Nine-tenths of the short-term loan balances at the end of 1971 were owed

by state enterprises, and one-tenth was due from collective enterprises.

Wholesale and retail trade accounted for 36 percent of the outstanding

loans; industry and construction were each liable for 28 percent.

Short-term loan balances of agriculture amounted to less than 8 percent

of the total sum, and balances of the services sector constituted less

than 0.2 percent. The largest part of short-term loans was granted for

working capital purposes, including the procurement of farm products. A

balance of almost 1 billion leva, however, was outstanding on loans for

the completion of building construction, including a small amount for

housing.

A very small, though increasing, volume of consumer loans for the

purchase of durable goods and clothing has been granted by the State

Savings Bank. The volume of such loans--36.5 million leva in 1966, 48.2

million leva in 1967, and 45.4 million leva in 1968--was equivalent to

slightly more than 1 percent of retail sales in the commercial trade

network. The outstanding balances of consumer loans at the end of the

year rose from 49.1 million leva in 1968 to 102.1 million leva in 1971.

Consumer loans may not exceed the sum of 500 leva and may be used only

for the purchase of designated goods. In 1969 the authorized list

included twenty-three categories. A sample survey in 1969 indicated that

about two-thirds of the loan volume was used to acquire television sets,

furniture, and motorcycles; another 20 percent was spent on radios,

sewing machines, and scooters.

Apart from consumer loans, the State Savings Bank grants small loans to

licensed private craftsmen for working capital and to collective and

state farmworkers and other qualified applicants for the purchase of

productive livestock, seeds, fertilizers, small tools, and other farm

perquisites. The bank also makes loans for adapting premises to the

needs of tourism; for current building repairs; and for meeting personal

emergencies, including loans to newlyweds for the acquisition of

furnishings. Depending upon the purpose of the loans, loan ceilings

range from 150 to 800 leva, and maturities extend from ten months to

eight years.

The volume of consumer loans was reported to have reached 116 million

leva in 1972. Under the economic plan for 1973, the State Savings Bank

was scheduled to make loans to individuals for the purchase of consumer

goods and other needs in the amount of 203 million leva and for home

construction in the amount of 180 million leva. The bank was also

expected to lend 141 million leva to people's councils.

Loan funds of the State Savings Bank have been derived from personal

savings deposits and, presumably, from interest payments. The bank also

conducts state lotteries for the benefit of the state budget. There is

no evidence as to whether the bank retains a portion of the lottery

proceeds for its own operations. Savings deposits increased almost

fivefold in the 1960-71 period to a level of about 3.6 billion leva--a

sum equivalent to 64 percent of total retail sales or 150 percent of

food sales through commercial and institutional channels in 1970.

According to preliminary data, savings deposits rose by 630 million leva

in 1972, and they were scheduled to increase further by 870 million leva

under the economic plan for 1973. The bulk of savings deposits has been

channeled into the budget.

The repayment record on loans by the State Savings Bank was excellent,

at least through 1969. The proportion of delinquent loans was reduced

from 3.1 percent in 1966 to 0.01 percent in 1969. This result was

achieved by a regulation that provided for penalties to be imposed on

paymasters throughout the economy who failed to withhold or to report to

the bank monthly loan payments. According to a bank official, there had

been no need to impose any penalties because the regulation itself

proved to be an adequate deterrent.

The loan repayment record of enterprises, trusts, and other economic

organizations has not been nearly so good and led to a tightening of

credit provisions in 1971. The proportion of overdue short-term loans in

the production sector increased from 10.7 percent in 1966 to 11.8

percent in 1971. Similar information on long-term loans has not been

published.

The penalty interest rate on delinquent loans is 10 percent (it was 8

percent through 1970), compared to a normal range of 1 to 5 percent on

loans for working capital. Whenever a bank loan or supplier credit is

delinquent for more than three months and the delinquent amount exceeds

20 percent of the borrower's working capital, the borrower becomes

subject to a special credit and repayment regime, the specific

conditions of which are not known. The ultimate sanction is the refusal

of credit and, at times, even the replacement of the trust or enterprise

director. The special credit regime is also applied whenever a trust or

its branch (enterprise) stockpiles unneeded inventories; procures

materials for production without guaranteed outlets for the output;

undertakes a construction program without adequate financial provisions;

increases its obligations; or suffers a worsening of its financial

condition for any other reason.

Interest costs in excess of those planned lower the economic

organization's income and, under the prevailing incentives system, also

reduce the funds available for the payment of wages, salaries, and

bonuses. Loan delinquency and the associated penalty interest rate,

therefore, often bring about the reduction or elimination of bonus

payments and, in extreme cases, the withholding of a portion of regular

pay. Application of the more severe sanctions entails a serious

deterioration of the economic organization's finances that adversely

affects its production program. Through close contact with borrowers and

detailed supervision of their operations the bank endeavors to forestall

delinquencies and the attendant losses to the economy. In December 1972

the Council of Ministers adopted a decision to enhance the role of the

banking system in administering the economy by intensifying its

participation in the formulation of economic plans and by expanding its

authority in monitoring plan fulfillment.

Currency

The currency unit of the country is the lev, divided into 100 stotinki

(see Glossary). It is a nonconvertible currency with a variety of

exchange rates, usable only in domestic transactions. Since January 1,

1962, the lev has been officially defined to contain 759.548 milligrams

of fine gold--equivalent to 1.17 leva per US$1 at that time. This

exchange rate was valid only for commercial transactions. In the wake of

the United States dollar devaluation on December 18, 1971, the official

commercial exchange rate was set at 1.08 leva per US$1 (greenback--see

Glossary). A further revision of the exchange rate was put into effect

on February 13, 1973, which established a parity of 0.97 leva per US$1.

The subsequent decline in the value of the dollar in foreign markets did

not call forth another official exchange revaluation to mid-1973.

The official tourist exchange rate for so-called capitalist currencies

underwent similar revisions and was set at 1.65 leva per US$1 on

February 14, 1973. The noncommercial rate for ruble area countries,

based on a parity of 0.78 leva per 1 ruble, was equivalent to 0.64 leva

per US$1 until that date; thereafter, at the new ruble-United States

dollar parity, it was equivalent to about 0.59 leva per US$1.

In addition to the official exchange rates, there are three varieties of

clearing account rates. The multilateral transferable ruble is used to

clear accounts with other European members of the Council for Mutual

Economic Assistance (COMECON--see Glossary). Socialist bilateral units

arise from bilateral trade agreements with other communist countries.

Neither of these two exchange varieties has private markets abroad.

Bilateral clearing units arise from bilateral trade and payments

agreements with about thirty noncommunist trading partners. These

clearing units are traded sporadically abroad at varying rates of

discount.

The lev has been traded on the black market in exchange for so-called

capitalist banknotes or gold coins. The black market rate of the lev

fluctuated between 4.60 leva per US$1 in January 1963 and 2.58 leva per

US$1 in June 1972.

Except for small remittances or travel allocations to other communist

countries, the lev is nontransferable for residents; resident status

applies to all physical and juridical persons who have resided in the

country for more than six months, regardless of their citizenship.

Ownership of or trade in gold, foreign currencies, or so-called

capitalist securities is prohibited, as is the import and export of

Bulgarian banknotes. There are no investments by noncommunist country

nationals in Bulgaria.

Exchange transactions are administered by the Bulgarian National Bank

jointly with the Ministry of Finance, the Ministry of Foreign Trade, and

the Bulgarian Foreign Trade Bank. Bulgaria is neither a member of the

International Bank for Reconstruction and Development nor of the

International Monetary Fund. Statistics on currency in circulation, the

public debt, foreign exchange reserves, gold stocks, and the balance of

payments have not been published.

FOREIGN TRADE

Foreign trade is a state monopoly. Trade policy is formulated by the BKP

and government leadership; it is translated into a complex set of laws

and regulations designed to encourage the expansion and qualitative

improvement of production for export, to promote import substitution,

and to bring about greater efficiency in production and foreign trade

operations. Control over foreign trade is shared by the Ministry of

Foreign Trade, the Ministry of Finance, and the Bulgarian National Bank

through the Bulgarian Foreign Trade Bank.

Along with other elements of the economic structure, the foreign trade

apparatus and the laws and regulations governing foreign trade have been

frequently modified. As a result, there are two basic types of foreign

trade organization: those attached to and serving individual economic

trusts with a large export volume and organizations serving several

trusts whose export activity did not justify a separate export

department. Two foreign trade organizations that imported most

industrial materials were attached to economic trusts responsible for

the domestic distribution of supplies. Foreign trade organizations

affiliated with trusts retain their legal identity and are not

considered to be branches of the trusts they serve. Relations between

foreign trade organizations and the trusts whose products they handle

are governed by contracts, the framework of which is provided by

official regulations. As a rule, foreign trade organizations carry on

their activities for the account of the trust. There are a few

organizations, however, that trade for their own account, and there are

also a few economic trusts that have the right to engage in foreign

trade activity directly.

Export plans are approved by the Council of Ministers for each economic

trust in physical and value terms and by major trading areas, that is,

member countries of COMECON, other communist countries, Western

industrialized nations, and developing countries. Trusts pass their

trade plans to foreign trade organizations. The plan of a single trust

may be apportioned among several foreign trade organizations, and many

foreign trade organizations receive plan assignments from several trusts

so that their own foreign trade plan is a composite.

Under the regulations of 1971, as amplified in 1972, and unlike earlier

conditions, the financial results of export operations are directly

reflected in the producer's profit position. This circumstance is

counted upon by the leadership to motivate trusts toward attaining

optimum efficiency in export production and toward adjusting output to

foreign market requirements. Financial incentives to surpass official

foreign trade targets are provided by allocating the producers and

foreign trade organizations a portion of the receipts from excess

exports and a portion of savings made on imports through import

substitution. Excess exports may not be made by diverting output

scheduled for the domestic market, and savings on imports may not be

made at the cost of quantitative or qualitative deterioration of the

domestic supply.

Producers for export are obligated both to produce the items called for

by the export plan in accordance with specifications and to meet

contractual delivery dates; with few exceptions, they have no direct

contact with foreign buyers. It is the responsibility of the foreign

trade organizations to seek out the most profitable markets and to

handle all physical and financial details of the trade transactions. It

is also their duty to keep producers currently informed about changing

conditions in world markets and to make them aware of needed adjustments

in production.

Standard subsidies per 100 leva, differing by trading area, are granted

on all exports. These subsidies, in effect, modify the official exchange

rate so that trade is actually conducted on a multiple exchange rate

basis. Subsidies from the state budget are also provided for exports,

the returns from which do not cover costs. Special bonuses are offered

to economic trusts and their branches that fulfill or surpass their

export assignments to noncommunist markets. Proceeds from exports are

credited to the economic trusts and not to the foreign trade

organizations.

Relations between economic trusts and foreign trade organizations are

determined in broad outline by government regulations. Specific details,

however, including precise financial arrangements that are the core of

the relationship, must be worked out by the parties to the contract.

This situation provides opportunities for friction that may be harmful

to the export program. Trusts and export associations were therefore

enjoined to undertake negotiations in a cooperative spirit and to avoid

taking advantage of their monopoly position as producers or exporters.

Disputes that threaten to involve financial losses are to be settled by

the Ministry of Foreign Trade and the Ministry of Finance.

Total trade turnover increased more than 3.5 times in the 1960-71 period

to a level of 5 billion leva, including 2.55 billion leva in exports and

2.45 billion leva in imports. The growth of trade was erratic,

particularly in the case of imports. Over the entire 1960-68 period,

however, the average annual growth of exports and imports was almost

identical--13.9 and 13.8 percent, respectively. In the subsequent three

years exports rose almost twice as rapidly as imports, though at a

lower rate than in earlier years. The change in the relative rates of

growth during the 1969-71 period--10.5 percent for exports and 5.6

percent for imports--helped reverse the consistently negative trade

balance of the earlier period and produced trade surpluses in three

consecutive years.

The great bulk of the trade has been carried on with communist

countries, primarily the Soviet Union. The share of these countries in

total trade, however, declined from 85 percent in 1961 to 78 percent in

1970; it had fallen to 73 percent in 1966. Communist countries outside

COMECON, primarily Cuba and the Democratic Republic of Vietnam (North

Vietnam), accounted for only 3 to 4 percent of the trade annually. The

Soviet Union alone provided more than half the imports and absorbed an

equal amount of exports. The German Democratic Republic (East Germany)

and Czechoslovakia were the main COMECON trading partners after the

Soviet Union, but the volume of trade with these countries was very much

lower. The share of East Germany in the total trade had been 10.5

percent in 1960 but ranged between 8 and 8.6 percent in the 1965-70

period. The proportion of trade with Czechoslovakia declined from 9.7

percent in 1960 to only 4.8 percent in 1970.

