U.S. Monetary Reform and Farm Trade
On balance, U.S. farm trade
will benefit from world currency
realignments-despite some off
setting factors.
The well-being of our
agricultural trade has
traditionally depended on
stability in the international
monetary system Trade
generally flourishes when the
system functions smoothly, and
plummets when the system
breaks down.
Fox example, the postwar
monetary system conceived at
Bretton Woods, N H., in 1944 gave
the world nearly a quarter
century of monetary stability.
World trade boomed, and the
Farmline SINGLE-PHASE
no 10 h.p. Motors
BELT, BASIC SOIL INSECTICIDE
OF THE ’7os. NEW IMPROVED GRANULES
GUARANTEED TO FLOW FREELY.
• ; rphe broad-spectrum soil insecti
* I cide, Belt, is growing rapidly in
• popularity. Controls the widest
; range of soil insects that at-
I tack com.
GUARANTEE
EFFECTIVE INSECT CONTROL
AND FREE FLOW GRANULES
Should Bolt 33G foil to offoctivoly control
tho soil insocts listod on the label, whan
usod specifically according to uso direc
tions shown* or should Bolt 33G not flow
adequately through a standard spreader
that has been properly adjusted* main
tained* end in food working condition*
Volsicol will refund an equivalent amount
of Belt 33G insecticide to that used on
acreage where Belt performance was not
satisfactory (verified by paid invoice shew
ing price and quantity purchased) if the
following conditions are met:
A. Grower has completed and returned the
guarantee registration card available
at his dealer's within 45 days of
Belt 33G purchase
B, Notice of dissatisfaction of product per
formance and handling covered by this
guarantee must be submitted in writing
within 60 days of application
C. A qualified Velsicol representative must
be assured that the purchaser used Belt
33G according to label directions The
Velsicol representative must have the
opportunity to observe insect control or
handling performance to determine
whether or not Belt provided economic
control or was applied with property
maintained equipment
IMPORTANT: Refund is limited to acreage
on which Belt performance or handling was
not satisfactory. Be sure to fill out and mail
the registration card, available at your
chemicals dealer, to verify your purchase
of Belt 33G soil insecticide
value of U.S. farm exports nearly
‘tripled during 1944-71.
During this period, the U.S.
dollar emerged as the dominant
currency in world commerce,
and became the yardstick by
which the values of other
currencies were measured.
Soundness of the dollar was
virtually beyond question in the
earlier years.
Confidence in the dollar began
to weaken, however, when in 1960
the number of dollars in foregin
countries exceeded the value of
our gold holdings. Confidence
was further shaken in 1971 when
it became apparent that the U S.
would incur its first balance of
ELECTROMEC
34 NORTH READING ROAD
EPHRATA, PA. 17522
717-733-7911
CUTWORMS?
WHITE GRUBS?
•ftSciltr
f
Belt protects corn till harvest, re
gardless of weather. Little hazard
to feed, water, wildlife, when used
properly, Belt is comparatively low
toxic. Its active ingredient is
covered by a tolerance on com of
0.3 ppm.
; Velsicol guarantees flowability of
Belt 33.3 G granules. Easy to
• handle; it’s applied and incorpo-
I rated at or prior to planting.
trade deficit in many decades
Economic difficulties weren’t
confined to the U.S. Several other
nations were struggling to
maintain established par values
Three major currencies were
floating - as was the price of gold
in private markets. Clearly, the
monetary system in 1971 needed
overhauling.
Against this backdrop,
representatives of the world’s ten
leading industrial nations con
vened to begin work on a new
international monetary system
The so-called Group of Ten
reached an agreement on Dec. 18,
1971. at Washington, DCs
Smithsonian Institution
The agreement resulted in a
realignment of major world
currencies - the U S dollar was
devalued against gold 8.57 per
cent - and the establishment of
an interim monetary system
THe temporary system set
more flexible margins for foreign
currency exchange rates - a
move deisnged to help countries
solve balance of payments
problems more easily. The wider
margins allow currencies in
foregm exchange markets to
fluctuate 2.25 percent above or
below par values.' The previous
SEED CORN MAGGOT?
limit was 1 percent
Consequences for the farm
sector .. . The currency realign
ments generate a two-sided
impact on U.S. farm trade by
affecting both overseas demand
and our vompetitive position in
world markets.
