Strong dollar weakens markets for US growers
Roger Baccigaluppi's business is selling California almonds - worldwide. But his main preoccupation these days is the strength of the dollar vs. other currencies.
It's too strong, he contends, and that's not good for most American farmers, including the members of the California Almond Growers Exchange.
As chairman of the National Council of Farmer Cooperatives as well as president of the exchange, Mr. Baccigaluppi is deeply involved in the ongoing debate over what to do about the decline of United States export trade in agricultural and industrial products.
Interviewed recently in San Francisco, Baccigaluppi made clear that he thinks the key to reversing the export decline, especially for farm products, is to adjust the value of the US dollar so that it ''would be a little bit weaker vs. almost every other currency.''
''First,'' he argues, ''this would make our products more competitive in France, Germany, Japan, and other nations. Second, if the rates of exchange were fixed, it would take the uncertainty out of the (trade) situation.
''Uncertainty is almost as big a problem as the strength of the dollar. We've got a situation today where a buyer of California almonds or Kansas wheat might purchase the product for delivery three months from now and be certain he's got a good price on it. But if he guesses wrong on the currency, he can lose not only all his profit but a lot of his investment in the product. He can't, as they say, 'cover the currency,' because values are unstable.''
Baccigaluppi was recently in Washington, where he had an opportunity to meet with Vice-President George Bush, Agriculture Secretary John Block, and other administration officials.
''The feeling I've had from the people I've talked with,'' says Baccigaluppi, ''is that they're proud of the strength of the dollar. I'm proud of the strength of the dollar, too. But our businesses could deteriorate while we brag about it.
''The dollar is overvalued. It has to be brought down - not to the levels it was in the late 1970s, but to a more reasonable level. The situation now is that we're selling our products about 20 percent cheaper than we were two years ago, in terms of our US dollar price, but to the French buyer they're about 40 percent higher in price.''
The California almond industry headed by Baccigaluppi clear of the strong dollar. The state's almond growers provide about 60 percent of the world supply; Spain supplies 30 percent; and some dozen other countries the remaining 10 percent.
''Spain's peseta is one of the weakest currencies in the world,'' says Baccigaluppi. ''They sell almonds in Germany and France at 20 to 25 cents a pound under our price. At our price, our farmers aren't making cost of production. Their growers, at 25 cents a pound under ours, are getting many more pesetas than they ever got before, so they're fairly happy.''
Other trade barriers faced by the California almond: a 7 percent duty in the European Community; Brazil's 130 percent duty on in-shell almonds and 155 percent on shelled ones, while nuts from that country enter the US duty-free; Mexico's 75 percent duty on California shelled almonds, despite a promise of liberalization.