The orientation of trade toward the Soviet Union has been based largely

on political factors but has also been dictated by the shortage of

export goods salable in Western markets and the inadequacy of foreign

exchange reserves (see ch. 10). Trade with COMECON members is conducted

on the basis of bilateral clearing accounts that do not involve the use

of foreign exchange. Furthermore, the Soviet Union has supplied Bulgaria

with a large volume of industrial plants and equipment in exchange for

the products of these plants. In the 1971-75 period trade with the

Soviet Union is scheduled to increase by 60 percent over the volume in

the preceding five-year period, and the share of the Soviet Union in the

total trade volume is planned to reach 68 percent.

Trade with noncommunist countries rose from about 15 percent of the

total volume in 1961 to 27 percent in 1966 but declined thereafter to 22

percent in 1970. From three-fourths to four-fifths of this trade was

accounted for by Western industrialized nations, primarily the Federal

Republic of Germany (West Germany), Italy, France and Great Britain. The

balance of the noncommunist trade was with developing countries, mainly

India, the United Arab Republic (UAR), and Iraq. Trade with the United

States has been negligible.

There has been a gradual shift in exports from agricultural to

industrial commodities and from raw materials to manufactured and

semiprocessed products. Yet in 1970 exports of agricultural origin still

constituted 55 percent of the export volume, including 8 percent of raw

farm products. The share of industrial exports rose from 25 percent in

1960 to 45 percent in 1970, of which 13 and 27 percent, respectively,

consisted of machinery and equipment. In 1972 the proportion of

machinery and equipment in exports was reported to have risen to 34

percent.

Machinery and equipment have been exported almost exclusively to

communist and developing countries. In 1968, the last year for which

information was available, machinery and equipment constituted only 1.8

percent of exports to Western industrialized nations.

Imports in the 1960-70 period consisted predominantly of machinery and

equipment, fuels, raw and processed industrial materials, and raw farm

commodities. Imports of foods and industrial consumer goods were limited

to about 10 percent per year. Machinery and equipment constituted from

40 to 44 percent of imports; fuels and industrial materials accounted

for about one-third; and agricultural raw materials made up the balance.

In the 1960-70 period the country's overall trade balance was negative

each year with the exception of 1969 and 1970. The trade deficit for the

entire period amounted to 580 million leva, including 530 million leva

in the trade with noncommunist countries and 50 million leva in the

trade with communist partners. A breakdown of the trade balance by all

four trading areas was available only for the 1965-70 period. For that

period the overall trade deficit amounted to 278 million leva. Whereas

trade with communist and developing countries had positive balances of

148 million leva and 154 million leva, trade with developed Western

countries accumulated a deficit of 580 million leva. Almost all of this

deficit was incurred in the years 1965 through 1967, when government

controls over foreign trade were temporarily relaxed in an aborted

economic reform. Under the system of bilateral agreements governing

Bulgaria's trade, the surplus in the trade with communist and developing

countries cannot be used to offset the deficit with Western trading

partners.

Data bearing on the balance of payments have never been published. The

Soviet Union has granted substantial loans to Bulgaria since 1946, some

of which were used to finance imports from that country. Bulgaria, in

turn, has made some loans to developing countries to help finance its

exports. A portion of the deficit with Western trading partners may be

offset by income from the rising Western European tourist trade,

particularly with West Germany. A reputable Western source reported

Bulgaria's indebtedness to Western nations to have been US$88 million in

1971, but the basis of this estimate and the degree of its reliability

are not known.

CHAPTER 13

AGRICULTURE

In the spring of 1973 the country's political and governmental

leadership expressed serious concern about the uneven growth of

agriculture over a period of several years. Although wheat production

had progressed satisfactorily and reached a record level in 1972, and

good results had also been obtained in the cultivation of tobacco and

tomatoes--both of which are important export crops--the expansionary

trend in fruit growing was reversed in 1968, and cattle raising had

stagnated for at least a decade.

The situation was particularly disappointing to the leadership because

in 1970 it had embarked on a comprehensive long-range program for

raising agricultural productivity and output through the introduction of

industrial production methods on the farms. To that end the country's

farms were consolidated into 170 agroindustrial complexes intended to

bring the advantages of scientific organization, concentration and

specialization of production, mechanization, and automation to all

phases of agricultural work. Planning for these complexes has been

concentrated at the highest government level, and any modification of

the obligatory plans requires the approval of the Council of Ministers.

In this process the traditional distinction between state and collective

property has been blurred and is slated for gradual elimination; the

same is true for the differences in status of industrial and farm

workers. The new approach to farm organization was taken despite severe

shortages of adequately trained management and technical personnel and

in the face of the demonstrated superior productivity of tiny farm plots

cultivated for their own benefit by individual farm and industrial

workers.

It is difficult to arrive at a comprehensive and balanced assessment of

agricultural development and of the situation in the 1972/73

agricultural year because of the continuing changes in the agricultural

regime and the lack of essential data. All published information,

including critical comments, emanates from controlled official sources.

The press output tends to concentrate on problem areas, treating other

aspects in uninformative generalities. Officials and press have been

especially silent on the question of the farmers' reactions to the new

agricultural order, beyond claiming the farmers' whole-hearted support

for every new agricultural edict.

CLIMATE AND SOILS

Natural conditions are generally favorable for agriculture. Fertile

soils and a varied climate make possible the cultivation of a wide

variety of field crops, fruits, and vegetables, including warm-weather

crops, such as cotton, tobacco, rice, sesame, and grapes. Frequent

summer droughts, however, lead to wide fluctuations in crop yields and

necessitate extensive irrigation.

The Stara Planina (literally, Old Mountain), or Balkan Mountains, divide

the country into several climatic and agricultural regions. The broad

Danubian tableland that lies north of these mountains has a continental

climate, except for a narrow strip along the Black Sea coast. Cold

winter winds sweep across the plateau from the Eurasian land mass,

causing prolonged periods of frost, which tend to damage orchards and

vineyards. There are 180 to 215 frost-free days in the year, and summers

are hot. A continental climate also prevails in the Sofia Basin and in

the region surrounding the headwaters of the Struma River.

In the Thracian Plain, south of the Stara Planina, the continental

climate is modified somewhat by the influence of the Mediterranean Sea.

Compared to the Danubian plateau, winters are less severe, and summers

are longer and warmer. The number of frost-free days per year ranges

from 198 to 206. A near-Mediterranean climate prevails in the valleys of

the lower Struma, Mesta, and Maritsa rivers; in the Arda basin; and on

the southern slopes of the Rodopi (or Rhodope Mountains) (see ch. 3).

The mountains protect the inland valleys and basins from strong winds;

summers there are hot, and winters are mild. Yet winters are not mild

enough for the cultivation of Mediterranean crops, such as olives and

citrus fruits.

The Black Sea coast is warmer than the interior of the country in winter

but cooler in summer; from 241 to 260 days in the year are frost free.

Frequent gale storms and hot winds resembling the African sirocco,

however, have an adverse influence on crops.

Although annual rainfall is reported to average about forty inches on

the higher mountain slopes and to reach seventy-five inches in the Rila

mountain range, precipitation in most farming areas averages only twenty

to twenty-five inches per year. Rainfall measures even less than twenty

inches in the Plovdiv area and in the coastal districts of the Dobrudzha

region in the northeast. Most of the rainfall occurs in the summer

months, but the amount and timing of precipitation are often unfavorable

for optimum crop growth. Drought conditions reached crisis proportions

in 1958 and 1963 and were serious also in 1968. In 1972 most crops were

adversely affected by a spring drought and excessive rains in the early

fall; the grape crop was an almost total loss.

Soils of superior and intermediate quality make up almost three-fourths

of the country's surface. The Danubian plateau contains several grades

of chernozem (black earth), which gradually give way to gray forest

soils in the foothills of the Stara Planina. A degraded chernozem called

_smolnitsa_, or pitch soil, predominates in the Thracian Plain, the

Tundzha and Burgas lowlands, and the Sofia Basin. This central region is

encircled at higher elevations by a belt of chestnut and brown forest

soils. Similar chestnut soils are also found in the Strandzha upland, in

the basins of the eastern Rodopi region, and in the Struma and Maritsa

valleys. Brown forest soils and mountain meadow soils occur in the Stara

Planina and in the Rila, Pirin, and western Rodopi. Alluvial soils,

often of good quality, are found alongside the rivers, particularly the

Danube and Maritsa, and also in several basins.

LAND USE

In 1970 agricultural land comprised almost 15 million acres, or 53

percent of the country's land area. Sixty-nine percent of the

agricultural land was suitable for field crops; 4 percent consisted of

meadows; and about 6 percent was devoted to vineyards, orchards, and

other perennial crops. Natural pastures constituted more than 20 percent

of the agricultural land. Bulgarian economists have repeatedly pointed

out that the per capita acreage of farmland in the country, excluding

pastures, is among the lowest in the world.

According to official statistics the area of agricultural land increased

by 840,000 acres in the 1960s as a result of the expansion of grazing

areas by 1.1 million acres and the simultaneous loss of 270,000 acres of

cultivated land. The loss of cultivated acreage was caused by the

diversion of land to industrial and other uses and by severe soil

erosion. The acreage devoted to vineyards and orchards nevertheless

increased by 100,000 acres, or 12 percent.

Land Protection

More than half the cultivated acreage is subject to erosion.

Increasingly large areas degraded by erosion have remained uncultivated

each year, but they continue to be included in the annual statistics on

farmland acreage. The unused area of plowland expanded from 720,000

acres in 1960 to 1.26 million acres in 1970. Another 1.5 million to 2

million acres have been reported to suffer from erosion to a degree that

will make it necessary to abandon them unless corrective measures are

quickly taken. Only 70 percent of the acreage under fruit trees and

vineyards bore fruit in 1970.

The government has long been aware of the need to arrest the loss of

cultivated farmland. An intensive program of reforestation has been

carried on over many years, but the rate of replanting has not been high

enough to halt the ravages of erosion. Proposals advanced by

agricultural experts to clear abandoned mountain farmland of noxious

weeds and to develop these areas into improved pastures--measures that

would also help control erosion--have not been acted upon.

In 1967 the continued loss of valuable farmland led to the promulgation

of a special law for the preservation of land; details of this law are

not available. In 1972 the Council of Ministers issued an order,

effective January 1, 1973, that provided, in part, for payments to be

made into a special land improvement fund in the event of diversion of

farmland for construction purposes. Depending upon the quality of the

land, payments into the fund range from 162 leva (for the value of the

lev--see Glossary) to 48,560 leva per acre. Land used for afforestation,

cemeteries, and housing or public works under the jurisdiction of town

authorities is exempt from the payment requirement. The exemption also

applies to land used for open pit mining on condition that the land is

rehabilitated in accordance with plans and within time limits approved

by the Ministry of Agriculture and the Food Industry (hereafter referred

to as the Ministry of Agriculture).

In 1970 the government created special district councils for the

preservation of cultivated land and, in May 1971, placed the councils

under the jurisdiction of the Ministry of Agriculture. The decree of

1971 required the ministry and district governments to take decisive

measures for the increased protection of farmland. The decree also

directed the chief prosecutor's office to increase control over the

expropriation of farmland for construction and other nonagricultural

purposes and to impose severe penalties on violators of the land

protection law.

The land protection measures were not sufficiently effective. The

acreage abandoned in the 1966-70 period was three times larger than the

area abandoned in the preceding five years. In January 1973 an inspector

of the Committee for State Control stated publicly that the farmland

problem had become increasingly more serious and that the committee was

obliged to intervene in order to identify shortcomings in the land

preservation work and to assist in eliminating the deficiencies. At the

same time the Council of Ministers reprimanded a deputy minister of

agriculture and the heads of two district governments for grave

shortcomings in the preservation and use of farmland.

In an effort to gain control over the deteriorating farmland situation,

a new land protection law that replaced the law of 1967 was passed in

March 1973. The new law explicitly provided that only land unsuitable

for agricultural purposes or farmland of low productivity could be put

to nonagricultural use. Under the law expansion of towns and villages

was to be allowed only after a specified density of construction had

been reached. Construction of country homes and resort facilities was

restricted to land unsuitable for agriculture. Provision was made for

regulations that would offer material and moral incentives to use

unproductive land for construction purposes, and more severe penalties

were prescribed for violations that result in the waste of arable land.

