How has the Iran war impacted fertilizer and fuel prices for farmers?

The U.S. and Israel’s war with Iran is driving up fertilizer and fuel prices for U.S. farmers. Nate Bruce, a farm business management specialist with the University of Delaware Cooperative Extension, says the Middle East is a key hub for fertilizer supply chains, and particularly nitrogen fertilizers. A lot of nitrogen-based fertilizers are made using natural gas from the Middle East, so the closure of the Strait of Hormuz has consequences for the international fertilizer market.

About 49% of the world’s global urea exports and 30% of the world’s ammonia exports are affected by the ongoing conflict, and while much of the fertilizer that U.S. farmers need for the upcoming growing season is already in the U.S., it is now much more expensive to buy.

“Profit margins were already tight before the conflict,” Bruce said, “and having a substantial increase in production costs such as fertilizer creates margin issues for producers going into planting season this spring.”

It’s a function of supply versus demand, Bruce said. And because corn production needs a lot of nitrogen to grow, the increased fertilizer costs will make corn more expensive to grow.

Bruce said many farmers may shift the acres where they would have planted corn to soybeans, which don’t need nitrogen fertilizer to grow.

However, farmers in the Mid-Atlantic may have an advantage insulating them a little bit from the conflict and hefty fertilizer and fuel price increases. Their advantage is the local poultry industry. Mid-Atlantic corn prices are usually higher than other places in the country because the poultry industry has a high demand for corn to use in their chicken feed.

“This is a market-unique situation that helps buffer producers in the Mid-Atlantic,” Bruce said.

To arrange an interview with Bruce, send an email to MediaRelations@udel.edu.