Take fertilizer prices, for example. One particular phosphorus-rich fertilizer called 11-52-0 used to cost about $470 per ton a decade ago; now, it costs $900, according to the Financial Times. Or how about diesel prices, which have jumped almost $2 per gallon over the past year.
“This is the worst financial downturn in the sector since the 1980s,” John Hansen, president of Nebraska Farmers Union, told the publication.
Pricing pressures had already been rattling the U.S. farms. The American Farm Bureau Federation (AFBF) noted that continued high inflation, low commodity prices and rising production costs are, taken together, squeezing major crop farmers with $31 billion in losses this year and an expected $32 billion in losses in 2027.
Losses associated with corn, wheat, soybean are all expected to rise next year by a minimum of $31 per acre. Cotton losses are expected to grow 19% from $342 per acre to $406 per acre.
“Rice, sorghum, oats, barley and peanuts are also projected to remain below breakeven,” the AFBF said in July.
Iran War backlash adds to American farmer woes
The ongoing war in Iran, particularly its impact on oil flow through the Strait of Hormuz and curbed fertilizer transport, has added to the U.S. farming sector’s ongoing financial troubles.
“The [Iran] war has made so much uncertainty for us as farmers,” Pam Johnson, a northern Iowa farmer and a former president of the National Corn Growers Association, told the Financial Times. “It’s projected that farmers aren’t going to make any money for the next two years.”
Meanwhile, two of the largest cost increases on American farms have nothing to do with Iran. Interest and labor costs have risen faster than either fuel or fertilizer since 2020. (71% and 47% against 32% and 37%, according to Farm Bureau Intel.
“Yet certainly, the conflict with Iran has exacerbated the effect, and it’s a loss for those that need to pay Hormuz transit fees or pay someone to carry integral components, and fuel is one of them,” Urial Zehavi, executive director at the Mitzpe Institute, an intelligence and strategy organization which tracks the impact of the Iran war daily for clients, told Moneywise.
Zehavi also noted that Middle East shipments have been virtually halted since March 12 and the damage is adding up. “Those Gulf producers represent about a quarter of the global capacity,” he said. “The U.S. imports roughly half of its total urea fertilizer needs, so that price directly takes out of a farmer’s profitability.”