Irrigation

Somewhat better results have been achieved in the expansion of

irrigation. In the 1965-70 period the irrigable area increased at an

annual average of 44,000 acres from 2.25 million to 2.47 million acres,

or 21 percent of the cultivated land. Under the Sixth Five-Year Plan

(1971-75) 494,000 acres are to be added to the irrigable area, raising

the total irrigable acreage to 26 percent of the cultivated land. During

the first two years of the plan period 124,000 acres were equipped for

irrigation, and 80,000 acres were to be made irrigable in 1973. In order

to complete the five-year irrigation program on schedule, therefore, it

would be necessary to bring under irrigation 270,000 acres in the last

two years of the plan period--a task not likely to be accomplished in

the light of past experience and of available resources.

Only about 70 percent of the irrigable acreage was actually irrigated in

the 1965-70 period. Although the irrigated area of 1.7 million acres in

1970 represented an increase of 21 percent of the acreage irrigated in

1965, it was 17 percent smaller than the acreage irrigated in 1968.

Primitive gravity irrigation is practiced on about nine-tenths of the

irrigated area. Water is distributed over the fields from unlined

earthen canals by means of furrows dug with a hoe. The work entails hard

manual labor, and a single worker can handle only about 1.25 to 2.5

acres per day. The timing of the water application and the quantity of

water used are not properly adjusted to the needs of the various crops,

so that the increase in yields is only half as great as that obtained

under optimum conditions, and about half the water is wasted. The

network of irrigation ditches also impedes mechanical cultivation of the

fields. Improper irrigation and drainage techniques have raised the

groundwater level excessively in several districts and have caused

various degrees of soil salinization in areas totaling more than 39,000

acres.

The five-year plan program for new irrigated areas calls for the

construction of stationary sprinkler systems over 25,000 acres; 469,000

acres are to be provided with portable sprinkler systems. Reconstruction

and modernization of existing basic facilities are to be limited to the

lining of canals. The ultimate longer term goal is to establish fully

automated stationary sprinkler systems in most irrigated districts. The

main problems in carrying out the irrigation program, in the view of an

irrigation authority official, are posed by the paucity of investment

funds allotted for this purpose and the contradictory nature of some of

the program's aims. Additional difficulties are presented by the

shortage of irrigation pipes and materials for their fabrication,

inadequate experience in the manufacture of advanced irrigation

equipment, and the lack of facilities for experimentation and testing.

Cropping Pattern

The area of field crops amounted to almost 9 million acres in 1970; it

had declined by 887,000 acres after 1960. The proportions of this

acreage devoted to the major types of crops were: grains, 62.5 percent;

industrial crops, 14.6 percent; feed crops, 18.7 percent; and

vegetables, potatoes, and melons, 4.2 percent. In accord with the

government's policy of intensifying agricultural production, the acreage

of bread grains had steadily declined, so that in 1970 it constituted

somewhat less than half the total grain acreage. The area of feed grains

remained fairly stable; a decline in corn acreage was virtually balanced

by an increase in the acreage of barley. A slight reduction also took

place in the acreage of pulses, but the area under rice expanded by 70

percent.

Whereas the total area of industrial crops changed very little in the

1960-70 period, a significant shift took place in the relative size of

the individual crop areas. While the acreages of oilseeds and tobacco

expanded significantly, the acreages of fibers, particularly cotton, and

of essential oils and medicinal plants declined sharply.

The area devoted to vegetables expanded by 20 percent. The tomato

acreage expanded at about twice that rate and accounted for one-fourth

of the vegetable acreage in 1970; tomatoes constitute an important

export crop. The potato acreage, on the other hand, declined by roughly

20 percent during the period.

The area of fodder crops suffered a substantial decline, particularly in

the case of annual grasses and silage crops. The loss was only partially

offset by the expansion of the perennial grass acreage.

Rapid expansion also took place in the areas of apple orchards and

vineyards. The acreage of bearing apple trees increased by about 70

percent in the 1970-70 period. During the same period the acreage of

producing vineyards grew by 24 percent, while the acreage of table

grapes increased by 2.3 times. Fruits and grapes are also important

export commodities. Expansion of the total acreage under fruit trees and

berries, however, was much slower--17 percent in the 1960-68 period--and

a decline in the acreage set in after 1968. In the spring of 1973 Todor

Zhivkov, the communist party leader, called for decisive action to halt

the unfavorable trend. He reported that plans for orchard and berry

plantings were not fulfilled in 1972; that from 27,000 to 40,000 acres

of orchards had been uprooted over a period of a few years; and that the

vineyard acreage had declined by 25,000 acres compared with the acreage

in 1968. Reasons for these developments had not been made public.

The little information available on the subject suggests that price

considerations have been the major reason for the crop acreage changes.

The price system and official regulations governing farm production have

not always operated in the manner planned by the government. Farms, for

instance, have steadfastly refused to enlarge the acreage of irrigated

corn to the extent demanded by the government, preferring to use

irrigation for more profitable crops. In 1971 the farms failed to plant

the prescribed acreage of feed crops or to expand the production of

vegetables. Public statements by the government on the reasons for these

problems have been most guarded. After a thorough review of the

situation in the spring of 1972, the Committee for State Control issued

a release that concluded by stating that the reasons for the problems

were analyzed in detail and that, after discussion, specific proposals

were made to the appropriate ministries.

ORGANIZATION

The organizational structure of agriculture in all its aspects is in a

state of transition, which will not be completed for several years. The

reorganization was decided upon by the Central Committee of the BKP

(Bulgarian Communist Party--see Glossary) in April 1970 on the

initiative of Zhivkov. The latest of several laws and decrees published

in this context appeared in June 1972 with an effective date of January

1, 1973. The new organizational policy represents a tightening of

central controls over agriculture.

Agroindustrial Complexes

The basic unit in the new organizational system, which is relied upon to

realize the leadership's agricultural policies, is the agroindustrial

complex. The agroindustrial complex is an organization comprising

several previously independent, contiguous collective and (or) state

farms having similar climatic and soil conditions. The complex may also

include other organizations that are engaged in the production,

processing, and distribution of farm products or in other activities

related predominantly to agriculture.

In the fall of 1972 there were 170 agroindustrial complexes formed

through the consolidation of 845 collective farms and 170 state farms;

including the private plots of collective and state farmers, they

contained 92.5 percent of the cultivated land and accounted for 95.4

percent of the farm output. Except for a few experimental units created

in 1969, most agroindustrial complexes were established toward the end

of 1970 and in early 1971. Only a small number of private farms located

in difficult mountain areas remained outside the new system.

The average agroindustrial complex is composed of five or six farms

having a cultivated area variously reported as 59,000 to 68,000 acres

and a permanent work force of about 6,500 people. Although the large

size of the complexes has been questioned by several economists on

grounds of efficiency, Zhivkov was reported to have suggested the

possibility of eventually merging the existing complexes into only

twenty-eight districtwide units.

Types and Aims

The announced purpose of the reorganization is to increase productivity

through concentration and specialization of agriculture on an industrial

basis in accord with the requirements of the current scientific and

technical revolution and with the achieved level of maturity of the

country's economy. The reorganization is intended to increase output,

improve quality, reduce costs, and increase the exportable surplus. It

is also expected to bring about social improvement in the countryside by

raising the farmworkers' incomes and helping to reduce the differences

between town and country. Government officials intend to complete the

transition to the new organizational structure by 1980.

The original aim of the new farm policy in the late 1960s was to create

large-scale regional organizations to handle all aspects of the

production, processing, and distribution of foods and the supply of

machinery, fertilizers, and other farm needs through vertical

integration of the consolidated farm organizations with industrial and

distribution enterprises. This aspect of farm policy is to be realized

gradually over a period of years. In the meantime vertical integration

will be based predominantly on contractual relations.

A first step in vertical integration of agriculture and the food

industry was taken in December 1972 with the establishment of an

agroindustrial trust called Bulgarian Sugar. Seven agroindustrial

complexes were to be created around an equal number of sugar mills

grouped in the newly formed trust. The complexes were to average 100,000

acres in size, one-fourth of which would be used each year for the

production of sugar beets. The first such complex was established in

Ruse in January 1973. The crop rotation is to include wheat, corn, and

fodder crops which, together with by-products from the sugar production,

are to provide the feed base for livestock keeping. All farmlands in the

new organization are to become state property, and farmworkers are to

acquire the status of industrial workers subject to the provisions of

the Labor Code.

Two basic types of agroindustrial complexes are provided for by the

regulations. The first type is a membership organization in which the

constituent farms retain their juridical identity and a certain measure

of economic independence. The second type is a centralized organization

in which the constituent farms are merged and lose their separate

identities. A further distinction is made depending upon the nature of

the constituent farms and other economic organizations. Agroindustrial

complexes composed only of collective farms and other collective

organizations are called cooperative complexes. Those constituted by

state farms and other state economic organizations are known as state

complexes. If both state and collective farms or other organizations

are members, the complex is referred to as state-cooperative. The

distinctions have both legal and economic implications.

In early 1971 the form of the 139 agroindustrial complexes established

up to that time was: collective, seventy-seven; state, seven; and

state-cooperative, fifty-five. Six complexes were created as centralized

organizations in which the constituent farms lost their legal

independence. The largest of these complexes covered an area of 145,000

acres.

Legal and Economic Aspects

The legal and economic aspects of the farm consolidation are extremely

involved, and most of the problems raised by consolidation have not been

worked out even theoretically. Activities of cooperative and

state-cooperative complexes are governed by the Provisional Regulation

issued in October 1970 and by earlier regulations concerning collective

organizations in matters not covered by the Provisional Regulation.

State agroindustrial complexes are subject to the same regulations that

apply to all state economic associations (trusts). The Ministry of

Agriculture was directed to prepare a draft statute for agroindustrial

complexes by the end of 1972, which was to be submitted at an indefinite

future date to the first agroindustrial complex conference for

discussion and adoption.

Official statements and documents have emphasized the voluntary and

democratic nature of agroindustrial complexes. Zhivkov's report to the

Central Committee plenum stated that farms would be free to opt whether

or not to join a complex and which complex to join if they decided to do

so. They were also to have freedom of decision concerning the

establishment of joint enterprises. The plenum's decision used a broader

formulation by referring only to voluntarism in the formation of

agroindustrial complexes on the basis of mutual advantage. The

Provisional Regulation contains a clause that permits farms and other

organizations to withdraw from the agroindustrial complex at their own

request.

Other provisions governing the establishment of agroindustrial

complexes, however, conflicted with the principle of voluntarism. The

composition, size, and production specialization of each complex was to

have a scientific foundation, and arbitrary decisions--as they were

called--as to which farms to include in a particular complex were not to

be tolerated. The requirement of territorial unity also nullified the

right of independent choice for most farms. Except for those located on

the borders of adjoining complexes, farms had perforce to join the

complex formed in their area. The speed with which the agroindustrial

complexes were formed throughout the entire country, with considerable

loss of independence for the farms, also suggests that the voluntary

nature of the complexes is a fiction. Available sources have contained

no reference to any change in the affiliation of farms from one complex

to another, let alone to the withdrawal of any farm from a complex. The

decree on the organization and management of agriculture that went into

effect on January 1, 1973, contained no provision for a farm's

withdrawal from an agroindustrial complex.

The major tasks assigned to the agroindustrial complexes include: the

creation of large specialized units for the various types of

agricultural production; the introduction of mechanized industrial

methods of production; the efficient application of human and material

resources; and the equitable distribution of income to workers and

managers in a manner that will provide an incentive for conscientious

work. Only preliminary official directives have been issued to guide the

agroindustrial complexes in these matters. Economists, agricultural

scientists, and officials have labored to develop a scientific basis for

the effective solution of the problems of transition.

One of the basic issues raised by the creation of agroindustrial

complexes concerns the ownership of land in the new organizations,

particularly in complexes that unite collective and state farms.

Legally, collective farm members retained ownership of the land they

contributed to the collective, although they have been unable to

exercise any ownership rights. Until 1961 collective farm members

received a rental payment for the land in the annual distribution of the

farm's income. There is an apparent official reluctance for political

reasons abruptly to convert collective property to state ownership.

Public statements have indicated that the difference between collective

and state property may be eliminated by transforming both into national

property. Under the prevailing economic system the distinction between

state and national property is purely verbal.

