After the conclusion of the Latvian War of Independence, the post of Commander-in-Chief was abolished in February 1921 and in July of the same year Balodis asked to be discharged from the army. By a special law of the Saeima he was presented with 100 hectares of land and a manor house. He joined the Latvian Farmers Union, the largest party at the time which was led by Kārlis Ulmanis. Balodis was elected to the Saeima in 1925, but played only a secondary role in politics. On 7 December 1931 he became Minister of War, a post he held until 5 April 1940.