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Megan Horsager is not looking forward to buying more fuel for her farm.
She’s got a large, white, cylindrical fuel tank that sits in the middle of her family’s row-crop farm in Montevideo, a city in southwest Minnesota. She draws diesel from the tank whenever her farm’s machines need a refill. While she buys her fertilizer and other planting needs in the fall, ahead of planting season, she opts to buy fuel whenever her tank needs a top-up.
That next refill will happen in June or July, Horsager said.
"I'm just kicking myself that I didn't price more ahead of time,” Horsager said. “Usually, June hasn't been a bad time to buy fuel, but you don't plan on the global events."
The price of key agricultural necessities such as diesel and nitrogen fertilizer has soared since the Strait of Hormuz, a vital trade passageway, has largely been choked off amid the war in Iran.
The price of urea, a major nitrogen-based fertilizer, shot up to nearly $700 per ton in late April from $455 per ton on Feb. 27, the day before the war in Iran broke out. On-highway diesel prices clocked around $5.35 a gallon in late April, a hike from the $3.81 a gallon reported the week the war began.
While Horsager didn’t book enough diesel in advance, she is set with fertilizer. However, not everyone is.
Too late for lower prices
A recent survey from the American Farm Bureau Federation found that about 70% of farmers nationwide who responded report they are unable to afford all the fertilizer they need.
In the Midwest, farmers are better prepared for the planting season than in other regions. The Farm Bureau survey found that 67% of farmers reported booking fertilizer in advance. In the South, the most affected region, only 19% of farmers reported pre-booking fertilizer.
Tommy Salisbury, a farmer in Oklahoma, is one of those producers who didn’t order fertilizer in advance. He said during a recent Farm Bureau media briefing that he waited because of low profits from the previous year, coupled with a drought near the end of last year. Now, with a sudden increase in fertilizer prices, he’s having to pivot which crops he plants.
“That immediate overnight increase of fertilizer to our region was very disheartening,” said Salisbury during the briefing. “We're going to reduce acres of Milo this year and transition to soybeans to try to make up that difference there.”
Farmers like Salisbury have suffered through multiple years of tight margins, which is partly why many farmers decided against purchasing fertilizer before planting season, according to Tyler Oxner, director of commodity activities and economics at the Arkansas Farm Bureau.
“There's just no leftover capital from the previous year to pre-book your fertilizer,” Oxner said. “If there is any capital left over, [farmers] are not going to want to make that gamble.”
Farming in the South is also different from that in the Midwest. Midwestern states tend to operate on a corn-soybean rotation, which makes it easier to know what supplies to buy in advance. Southern farms, on the other hand, have more crops to choose from. According to Oxner, that means farmers will often wait to make planting decisions in case the market offers better crop options.
Faith Parum, an economist with the American Farm Bureau, said that with the newfound price increases, some farmers have said they will either have to apply less fertilizer or plant different crops.
“We're probably going to plant more soybeans this year,” Parum said. “We're all kind of eagerly awaiting the [USDA] June acreage report to see what decisions farmers did end up making.”
Parum also warned that reducing fertilizer use may not be feasible for everyone and could lead to lower yields.
“We have pretty good storage right now across corn and soybeans, so it might not be that big of a deal, but depending on how long this conflict goes on, if we see really high reductions of yields, it could be a pretty big shock to global supply,” Parum said.
How long will high prices last?
The Agricultural Risk Policy Center at North Dakota State University ran fertilizer price projections under different scenarios, including the Strait of Hormuz opening soon or remaining closed throughout the year.
“We have seen that even in the most optimistic scenario, we're going to see elevated prices on the nitrogen as well as phosphate side that continues on through the fall and moving into 2027,” said Shawn Arita, who is the associate director of the Agricultural Risk Policy Center.
Arita added that those prices will be higher than the ones farmers worked with this year and last year. Part of that is because it’ll take time to repair Middle Eastern fertilizer production infrastructure that’s been damaged in the war. The center’s report shows that the price of urea fertilizer could remain 13% higher than its pre‐crisis price into at least 2028, even if the strait were to open soon.
It could also take some time before barge companies feel safe to pass through the Strait, Arita said. There are leftover underwater mines through the waterway that the U.S. is working to clear, according to President Donald Trump. The Associated Press reports that Pentagon officials told lawmakers it would likely take six months to clear the mines.
Vessels and their insurance companies would likely also want some stability between the U.S. and Iran, Arita said.
“Many of these ships, as well as the insurance companies, are very, very risk-averse,” Arita said. “It's going to take time for them to see how the situation is, to feel comfortable and to have assurances that they'll be willing to re-enter the strait to pick up cargo.”
There are also about 2,000 vessels stranded in the Persian Gulf, according to the International Maritime Organization. Though some experts say that estimate is high, there is nevertheless a backlog, said Bill Knudson, an agriculture economist at Michigan State University.
“You're not going to see a return to normal for several months, even if the Strait of Hormuz was opened relatively quickly, because you've got to get all those ships out of there,” Knudson said.
Once the strait opens and oil tankers pass through, there could be some immediate relief for oil prices, Knudson said. However, he adds that relief is contingent on the extent of energy infrastructure destroyed during the war.
“That'll tell us how quickly prices will return to where they were before the war started,” Knudson said. “Because it takes a while if, say, a refinery has been destroyed, it's going to take months for it to get back online and start processing oil again.”
The longer the war goes on, the greater the risk of further damage to energy infrastructure, he added, which could further set back oil prices. And if the war extends into the summer, farmers could continue to see higher operational costs eating into their profits next year, Knudson said.
“The crunch on profitability would continue if there's no solution in the next seven or eight months,” Knudson said.
If nitrogen fertilizer remains expensive next year, Knudson figures some farmers would likely switch from growing corn, which requires a lot of nitrogen fertilizer, to soybeans, which can absorb nitrogen from the atmosphere.
Relief efforts underway
U.S. Department of Agriculture Secretary Brooke Rollins recently told lawmakers that the Trump Administration is poised to draw tens of billions of dollars from tariffs and trade deals to invest in domestic fertilizer supplies. Rollins added she’s hopeful the Trump Administration will release a detailed plan soon.
Elsewhere in Washington, lawmakers are in talks about including $15 billion in tariff relief in a military funding package. Similarly, the Republican Senate Agriculture Committee chair has called for additional aid for farmers amid price shocks in key inputs.
Parum, the economist with the American Farm Bureau, also said that changes in the One Big Beautiful Bill Act could help some farmers.
“That's going to be an updated safety net that really does reflect some of the current cost of farming in the United States,” Parum said.
A modernized farm bill would also be welcome, she added. The House passed a version of the bill Thursday morning.
Parum said increased Renewable Fuel Standard volumes could provide a boost to the farm economy, but also advocated for the year-round use of E-15, which is gasoline blended with up to 15% ethanol. The Environmental Protection Agency recently approved nationwide sales of E-15 temporarily through the summer.
“Building more domestic markets and more export markets is a great way to help boost the farm economy,” Parum said.
Most of the farmers and ranchers who responded to the Farm Bureau survey expected their financial conditions this year to be the same as or worse than last year’s. Experts say it wouldn’t be surprising if the government offered more rounds of assistance payments.
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest and Great Plains. It reports on food systems, agriculture and rural issues.
