Weaker Dollar Strengthens U.S. Agriculture

The depreciating US dollar combined with strong economic growth in developing countries has increased the competitive advantage of US agriculture and stimulated export demand for US agricultural products. Despite depreciating against currencies of some US trading partners, the dollar has been largely fixed against currencies of others, such as China, reducing potential gains in competitiveness. Trade policies and imperfect markets can also reduce the effects of depreciation, further diminishing the gains. Other longer term factors can help boost US agricultural exports. High income growth in developing countries is the most important. However, pursuing and maintaining high rates of productivity growth in US agriculture is equally important. These two factors combine to create a strong potential for the future growth in US agricultural exports regardless of how the exchange rate fluctuates in the short to medium term.