Exchange Rate volatility and Domestic Factors Affecting the Export Performance of Agricultural Goods

Exchange rate volatility has had a positive effect on exports of agricultural goods in general and saffron in particular (Goudarzi, Khanarinejad, & Ardakani, 2012). In view of this, it will be very important that agricultural trade policies toward different countries, should be based on exchange rate fluctuations. In addition, other active and efficacious factors on trade relationships such as the gross domestic product of importing countries and marketing should be taken into account. As far as relative prices are concerned, they have had a negative effect on exports of high-value commercial crops in generic form and saffron in a specific form, for that reason, the effort to reduce relative prices of high-value commercial crops will go a long way for a stronger presence of them in internal markets. Such efforts can be realized only in the presence of low production and marketing costs.
The domestic factors have their great bearing upon the production and marketing costs along with the export performance of high-value commercial crops and agricultural goods in general. Many empirical research studies confirm a significant relationship between agricultural exports and export performance of the country which depend upon economic reforms that indicate the changes and improvements of the country’s economic policies with the objective of refining the economy on all fronts.
The export performance of the country in general and agriculture sector in particular is more sensitive to the domestic factors, which changes due to economic reforms. In order to improve the production, marketing and exports in the agricultural industry and its allied areas, the domestic factors affecting them must be improved which are reliant upon value additions and better supply chains.
Value additions in the agriculture sector are greatly dependent upon the rate of absorption of the export sector. It means that if the resources attracted from the export sector and incomes earned from the same sector can be spent on productive and vital areas in general and agriculture and allied sectors in particular, it will certainly generate value-added growth in the economy. Therefore, promote export-led growth should be promoted. Saffron which is cultivated in Jammu and Kashmir, has a high international standup. It is an important horticulture crop with greater economic viability, efficiency and inclusive market. The administration should promote exports of horticulture crops in general and high-value cash crops like saffron in particular for the reason that it will increase agricultural GDP to a great extent. Promoting exports through export promotion measures, we will surely improve the economy as well the financial viability of the important sectors in a broad-spectrum and agriculture sector in a precise manner.
Goudarzi, M., Khanarinejad, K., & Ardakani, Z. (2012). Investigating the Role of Exchange Rate Volatility on Iran’s Agricultural Exports (Case Study : Date, Pistachio and Saffron ). World Applied Sciences Journal, 20(06), 904–909.

—The author is an ICSSR Doctoral Fellow at the Department of Economics, Central University of Kashmir and Guest Faculty at NIFT, Srinagar. She can be reached