Analysis of Terms of Trade of Agricultural Commodities in Afghanistan

The agricultural sector plays a leading role in the national exports of Afghanistan. Still, prolonged war and political instability in the country have weakened internal food security, intensified the dependence on imports of food items, and made the country suffer a chronic agricultural trade deficit. This engulfing agricultural trade deficit is attributed to a relative growth in agricultural exports and imports and a relative change in export prices. The present study attempted to examine the exchange competitiveness of traded commodities by estimating a ratio of export prices to import prices. Results showed that the commodity terms of trade of agricultural exports versus agricultural imports of Afghanistan with the rest of the world had increased during the study period. It was suggested that the country should focus on producing quality products with a higher market value at a low-costto gain from international trade.