Private Farm Plots

In the current reorganization of agriculture there is no intention to

eliminate the time-honored institution of private subsidiary farm plots

held by collective farm members, state farm and industrial workers,

artisans, and other individuals. In the 1965-70 period private plots

constituted only 10 percent of the farmland, yet in 1968 they accounted

for 22 percent of the crop output and 33 percent of the livestock

output. In 1970 the proportions of livestock products contributed by the

private plots were: milk, 23 percent; meat and wool, 31 percent; eggs,

50 percent; honey, 70 percent; and silk, 89 percent.

Despite the support of private farm plots by the leadership, many local

officials consider them to be incompatible with the socialist system and

place various obstacles, often illegal, in the way of their operation.

In the directives for the Sixth Five-Year Plan the party reaffirmed the

importance of private farm plots as a reserve for the increase of farm

output and particularly of livestock production. In a subsequently

published decree, which lifted restrictions on livestock rearing on

private plots, the party and government again stressed that private

plots will be an important source of products for their owners and for

sale to the state.

The growing importance of private plots for collective farmers was

disclosed by income data published in the spring of 1973. In the 1960-70

period the average annual income of permanently employed collective

farmers from private plots increased from 251 leva to 620 leva, while

the average remuneration for work performed on the collective property

rose from 458 leva to 847 leva. Whereas the growth of income from

collective farm work amounted to 85 percent, income from private plots

advanced by 147 percent.

PLANNING AND MANAGEMENT

Agricultural planning has been highly centralized by the decree

effective January 1, 1973. The system of planning has been made to

conform to the system used for other sectors of the economy, with some

allowances for the specific conditions of agricultural organization and

production. Planning is to encompass long-range (ten to fifteen-years),

five-year, and annual plans that must be coordinated with a general plan

for regional development.

Planning in agriculture is to be based on the balancing of inputs and

outputs and the use of government-determined long-range norms, limits,

and indexes. Wide use is to be made of econometric models in the search

for optimal solutions. The norms, limits, and indexes are to be

elaborated in direct relation to the natural and economic conditions of

individual agroindustrial complexes, crop varieties, kinds and breeds of

livestock, farm technology, and the availability of physical resources

and manpower. The norms, limits, and indexes are to be of such a nature

as to contribute to a continuous upgrading of agricultural efficiency,

that is, they will become increasingly more demanding as time

progresses. They are binding for planners and managers at all levels

from the central government authorities down to the farm.

In essence the agricultural plan consists of state-imposed production

targets and estimates of resources to be allocated for their attainment,

together with detailed directives for the use of the resources and for

the introduction of technological improvements. Responsibility for

fulfilling the planned tasks rests upon the management of the

agroindustrial complexes. The planned targets and conditions for their

attainment are formulated for each individual complex by the State

Planning Committee together with the Ministry of Agriculture and the

local district people's council; all plans are approved by the Council

of Ministers.

Ten groups of norms, limits, and indexes enter into the formulation of

plan targets. They specify progressive technical measures to be

introduced; the physical volume of each crop and livestock product to be

sold to the state; the volume of capital investment and its specific

uses; consumption norms for all materials, parts, and products in

accordance with a list approved by the Council of Ministers; allowable

expenditures for each 100 leva of farm products and for labor

remuneration per 100 leva of total income; norms for the formation of

various operating and reserve funds and for material incentives; and

limits for the development of social amenities within the agroindustrial

complex.

The five-year plan tasks are broken down by years and may be changed

only in exceptional cases. The required changes may be made by the

Ministry of Agriculture, with the approval of the State Planning

Committee, upon request made by the executive committee of the district

people's council. Whenever a specific change is introduced, all

necessary corrections must be made to maintain the overall balance of

the plan.

The agroindustrial complexes must distribute the planned tasks handed to

them from above among their constituent units in accordance with

standards and conditions spelled out by the Ministry of Agriculture. The

district people's councils are required to take an active part in the

process of coordinating the plan and in measures for its attainment

among the units of the agroindustrial complex. On the basis of the state

plan each agroindustrial complex and its constituent parts must prepare

what has been called a counterplan, that is, a plan that sets higher

goals than those officially established.

The large size and diversified operations of the agroindustrial

complexes place a heavy demand upon the expertise of management. Most of

the available specialists do not have the requisite training to solve

the numerous problems posed by planning and operational direction under

the new conditions. Adaptation of agricultural school curricula to the

new requirements and speedy retraining of specialists are therefore

considered to be most urgent.

Some optimistic agricultural officials place high hopes in the

introduction of computer-based automatic control systems. An electronic

computer center was established at the Ministry of Agriculture in 1969,

staffed by a group of 104 enthusiastic young specialists. They undertook

the task of developing a single automated control system for agriculture

and food production in the entire country by 1975, to be based on a

number of integrated local and regional computer centers. By the end of

1970 the computer center had worked out annual plans for several farms

and a plan for hothouse production in the country. It was in the process

of finding a solution to a basic problem of the feed industry--a

solution that would also drastically reduce the industry's

transportation costs.

Considerable attention has also been given to the problem of

communication in connection with the internal direction of the

agroindustrial complexes' varied activities. Here, too, the idea has

been advanced for automated control centers from which instructions

would be issued to all operating divisions and workers in the field

through radiotelephones or similar equipment. In this context a

university instructor analyzing the management problems of

agroindustrial complexes remarked that it was premature to speak of

modern administrative and management methods as long as it was easier

and faster to go by car from the farm center to any of the neighboring

villages than to reach them by telephone.

LABOR AND WAGES

Official data on manpower and employment in agriculture are incomplete

and incommensurate. The number of people gainfully employed in

agriculture in 1970 was reported to have been 35.2 percent of the total

in the economy, compared to 54.7 percent in 1960 and 44.9 percent in

1965. Full-time employment on farms of the agroindustrial complexes in

1970 was reported as 1,117,000 people--a reduction of 278,000 from the

1,395,000 employed in 1965. Yet the number of female collective

farmworkers alone in 1969 was reported to have been 1,682,000, more than

1 million of whom participated full or part time in the collective work

of the farms. No explanation concerning the discrepancies in these

reported figures was available. The Sixth Five-Year Plan is variously

reported to call for the transfer of an additional 220,000 or 350,000

people from the farms to nonagricultural employment.

The out-migration, mostly of young people, from agriculture brought

about a deterioration in the age structure of the remaining farm

population. The proportion of the sixteen- to twenty-five-year-old age

group on farms was only 9.2 percent in 1969, compared to 22.3 percent in

industry. Conversely, the proportion of persons fifty-five years and

older was 29.1 percent in agriculture, compared to 8.6 percent in

industry. The program for the modernization and intensification of

agricultural production and, more particularly, the planned high level

of mechanization demand the employment of large numbers of highly

skilled young people. A series of economic, social, and cultural

measures is therefore urgently needed to halt the drain of young

manpower from the farms.

By 1971 the agricultural school system had not adapted its training

programs to the actual needs of the emerging agroindustrial complexes.

At the same time a serious problem in the employment of available

technicians was presented by the scornful attitude of many farm managers

toward specialists with secondary education. In 1971 farms employed more

than 4,000 people without the requisite training in various professional

positions. Although some of them may have compensated by experience for

the lack of training, the situation was considered deplorable by a

number of agricultural economists.

Under previously prevailing conditions, payments to farmworkers differed

widely, depending upon the income levels of the individual farms. Under

the new law wages for all farmworkers are to be gradually standardized

on the principle of equal wages for equal work. Work input is to be

measured on the basis of uniform labor norms differentiated according to

natural conditions. In determining the wage level, consideration will

also be given to increases in productivity, cost reduction, and the

accumulation of investment funds by the farms. Distribution of the

farm's income is to be carried out on the basis of a resolution by the

Council of Ministers, details of which were not available in early 1973.

Its main import is that the total remuneration of farmworkers, over and

above their wages, will remain dependent upon the overall results of the

individual farms. All farmworkers are entitled to a minimum wage of 80

leva per month, and members of previously independent collective farms

retain their right to advance payments against their estimated final

income shares.

Little substantive information is available on the current practice of

remunerating people working on farms. The decree that went into effect

on January 1, 1973, directed that the formation and distribution of

incomes of all agroindustrial complexes and their constituent farms be

based on a uniform system and on the principle that each farm must be

fully self-supporting. Each farm must establish a wage fund calculated

as a percentage of its total income. In the event that this fund is

inadequate to cover legitimate wage requirements, the farms may draw

upon two other obligatory funds or resort to bank credits.

INVESTMENT AND MECHANIZATION

Investment

In the 1960-71 period annual investment in agriculture increased from

381 million to 548 million leva, but it declined as a proportion of

total investment from 28 to 15 percent. A substantial portion of the

agricultural investment was used to equip new state farms established on

previously collective farmlands. Investment funds were used for the

construction of farm buildings, machinery repair stations, and

irrigation facilities and for the acquisition of farm machinery. On the

basis of cultivated acreage, state farms received more investment than

collective farms, but the disproportion was gradually reduced and become

quite small by 1970. In that year state farms had about 15 percent more

fixed assets per acre of cultivated land than the collective farms.

With the formation of agricultural complexes discrimination in

investment between the two types of farms is being eliminated along with

other distinctions. Investment plans are to be uniformly based on the

needs of the entire complex regardless of the former status of its

constituent farms. Needs will be evaluated mainly on the basis of

government programs for individual kinds of production, the availability

of manpower, and the natural conditions of the farms and complexes.

Agricultural investment in the 1971-75 period was planned at about 2.7

billion leva. This sum constitutes only 13.5 percent of the total

planned investment and implies the maintenance of annual agricultural

investment at the level of 1970. It also reflects the continued

underinvestment in agriculture in favor of industry, despite the

grandiose, plans for agricultural transformation, considering that

agriculture contributed 22 percent of the national income in 1970. In

that year a Soviet economist observed that the small proportion of

national resources allotted to agriculture in the past was responsible

for the slow growth of that important economic sector and that the

increase in the mechanization of farms was not sufficient to offset the

loss of manpower. The leadership's policy of placing agriculture on an

industrial footing and mechanizing production demands increased

investment in machinery and other physical facilities. The low

investment decreed for the 1971-75 period is not in keeping with that

policy.

A national conference on construction in agriculture, convened in the

spring of 1972, was devoted to the study of shortcomings in capital

construction. The underlying causes of unsatisfactory performance were

analyzed, and persons responsible for the failures were identified. The

findings of the conference were not published, but an account of the

conference contained references to inadequate project planning, poor

design, acceptance of inferior equipment, delays in the completion of

construction, and cost overruns. A sympathetic foreign observer noted a

disproportionately large allocation of investment funds to building

construction compared with the funds allotted for farm machinery.

Mechanization

At the beginning of 1971 Bulgarian agriculture possessed about 53,600

tractors with a total of 1.4 million horsepower--the equivalent of about

sixteen horsepower per 100 acres of plowed land. The horsepower of the

tractor inventory increased by 2.3 times after 1960, but a portion of

that increase was offset by the loss of more than 358,000 horses and

buffalo. In 1970 Bulgaria had more tractor power per acre than any other

Eastern European communist country except Czechoslovakia and more horses

per acre than any of these countries with the exception of Hungary,

which had a slightly larger number.

Grain combines on farms numbered 9,340, or 2.4 combines for each 1,000

acres of grain crops. In this regard Bulgaria ranked above the Soviet

Union and at the average of the other Eastern European communist

countries. Nevertheless, according to the minister of agriculture, only

about 50 percent of the labor in wheat production was mechanized in

1972, even though wheat production was considered to be the most highly

mechanized branch of agriculture. In other production branches the level

of mechanization was extremely low.

According to scattered Bulgarian press reports the supply of farm

machinery is inadequate for the needs, unbalanced as to composition,

and inferior in design and physical condition. Many of the available

tractors and combines are overage and obsolete. The situation is

aggravated by chronic shortages of spare parts for both domestic and

imported equipment. Production of parts is inhibited by its relatively

low profitability, despite incentives offered by the government.

Under the Sixth Five-Year Plan farm machinery valued at 780 million leva

is to be delivered to agriculture from domestic sources and from the

Council for Mutual Economic Assistance (COMECON--see Glossary). This

machinery is to include more powerful tractors and grain combines,

milking machines, and sprinkler irrigation systems. Machinery is also to

be provided for the harvesting of corn, sugar beets, cotton, rice,

fruits, and vegetables and for the harvesting and processing of feed

crops. Adequate information on the progress of the mechanization program

during the first two years of the five-year period is not available, but

there is evidence that shortages of spare parts and trained operators

continued to immobilize substantial numbers of farm machines.

