How Exchange Rate Fluctuations Affect Agricultural Innovation
Main Article Content
Keywords
exchange rate fluctuations, agricultural innovation, industrial chain, asymmetric transmission, risk management
Abstract
Against the backdrop of the deep integration of global agricultural trade, fluctuations of exchange rates have evolved from an external factor into a systemic variable affecting the entire agricultural industry chain. By building an analytical framework around the “whole industry chain and multiple stages,” this essay examines how exchange rate shocks move through agriculture. Using Brazil as a case, it finds that transmission is uneven across the chain. Cost shocks from imported inputs are passed through quite rigidly at the upstream stage, while their effect on the downstream is weaker because of export hedging and unequal bargaining power. The analysis also suggests that exchange rate fluctuations can push agricultural innovation. For China, exchange rate risk should be treated as a strategic opening rather than only a source of pressure. By funding research and developing technological substitutes for traditional technologies, China can strengthen its agricultural resilience. The essay argues that active risk management and industrial upgrading matter for keeping the domestic agricultural market stable in a complex economic environment.
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