ABSTRACT
The Soviet political leadership apparently thinks that the Soviet Onion would be better off buying less grain for political and strategic reasons. The Soviet gains from trading energy for grain are already huge. The essence of the principle of comparative advantage is to compare relative domestic production costs of different commodities and terms of trade of these commodities on the world market. In fact, what is surprising is that the Soviet Union imports so little grain given the extremely unfavorable domestic tradeoff between additional output of oil or gas, and grain. The availability of grain imports enables the Soviets to eliminate costly expenditures on fertilizer, agricultural machinery, grain drying facilities, storage facilities, etc. Increased dependence on grain imports would make the Soviet Union too vulnerable to a grain embargo. In the short run, the economic problems facing the Soviets if they want to increase imports of grain are the port unloading, storage, and rail capacity for shipping imported grain.