MARKETING

The marketing of farm products has been geared to the fixed five-year

plan quotas for sales to the state. It is based on bilateral contracts

between trusts in the food-processing industry and agroindustrial

complexes or their constituent units. Contracts are concluded for a

five-year period and are broken down by years. They cover the entire

farm output specified in the counterplans at prices officially revised

on January 1, 1973. The price system includes bonuses for quality; these

bonuses are payable only after a specified portion of the contracted

quantity has been delivered and vary in relation to the total volume of

product delivered. The intent of the bonuses is to stimulate product

improvement without encouraging production beyond the planned limits.

Excess production would destroy the balance of the plan.

Provisions of the marketing contracts were worked out by the Ministry of

Agriculture and the State Arbitration Commission with the agreement of

the government departments involved. Provisions concerning the

performance of contractual obligations were strengthened compared with

those previously in force. They established financial incentives and

sanctions not only for the contracting organizations but also for their

top managers as individuals, based upon the end results of their joint

work.

Each food-processing trust engaged in the procurement of farm products

must establish a fund for the promotion of their production, for

improving farming methods, and for modernizing the farm's physical

facilities. The funds are to be used in the first place for stimulating

the output of products required on the domestic market and for export.

The allocation of promotional funds is to be in accord with a program

worked out jointly by the trust and the agroindustrial complex; the

program constitutes an integral part of the procurement contract.

Farms, individual farmers, and private agricultural producers may sell

some of their products at retail directly to consumers in cooperative

markets at prices not exceeding those charged by state retail stores. In

some instances and for some products sale on a commission basis through

state and cooperative outlets is also allowed. The sale of meat, meat

products, and alcoholic beverages in cooperative markets is prohibited

as is also the sale of any product through middlemen. Cooperative

markets are subordinated to the trade organs of municipal authorities.

Violations of applicable regulations are subject to penalties the

severity of which depends upon the nature of the offenses. Information

on the total volume of direct sales by agricultural producers is not

available. The share of collective farms in cooperative market sales,

however, declined from 53 percent in 1959 to 16 percent in 1970.

PRODUCTION

Growth and Structure

As a result of continued emphasis on the country's industrialization,

the share of agriculture in national income (net material product) was

only 22 percent in 1970, compared to 31 percent ten years earlier.

According to official sources, however, output continued to rise. It

increased at an average annual rate of 4.8 percent in the 1960-67

period, declined by 10 percent in 1968, and regained the 1967 level in

1970. An increase of 8 percent in the next two years raised the farm

output in 1972 to a level 50 percent above the output level in 1960. For

the entire period the average annual increase in farm output was 3.4

percent.

Livestock production was reported to have increased more rapidly than

crop production in the 1960-70 period; the respective average annual

rates of growth in output were 4.1 and 2.9 percent. Crop output in 1970

was 33 percent larger than output in 1960, whereas livestock output was

50 percent higher. Available data are inadequate to reconcile the

reported growth in the value of livestock production with a seemingly

inconsistent rise in the physical output of livestock products and

changes in livestock herds.

The structure of farm output in 1970 did not differ materially from the

structure in 1960. The share of crops in the total output declined from

67.3 to 64.7 percent, while the share of livestock production rose

correspondingly from 32.7 to 35.3 percent. The proportions of grains and

technical crops were identical in both years. The share of vegetables,

potatoes, and melons declined slightly, but the proportion of feed crops

dropped from 9.2 to 6.2 percent. The lag in the growth rate of feed

production has contributed to the difficulties in the livestock sector.

Crops

With the exception of rye, potatoes, hemp, and cotton, output of all

major crops increased substantially in the 1960s (see table 16). The

production of rye declined sharply as a result of the diversion of rye

acreage to the production of more valuable crops. By 1970 rye output had

become insignificant--less than 1 percent of the volume of wheat

produced in that year. The decline in potato production was minor, but

the output of raw cotton declined by 15 percent. The largest increases

were attained in the production of alfalfa and table grapes--crops that

are important for livestock production and export, respectively. Barley

output, important for livestock and beer production, rose by 82 percent.

Wheat output surpassed 3 million tons in 1970; it reached 3.56 million

tons in 1972.

_Table 16. Bulgaria, Production of Major Crops, Annual Average, Selected

Years, 1958-60 to 1966-70, and 1970_ (in thousands of tons)

--------------------+-----------+-----------+-----------+----------

| Average | Average | Average |

Crops | 1958-60 | 1961-65 | 1966-70 | 1970

--------------------+-----------+-----------+-----------+----------

Wheat | 2,376 | 2,208 | 2,919 | 3,032

Rye | 97 | 58 | 35 | 28

Barley | 542 | 694 | 986 | 1,167

Corn (grain) | 1,298 | 1,601 | 2,147 | 2,375

Sunflower seeds | 281 | 338 | 462 | 407

Hemp (dry stem) | 62 | 49 | 62 | 55

Cotton (raw) | 54 | 39 | 46 | 36

Tobacco (oriental) | 77 | 101 | 109 | 112

Sugar beets | 1,328 | 1,440 | 1,862 | 1,714

Tomatoes | 525 | 738 | 716 | 685

Potatoes | 383 | 400 | 380 | 374

Alfalfa | 598 | 951 | 1,443 | 1,719

Apples | 265 | 315 | 402 | 363

Grapes | 721 | 1,006 | 1,133 | 884

(Table grapes) | (135) | (267) | (313) | (263)

--------------------+-----------+-----------+-----------+----------

Source: Adapted from _Statistical Yearbook, 1971_, Sofia, 1971, pp.

120-122.

Virtually all wheat grown in the country is a hard red winter wheat of

good quality, somewhat softer than durum wheat. Cultivation of durum

wheat has been almost completely abandoned because of its low yield. The

possibility has been suggested, however, that production of durum may be

resumed eventually on the basis of newly developed, more productive

varieties. Durum wheat requirements for the manufacture of noodles,

semolina, and other products have been imported against payment in

foreign currencies.

Increases in the output and yields of crops were reported to have been

achieved through the introduction of improved plant varieties and seeds,

better cultivation practices, expanded irrigation, greater use of

fertilizers, and more effective disease and pest control. The supply of

fertilizers to agriculture, in terms of plant nutrients, increased from

about 49,000 tons in 1956 to 842,000 tons in 1968 but thereafter

declined sharply to only 692,000 tons in 1969 and 635,000 tons in 1971.

In 1972 the fertilizer supply improved by a mere 10,000 tons. The bulk

of the decline was in phosphates and potash, imports of which were

drastically curtailed after 1968, presumably because of the shortage of

foreign exchange.

The supply of pesticides also depends very largely upon imports.

Deliveries to agriculture rose from less than 10,000 tons in 1960 to

almost 12,900 tons in 1965, declined to 11,150 tons in 1969, and then

surpassed the 1965 supply by 300 tons in 1971. The need for a drastic

increase in the use of pesticides and fungicides is indicated by the

official estimate that annual losses from crop diseases, pests, and

weeds amount to from 150 to 200 million leva.

Despite the progress made, agricultural technicians continue to call

attention to the persistence of faulty practices in all phases of crop

production--practices that tend to lower crop yields and retard

agricultural growth. Traditionally a single variety of wheat has been

grown throughout the entire country, despite variations in soil and

climatic conditions. Although yields generally rose with the successive

introduction of better varieties, they remained low and of inferior

quality in areas poorly adapted for the cultivation of a particular

variety. Specialists have stressed the need for diversification of

varieties, particularly under conditions of regionally defined

agroindustrial complexes.

A task force for scientific and technical aid to agriculture, formed by

the government at the end of 1965, uncovered the appearance and rapid

dispersion of new grain diseases. Dry rot, which had assumed significant

proportions in 1961, caused the most severe losses of wheat in 1970 and

1971, when 1.2 million acres were affected by the disease, mainly in the

northern grain-growing part of the country. Wheat flower blight, long

known in Bulgaria, became particularly widespread in 1965 after the

introduction of a new wheat variety highly susceptible to that disease.

Losses from this source reached about 15 to 20 percent.

Propagation of diseases has been aided by faulty cultivation practices.

Excessively heavy seeding has been used increasingly to compensate for

inadequate soil preparation. The resultant overly thick stands of grain

are prone to lodging, which facilitates the spread of disease through

greater contact of the wheatstalks. The tendency to lodging and, thus,

to the spreading of disease is also encouraged by the improper use of

fertilizers. To compensate for the shortage of phosphatic fertilizers an

erroneous practice has developed of increasing the application of

nitrogenous fertilizers, thereby upsetting the proper balance of plant

nutrients. The resultant excessive vegetative growth weakens the grain

stalks and induces lodging of the grain. Lodging also causes heavy

losses through the germination of kernels and through major difficulties

in harvesting.

Damage to wheat and barley crops from improper use of phosphatic

fertilizers has also been reported. Substantial losses have been

incurred in the production of sunflower seeds through inexpert use of

fertilizers and insecticides, inadequate thinning and weeding, improper

crop rotation, and poor harvesting methods. The basic underlying cause

of these difficulties is the widespread lack of familiarity with modern

production methods and the inadequate supply of technically trained

personnel to guide farmers.

Livestock and Livestock Products

Despite repeated government decrees concerning measures for raising

livestock production, including various incentives, no significant

success was attained in increasing livestock herds in the period 1961 to

January 1971 (see table 17). The numbers of cattle, hogs, and rabbits

actually declined; the flocks of sheep grew by less than 4 percent; and

only the numbers of goats and poultry increased substantially. An

increase in all categories of livestock other than sheep, however, took

place in 1971. In comparison with 1948 the total number of cattle in

1971 was lower by 28 percent, and the number of cows had declined by 16

percent. The poor performance of the livestock sector, particularly with

regard to cattle, has been a source of great concern for the leadership

because of the leadership's promise of a better standard of living for

the population and the obligation to meet export commitments to COMECON

partners, particularly the Soviet Union. Exports of livestock are also

important as a source of convertible foreign exchange.

_Table 17. Bulgaria, Livestock Numbers, Selected Years, 1948-72_* (in

thousands)

----------+---------+---------+---------+---------+---------

Livestock | 1948 | 1961 | 1970 | 1971 | 1972

----------+---------+---------+---------+---------+---------

Cattle | 1,783 | 1,452 | 1,255 | 1,279 | 1,379

(Cows) | (703) | (547) | (574) | (589) | (607)

Hogs | 1,078 | 2,553 | 1,967 | 2,369 | 2,806

Sheep | 9,266 | 9,333 | 9,223 | 9,678 | 10,127

Goats | 720 | 246 | 350 | 335 | 318

Rabbits | 128 | 470 | 164 | 277 | 350

Poultry | 11,380 | 23,366 | 29,590 | 33,706 | 34,102

----------+---------+---------+---------+---------+---------

* Figure for 1948 as of December 25; for all other years, January 1.

Source: Adapted from _Statistical Yearbook, 1971_, Sofia, 1971, p. 124;

and _Statistical Yearbook, 1972_, Sofia, 1972, p. 236.

Although agriculture is almost entirely socialized, substantial numbers

of livestock are nevertheless privately owned by farm and urban workers,

artisans, and the few remaining individual farmers. In 1971 these groups

possessed virtually all the goats and rabbits, more than half the

poultry, and about two-fifths of the sheep. They also owned 27 percent

of the hogs and 22 percent of the cattle, including 30 percent of the

cows. On socialized farms all types of livestock were reduced in numbers

during the 1961-70 period except for cows and poultry. Among private

owners the decline in the numbers of cattle and hogs was more

pronounced, but substantial gains were made in the stock of sheep,

goats, and poultry. Government policies concerning prices, incentives,

and feed allocation were mainly responsible for the differences in

development within the socialized and private sectors.

Expansion of livestock herds and production has been hampered by an

inadequate feed supply. The feed shortage in the 1966-70 period was

estimated by the Bulgarian Academy of Sciences to have approximated 30

percent. Domestically produced feed concentrates have been of poor

quality and nutritionally unbalanced. In 1972 more than 45 percent of

the mixed feeds and concentrates were substandard, and requirements for

these feeds were met by less than 55 percent.

The production of feed crops increased in absolute terms during the

1960-70 period, but its rate of growth lagged by comparison with other

crops and with official plans. In 1971 and 1972 the alfalfa acreage was

supposed to be 990,000 acres, but only 840,000 acres were actually

cropped. In 1972 only 57 percent of the requirements for alfalfa and

meadow hay were met on farms of the agroindustrial complexes, and the

quality of the hay was extremely low. The inadequacy of the feed supply

in relation to the government's livestock program has been designated by

the leadership as one of the most crucial problems of agriculture.

