Iran war has US farmers worried about the cost and availability of fertilizer

U.S. farmers are facing a severe financial crunch as fertilizer prices surge amid Middle East tensions. Tennessee farmer Todd Littleton expects to pay an additional $100,000 for fertilizer this season, representing a 40% increase from last year due to the ongoing conflict in Iran.

“We’re so strained financially coming into this issue,” said Littleton, a third-generation farmer from Gibson County who grows corn, soybeans, and wheat. “We have had a couple of record losses the last couple years, so everyone’s kind of grabbing at straws anyway, and then to have input prices increase yet again, it just really couldn’t happen at a worse time.”

This crisis is affecting thousands of American farmers who rely heavily on nitrogen-based fertilizer, particularly for corn production. Corn stands as the largest crop in the United States, serving as feed for livestock and as a source for biofuels that power much of the nation’s vehicles.

The dramatic price spike followed U.S. and Israeli military actions against Iran on February 28, which disrupted shipping through the Strait of Hormuz, a critical passageway for 20% of global oil and natural gas. This disruption has not only increased fuel costs—a key component in fertilizer production—but also severely restricted exports of nitrogen fertilizers manufactured in the Persian Gulf and limited access to essential ingredients.

According to the American Farm Bureau Federation, approximately 15% of U.S. fertilizer imports come from the Middle East. The region also supplies about half of the global supply of urea and 30% of ammonia, both crucial fertilizer components.

The situation extends beyond mere price concerns. Zippy Duvall, president of the American Farm Bureau Federation, warns of potential availability issues: “We’re being told that many of our farmers that haven’t preordered their fertilizer and paid for it may not even obtain the fertilizer that they’re going to need during the season or for spring planting. That’s why this situation is so serious.”

Harry Ott, who leads the South Carolina Farm Bureau and farms cotton, corn, and peanuts, confirmed the severity of the supply shortage. “It is a really dire situation that our farmers are facing,” Ott said, noting that warehoused supplies aren’t sufficient to meet upcoming demand.

Agricultural experts caution that even if the Iran conflict were resolved quickly, fertilizer prices wouldn’t immediately normalize. Jacqui Fatka, a farm supply economist for creditor CoBank, explained that the current crisis has worsened existing supply challenges that began with the Russia-Ukraine war, which blocked access to raw materials and increased natural gas prices. China’s reduction of phosphate exports to prioritize domestic needs has further strained global supplies.

“There’s going to be a tail to this that’s going to take time to get everything turned back on, sent back out,” Fatka said.

Logistics present another complication. Shipments from the Middle East typically take 30-45 days to reach the Port of New Orleans. While some fertilizer is already stored in the U.S., these reserves will eventually diminish.

Nancy Martinez, director of public policy, trade, and biotechnology for the National Corn Growers Association, acknowledged the uncertainty: “We don’t quite know how it’s going to shake out.”

The United States does produce nitrogen and phosphate-based fertilizers domestically, which provides some buffer. However, Anne Villamil, a professor of economics at the University of Iowa, noted that rising energy prices affect domestic production costs as well: “Even if you’re producing it in the U.S., if the cost of your inputs goes up, then it’s going to be an increase in price to the farmers who want to buy it.”

While these challenges are severely impacting farmers’ profit margins, economists suggest the effect on consumer food prices should be relatively limited. Chad Hart, an economics professor at Iowa State University, explained that on-farm costs represent only a small portion of what consumers pay at grocery stores, although higher oil prices could contribute to food inflation through increased transportation costs and packaging materials.

The Trump administration has claimed to take steps to ease fertilizer costs, including increasing imports from Venezuela, which Agriculture Secretary Brooke Rollins called “a huge step that puts farm security and farmers first.” The Department of Agriculture cited $12 billion in one-time payments to help farmers offset losses and noted its support for creating a more competitive fertilizer marketplace.

However, Fatka of CoBank pointed out that the $12 billion support translates to only $44 per corn acre, compared to the USDA’s estimated $900 per acre production cost for the average U.S. farmer.

Despite these challenges, farm bankruptcies remain relatively rare, with only 315 recorded last year among nearly 1.9 million farms nationwide. Recent price increases for corn and soybeans, the nation’s two largest crops, have provided some relief.

Tom Waters, who farms about 5,000 acres of corn, soybeans, and wheat near Kansas City, summarized the predicament facing many American farmers: “The margins get smaller and smaller so we just have to really work hard to trim our costs and be as frugal as we can be but still provide the soil and crop what it needs to grow and produce.”