The objective of this paper is twofold. First, a theoretical trade model accounting for production and marketing lags in agricultural supply chains is developed to analyse the effect of exchange rate volatility on the volume of trade. The second objective is to gauge to what extent trade flow responses to exchange rate/price volatility suggested by our theoretical framework are consistent with observed empirical responses. The theoretical model suggests that the
relationship between export price volatility and exports may be not monotonic, yet sensitive to changes in the parameters embodying risk preferences, the degree of volatility, and the mean export price.