In the 1971-75 period improvement in the feed supply is to be achieved

mainly through an increase in feed crop yields, but a certain increase

in acreage has also been planned. Results in the first two years of the

five-year period have jeopardized the attainment of the goal for 1975.

Substantial investment funds are to be provided for the modernization of

dairy barns and for the construction of feed mills with assistance from

the Soviet Union. With a view to raising productivity and output,

livestock production is to be increasingly concentrated on large

specialized farms. This policy ignored the demonstrated superiority of

livestock production on small farm plots.

Major problems in the expansion of cattle herds and livestock production

are also posed by poor management and inadequate veterinary services.

The reproduction rate of cattle is abnormally low because of the high

percentage of old, sterile cows in the herds. The incidence of diseases

of the reproductive system and of mastitis among cows is rapidly

increasing, and mortality among cattle is high. Young breeding stock is

reared in unsuitable surroundings, is ill fed, and consequently remains

underdeveloped. A large proportion of newly born calves succumb to

various diseases. There is a shortage of trained veterinarians, but

veterinarians stationed on farms and in district veterinary hospitals

are reported to feel no responsibility for the deplorable conditions.

The care of livestock also suffers from a lack of adequately trained

workers and a high labor turnover in the livestock sections of the

agroindustrial complexes. Managers and specialists at the higher levels

of the agroindustrial complexes fail to provide systematic supervision

and guidance and often exhibit a lack of interest in the livestock

enterprise. These conditions were reported to the General Assembly by a

deputy minister of agriculture.

Despite the shortage of feed, increased yields per animal were attained

in the 1960-71 period. For agriculture as a whole the output of milk per

cow rose from 1,482 to 2,281 quarts, the number of eggs per hen

increased from ninety-one to 115, and the amount of wool per sheep rose

from 5.3 to 7.4 pounds. In 1972, however, yields per cow and per hen

declined. In the socialized sector the decline in milk yield had begun

in 1968 and reached serious proportions in 1972; the egg yield remained

stable through 1970 (data for later years were not available in 1973).

In the private sector the milk yield continued to rise at least until

1970; the egg yield remained stable through 1969 and rose in 1970. In

the spring of 1973 several agricultural officials, including a deputy

minister of agriculture, were reprimanded by the Council of Ministers

Bureau for permitting the decline in yields of milk and eggs.

A study of milk production during the 1965-67 period found that farms

having milk yields of 2,110 to 2,640 quarts per cow sustained an annual

loss of 56 leva for each animal, whereas farms with yields of 3,170 to

4,287 quarts earned a net income of 111 leva per cow. The reported

national average milk yield per cow therefore indicates that most farms

produced milk at a loss.

The officially reported meat output increased by 74 percent in the

1960-68 period but declined by 11 percent in the next two years. By far

the largest increase in production to 1968--2.9 times--was reported for

beef and veal, while production of poultry meat and of sheep, and goat

meat almost doubled (see table 18). The decline in output after 1968

affected all types of meat except for poultry and rabbits. For the

entire period of 1960 through 1970, meat output rose by 55 percent,

including production increases of 150 percent for beef and veal, 160

percent for poultry, and 82 percent for sheep and goat meat. Pork

production, however, had risen by only 10 percent, and the output of

rabbit meat declined by about one-third. The reported increase in meat

production cannot be correlated with available data on changes in the

size of livestock herds. An improvement in the supply of all types of

meat other than beef and veal took place in 1971.

Production of milk and eggs also increased substantially during the

1960-71 period (see table 19). Nevertheless, domestic market supplies of

livestock products remained chronically and seriously short of demand,

in part because of the magnitude of exports. Exports of agricultural raw

materials and processed foods exceeded 1 billion leva in 1970; they had

increased 2.7 times during the decade and were equivalent to 44 percent

of agriculture's contribution to the national income. Exports of food

products alone had increased more than 3.5 times during the decade to a

total of 732 million leva.

_Table 18. Bulgaria, Production of Meat, Selected Years, 1948-71_ (in

thousands of tons)

--------------------+------+------+------+------+------+------

Meat | 1948 | 1960 | 1968 | 1969 | 1970 | 1971

--------------------+------+------+------+------+------+------

Beef and veal | 41 | 37 | 105 | 94 | 90 | 85

Pork | 74 | 134 | 194 | 167 | 148 | 169

Sheep and goat meat | 45 | 45 | 88 | 87 | 82 | 88

Poultry | 17 | 36 | 70 | 78 | 93 | 111

Other | 1 | 4 | 2 | 2 | 3 | 4

| --- | --- | --- | --- | --- | ---

TOTAL[*+] | 178 | 257 | 460 | 428 | 416 | 457

Edible offals | 29 | 50 | 73 | 65 | 60 | 64

| === | === | === | === | === | ===

GRAND TOTAL[+] | 208 | 307 | 534 | 493 | 476 | 521

--------------------+------+------+------+------+------+------

* Less offals.

+ Columns may not add because of rounding.

Source: Adapted from _Statistical Yearbook, 1971_, Sofia, 1971, p. 127;

and _Statistical Yearbook, 1972_, Sofia, 1972, p. 232.

_Table 19. Bulgaria, Production of Milk, Eggs, and Wool, Selected Years,

1960-71_

-----+---------------+----------------+---------------+---------------

Year | Milk | Cow's Milk | Raw Wool | Eggs

|(thousand tons)|(thousand tons) |(thousand tons)|(million dozen)

-----+---------------+----------------+---------------+---------------

1960 | 1,120 | 744 | 21 | 102

1967 | 1,609 | 1,210 | 27 | 140

1969 | 1,580 | 1,205 | 28 | 127

1970 | 1,631 | 1,250 | 29 | 135

1971 | 1,620 | 1,290 | 30 | 146

-----+---------------+----------------+---------------+---------------

Source: Adapted from _Statistical Yearbook, 1971_, Sofia, 1971, p. 128;

and _Statistical Yearbook, 1972_, Sofia, 1972, p. 233.

CHAPTER 14

INDUSTRY

In mid-1973 industry continued to expand, though at a significantly

lower rate than in the mid-1960s. Industrial expansion was being

increasingly restrained by the inadequacy of domestic raw material and

skilled labor resources. Limits on an increase in imports of materials

and essential machinery were placed by the insufficiency of foreign

exchange reserve and by the need to reduce traditional exports of

consumer goods in short supply on the domestic market. The Soviet Union

continued to be the predominant supplier of raw materials, machinery,

and technical and technological assistance.

To overcome the limitations on industrial expansion, the leadership of

the Bulgarian Communist Party (BKP--see Glossary) and government sought

to raise industrial productivity through concentration and

specialization of production and through improvements in the management

of material and labor resources. Strong emphasis was placed on the

introduction of automation in both production and management processes.

Heavy stress was also laid on the need to raise the quality of

industrial products in order to increase their salability abroad and

their acceptance in the domestic market.

The consolidation of industrial enterprises into a limited number of

trusts, introduced in 1971 as a measure for increased centralized

control in the search for greater efficiency, was being carried forward

by means of further regulatory and clarifying edicts. The leadership's

ultimate goal of an efficiently managed, technologically advanced,

low-cost industry remained the driving force behind all industrial

policy decisions.

ORGANIZATION AND STRUCTURE

Virtually all industry is state owned. In 1970 state enterprises

possessed 98.6 percent of all industrial assets; they employed 88.8

percent of the industrial work force and produced 89.7 percent of the

industrial output. Collective industrial enterprises owned the balance

of 1.4 percent of the assets, employed 11.2 percent of the workers, and

contributed 9.9 percent of the industrial output. Small private

enterprises, mostly artisan shops, accounted for only 0.4 percent of the

industrial output.

Organization

Size and Location

In 1970 the industrial establishment (excluding the private sector,

information on which is not available) consisted of 1,827 state

enterprises and 644 collective enterprises, employing about 1.02 million

and 129,000 people, respectively. More than one-half of the enterprises

in the state industry employed over 200 people, and almost one-fourth

employed more than 1,000 people. Enterprises with large numbers of

workers predominated in metallurgy; in the glass and china industry; in

clothing manufacture; and in the leather, shoe, and fur industry.

Beginning in 1971 previously independent enterprises were transformed

into branches of countrywide trusts organized along functional lines

(see ch. 12).

The territorial distribution of industry during the 1950-70 period was

determined in large part by the priority development of heavy industry,

the location of which was dictated mainly by the sites of raw material

sources and the location of major consuming centers. In this process

several cities and districts, including Sofia, Plovdiv, Varna, Burgas,

and Ruse, experienced a large population influx from rural areas and

attendant shortages of housing and public services. At the same time

many villages were deprived of their inhabitants, and homes and public

facilities were abandoned.

In 1970 the Central Committee of the BKP laid down guidelines for a

program of regional economic development, with a view to attaining an

optimal distribution of productive resources (capital and labor). The

aim of the program was to arrest excessive urban growth and the

associated demands on the country's resources for new housing and other

amenities and, at the same time, to help develop backward rural areas.

Within these guidelines, decentralization of industry has been

undertaken, and plans are being worked out for the socioeconomic

development of individual districts under the Seventh Five-Year Plan

(1976-80) and until 1990.

In this context the construction of new industrial plants in heavily

populated areas has been restricted. Further production increases in

these areas are to be attained through modernization of existing

facilities and the introduction of more advanced technology. Special

measures have also been adopted to promote economic growth in the

relatively underdeveloped districts. In part, this program is

implemented through the transfer of industrial activities, equipment,

and labor from the congested cities and districts to rural areas.

Transfers of this kind decreed by the Council of Ministers Bureau in

December 1971 and July 1972 involved 195 production units and 25,000

workers and an annual output of 225 million leva (for value of the

lev--see Glossary). Under existing plans lasting until 1975, however,

industry and employment will continue to expand in some of the most

heavily congested cities.

Supply System

The organization of a smoothly functioning materials and equipment

supply system for industry has been an elusive goal of the leadership

ever since the inception of the controlled economy. Various approaches

to the problem over a period of years have not succeeded in

accomplishing the basic task of ensuring a dependable supply of material

resources to industrial producers. As a result, the economy has been

officially reported to suffer enormous losses through production

shutdowns, substitutions of materials that lower quality and increase

costs, and hoarding of scarce materials. Heavy losses have also been

incurred through improper storage of materials, careless use that

entails excessive waste, and pilferage.

Adequate information on the organization and functioning of the

industrial supply system has not been available. The latest

reorganization of the supply system was undertaken at the end of 1971

with a view to providing a normal flow of supplies for the economic

trusts beginning in 1972. Until 1971 the supply organizations had dealt

almost entirely with individual enterprises. The reorganization was

accompanied by extensive consultations with producers of raw materials,

importing organizations, and industrial consumers. The consultations

were held in order to clarify the needs of consumers, ensure the

availability of the needed supplies, and agree upon specific measures

for timely deliveries of materials and supplies.

Particular attention in the reorganization was paid to the problem of

reducing the inventories of materials in enterprises and concentrating

them in the supply organizations. Decisive measures were taken to halt

the former practice of making deliveries of materials large enough to

cover requirements for three months or longer. Under the new system,

supply organizations are required to make periodic deliveries to

consumers on guaranteed time schedules, at short intervals, and in

quantities that do not exceed one month's requirements. Adherence to the

regulation is to be used as a standard in evaluating the performance of

supply organizations.

One of the basic elements in industrial consumer-supplier relations has

been the annual contract for estimated material and equipment

requirements needed to complete the annual production quota. For a

variety of reasons both suppliers and users have often failed to honor

these contracts, and the penalties provided for breach of contract have

not been sufficient to deter this practice. Breaches of supply contracts

have been an important cause of economic difficulties. Supply

difficulties have been particularly disruptive because of the

traditionally stringent nature of the production plans and the limited

availability of resources.

In 1972 the Ministry of Supply and State Reserves planned to take

energetic measures to strengthen contract discipline and to use

contracts as legal and economic instruments for exerting pressure on

both parties to fulfill their obligations. The minister considered it

particularly important to put an end to the practice of contract

cancellation, either under provisions of official regulations or by

mutual agreement of the parties concerned--a practice that, according to

the minister, caused huge losses to the national economy.

Structure

Manufacturing is the dominant sector of industry in terms of employment

and output. In 1971 manufacturing accounted for 93.9 percent of the

total industrial output and provided employment to 88.3 percent of the

industrial labor force. Mining and energy production contributed 3.6 and

2.5 percent, respectively, of the industrial output and employed 10.3

and 1.4 percent, respectively, of the labor force. More than half the

industrial establishment was devoted to the production of capital goods.

