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BLACKSBURG - The American farmer would have received significantly more money for his crop exports if there had been a policy during the first five years of this decade to lower the value of the U.S. dollar.
This is the contention of a study by Virginia Tech agricultural economist David Orden. He shows the extend that agricultural exports and real-crop prices received by farmers were reduced by the high value of the U.S. dollar from January 1981 through the first quarter of 1985.
The study states that U.S. agricultural exports would have been 22 percent greater and real-crop prices 11 percent higher if macroeconomic policies had been used to lower by 10 percent the dollar’s value in foreign exchange markets.
During 1980/81 and 1985/86, exports of U.S. wheat fell from 42 to 25 million metric (mm) tons, and the U.S. share of wheat trade dropped from 44 to 29 percent. During the same period, U.S. exports of coarse grains slid from 69 to 36 mm tons, causing the nation’s market share to decline from 64 to 44 percent.
U.S. soybean exports remained reasonably steady during this period. Mr. Orden pointed out that more than the U.S. monetary policy and the budget deficit have affected this nation’s agricultural exports. The 1981-83 U.S. recession caused incomes in developing countries to drop, making it hard for them to repay foreign loans.
As a result, cereal grain imports by the developing countries dropped 33 mm tons from 1980 projections that they would import 120 mm tons by 1985. The impact of this was revealed by this country’s bulging storage bins.
The study says the drop in demand reduced food imports by developing countries 10 mm tons more
90.9%