The Price of Wheat in Russia

Agriculture in the Soviet Union employs one-fifth of the work force, absorbs 27% of all state investment and continues to fall miserably short of meeting domestic food demands. As a result, the Soviet government is forced to spend huge amounts of scarce hard currency--nearly $8 billion this year--to import wheat, edible oils and other basic foods. In the process, it has become the biggest buyer of U.S. farm goods.

Now, driven by desperate necessity, it plans a bold experiment. Starting this year and through 1990, the government will divert to its own farmers some of the dollars it spends on agricultural imports, provided they increase production above their average levels for the first half of this decade.

The cash payments, ranging from $64 to $96 a ton for wheat and up to $154 for sunflower, soy and other oil-bearing seeds, could be used to buy new equipment for the 48,000 state and collective farms or--far more likely--to import scarce consumer goods. If the inducement works, the state should save money over time, since it’s far cheaper to grow food at home than to buy it abroad.

There is plenty of precedent for expecting that such capitalist incentives will work, provided that the Communist Party ideologues who want to keep agriculture under tight central controls let them. Soviet farmers for some time have been allowed to sell produce from their own small garden plots at market prices, rather than at prices fixed by the state. Those private plots take up just 3% of arable land, but supply about 30% of the country’s agricultural produce. What farmers are being told now is that if they boost output they will be rewarded, not in inflated rubles which are largely useless given the absence of consumer goods, but in hard currency that can be spent on the imported products they crave.

This may be a--literally--golden opportunity for Soviet farm workers, but perhaps American taxpayers ought to be feeling a bit nervous. If the Soviets are able to reduce their purchases of U.S. grains, then almost certainly farm surpluses in this country will grow, and along with them political pressures for yet more government spending on props and subsidies. It would be splendid if the Soviets were at last to discover the virtues of a really free market in agriculture. It would be nice if the United States did, too.