When fertilizer prices react almost immediately to global fluctuations, while agricultural commodity prices tend to lag and do not always move in the same direction, most cost shocks are borne by downstream producers. The issue lies not only in the shocks themselves, but also in the system’s capacity to absorb increasingly frequent disruptions. From isolated shocks to systemic risks The ongoing Middle East conflict has driven up energy prices, particularly natural gas, along with transportation costs, while also disrupting supply chains, leading to a rapid increase in fertilizer prices. External shocks are transmitted almost directly into domestic production costs, while the system lacks sufficiently effective mechanisms to slow down or distribute these risks. In practice, agricultural prices respond more slowly than input costs and are also influenced by consumption markets (both at home and abroad), distribution channels, and purchasing power. This mismatch places pressure on producers. A common response is to cut inputs: reducing fertilizer use, saving on materials, adjusting farming practices, and lowering yield expectations. However, agricultural production is constrained by seasons and biological growth cycles, making it less flexible than many other industries. Even small adjustments in inputs tend to accumulate risks, which can lead to significant consequences […]
To read more, please click here.
