I. For the forest belt
a. Production in the forest belt (the food-deficit area) will become "naturalized," similar to the events during the World War and the Communistic tendencies of the war, etc., viz : agriculture in that territory will begin to become a mere "home production." The result will be that the planting of products destined for the market such as, in particular, flax and hemp, will be discontinued, and the area used therefor will be taken over for products for the producer (grain, potatoes, etc.) Moreover, discontinuance of fodder for that area will lead to the collapse of the dairy production and of pig-producing in that territory.
b. Germany is not interested in the maintenance of the productive power of these territories, except for supplying the troops stationed there. The population, as in the old days, will utilize arable land for growing its own food. It is useless to expect grain or other surpluses to be produced. Only after many years can these extensive regions be intensified to an extent that they might produce genuine surpluses. The population of these areas, in particular the urban population, will have to face most serious distress from famine. It will be necessary to divert the population into the Siberian spaces. Since rail transport is out of the question,- this too, will be an extremely difficult problem.
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c. In this situation, Germany will only draw substantial advantages by quick, non-recurrent seizure, i. e. it will be vitally necessary to make the entire flax harvest available for German needs, not only the fibers but also the oleaginous seed.
It will also be necessary to utilize for German purposes the livestock which has no fodder base of its own, i. e. it will be necessary to seize livestock holdings immediately, and to make them available to the troops not only for the moment, but in the long run, and also for exportation to Germany. Since fodder supplies will be cut off, pig and cattle holdings in these areas will of necessity drastically decline in the near future. If they are not seized by the Germans at an early date, they will be slaughtered by the population for its own use, without Germany getting anything out of it.
* * * * * * *
It has -been demanded by the Fuehrer that the reduction in the meat ration should be made good by the fall. This can only be achieved by the most drastic seizures of Russian livestock holdings, particularly in areas which are in a favorable transport situation in relation to Germany * * *
In respect of flax cultivation, too, the German economy will be interested in these territories. On the other hand, if at all possible, it must be attempted to treat these territories leniently, for political reasons: the conflict between White Russians and Lithuanians on one hand against Great Russians on the other. Only the future will show to what extent this is possible.
. 3. Th& 'problem of fisheries
The fisheries in the North constitute a special problem. Germany's aim must be to seize the approximately 100 steam fishing vessels in Murmansk, Kola, etc., in order to utilize them for German benefit in fishing operations based on Norway * * *
Thus, there is no question of a development of Russian fisheries, but what is needed is conquest of the Russian fishing fleet.
A destruction of the Russian, manufacturing industries in the forest zone is also an indispensable necessity for Germany's more remote peace-time future. Even in Tsarist Russia, the high prices of consumer goods were a device, in addition to taxes, for increasing the grain surpluses of the producing zone. Peasants in this zone were compelled to sell all their produce, except for a subsistence minimum, in order to pay their taxes and buy the consumer goods which they needed. In future, Southern Russia must turn its face towards Europe. Its food surpluses, however, will only be paid for if it purchases its industrial consumer goods from Germany, or Europe. Russian competition from the forest
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zone must therefore be abolished. It follows from all that has been said that the German administration in these territories may well attempt to mitigate the consequences of the famine which undoubtedly will take place, and to accelerate the return to primitive agricultural conditions. An attempt might be made to intensify cultivation in these areas by expanding the acreage under potatoes or other important food crops giving a high yield. However, these measures will not avert famine. Many tens of millions of people in this area will become redundant and will either die,, or have to emigrate to Siberia. Any attempt to save the population there from death by starvation by importing surpluses from the black soil zone would be at the expense of supplies to Europe. It would reduce Germany's staying power in the war, and would undermine Germany's and Europe's power to resist the blockade. This must be clearly and absolutely understood. The manufacturing industries in Belgium and France are much more important for Germany and the German war effort than those in Russia. It is therefore much more essential to safeguard food supplies to those countries through surpluses from the East than to make an ambitious attempt to preserve Russian industry in the food-consuming zone. One must always bear in mind that the Great Russian people, whether under Tsarism or Bolshevism, is always an irreconcilable enemy not only of Germany, but also of Europe. From this it also follows that there can be no question of introducing marketing regulations or food rationing in these territories. Rationing would establish a claim against the German administration on the part
of the population, and such a claim must be rejected beforehand.
* # * * * * *
For the rest, it can be pointed out that even given the best intentions on the part of the German administration to supply the forest zone with the surpluses of the South, such supplies would fail on account of transport conditions alone. The Russian rail network is weak in itself, and will be taxed to capacity by the tasks of supplying the Army and the necessity of exports to Europe.
II. For the black soil belt
^ * He £
2. The battle for increased production, and the seizure of surpluses, presupposes a retention of large-scale farming units (collective and Soviet farms). . . .In view of the Russians' mentality an increase in production is only possible by decree from above. ... A splitting-up into several millions of individual peasant holdings would make any German influence on production corn-
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pletely illusory. Every attempt to liquidate the large-scale units must therefore be fought with the most drastic means.
