William M. Liefert

Comparative (Dis?) Advantage in Russian Agriculture

The economic reform that began in Russia in the early 1990s has spurred major changes in the structure and volume of the country’s agricultural production and trade. This paper examines whether Russia has a comparative advantage in agricultural outputs compared to agricultural inputs, and whether it has a comparative advantage in bulk crops versus meat. The paper also investigates whether the changes in Russia’s agricultural production and trade during transition have been consistent with the country’s agricultural comparative advantage, as indicated by the empirical results.

Russia's potential to increase grain production by expanding area

Since 2000, Russia has substantially increased grain production and exports. The grain output growth has come from a rise in yields rather than area. After falling heavily during the 1990s, grain area stabilized during the 2000s and has remained flat, at about two-thirds the level of the late Soviet period. Using data on the regional structure of Russian grain production costs, this article examines the country’s potential to increase grain output further by returning the lost grain area to production. The analysis finds that if grain area were to grow beyond a certain level, one that is still well below the level of the late Soviet period, production costs would rise steeply. Therefore, any major expansion in grain area would require that world grain prices rise considerably beyond their level in the early 2010s to cover the high marginal costs of production.

The Development of the Eurasian Livestock and Grain Economies

The major agricultural countries of Eurasia (Russia, Ukraine and Kazakhstan) have become increasingly important for world agriculture, mainly as a large grain-exporting region. However, Russia is also a large agricultural and food importer, especially of livestock products. The rise in grain exports marks a reversal of the region’s status during the Soviet period as a major grain importer. This chapter examines the development of the Eurasian livestock and grain sectors since these countries began their transition from planned to market economies, and also provides an outlook. The key element in the relationship between the two sectors is livestock producers’ demand for animal feed, which reduces the grain surpluses available for export. The major changes in the region’s agricultural trade since the Soviet period appear to be consistent with its underlying cost-competitiveness, or comparative advantage, vis-a-vis world agricultural markets.

Comparative Advantage and Government Budget Effects: An Application to the Grain Trade of the Former USSR

A model is developed for analyzing the relationship between trade according to comparative advantage, price policy, and government budget effects. The model is used to examine a debate in the USSR in its last years concerning the economic rationale of grain imports, one concern being government budgetary consequences. It appears that changing the mix of goods produced and traded such that grain imports would fall, which many Soviet economists advocated, would have unintentionally decreased state revenue. This is mainly because empirical evidence indicates that the former USSR had a comparative disadvantage in the production of grain. Copyright 1997, Oxford University Press.