Effect of Relative Price Changes of Top Principle Crops on Farm Land Allocation in Post-Soviet Russia: Do Prices Matter?

After the collapse of the Soviet Union in 1991, Russian economy was on the way to becoming more market-based. While the broadening of market forces in Russian agriculture seems plausible, there is little empirical evidence to support the proportion that land allocation decision among grains and oil-seeds are in large determined by output prices for the crops. The crops are wheat, barley, oats, corn, rye, soybeans, rapeseed, and sunflower. In this chapter, a land allocation model developed recently by Vorotnikova, Asci and Seale (2013) is fit to post-Soviet data to determine if output prices for grains and oil-seeds significantly affect land allocation among these crops and by what magnitudes. We look at the effect of the relative export price changes on allocation of land among top eight top crops in agricultural production for Russia during the years 1992 to 2012. We have determined that most price responsive acreages are those of 1) soybeans, 2) corn, 3) sunflower, 4) wheat, 5) rye, 6) barley, and 7) other. Overall, we can conclude that Russian agriculture has become price responsive when it comes to the land allocation