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1. SuppUes for the Army
Germany's food situation in the third year of war demands it imperatively that the Wehrmacht, in all its provisioning, must not live off Greater German territory or that of incorporated or friendly areas from which this territory receives imports. This minimum aim, the provisioning of the Wehrmacht from enemy territory in the third year, and if necessary in later years, must be attained at any price. This means that one-third of the Wehrmacht must be fully provisioned by French deliveries to the army of occupation. The remaining two-thirds (and even slightly more in view of the present size of the Wehrmacht) must without exception be provisioned from the Eastern space. This leads to the following particulars:—
* 1. Bread Cereals. The requirements of the Wehrmacht as to bread cereals amount annually to about 1 and a half million tons. France supplies 470,000 tons yearly in accordance with the Hague Convention for Land Warfare and the Armistice Treaty. France will have to continue to make such shipments also in the third year. The East will, in future, have to make available under all circumstances about 1 million tons. In furnishing bread cereals to the Wehrmacht, consideration must also be given to the problem of supply of foodstuffs and beer.
2. Oats. The requirements of the army amount to about 1.8 million tons. France and other occupied territories in the West ship approximately 600,000 tons. Accordingly, 1.2 to 1.5 million tons would be the quota for the East.
3. Meats. The requirements of the Wehrmacht amount to about 600,000 tons annually. France, with Holland and Denmark delivered up to now 200,000 tons and will, in the third year of the war, ship 125,000 tons at the most. Accordingly, there remain about 475,000 tons of meats which the Eastern territories will have to supply, or figured in the exchange of value of grain,
2.400.000 tons of grain.
4. Fats. The requirements of the army amount annually to about 100,000 tons. France has been up to now unable to supply fats and will in the future also be unable to do so. The entire
100.000 tons will have to be shipped by the Eastern territories.
5. Besides, the Eastern territories will have to supply the proportionate requirements of the Wehrmacht as to hay and straw respectively; furthermore, they will have to furnish the require-
693260—46—20
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ments as to fruit, vegetables, canned fish, sugar, prepared foodstuffs and legumes.
From this it follows that about 1 million tons of bread cereals, 1.2 million tons of fodder cereals, 2.U million tons of grain for meat production, or a total of from U and a half million to 5 million tons of grain will have to be supplied from the Eastern territories for the requirements of the army, in addition to the shipments of hay, straw, fats, eggs, etc. It is to be noted that hereby the transport situation for exports to Germany from the East and for supplies from Germany will be considerably relieved.
These quantities have by all means to be furnished for the army in the Eastern territories. They will be increased by these amounts by which the French quotas might possibly be reduced.
It cannot be anticipated today what troop transfers will take place during the third year of war (possibly also demobilization of a considerable number of soldiers). Furthermore, it should not be overlooked that a part of the army, such as for instance, the "Flak" (anti-aircraft batteries), the personnel in training, especially the youngest training age class, etc., will also in the future be permanently stationed in Germany. For all these reasons, the estimated size of the Wehrmacht in the East may be considerably reduced during the third year of war, which would lead to an increase in the number of consumers in Germany herself. Also, in this case, the quantities made available for the estimated 2/3 of the entire Wehrmacht will have to be supplied under any circumstances from the Eastern territories. Obviously the transport situation will hereby be considerably burdened.
II. Supplies for the German civilian population.
1. Only after meeting these requirements of the army which, under any circumstances, will have to be made available from the Eastern territories, can shipments to Germany to cover civilian needs begin. In this matter, any dissipation of energy on side issues must, under any circumstances, be abstained from. First and foremost is the transport to Germany of oil seeds—-particularly of sunflower seeds, but also of flax seed, cotton seed, soya beans—in order to increase the stocks of fats. For, from the fat stocks in the third year of war there will be a lack of about 150,000 tons of oil which Japan and Manehukuo.up to now shipped through Russia. Furthermore, the remaining oil seed reserves that are still on hand will be used up in the third year of the war economy. For these reasons, it will be necessary to procure from the East from 400,000 to 500,000 tons of oil which
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must be considered equivalent to about 1 and a half million tons of oil seeds. This transport problem must under all circumstances be solved, and in doing so the fact that in the Eastern territories the oil seeds are being pressed to oil will not lead to an alleviation of the situation for the reason that greater Germany can likewise not do without the resulting oil cake. It will be a question of expediency as to whether oil seeds or oil and oil cake should be shipped. The final result must be the delivery of about ¿00,000 tons of oil and 1 million tons of oil cake.
2. Only after the transport of these oil seeds is accomplished, may an export of grain be effected, which of course, is extremely desirable, because greater Germany must at an increasing rate supply the occupied territories and must also herself replenish her reserves after the bad harvest in 1940 and after this year's harvest which, at best, must be expected to be an average one. In any case, the grain surpluses of the newly-annexed border territories and also of regions situated favorably in respect of transportation, must be exported to Germany in order to obtain soon the quantities which the Russians anyway would have supplied voluntarily. In any case, however, if transportation is not possible, all grain surpluses that exist in the Eastern territories above the quota for army requirements, must be secured so that these stocks can be transferred to Germany during the coming year.
