How strongly does the exchange rate influence Swiss agri-food exports?

In the last few years, and since the abolition of the minimum exchange rate by the Swiss National Bank in January 2015, the Swiss franc has appreciated strongly against all currencies of Switzerland’s most important trading partners. With the help of empirical models, we analyse how strongly aggregate exports of the agri-food sector react to an appreciation of the Swiss franc. According to our analysis, a one-time appreciation of 1 % leads on average to a temporary decline in exports of approx. 0.8 % after four quarters. This lagged effect could be the result of long-term contracts and inert consumption habits. By contrast, a sustained appreciation in which the Swiss franc appreciates by 1 % each quarter leads on average to a permanent decrease in exports of approx. 0.9 % per quarter. The estimated exchange rate effects for agri-food exports are therefore of the same order of magnitude as those for aggregate Swiss exports. Hence, agri-food sector exports also prove remarkably resilient to exchange rate fluctuations. The reason for this may be that businesses in this sector are also able to successfully differentiate their products on the basis of quality, and hence are able – at least in part – to avoid price competition abroad.