D3B-Lancaster Farming Saturday, June 1,1985
NEWARK, DE - For tourists
planning to travel abroad, today's
strong American dollar is an ad
vantage because they can buy
more for their money But for
farmers trying to sell gram, the
rate of exchange is less favorable
In fact it's putting some producers
out of business
Just what is a "strong” dollar 7
And what difference does it mal e
to U S and Middle Atlantic far
mers 7 Are reduced farm exports
the only effect, or does a strong
dollar also have its virtues 7
“By calling it 'strong’ we mean
the U S dollar has more pur
chasing power in other countries
than normally would be expected,”
explains University of Delaware
extension farm policy specialist
Gerald F Vaughn "If, for
example, a ballpoint pen made in
France costs two francs there, and
a comparable pen made in the U S.
sells for one dollar here, the nor
mal rate of exchange between the
two currencies would be two francs
per dollar. But if the dollar ex
changes for three, four, or more
francs, it's considered strong or
overvalued."
Importers must pay exporters in
the exporting country’s currency.
A French importer needs dollars to
but U.S. exports; a U.S. importer
needs francs to buy French ex
ports.
“Ordinarily,” says Vaughn,
“when the exchange rate gets too
far out of line, the flow of mer
chandise will tend to be one way
until the rate returns to normal.
French pens, for example, might
be shipped to the U.S. until dollars
accumulate in France, causing the
dollar’s value to fall there.” This
adjustment hasn’t occurred yet
with today’s strong dollar.
Instead of falling, its value has
actually increased as the result of
foreign investments in the U.S.
This is because exchange rates
between countries depend on the
flow of capital investment as well
as merchandise.
“Even though the U.S. is rutthmg
substantial deficits in merchandise
trade, which should lower the
dollar’s value, the dollar remains
strong because foreign investors
want to invest here and need
dollars to do so,” the economist
explains.
“Capital (money) is the most
liquid of all resources,” he con
tinues. “It flows quickly, with few
restraints, from country to
country. Capital usually flows to
countries with high interest and
low inflation rates. The tax policies
of different countries also in
fluence foreign investors looking
for after-tax profits. Since 1979 real
rates of return on investment in the
U.S. have been generally higher
than in other countries.”
Unfortunately, a strong dollar
makes U.S. farm products more
expensive in world markets.
“A 10 percent rise in the dollar’s
value means a 5 percent fall in U.S.
farm exports,” Vaughn says.
“Declining exports depress the
U.S. price of commodities, first to
farmers in the Midwest, the major
exporting region of the U.S., and
then to farmers across the nation,
including Delmarva, whose price
is based on the Midwest price.”
But there’s also a positive side to
the strong dollar, Vaughn reminds.
“It may price us out of the export
market, but on the other hand it
makes goods from other countries
cost less to import here. In turn,
these cheaper goods help hold
down American production ex
penses and living costs. A 10
percent rise in the dollar’s value
reduces the U.S. inflation rate by
one percentage point.”
The strong dollar, together with
an export push by developing
countries to acquire dollars, has
produced a surge of imports into
the U.S.-particularly electronic
goods, machinery and machine
tools These capital equipment
Strong dollar: good news and bad news
items now account for 22 percent of
U S. imports, up from 12 percent
just a few years ago.
This trend has benefits for
agriculture, the specialist says
For example, farm machinery
imports (especially small- to
<- —'in
Use testing to determine if treated hay is dry
PISCATAWAY, NJ
Everything from microwaves to
electronic probes to human hands
are used to test the moisture
content in mowed alfalfa. All tests,
however, have the same objective
- determining when hay is dry
enough to store, yet moist enough
for optimum leaf retention.
Now that chemical conditioners
have entered the forage market,
alfalfa growers are concerned
whether previous test methods will
be effective in measuring hay
dryness. Chemical conditioners
allow hay to be baled at normal
moisture levels up to a day sooner
But the treatment leaves hay
feeling softer and wetter than it
really is.
John Arledge, research
agronomist at New Mexico State
University, has been studying
alfalfa moisture testing for several
years. He suspects the different
feel of treated hay is not from the
chemical, but from reduced en
vironmental exposure. He also
sees no problems in determining
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twice as fast as exports. This
reflects business arrangements
between U S manufacturers and
overseas firms or foreign sub
sidiaries to produce these tractors.
Fertilizer imports (mainly
potash and nitrogen) have risen
when treated hay is dry enough tor
baling.
“A grower can employ the same
moisture testing method used
before,” says Arledge. “When you
first use a chemical conditioner,
however, you may want to rely on
a moisture testing technique mom
elaborate than ‘feeT. Aftc •
become familiar with the shoiier
curing time, then you can use
WASHINGTON - The Senate
Committee on Agriculture,
Nutrition, and Forestry, today
passed by voice vote S. 822, a bill to
give the Secretary of Agriculture
discretionary authority to post
pone a producer referendum on
wheat marketing quotas for 1986.
The bill allows the Secretary to
delay the referendum until not
later than 30 days after ad-
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nearly four tunes as fast as ex
ports. More of these imports now
come from developing countries
where production costs (par
ticularly wages) are much below
U.S. levels.
According to the economist, the
whatever procedure seems con
sistently efficient.”
The primary methods for testing
moisture in alfalfa include,
dessicating or heat devices,
electronic probes and “feel”.
Arledge says no method is both
very fast and accurate.
Chemical conditioners also can
require more aggressive
management. “A hay grower will
vote postponement
by Senate Ag group
journment of the first session of the
99th Congress. cro P s unless new legislation
Under permanent law, the suspending or repealing per-
Secretary is required to hold a noanent law is passed,
referendum by August lof the Agriculture Secretary John
calendar year in which a national Blod* has proclaimed national
marketing quota for wheat is niarketing quotas for the wheat
proclaimed. That permanent law, niarketing year beginning June 1,
which was last suspended with the anc * as announced that a
enactment of the 1981 farm bill, referendum will be held July 19-26,
will he applicable to the 1986 wheat 1985 -
BINS
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FEED
SYSTEMS
surge of imports has helped keep
U.S. price increases in check,
including prices farmers pay for
production supplies This has
helped put a lid on inflation. “The
outlook,” concludes Vaughn, “is
for continuation of a relatively
strong dollar,”
want to check his fields a day
sooner after cutting and about
twice as often,” says Jeff Roberts,
president of Harvest Tec, a
manufacturer of hay equipment
“It's important to bale at safe
moisture levels, and when you first
use chemical conditioners, it’s
surprising how much quicker hay
will be ready.”
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