3. As thé shortening of rations in Germany has already now shown, the weakest point in the German food situation is the meat supply. The relief resulting from the fact that 2/3 of the army is procuring its meat from the Eastern territories, is not sufficient to make good in the fall the cut that was made in meat rations, because Germany's fodder supply situation makes it absolutely necessary to reduce further the stocks of pigs. Therefore, it will be necessary to place quantities of meat, also, from the Eastern territories at the disposal of the Reich.
While, however, the supply to the army must come from all territories in the East (according to the troop contingents stationed in the individual territories), and while the export of oil seeds and grain will for the most part originate in the black soil zone, the procurement of meat for German purposes, even for the purposes of the current requirements of the Wehrmacht, must take place from the forest belt and, in that zone, especially from the White Russian region and the central industrial areas in the vicinity of Moscow.
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One has to be entirely clear regarding the following situation:
The stocks of cattle in the whole of Russia amount to about 63 million compared with 22 million in greater Germany, the stocks of pigs amount to 30 million compared with 2U million in Germany at the present time. The cattle stocks are more concentrated in the natural pasture-lands; these are the regions north of Moscow, excluding the Baltic provinces, up to Siberia and the Steppe regions in the south-east. The pork larders are situated in the north-west wooded regions as far as Moscow. These territories in the future will, in any case, have to reduce their stocks of cattle very considerably, especially their pig inventories, on account of the interruption in grain deliveries from the black soil zone. In such a situation, the danger exists that if our authorities do not seize the stocks of cattle immediately, in order to supply the army on the one hand and the homeland on the other, the livestock might be slaughtered within a very short time for the purposes of the local population and would therefore no longer be available for German purposes.
What matters, therefore, is not only to prepare making available stocks of cattle for 1 year for 2/3 of the Wehrmacht and to ship to the Baltic Sea ports livestock, especially from the north-west and the central regions, in order to utilize it for German civilian requirements by way of the border slaughter house in the North of Germany, but the decisive point is to assure, as far as possible, meat stocks for the future as well. The problem of preserving meat therefore will be of utmost importance, especially in the northern regions. Everything in tin-plate that is obtainable or can be made in Russia must, therefore, be withdrawn from all other canning purposes and serve in the manufacture of canned meat, which can be stored over a longer period of time only in tin-plate cans. Possible exceptions to this rule, perhaps in the case of canned fish, will only be ordered later as far as it should be necessary. Another important point is to use as well all other methods of preserving food (pickling, freezing and smoking of food). It is necessary for this important purpose to make use of all meat packing houses that are located in these regions. The importance and urgency of this task will have to be pointed out again and again. The interruption in the fodder supply will make it impossible to get hold of the cattle later on.
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IV. Collection: The solution of these problems requires, apart from the maintenance of production in the surplus area, a smooth functioning of collection. For this reason alone the col-
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lective farming structure must not be touched, since collection is the easier the bigger each individual farming unit. In conducting collection in the reconstruction areas, i.e. in the surplus-producing districts, the food supplies of the producing peasants and farm laborers will have to be considered, in order to insure maintenance and increase of production in future years. Such considerations will not always be possible, or necessary, in the foodconsuming areas of the forest zone, except for the special treatment to be accorded the Baltic and, if possible, the White Russian territories. Apart from collecting provisions and supplies for the Wehrmacht, the important thing in the food-consuming areas will be to seize the largest possible portion of the oil seed harvest and to collect the largest possible quantities of grain in order to insure export to Germany. The seizure of livestock which will be needed has already been discussed. In order to obtain barter goods for the peasants in the surplus producing zone, sugar crops will be seized without exception. The same goes for tobacco, alcohol, hides, leather, and fiber crops for the manufacture of textiles, as well as for industrial consumer goods, such as coal, kerosene, etc.
In conclusion, the principles must be pointed out once more: under the Bolshevik system Russia has, purely out of power motives, withdrawn from Europe and thus upset the European equilibrium based on division of labor. Our task is to re-integrate Russia with the European division of labor, and it involves, of necessity, the destruction of the existing economic equilibrium within the Soviet Union. Thus, it is. not important, under any circumstances, to preserve what has existed, but what matters is a deliberate turning away from the existing situation and introducing Russian food resources into the European framework. This will inevitably result in an extinction of industry as well as of a large part of the people in what so far have been the food-deficit areas.
It is impossible to state an alternate in sufficiently hard and severe terms.
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Our problem is not to replace intensive food production in Europe through the incorporation of new space in the East, but to replace imports from overseas by imports from the East. The task is two-fold:—
1. We must use the Eastern spaces for overcoming the food shortage during and after the war. This means that we must not be afraid of drawing upon the capital substance of the East.
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Such an intervention is much more acceptable from the European standpoint than drawing upon the capital substance of Europe's agriculture. * * *
2. For the future new order the food-producing areas in the East must be turned into a permanent and substantial complementary source of food for Europe, through intensified cultivation and resulting higher yields.
The first-named task must be accomplished at any price, even through the most ruthless cutting down of Russian domestic consumption, which will require discrimination between the consuming and producing zones.
The second task, however, presupposes adequate feeding of the working people, since no production increase is possible without adequate feeding of the men who have to accomplish it.