With devaluation of the dollar,
U S commodities become
cheaper in terms of the currency
of the importing country.
Presumably, this provides
stimulus for foreign nations to
buy more American products
However. 47 countries then
devalued their currencies, with
the result that prices for
American goods in these markets
remained unchanged About a
third of all U S farm exports go
to these countries
Moreover, eight foreign nations
devalued more than the US,
making American commodities
more costly than before These
countries take less than 4 percent
of our agricultural exports
On the positive side. 62 nations
did not devalue, so their
currencies became more
valuable relative to ours These
countries take nearly two-thirds
of all U S farm shipments.
Offsetting factors. Nearly 5
In “no-till” planting, a once-over
application proves especially effec
tive and economical. Belt stays in
the soil. -. and works!
The emulsifiable concentrate, Belt
72ECF, is also available if you pre
fer liquid application.
You can have confidence in Belt.
It’s chlordane at its best, for eco
nomical, broad-spectrum control.
At your ag chem dealer’s.
BELT® from
VELSICOL
VELSICOL CHEMICAL CORPORATION
341 East Ohio Street. Chicago, Illinois 60611
'S'l^y
Lancaster Farming, Saturday, March 10.1973
percent of our agriculturalexports
to the 62 nations, however, move
under P L 480, and are not af
fected by changes in exchange
rates An additional 30 percent of
U S farm shipments to these
nations are hampered by such
notanff trade barriers as
domestic support programs
The net result: of total farm
shipments to the 62 nations, only
65 percent - or 43 percent of all
U S commodity exports - are
free to benefit from dollar
devaluation
Commodities that stand to gain
(he most are soybeans, soy
products, and cotton - products
not grown in other developed
nations Grains, however, are
generally subject to nontariff
barriers
Prospects mixed. Even in the
absence of nontariff barriers,
prospects for lifting our export
volume aren’t altogether rosy.
For one thing, consumers in
developed countries where in
comes are relatively high are not
likely to accelerate consumption
of certain items just because
prices drop slightly
Moreover, there’s no guarantee
that lower prices will be passed
on to consumers Importers,
wholesalers, retailers, etc ,
might widen their profit margin
by continuing to sell at the same
price, thus giving the consumer
no incentive to buy more
A devaluation will not improve
our competitive position in
relation to third country sup
pliers unless these suppliers
appreciate their currencies
relative to the dollar Few did so
Even when they did, the U S
might still be at a disadvantage
because some of these third
country rivals have greater
access to certain markets
For example, the U S in unable
to gain advantage over France in
grains sales to West Germany,
though France allowed the dollar
to devalue Why? The European
Community’s Common
Agricultural Policy gives
preference to France as a
member nation
Moves by rivals. France and
Australia are the leading grain
competitors who let the dollar
devalue Other major rivals that
allowed devaluation include
Turkey (tobacco) and Spain and
Morocco (citrus fruits).
Major competitors that
devalued along with the dollar -
thus offsetting possible trade
benefits - are Argentina and
Canada (grains), Greece
(tobacco), Brazil, Mexico, and
the Sudan (cotton), Egypt (citrus
fruits), and Thailand (rice).
The impact of more flexible
exchange rates on U S farm
trade is not without drawbacks.
For one thing, the wider margins
make the value of future
payments less certain for both
exporter and importer. Thus,
some trade might not take place
that otherwise would have
Though narrower exchange
margins might give more im
petus to trade, they may also
dampen a nations’ expansionary
money policies that promote
fuller employment
Trade growth. Meantime, as
negotiators press for an ac
ceptable balance between
flexibility and rigidity, the in
terim monetary reform system
appears to be working smoothly
enough to permit trade ex
pansion
' Even during fiscal ’72, when
most major currencies floated
for part of the year, U S farm
exports surged past the $8 billion
mark. And with the present world
supply situation, the outlook for
U S agricultural trade in fiscal
’73 appears even brighter
11