U.S. Agriculture and the Value of the Dollar
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The Center for Agricultural and Rural Development (CARD) conducts innovative public policy and economic research on agricultural, environmental, and food issues. CARD uniquely combines academic excellence with engagement and anticipatory thinking to inform and benefit society.
CARD researchers develop and apply economic theory, quantitative methods, and interdisciplinary approaches to create relevant knowledge. Communication efforts target state and federal policymakers; the research community; agricultural, food, and environmental groups; individual decision-makers; and international audiences.
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Abstract
Roughly 20 percent of U.S. agricultural production is exported to other countries. So our competitiveness in export markets is crucial to the stability and growth of U.S. agriculture. One of the fundamental factors in our competitiveness in export markets is the currency exchange rate. The currency exchange rate is the ratio of the value of a nation’s currency to the value of another nation’s currency. Many factors affect exchange rates, including the countries’ macroeconomic policies, fiscal situation, and expected economic growth. Changes in the exchange rate affect our agricultural trade competitiveness because they indicate relative changes in the prices for traded goods in other countries. Nearly half of the change in the real value of U.S. agricultural exports can be attributed to changes in exchange rates.