Exchange Rates

Thirty years ago, I attended an economics conference at which Ed Schuh presented a paper showing the almost perfect inverse correlation between the value of the U.S. dollar and the value of U.S. agricultural exports.  When the U.S. dollar rises in value relative to other currencies, exports and the prices of U.S. farm commodities decline.

I soon forgot about Ed’s paper and, like most wheat growers, paid little attention to exchange rates until the late 1990’s (see the discussion here).  Wheat prices had then been stuck at very low levels for almost three years and I finally realized that the rising value of the U.S. dollar was an important explanation.  I was then a member of the board of directors of the National Association of Wheat Growers (NAWG) and on NAWG’s joint International Policy Committee.  When I introduced a resolution advocating a lower value of the U.S. dollar, my fellow committee members were not supportive and seemed to believe that advocating a lower value for the U.S. dollar was unpatriotic.  I realized I needed to collect additional data and make a better case.  Since the U.S. dollar had appreciated dramatically against the Australian dollar, I decided to compare trends in U.S. and Australian wheat production in the late 1990’s.  The paper I wrote is:

US Wheat Exports and the Value of the Dollar Part 1

After reading my paper, a common reaction was “All right, you’ve convinced me that a rising value of the U.S. dollar depresses U.S. wheat prices. However, there isn’t anything we can do about the value of the dollar.”  Influencing exchange rates is complicated and difficult.  I attempted to make the case for action to lower the dollar in this subsequent paper:

A Case for Action to Lower the Dollar

The USDA maintains an excellent website containing exchange rate data.  The USDA site includes yearly and monthly data on the value of the U.S. dollar relative to each of the other world currencies.  It also includes data showing how the value of the dollars has changed relative to a weighted average of the currencies of our customers and also the currencies of the other wheat exporters.  See

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