Since the late 1960s and early 1970s, inter-enterprise cooperation and agro-industrial integration have become the most intensely discussed subjects in Soviet agricultural management and organization. Whether among Soviet leaders or in academic circles, discussions of agricultural issues almost invariably touched upon these topics. In 1976, the Central Committee of the Communist Party of the Soviet Union adopted a special resolution entitled Further Development of Specialization and Concentration of Agricultural Production on the Basis of Inter-Enterprise Cooperation and Agro-Industrial Integration. The resolution described inter-enterprise cooperation and agro-industrial integration as a “fundamentally new solution” for improving the management and organization of agricultural production, the “main direction for the further development of agriculture,” and a “major task for the entire nation and the entire Party.” In practical work, different regions and agricultural sectors throughout the Soviet Union were carrying out major reorganizations in various forms under this general policy, a process referred to as a “qualitative transformation.” This is a subject worthy of careful study. The promotion of inter-enterprise cooperation and agro-industrial integration represented a continuation and development of the reforms in Soviet agricultural management initiated in the mid-1950s. Under the specific conditions of the Soviet Union, the emergence of this policy had a certain objective necessity. The development of Soviet agriculture followed a tortuous path. In the late 1920s and early 1930s, Soviet agriculture underwent complete collectivization. Numerous scattered small peasant farms were merged into collective farms, creating a socialist large-scale agricultural system. Socialist production relations opened broad possibilities for the development of productive forces. Nevertheless, Soviet agriculture stagnated for a long period. As late as 1953, Soviet grain production had still not reached its highest level recorded before the October Revolution. The reasons were manifold. Objectively, the socialist revolution lacked historical precedent, and there was no model to follow for agricultural collectivization. Various mistakes and shortcomings during the collectivization process caused losses in agricultural production. Just as Soviet agriculture began to recover in the 1930s, the Second World War broke out. Nazi Germany occupied vast and fertile agricultural regions of the Soviet Union, causing severe destruction to agriculture. Within little more than two decades, agricultural production suffered two major declines, inevitably affecting the overall rate of agricultural development. However, the slow development of Soviet agriculture was due not only to objective causes but also to a number of subjective factors. Particularly after the war, Soviet agriculture still failed to improve significantly, largely because of policy errors and weaknesses in the agricultural management system. During this period, as Mao Zedong pointed out, the state's procurement quotas for farm products were excessive and purchase prices too low, effectively “squeezing the peasants very hard.” According to statistics, in the early 1950s the compulsory procurement price for grain amounted to only 10 percent of production cost; for beef, 5 percent; for pork, 6 percent; and for milk, 22 percent. Such short-sighted policies seriously undermined peasants' enthusiasm and hindered the consolidation and development of the collective economy. There were also numerous problems in agricultural administration. For example, agricultural production was mainly directed and managed through administrative measures, with little use of economic methods; collective farms were subject to overly rigid control, and their initiative was not sufficiently encouraged; the principle of material incentives was not effectively implemented; and excessive restrictions were imposed on the household sideline activities of collective-farm members and employees. All of these factors adversely affected agricultural development. Since the mid-1950s, Soviet agriculture has developed more rapidly. During the twenty-five years from 1953 to 1978, the gross agricultural output of the Soviet Union increased at an average annual rate of 3.6 percent. Undoubtedly, Soviet agriculture remained relatively backward and continued to be a weak link in the national economy. Nevertheless, it should also be recognized that over the past two decades the output of various agricultural and livestock products increased substantially, and the overall appearance of agricultural production changed significantly. During the past two decades, the Soviet Union attached considerable importance to agriculture. Investment in agriculture increased steadily. In the most recent five-year period, agricultural capital construction accounted for 27 percent of total national investment. The material and technical basis of agriculture was continuously strengthened, while mechanization, chemicalization, and irrigation expanded steadily. At the same time, a series of reforms was introduced in agricultural administration. The Soviet Union revised its agricultural planning methods and implemented a planning system based on the volume of marketable output. Collective farms and state farms were given the right to formulate their own production plans on the basis of state procurement targets, thereby expanding their managerial autonomy in organizing production according to local conditions. Greater emphasis was placed on economic methods of management, and economic levers such as value, prices, costs, profits, credit, and interest were increasingly used