In 1971 the capital goods sector employed 52.5 percent of the industrial

labor force and produced 56 percent of the output. The relative

importance of the capital goods sector had been rising over a period of

years, from 36.7 percent of the output in 1948 and 47.2 percent in 1960.

During the same period the contribution of the consumer goods sector to

total output had declined from 63.3 percent in 1948 to 52.8 percent in

1960 and 44 percent in 1971. As a consequence of the priority

development of heavy industry, the supply of consumer goods on the

domestic market has been inadequate to meet consumer needs (see ch. 5).

In terms of their employment shares, the largest state industry branches

in 1971 were: machine building and metalworking, 25.5 percent; food

processing, 14.4 percent; and textiles, 11.3 percent. Next in

importance, but with much lower levels of employment, were: timber and

woodworking, 7.4 percent; chemicals and rubber, 6.1 percent; and fuels,

5.5 percent. Industrial branches that experienced the most rapid growth

in the 1960-71 period included ferrous metallurgy, chemicals and rubber,

machine building and metalworking, and fuels. Among the slowest growing

branches were timber and wood processing, textiles, nonferrous

metallurgy, and food processing.

FUELS AND POWER

Domestic resources of mineral fuels are inadequate for the needs of

industry. Through the limitation that it places on electric power

development, the fuel shortage--in the absence of a large hydroelectric

power potential--may become a major factor inhibiting industrial growth.

In 1968 the proportion of petroleum and natural gas in the fuel balance

was somewhat more than 42 percent; it is planned to rise to about 60

percent in 1975 and to at least 65 percent in 1980. Virtually all

petroleum and natural gas must be imported.

Coal and Lignite

Reserves of anthracite and bituminous coal are insignificant; their

production amounts to less than 2 percent of the annual coal output.

Brown coal deposits that can be mined economically are nearing

exhaustion, and brown coal production declined by about one-third in the

1960-70 period. Low-calorie lignite remains the major fuel base for

thermoelectric power stations. Reserves of this inferior fuel are large.

Coal deposits are scattered in about twenty small deposits. Because of

difficult geological conditions, however, only a few of the deposits are

exploited. Anthracite is mined in the Svoge basin, located in the Iskur

gorge area of the Stara Planina, north of Sofia. Bituminous coal is

mined in the same mountain range, in the area between Gabrovo and

Sliven. The deposit at Sliven was reported to contain a very small

quantity of coking-grade coal--a quantity far below the needs of the

iron and steel industry. In addition to large annual imports of coking

coal, Bulgaria has also imported from 250,000 to 465,000 tons of coke

per year.

The main source of brown coal for many years has been the Pernik basin

in the upper Struma valley, about nineteen miles southwest of Sofia. In

the 1971-75 period brown coal mining is to be substantially expanded at

the Bobov Dol deposit in the Rila mountain range, south of the Pernik

basin. The Babino mine in the Bobov Dol coalfield is scheduled to become

the largest underground coal mine in the Balkans. Reserves in this

deposit, however, are equivalent to only about five to six years'

production at the 1970 rate of brown coal output.

Lignite is mined mainly in the Maritsa basin, near Dimitrovgrad in the

Thracian Plain, and in the Sofia Basin. The Maritsa basin, particularly

the area known as Maritsa-Iztok (Maritsa-East), has become the basic

source of coal production, contributing about 50 percent of the

country's output. Aside from planned new mine construction, the

Maritsa-Iztok complex is to be rebuilt and modernized. Production

problems at this mine have not yet been solved satisfactorily.

Coal-bearing strata have not been fully identified; equipment is

utilized to only about 40 percent of capacity; and the organization of

labor is poor. Substantial improvement also remains to be attained in

processing the coal for market, in view of its high ash and moisture

content. Unsolved problems also remain in the manufacture of coal

briquettes.

In the 1971-75 period substantial investment is to be devoted to the

expansion and modernization of coal mines. New mines with an annual

capacity of about 4 million tons are to be built. Three-fourths of the

investment funds are to be concentrated on three major production

centers. The relative investment shares of these centers were planned to

be: Maritsa-Iztok complex, 41 percent; Bobov Dol complex, 25 percent;

and the Georgi Dimitrov mine at Pernik, 10 percent.

Production of marketable coal increased by 83 percent in the 1960-70

period to a level of about 29 million tons. The rise in output, however,

was confined to lignite production, which grew more than fourfold during

the decade. Production of bituminous and brown coal declined by 42 and

32 percent, respectively. Output of anthracite in 1970 equaled the

output in 1960 but was 9 percent below the production level in 1966.

Production of both anthracite and bituminous coal amounted to less than

400,000 tons in 1970. Strip mining has steadily grown in importance and

accounted for 73 percent of the output in 1970.

The Sixth Five-Year Plan (1971-75) calls for a rise in coal output to 33

million tons--an increase of about 13 percent. In the view of the

minister of heavy industry, the planned increase is not large, but its

attainment is difficult considering the character and condition of the

mines. Experience has justified the minister's assessment. In the first

two years of the five-year period, coal output rose by less than 1

percent.

Crude Oil and Natural Gas

Deposits of crude oil are located at Tyulenovo in the Dobrudzha region

and at Dolni Dubnik, east of Pleven. Natural gas fields have been

discovered near Vratsa and in the area of Lovech, south of Pleven.

Reliable information on the magnitude of crude oil and natural gas

reserves is not available. Statistics on current imports and official

projections of import requirements, however, indicate that domestic

production of oil and natural gas will continue to cover only a small

fraction of needs.

Production of crude oil rose from 200,000 tons in 1960 to 500,000 tons

in 1967 but declined thereafter to 305,000 tons in 1971. Natural gas

output, which had increased to 18.5 billion cubic feet in 1969, declined

to 16.7 billion cubic feet in 1970 and 11.6 billion cubic feet in 1971.

Imports of crude oil, mostly from the Soviet Union, increased almost

3-1/2 times between 1965 and 1971 to a level of 7.5 million tons. In

1972 the Soviet Union alone provided 95 percent of the country's

requirements for crude oil and petroleum products. Imports of natural

gas from the Soviet Union, through a pipeline still under construction,

are scheduled to begin in 1974 at a level of 35 billion cubic feet and

to continue at an annual rate of 106 billion cubic feet beginning in

1975. The planned 1975 import volume represents about three-fourths of

the estimated requirements in that year.

Crude oil is processed in two refineries, located at Burgas and Pleven,

with daily throughput capacities of about 16,500 tons and 5,500 tons,

respectively. Except for the small domestic output, crude oil for the

Pleven refinery is moved by rail from Black Sea ports. A pipeline

network that will connect the refinery with the ports is under

construction and is scheduled to enter into full operation in 1975. By

that date the capacity of the Pleven refinery is planned to attain

16,500 tons per day. A pipeline under construction for the transport of

petroleum products from the Burgas refinery to consuming centers at

Stara Zagora and Plovdiv is to be completed sometime in 1973.

The refinery output has not been sufficient to cover all the country's

requirements for petroleum products. Net imports of petroleum products

in 1970, including gasoline, fuel oils, and lubricating oils, amounted

to 2.5 million tons. Ninety percent of the imports originated in the

Soviet Union.

Electrical Energy

Installed electric generating capacity and production of electrical

energy increased more than fourfold in the 1960-71 period but failed to

keep pace with the country's growing requirements. Installed capacity in

1971 was 4.48 million kilowatts, including 3.65 million kilowatts in

thermal and 0.83 million kilowatts in hydroelectric stations. During the

period the proportion of hydroelectric capacity declined from 50 to 18

percent, and the production of electricity per kilowatt of hydroelectric

capacity dropped by more than one-third. The utilization of thermal

capacity declined by 13.5 percent.

New power from generating plants scheduled to begin operation in the

1971-75 period totals about 3 million kilowatts. Major power stations to

be commissioned include: hydroelectric stations--with a capacity of 1

million kilowatts--on the Sestrimo cascade, in the upper reaches of the

Maritsa River and at the Vucha cascade, southwest of Plovdiv; a thermal

power plant with a capacity of about 620,000 kilowatts at Bobov Dol,

fueled by local coal; and an atomic power station with a capacity of

880,000 kilowatts at Kozloduy on the Danube River, in the northwestern

corner of the country. According to government plans, total generating

capacity is scheduled to reach 7 million kilowatts in 1975 and 12

million kilowatts in 1980. The more distant plans include the

construction, jointly with Romania, of a hydroelectric power complex on

the Danube, at Belene on the Bulgarian bank of the river and Ciora on

the Romanian side. The Soviet Union has provided large-scale technical

and material assistance in the development of the electric power system.

Production of electrical energy amounted to 21 billion kilowatt-hours in

1971, of which 90 percent was generated by thermal stations. Energy

output in 1972 reached 22.3 billion kilowatt-hours. The Sixth Five-Year

Plan calls for an energy output of 30.5 billion kilowatt-hours in 1975,

which is equivalent to an average annual increase in output of 9.4

percent during the five-year period. In the years 1971 and 1972 energy

output rose by an average of 6.9 percent per year, so that an average

annual rise of 11 percent will be needed in the remaining years to

attain the planned goal in 1975. Consumption of electrical energy in

1975 is planned to reach 33.5 billion kilowatt-hours. The planned

deficit of 3 billion kilowatt-hours is to be covered by imports from

Romania, Yugoslavia, and the Soviet Union.

The electrical transmission network is well developed, and further major

improvements have been planned. The network is connected with the power

grids of Romania and Yugoslavia. A 400-kilovolt power line from the

Moldavian Soviet Socialist Republic in the Soviet Union was reported to

have been completed in mid-1972. There was no evidence nine months later

that power had actually been transmitted over that line.

Eighteen percent of the total electrical energy supply in 1971 was used

by the power stations or lost in transmission. Of the remaining net

supply, almost 70 percent was consumed in industry and construction;

agriculture received only 4 percent; and transport and communications

accounted for little more than 3 percent. Households were allotted about

16 percent of the net electrical supply, and the balance of 7 percent

was consumed in trade, public institutions, and street lighting. The

major industrial users of energy were metallurgical enterprises and the

producers of chemicals and rubber; each of these industrial branches

consumed one-fifth of the energy supply to industry.

Expansion of electric-generating capacity and energy output at rates

planned by the government has been hampered by a chronic lag in new

construction and by inadequate maintenance of existing facilities. The

lack of preventive maintenance and disregard of technical requirements

in the operation of equipment result in frequent breakdowns requiring

major repairs. Such repairs, particularly those involving boilers,

turbines, and transformers, pose difficult problems because of the

shortage of technically qualified repair personnel and ineffective

organization of repair work. Efficiency of operation is also adversely

affected by a high labor turnover and the difficulty of finding

qualified replacements.

The lag in the completion of new power stations, equipment breakdowns,

and insufficient water reserves for hydroelectric stations have caused

frequent power shortages, particularly at peak load hours. Elaborate

official measures have been introduced to regulate the consumption of

electricity and to eliminate waste, including a bonus system for saving

electricity. These measures have not proved sufficiently effective, and

some enterprises have been reported to earn bonuses by the simple

expedient of overstating their requirements in the formulation of the

annual economic plans. The State Inspectorate for Industrial Power and

Power Control, it was stated by officials, was not in a position to

solve the problem of economizing electric power without the active

cooperation of every enterprise, plant, and trade union. Additional

unspecified measures affecting industry were reported to have been taken

in 1973 to reduce peak power loads, and the population was advised to

use electricity more sparingly between 6:00 P.M. and 9:00 P.M.

RAW MATERIALS

In 1970 about 54 percent of the manufacturing industry's output was

based on industrial materials, and 46 percent was derived from

agricultural raw materials; the proportion of industrial materials in

manufacturing continued on its post-World War II upward trend in the

1960-70 period from a level of 24 percent in 1948 and 49 percent in

1960. This trend was sustained by the relatively rapid rise in the

production and imports of industrial materials compared to the slower

increase in agricultural output and imports. Because of the limitation

of domestic resources, further industrial expansion will necessitate

ever larger material imports.

Iron and Steel

The main deposits of iron ore are located at Kremikovtsi, northeast of

Sofia, and at Krumovo in the lower Tundzha valley. Other small deposits

of little or no commercial value are scattered in the Strandzha

mountains, in the western Stara Planina, and at several locations in the

Rodopi (or Rhodope Mountains). The ore in the Kremikovtsi deposit is of

low grade; it has a mineral content of about 33 percent and requires

beneficiation. Reserves at Krumovo were reported to be of better grade

but much smaller. Available evidence suggests that mining at this

deposit was discontinued after the mid-1960s. Its site is far removed

from the country's two iron and steel mills.

