as authorized to grant credits to private farmers
and to individual members of collective farms for periods of up to five
years at an annual interest rate of 3 percent. These credits may be used
to purchase for breeding and production purposes a limited number of
cattle, sheep, bee colonies with hives, and fruit tree seedlings for
orchards up to 7.4 acres in size. Credits may be granted up to 70
percent of the purchase value of these items. To ensure repayment of the
loans, recipients must conclude contracts with state procurement
agencies or collective farms for the sale of their products.

Procedures for granting credits to collective farms were tightened in
1969 in a move to ensure a more effective use of borrowed funds and the
timely repayment of outstanding debts. Under the new regulations,
credits may be granted only for investment projects and production
expenditures that guarantee the attainment of planned returns and
unconditionally ensure loan repayment on the due date. The principal
criteria for granting long-term credits are the need for, and the
economic effectiveness of, the investment projects and the outlook for
completing the projects within prescribed time limits. Economic
effectiveness is analyzed in terms of production growth, increase in
output per acre or per head of livestock, and rise in labor productivity
and revenues.

Despite increasingly close supervision by the bank of its borrowers'
activities, the effectiveness of investment credits in many instances
has not measured up to expectations. Inadequate project analysis,
construction delays, cost overruns, dissipation of funds, program
changes that made partially or fully completed projects obsolete, and
various other shortcomings have been cited by bank officials as the
major reasons for this situation. As a means of resolving the problems,
the officials have stressed the need for more profound project
evaluation, greater stringency in granting loans, and increased firmness
in the supervision of borrowers. They have also emphasized the criterion
of ability to repay as being one of basic importance.

PRODUCTION

Total Farm Output

Official statistics on total farm output are limited to a percentage
distribution of the output between crop and livestock production. In the
1965-69 period, for which comparable data are available, crop production
accounted for 62 to 63 percent of output; and livestock production, for
the remaining 37 to 38 pe