An Assessment of the Relationship between Exchange Rate Volatility and Global Food Supply Chains
Authors: Müller, Stefan, Chen, Li, García, Maria, Kim, Joon-Ho, Smith, John
Journal: International Journal of Economics and Public Policy (IJEPP), ISSN 2766-2640
Citation: IJEPP 4(1), 2021-11-11.
DOI: 10.70878/ijepp.2021.9ea8a11a
Type: Original Research
Abstract
This study examines the multifaceted relationship between exchange rate volatility and the resilience and efficiency of global food supply chains. Utilizing a comprehensive dataset spanning several decades and incorporating various econometric models, we analyze how fluctuations in currency exchange rates impact the costs of agricultural inputs, international trade flows of food commodities, and the final prices paid by consumers. Our findings reveal that increased exchange rate volatility is generally associated with higher transaction costs, reduced predictability in pricing, and a greater likelihood of supply chain disruptions, particularly for countries heavily reliant on food imports. We also explore the mitigating roles of financial hedging strategies and diversified sourcing in enhancing the stability of food supply chains against currency fluctuations. The research contributes to a deeper understanding of macroeconomic factors influencing global food security and offers policy implications for stakeholders aiming to bolster the resilience of agricultural trade in an increasingly interconnected and volatile global economy.
Keywords
exchange rate volatility, global food supply chains, food security, agricultural economics, international trade, supply chain resilience, econometric analysis