Abstract
The Bulgarian agricultural sector remains highly sensitive to currency value fluctuations, particularly in the context of upcoming euro adoption. Escalating input costs, notably energy, fertilizers, and other essential production materials, may induce sector-specific debasement of the lev and subsequently the euro, eroding farm profitability and international competitiveness. This study examines the transmission mechanisms through which input price shocks affect agricultural output, export performance, and rural livelihoods, highlighting the vulnerability of small and medium-sized farms. Historical data on energy prices, and key agricultural indicators are analysed to identify structural weaknesses and potential stress points within the sector. The transition to the euro could either amplify or mitigate these effects, depending on factors such as price convergence, input cost volatility, and broader inflationary dynamics. In addition, the interconnection between energy dependency and agricultural competitiveness is explored, demonstrating how external shocks in global energy markets can propagate into domestic farming systems. Coordinated macroeconomic and sectoral policies, including targeted subsidies, strategic input cost management, and investment in energy efficiency, are essential to safeguard both short-term stability and long-term sustainability. The study also emphasizes the importance of structural reforms, enhanced risk management mechanisms, and monitoring frameworks to improve resilience against asymmetric shocks. Overall, the findings underline the need for a proactive policy approach to ensure that Bulgaria’s agricultural sector remains competitive and productive during and after eurozone accession.
Keywords: currency debasement, agricultural sector, energy costs, optimal currency areas, asymmetric shocks, euro, Bulgaria