Farmers in the U.S. are feeling the strain from increasing costs related to tariffs and the ongoing conflict in Iran, which is pushing up prices for essential items like fertilizer, feed, and energy. This situation poses a real threat to food prices as they continue to rise.
The current blockade by Iran in the Strait of Hormuz is causing significant disruption to global oil supplies, but it’s important to note that this route is also responsible for moving about one-third of the world’s fertilizer, as per the United Nations Trade and Development Organization.
A recent report highlights a 23.6% spike in nitrogen prices, a key element in synthetic fertilizers, within the last year, according to the latest data from the producer price index.
Harriet Behar, a lifelong farmer from Wisconsin and a member of the Organic Farmers Association, expressed concern, stating that “Farmers are in the water.” She mentioned the war and tariffs as a “double whammy” for agricultural producers.
Many orders for soybeans from China have been canceled since tariffs were imposed, forcing some farmers to lay off employees or even close their farms. Furthermore, other import taxes are amplifying costs for machinery and fertilizers.
“Production costs are higher than what we can actually make,” Behar noted, adding that many farmers are now contemplating whether it’s even worth planting this year. “I don’t even know if I’m going to be able to plant a crop this year…I’m done with this,” she quoted some farmers saying.
Behar warned that consumers may soon notice increased prices for short-term crops that depend on synthetic fertilizers, like lettuce and tomatoes.
She also mentioned that corn, which heavily relies on nitrogen fertilizers for good growth, is among the crops likely to be affected. Not to forget, there’s the possibility of higher prices for beef and veal, given that corn-based feed is often used for livestock.
At this point, the consumer price index indicates that beef and veal prices have already jumped 14.4% compared to last year. Compounding the issue, drought and rising production costs have led to a severe reduction in U.S. cattle herds, the lowest numbers since World War II.
Will Harris, a fourth-generation rancher from Georgia, remarked that many producers have had to cut back or exit the market entirely due to prolonged low profitability. “Meaningful herd rebuilding has been elusive,” he said.
An executive order from earlier this year aiming to quadruple beef imports from Argentina, intended to help lower prices, has been criticized by the National Cattle Beef Association for potentially harming American cattle producers further.
As they gear up for the essential spring planting season. Behar and Harris both pointed out that now could be one of the worst times for farmers, given the energy supply shocks stemming from the Iran conflict. Farmers prepare their fields and invest in fertilizers and other crucial inputs during this time, both of which heavily depend on diesel and natural gas.
Behar mentioned that some farmers are making a shift to natural fertilizers, such as manure, but this choice is causing prices to rise as well. However, diesel remains a critical component for powering tractors and other farm machinery, and it can’t simply be replaced.
As of this Wednesday, the average price for diesel has surged to $5.37 per gallon—up over 43% from just last month, according to AAA.
This spike in fuel costs might lead to price increases for a wide array of goods, including food, clothing, and furniture, as most of these items rely on trucks for transportation, which require more expensive fuel.
There are also fears that a potential strike at Qatar’s Ras Laffan factory could result in severe interruptions to liquefied natural gas (LNG) supplies, which are essential for heating, cooking, and electricity.
Most fertilizers used by U.S. farmers are produced locally, but the process needs LNG. If the current shortages persist, it’s likely that costs for domestically produced fertilizers would continue to soar.
Behar likened the present economic climate to the agricultural crisis of the 1980s, where many farmers faced severe financial difficulties that led to widespread bankruptcies and the inability to maintain their land.
According to a report from the American Farm Bureau Federation, farm bankruptcies had already shot up by 46% compared to the previous year, marking the second consecutive year of significant increases.
The average age of American farmers is also continuing to rise, hitting 58.1 years in 2022, which is an increase of over half a year since 2017, according to the 2022 Agricultural Census.
Behar expressed her concerns that as farmers near retirement age, many might decide to simply walk away from farming. “Everyone is holding on as best they can, but it seems like every time the farmers turn around, something else is happening,” she shared.
The USDA approved up to $11 billion in assistance for farmers, but the aid has proven short-lived—payments began on the same day that military actions against Iran escalated, leaving the extent of the aid unclear.
The Trump administration is seeking alternative fertilizer sources, possibly from Venezuela, to help ensure a stable supply amid the ongoing conflict with Iran.
