IDEAS home Printed from
   My bibliography  Save this paper

The Transmission of Exchange Rate Changes to Agricultural Prices


  • Liefert, William M.
  • Persuad, Suresh


Movements in countries’ exchange rates can substantially change the prices of goods faced by producers and consumers and thereby affect incentives to produce, consume, and trade goods. Exchange rate changes, however, might not be completely transmitted (passed through) to domestic prices. Empirical evidence shows that price and exchange rate transmission for agricultural products is low in most developing economies, partly because of trade policies but also because of inadequate infrastructure and other market deficiencies. During the last 20 years, developed and developing countries generally have moved away from support policies that impede price and exchange rate transmission toward trade policies that allow transmission, such as tariffs. The Uruguay Round Agreement on Agriculture of 1994 strongly encouraged this development. Despite these policy changes, market deficiencies remain as a cause of incomplete transmission. Incomplete transmission weakens countries’ integration into world agricultural markets and thereby reduces agricultural trade potential. Low transmission in developing countries also decreases their own benefits from trade, including the gains they could realize if there is further global agricultural liberalization.

Suggested Citation

  • Liefert, William M. & Persuad, Suresh, 2009. "The Transmission of Exchange Rate Changes to Agricultural Prices," Economic Research Report 55942, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uersrr:55942

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    2. Mundlak, Yair & Larson, Donald F, 1992. "On the Transmission of World Agricultural Prices," World Bank Economic Review, World Bank Group, vol. 6(3), pages 399-422, September.
    3. Roberts, Donna & Josling, Timothy E. & Orden, David, 1999. "A Framework for Analyzing Technical Trade Barriers in Agricultural Markets," Technical Bulletins 33560, United States Department of Agriculture, Economic Research Service.
    4. Gow, Hamish R & Swinnen, Johan F M, 1998. "Up- and Downstream Restructuring, Foreign Direct Investment, and Hold-Up Problems in Agricultural Transition," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(3), pages 331-350.
    5. Skully, David W., 2001. "Economics of Tariff-Rate Quota Administration," Technical Bulletins 184332, United States Department of Agriculture, Economic Research Service.
    6. Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024 Elsevier.
    7. Christopher B. Barrett, 2001. "Measuring Integration and Efficiency in International Agricultural Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(1), pages 19-32.
    8. Liefert, William M. & Swinnen, Johan F.M., 2002. "Changes In Agricultural Markets In Transition Economies," Agricultural Economics Reports 33945, United States Department of Agriculture, Economic Research Service.
    9. Jorge Quiróz & Raimundo Soto, "undated". "International Price Signals in Agricultural Markets: DoGovernments Care?," ILADES-Georgetown University Working Papers inv088, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    10. Christopher B. Barrett & Jau Rong Li, 2002. "Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 292-307.
    11. Kelvin Balcombe & Alastair Bailey & Jonathan Brooks, 2007. "Threshold Effects in Price Transmission: The Case of Brazilian Wheat, Maize, and Soya Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 308-323.
    12. P. B. R. Hazell & M. Jaramillo & A. Williamson, 1990. "The Relationship Between World Price Instability And The Prices Farmers Receive In Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(2), pages 227-241.
    13. John Baffes & Bruce Gardner, 2003. "The transmission of world commodity prices to domestic markets under policy reforms in developing countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(3), pages 159-180.
    14. Skully, David W., 2001. "Economics Of Tariff-Rate Quota Administration," Technical Bulletins 33576, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Thomas Barré, 2011. "Price expectations and price dynamics: the case of the rice sector in developing Asia," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00630711, HAL.
    2. Iqbal, Md Zabid & Babcock, Bruce, 2016. "Transmission of Global Commodity Prices to Domestic Producer Prices: A Comprehensive Analysis," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236285, Agricultural and Applied Economics Association.
    3. Amikuzuno, Joseph & Ogundari, Kolawole, 2012. "The Contribution of Agricultural Economics to Price transmission Analysis and Market Policy in Sub-Sahara Africa: What Does the Literature Say?," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134754, Agricultural Economics Society.
    4. Nazif Durmaz, 2014. "Inventories of Asian Textile Producers, US Cotton Exports, and the Exchange Rate," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(4), pages 397-413, September.
    5. Amikuzuno, Joseph & Ogundari, Kolawole, 2013. "Price transmission Analysis and Associated Policy in Sub-Saharan Africa’s Agricultural Markets: What Does the Literature Say?," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 160479, African Association of Agricultural Economists (AAAE).
    6. Baquedano, Felix G. & Liefert, William M., 2014. "Market integration and price transmission in consumer markets of developing countries," Food Policy, Elsevier, vol. 44(C), pages 103-114.
    7. Siami-Namini, Sima & Hudson, Darren, 2017. "Volatility Spillover Between Oil Prices, Us Dollar Exchange Rates And International Agricultural Commodities Prices," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252845, Southern Agricultural Economics Association.
    8. Liefert, William M. & Liefert, Olga, 2007. "Distortions to Agricultural Incentives in Russia," Agricultural Distortions Working Paper 48386, World Bank.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:uersrr:55942. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.