The economic consequences of fertilizer supply shocks

This paper develops a fertilizer supply index to measure global fertilizer supply disruptions using text-mining analysis of newspaper articles from over 30 countries. The index captures events including export restrictions, tariff changes, raw material shortages, and international sanctions. Using a structural BVAR framework, the analysis examines how fertilizer supply shocks affect Portugal’s food industry across three dimensions: market activity (domestic and foreign turnover), output prices, and labor market dynamics. The results show that fertilizer supply shocks trigger immediate increases in output prices across both domestic and foreign markets, with firms passing input costs to consumers. Labor market responses are delayed: wages and hours worked remain stable initially before rising, consistent with delayed adjustment to inflation expectations. This research also provides new evidence on how a critical agricultural input shocks propagate through food supply chains in a small open economy, with implications for both policymaking and industry strategy.