"During that time, other countries responded to high U.S. tariffs by raising their own tariffs, which led to higher consumer prices," he said. "A lot of people maintain that the Great Depression wouldn't have been as severe had this situation not occurred."

Higher tariffs and higher consumer prices would lead to a buildup of inventories as a result of not moving goods to export locations, Rosson said. That could further slow the economic recovery in the U.S. and globally.

Even as agricultural prices have increased, U.S. exports have remained strong, Rosson said. This is attributed to the relatively low value of the U.S. dollar, which is currently trading almost even with the Canadian dollar.

"The belief is that China will retain a low-priced currency to export more," Rosson said. "China is the number two U.S. agricultural export market. Cotton, soybeans and many other products are in high demand there. So, a relatively weak Chinese yuan will limit their ability to purchase U.S. agricultural products."

Rosson said what many would like to see happen is China’s currency determined by the market rather than by the government.

"There will be dual impacts if their currency appreciates," Rosson said. "Some analysts indicate that the yuan could appreciate by a minimum of 20 percent and possibly by as much as 40 percent. However, that would be somewhat disruptive to the Chinese economy in the near term. U.S. exports to China would be boosted over time due to stronger consumer demand and lower cost U.S. products."

U.S. agricultural exports remain strong, Rosson said.

"Exports are booming," he said, with agricultural exports running 14 percent above last year. "The U.S. Department of Agriculture chief economist has indicated that we may set another record (for exports). That's certainly good news for U.S. agriculture, but we'll need to watch exchange-rate policies and economic recovery around the world to see whether or not this actually happens."

b-fannin@tamu.edu