to stimulate agricultural production. Procurement prices for agricultural products were adjusted repeatedly to ensure profitability. Procurement plans were fixed for five-year periods, and deliveries beyond planned targets were rewarded with a 50 percent bonus. Comprehensive economic accounting was introduced in state farms, while direct bank lending was provided to collective farms. At the same time, material incentives were strengthened. A guaranteed remuneration system for the labor of collective-farm members was introduced, and efforts were made to link the incomes of collective-farm members and state-farm employees with the final production results of their enterprises. In addition, policies concerning household sideline production were revised. So-called “unfounded restrictions” were abolished, and various forms of support and encouragement were provided within the framework of legal regulations. Of course, many problems still existed in Soviet agricultural management. Excessively rigid control over collective and state farms had not been fundamentally eliminated, and the problem of low agricultural productivity remained unresolved for a long time. Nevertheless, it should be acknowledged that the reforms implemented since the mid-1950s improved certain aspects of production relations and contributed to agricultural development to some extent. The management system and organizational forms of agricultural production should evolve along with the development of productive forces. Since the latter half of the 1960s, the material and technical foundation of Soviet agriculture has been further strengthened. Modern scientific and technological achievements have been increasingly applied in agriculture, and agricultural production has gradually shifted onto an industrial foundation. Under these conditions, objective circumstances demanded further reform of agricultural management. If the agricultural reforms of the mid-1950s through the 1960s were primarily aimed at adjusting the economic interests of the state, the collective, and the individual, and at stimulating the initiative of farms and agricultural workers, then the reforms of the 1970s focused more on restructuring production and organizational arrangements. The principal method of this restructuring was to transform diversified collective and state farms into specialized production units through inter-enterprise cooperation and agro-industrial integration, further raising the level of concentration in agricultural production while strengthening economic ties between agriculture and related industrial and service sectors and integrating them organizationally into a unified whole. This was an objective requirement of modern agriculture. Various forms of inter-enterprise cooperation and agro-industrial organizations had already achieved considerable development in the Soviet Union and had produced significant results. It should be pointed out that inter-enterprise cooperation and agro-industrial integration were not uniquely Soviet phenomena. In most Eastern European countries whose economic management systems were broadly similar to that of the Soviet Union, cooperation among collective and state agricultural enterprises had developed to varying degrees. Agro-industrial integration, meanwhile, had become a widespread trend in many agriculturally advanced countries throughout the world, regardless of their social and economic systems. After the downfall of the “Gang of Four,” and especially since the implementation of the spirit of the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China, a new situation has emerged in Chinese agriculture. On the basis of summarizing both the positive and negative experiences of agricultural development during the thirty years since the founding of the People's Republic, peasants, cadres, and agricultural workers have been engaged in extensive discussions about the future course of Chinese agricultural development. This far-reaching discussion, concerning how China can realize agricultural modernization, requires reference to the experiences and developments of agriculture in other countries. Mao Zedong once pointed out that every nation and every country has both strengths and weaknesses. While we must firmly resist and criticize all corrupt foreign institutions and unhealthy ideological trends, this does not prevent us from learning from the scientifically sound aspects of advanced foreign science, technology, and enterprise management. To reject everything foreign indiscriminately or to copy everything indiscriminately are both “attitudes inconsistent with Marxism and detrimental to our cause.” We should adopt the same realistic and analytical approach toward Soviet agricultural management, discarding its undesirable elements while absorbing its valuable experience for our own benefit. This book seeks, on the basis of official Soviet documents, newspaper articles, and related materials, to provide an objective introduction to the theory and development of Soviet inter-enterprise cooperation and agro-industrial integration for the reference of researchers and others interested in agricultural issues. Inter-enterprise cooperation and agro-industrial integration in Soviet agriculture are two processes that are closely related yet distinct. For convenience of presentation, they are discussed separately in this book. Chapters One through Four primarily deal with issues of inter-enterprise cooperation, while Chapters Five through Eight focus on agro-industrial integration. Owing to our limited expertise and access to source materials, errors and shortcomings are inevitable, and readers' comments and corrections are sincerely welcomed. February 1980