Reserves at Kremikovtsi were estimated a number of years ago to contain

from 200 million to 250 million tons of ore. An official

Russian-language survey of Bulgaria, published in 1969, cited a figure

of 317 million tons for total iron ore reserves but mentioned only the

Kremikovtsi deposit as one being mined. In a review of the country's

natural resources, published in a Bulgarian technical journal in

mid-1970, it was stated that known reserves of iron ore would last

another fifty years. At the average annual rate of iron ore output in

the years 1968 and 1969 the reported life span of the deposits indicates

a reserve of only 133 million tons as of 1970. Whatever the actual

reserves may be, domestic iron ore has had to be supplemented by imports

of about 1 million tons per year from the Soviet Union and Algeria to

meet the requirements of the metallurgical industry.

Reserves of steel-alloying minerals are reported to be available,

particularly manganese, chromium, and molybdenum. The quality of the

manganese ores, however, is low, and reserves of chromium are

insufficient for the needs of the economy. Output data are available

only for manganese ore. Production of this mineral declined by about 60

percent in the 1957-70 period, which suggests the depletion of known

reserves. The metal content of the manganese ore mined in 1970 amounted

to 10,300 tons. In that year the discovery of new manganese deposits in

the Obrocha area was reported, the eventual exploitation of which, it

was said, would not only provide for all domestic requirements but would

also make it possible to export manganese for an entire century.

Although small amounts of ferroalloys are also obtained as by-products

of copper, lead, and zinc smelting, imports must be relied upon to cover

substantial deficits. Imports of manganese ores and concentrates in 1969

and in 1970 were more than double the volume of domestic production, and

imports of chromium and chromite amounted to 3,400 tons in 1969. Nickel

and titanium were also imported.

Steel is produced at the integrated Kremikovtsi metallurgical combine

and at the smaller integrated Lenin Steel Works in Pernik. With Soviet

assistance the Kremikovtsi combine is being expanded to a planned annual

capacity of 2 million tons of steel and 2.2 million tons of rolled

products by the end of 1975. A third coking plant was put into operation

in the spring of 1971, and the production of coke is scheduled to reach

1.4 million tons in 1975, compared to an output of 837,000 tons in 1970.

The steel mill at Pernik is to be modernized, also with Soviet

assistance.

Production of pig iron and steel increased about sevenfold in the

1960-70 period, reaching levels of 1.25 million tons and 1.8 million

tons, respectively. The same was true of rolled steel products, the

volume of which rose to 1.42 million tons. Nevertheless, Bulgaria

remained a net importer of iron and steel throughout the entire period.

In 1970 the import surplus amounted to 272,000 tons of pig iron and

96,000 tons of steel.

Nonferrous Metals

Reserves of nonferrous metals are reported to be more plentiful than

reserves of iron ore. Unofficial claims have been made that copper

reserves will meet requirements during the next fifty years despite the

planned rapid growth in output. Similarly, known reserves of lead and

zinc ores were said to be sufficient to supply the needs of available

smelters until 1990. A foreign observer, however, noted that plans for

large-scale expansion of nonferrous mining and smelting may be

frustrated by the deteriorating quality of the ores being mined and that

metal output may not rise much beyond the level attained in the late

1960s. In fact, mine output of lead and zinc in 1970 was not higher than

it had been in 1960, although the mine output of copper increased at an

annual rate of 7.1 percent from 1967 to 1971. In this context it is

noteworthy that data on nonferrous metals were omitted from the official

statistical yearbook published in 1972.

In 1972 the minister of heavy industry pointed out that the relatively

small planned increase in the output of the nonferrous metals industry

in the 1971-75 period--22.8 percent--was dictated by inadequate

supplies of raw materials. He stated that prospecting for new deposits

would be intensified and stressed the urgent need to increase the degree

of metal recovery from ores and the need to utilize fully all ore

components. Nevertheless, the minister assured his audience that the

requirements of the economy for copper, lead, and zinc in the 1971-75

period would be met from domestic production, except for 3 to 10 percent

of certain types of rolled metal. He called for the construction of

plants to extract the metal from the industry's tailings as a means for

partially eliminating the troublesome shortage.

Copper is mined south of Burgas; in the Sredna Gora mountains near the

town of Panagyurishte; and in the western Stara Planina mountains, south

of Vratsa. A deposit is also being developed at Chelopets, near Sofia.

The ore is concentrated locally and is smelted and refined in plants at

Eliseyna, Pirdop, and the Medet complex near Panagyurishte. Production

of refined copper from ores and reused scrap increased from 14,000 tons

in 1960 to 24,000 tons in 1965 and 41,000 tons in 1971. More than half

the copper output is processed into copper profiles, sheet, and wire at

the Dimiter Ganev plant in Sofia--the only plant for manufacturing

rolled products. Bulgaria has both imported and exported copper and

copper products.

Lead and zinc are obtained from mines near the towns of Madan and

Rudozem, in the eastern Rodopi, and in the western part of the Stara

Planina, at Eliseyna and Chiprovtsi. A new lead mine is under

development at Erma Reka, in the vicinity of Madan. The Rodopi mines

account for the major portion of the ore output. The ore is processed in

flotation plants near the sites of the mines and is refined at

Kurdzhali, Plovdiv, and Kurilo.

Production of refined lead and zinc rose rapidly in the first half of

the 1960s but leveled off in the second. Substantial amounts of these

metals have been exported, mostly to Western Europe. Exports, however,

have been declining both in volume and as a proportion of output. The

decline has been more pronounced in the case of lead, and lead exports

dropped from 65 percent of output in 1960 to 22 percent in 1970. The

volume of lead exports fell from 53,500 tons to 22,100 tons in the

1965-70 period. Zinc exports declined from highs of 78 percent of output

in 1965 and 58,100 tons in 1966 to 64 percent of output and 48,100 tons

in volume in 1970.

Bulgaria also possesses small reserves of gold, silver, and uranium.

Gold has been found near the town of Trun, not far from the border of

Yugoslavia. Silver and uranium deposits are located in the western Stara

Planina. The uranium ore is processed by the Rare Metals Combine near

Sofia. Gold and silver are also obtained as by-products in the smelting

of copper, lead, and zinc. Information on reserves and production of

these metals is not available. Aluminum and tin must be imported.

Other Raw Materials

There are reported to be adequate resources of nonmetallic minerals for

the production of cement and other building materials, glass, and

ceramics. Asbestos, salt, sulfur, and cement are produced in quantities

large enough to allow some exports. The quality of asbestos, however, is

low, and better grades must be imported for some uses. Exports of cement

declined from 715,000 tons in 1965 to 153,000 tons in 1970. Timber and

wood pulp from domestic sources are in short supply. Under an agreement

with the Soviet Union, Bulgaria has supplied 8,000 workers to the timber

industry of the Komi Autonomous Soviet Socialist Republic for the

development of Siberian timber resources, in return for which the Soviet

Union has undertaken to export to Bulgaria about 900,000 cubic yards of

timber in 1973 and up to 2 million cubic yards per year after 1975.

Similar arrangements exist with regard to paper pulp, iron and steel,

natural gas, and other raw materials.

Domestic agriculture provides ample raw materials for the food

processing industry, but only a fraction of light industry's needs for

fibers and hides. In the 1968-70 period average annual imports of these

materials included cotton, 60,000 tons; wool, 2,900 tons; synthetic

fibers, 26,000 tons; and cattle hides, 7,700 tons. In addition to the

raw cotton, cotton textiles in the amount of 63,000 tons were imported

annually.

Because of the general shortage of domestic raw materials and the need

to conserve scarce foreign exchange, strong emphasis has been placed on

recycling waste materials. A decree on this subject was issued in 1960,

and a special Secondary Raw Materials State Economic Trust was created

in 1965. Another comprehensive decree was issued in November 1971

because, as stated in its preamble, the importance of collecting and

using waste materials had been underestimated, and the needs of the

economy were not being met. The new decree was intended to organize the

collection and processing of waste materials, including metals, paper,

rubber, textiles, and worn-out machinery and household equipment, on a

modern industrial basis under the direction of the waste materials

trust. Special provision was made in the decree concerning the handling

of unused machinery and surplus materials held by economic enterprises,

and sanctions were provided for failure to surrender or refusal to

purchase such surplus equipment and materials.

INVESTMENT

Industry's share of total annual investment rose steadily from 34.2

percent in 1960 to 47.3 percent in 1969 but declined in the next two

years to 43.9 percent. In absolute terms and in current prices, annual

investment in industry increased from 466.3 million leva in 1960 to 1.6

billion leva in 1970 and declined to 1.58 billion leva in 1971.

More than four-fifths of the industrial investment in the 1961-71 period

was devoted to the expansion of producer goods industries. The

proportion of investment funds allotted annually for this purpose was

slightly lower in the 1966-71 period than it had been in the preceding

five years; it ranged between 84.7 and 87.8 percent in the 1961-65

period and between 81.2 and 85.5 percent thereafter, except for 1970,

when it declined to an atypical low of 78.5 percent.

The bulk of industrial investment was channeled into heavy industry,

including fuel and energy production, ferrous and nonferrous metallurgy,

chemicals, and machine building and metalworking. In the 1960-65 period

fuel and energy production were the major recipients of investment

funds; in subsequent years machine building and chemicals became the

primary targets of investment activity. Ferrous metallurgy was among the

five largest investment recipients through 1967, but nonferrous

metallurgy dropped from this group after 1964. Beginning in 1967

substantial investment funds were also devoted to food processing--the

major export industry and earner of foreign exchange.

Investment allotments to consumer goods industries ranged between 12.2

and 18.8 percent of industrial investment, except for an unusually high

allocation of 21.5 percent in 1970. In 1971, however, the investment

share of consumer industries dropped sharply to only 14.5 percent. The

predominance of investment in heavy industry reflected the leadership's

basic economic policy tenet that, with minor temporary exceptions, the

production of capital goods must develop more rapidly than the output of

consumer goods.

Construction of industrial plants has frequently fallen behind schedule,

causing losses of planned production and disruption of the five-year

plans. The situation became critical in the fall of 1972 because of the

failure to commission on time new facilities that were counted upon to

produce in 1973, among other products, 0.5 million tons of rolled steel;

0.4 million tons of mineral fertilizers; 30,000 tons of synthetic

fibers; 20,000 tons of cellulose; 11,000 tons of polyethylene; 0.3

million kilowatts of electric generating capacity; and a large volume of

machinery and equipment.

The main reasons for the construction lag were delays in the supply of

materials and a shortage of construction workers. In an effort to

expedite the completion of the most essential projects that were under

the direct supervision of the Council of Ministers because of their

national importance, the council created a special operational bureau

for the coordination and control of the construction activities

associated with these projects. At the same time 6,000 workers were

transferred to the priority projects from less important construction

jobs. These measures did little to solve the basic problems and merely

shifted the incidence of construction delays from one category of

projects to another.

LABOR

The labor force in state and collective industry numbered 1.17 million

workers in 1971, of whom 542,000--or 46 percent--were women. The labor

force had increased by 54 percent compared with its size in 1960, and

the number of women workers more than doubled. About 88 percent of the

workers were employed in manufacturing; the remaining 12 percent were

engaged in mining and energy production. Production of capital goods

provided employment for 52.5 percent of the workers, and consumer goods

industries absorbed the remainder. One-fourth of the labor force was

concentrated in machine building and metalworking, and another

one-fourth was occupied in food processing and textile production (see

Organization and Structure, this ch.).

By far the largest proportion of women workers--26 percent of their

total number--were employed in the textiles and clothing branches of

industry, where they constituted 77 percent of total employment. Women

constituted the majority of workers in food processing--53 percent--and

accounted for 21 percent of the workers in machine building and

metalworking. Substantial numbers of women were also employed in

chemical and rubber plants, in logging and woodworking, and in the

production of leather shoes and furs. Four-fifths of all women working

in industry were in blue-collar jobs.

According to official statistics, 95 percent of the workers in 1971 were

directly engaged in production; the rest were employed in various

auxiliary occupations, such as maintenance and warehousing. Yet in

outlining means for raising industrial labor productivity in the fall of

1972, the minister of labor and social welfare included as an objective

a reduction in the proportion of auxiliary personnel to about 30 or 35

percent of the number of production workers in industry. About 17

percent of the production workers were in white-collar jobs; information

on the total number of white-collar workers has not been published.

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