Fertilizer Prices Soar! U.S. Farmers Face a "Double Squeeze": Missiles from the Middle East and Trump's Tariffs
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The dual impact of the Iran war and trade frictions is pushing the U.S. agricultural sector into its most severe financial crisis in decades.
Since the outbreak of the Iran war in February this year, the blockade of the Strait of Hormuz has severely damaged the global fertilizer supply chain. According to data from the American Farm Bureau Federation (AFBF), the price of urea, the world's most traded nitrogen fertilizer, has risen by a cumulative 47%, setting a historic record; overall nitrogen fertilizer prices are up more than 30%; agricultural diesel prices have jumped 46% in the same period.
Meanwhile, the trade war triggered by the Trump administration's tariffs has not subsided, and the ongoing tension in international relations continues to erode U.S. soybean export market share.
The combined effect of these two headwinds is crushing American farmers. An AFBF survey earlier this month showed that about 70% of farmers surveyed said they could not afford all the fertilizer they need. "Farmers are now facing headwinds unlike any seen in generations," said AFBF President Zippy Duvall. "The outlook for agriculture is grim, and rural areas need help."
Strait of Hormuz Blockade—Fertilizer Prices Hit Record Highs
The Strait of Hormuz is not only a vital artery for one-fifth of the world's oil supply but also a key route for fertilizer trade. AFBF data shows that Middle Eastern countries affected by the blockade account for nearly half of global urea exports. The outbreak of war led to a sudden tightening of supply, and prices soared rapidly.
This shock is especially direct for corn growers who rely on anhydrous ammonia. John Yeley, who farms 3,500 acres of corn and soybeans near Marshall, Illinois, told the Financial Times that before the outbreak, the price of anhydrous ammonia he used was $800 per ton, now it's $1,050, meaning he will spend $53,000 more on this key input than before the war. "This is a completely unexpected cost increase," Yeley said.
Gerald Mashange, an agricultural economist at the University of Illinois Urbana-Champaign, described this price shock as an "all-encompassing tremor." Even more troublesome, the price surge comes at a critical point in spring planting. "The timing couldn't be worse," said Philip Nelson, president of the Illinois Farm Bureau. "This is a very sensitive period."
Costs "at Historic Highs"—Low Grain Prices Make Situation Worse Than 2022
The persistently high fertilizer prices are not a new problem. After the Russia-Ukraine conflict in 2022, natural gas prices—the key raw material for ammonia and urea—soared, causing a spike in fertilizer prices, which have not significantly eased since. "Since fertilizer prices rose in 2022, everyone here has been squeezed dry," said Lance Lillibridge, a corn grower in Vinton, Iowa.
However, John Newton, AFBF's vice president for public policy and economic analysis, noted that the current situation is actually tougher than in 2022—although the absolute increase is not as high, corn prices are now much lower than in 2022. According to the National Corn Growers Association, measured by "corn purchasing power," farmers now need 185 bushels of corn to buy one ton of urea, a historic record. Nelson pointed out that, after adjusting for inflation, current corn and soybean prices are comparable to the late 1970s and early 1980s, while the costs of production inputs like fertilizer and fuel have nearly quadrupled over the same period.
Tariffs Make Things Worse—Farm Finances in Crisis
Even without the Iran war, Midwest states like Illinois have already suffered from Trump administration trade policies. Trade tensions have accelerated the loss of U.S. soybean market share internationally, benefitting Brazil. The Trump administration launched a $12 billion rural aid program late last year, partly to cushion trade shocks, but farmers generally see it as inadequate. "It's just a drop in the bucket, nothing but lipstick on a pig," Yeley said.
AFBF’s Newton said many farmers have been losing money since 2023, and some have had to seek federal financial aid, "some are going bankrupt." Yeley’s neighbor, Bart Morgan, who farms about 1,000 acres near Marshall, gave up 2,000 acres last year because his landlord raised rents, and now relies on side jobs—selling agricultural insurance and plowing snow in winter—to supplement farm income. "Unless you own your land and equipment, it makes almost no sense to keep farming now," Morgan said.
Slow Supply Recovery—Bleak Prospects for Fall
Even if the Strait of Hormuz is eventually reopened, it will take a long time for fertilizer prices to fall. "The reopening of the strait does not mean fertilizer arrives at your port the next day," Newton pointed out, "it takes time." Bart Morgan estimates it will take one to one and a half years for fertilizer prices to return to normal, and about six months for diesel.
This means high cost pressures could last until the fall harvest. "This fall is going to be terrible," Yeley predicts, as many farmers will not be able to afford fertilizer for the autumn, "people will start to use less fertilizer, and yields will decline." He warned that falling yields could impact food prices, "it's a vicious cycle."
In the long run, financial pressures are already shaking young people's confidence in agriculture. Lillibridge said young people watching their parents struggle financially due to geopolitical tensions and monopoly behavior by agribusiness giants "see a boot always pressing down on the farmer’s neck. Why would they want to take this path?"
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