The United States' military conflict with Iran has resulted in increasing input costs for an already struggling agriculture industry in Nebraska. Ag leaders say both fertilizer and diesel prices are driving up input costs, forcing the state’s farmers deeper into the red.
The Strait of Hormuz, a waterway between Iran and Oman, has seen an intense Iranian military presence, discouraging the passage of both oil and fertilizer shipments. According to an NPR report, nearly one-fifth of the world's oil supply passes through the waterway.
U.S. Sen. Pete Ricketts acknowledged the economic effects of the conflict during a Wednesday call with reporters, saying Iran's attacks in the Strait of Hormuz are holding up oil shipments, and that urea, a key component of fertilizer, is also being disrupted, resulting in higher prices for farmers.
Ricketts said the campaign to degrade Iran’s missile and nuclear capabilities and will only cease when the Trump administration is satisfied with its mission.
"When the administration feels they've degraded those abilities enough, they will bring those hostilities to a close, and then that's when I would look to see that we start getting more of that cargo traffic going back through the Strait of Hormuz, and those prices would start coming down," he said.
Farming advocates are seeking more protection for important products that are moving through passageways caught up in the war. The American Farm Bureau Board this week sent a letter to the Trump administration urging it to temporarily suspend countervailing duties on imported fertilizer and deploy the U.S. Navy to escort fertilizer shipments through the Strait of Hormuz ahead of planting season.
The bureau said the supply chain shocks are disrupting farmers, who are “still experiencing decline in farm income driven by out-of-control inflation and dramatically declining crop prices.”
Zipply Duvall, the bureau’s president, also asked Trump to temporarily suspend tariffs on imported fertilizer.
Nebraska Farm Bureau President and board member of the American Farm Bureau Board Mark McHargue said the timing of the conflict couldn't be worse for farmers, with planting season already underway.
"It certainly could be a 20% spike or better than a year ago on the inputs, especially fertilizer and diesel," McHargue said. "If we just take fertilizer prices up 20%, that would put us at $2.5 billion. That would definitely break the record that we spent in 2022. This is a case where you don't want to break the record."
Nebraska Farmers Union President John Hansen said the conflict is landing on a Nebraska farm economy that has already seen producers lose money for multiple consecutive years.
"We already have a substantial number of folks that have lost money the last two years, the last four years," Hansen said. "When you're working with really, really tight margins already and you're trying to squeeze every penny out of that dollar that you can, when you see movements this big right as you're locking in spring inputs, it's certainly not helpful."
Both ag leaders said row crop farmers are not just making less money but losing money, and cost spikes are making losses worse.
"We are going to be putting a crop in the ground that we cannot necessarily lock in a profit on," McHargue said. "These spikes in fertilizer and diesel actually are increasing losses, not limiting gains."
Hansen said he has been receiving calls from experienced operators who see no way out.
"When I'm getting phone calls from guys in their 40s, 50s, 60s that are really solid operators doing a really good job, and they're saying, 'I'm losing $100 to $150 an acre' — that's not working," Hansen said.
To manage increasing input costs, McHargue said farmers are going field by field to determine where they can cut fertilizer applications. Hansen said farmers' management options were “pretty well gone,” with liquidation and salvage becoming the reality for many operations this season.
Hansen warned that farmers who didn't lock in input prices earlier are now facing compounding issues when seeking financing.
"If you're struggling to get your ag loan renewed – that makes that situation worse because now you're trying to lock in higher prices,” he said. “If you get your loan renewed and if you were really struggling to get your loan renewed, this will make a bad situation worse," Hansen said.
McHargue said the federal government has already approved $12 billion in emergency economic assistance, but that more will likely be needed.
"We will probably be asking for some more just in light of recent events,” McHargue said. “Probably need at least that much, maybe even up to $18 or $20 billion,"
Hansen said congressional inaction has contributed to the crisis, as farmers are made to wait for a rebound in commodity prices.
“That's why we're so frustrated that Congress, you know, hasn't gotten their act together to really make the kinds of substantial improvements that we need to give us enough additional tools that we need,” Hansen said.
He warned that the agricultural issues extend beyond the farm gate.
"Long term, it's not in the interest of food consumers to put family farmers and ranchers out of business... In fact, it's counterproductive," Hansen said.
The financial strain has both leaders concerned about farmer well-being. McHargue urged struggling farmers to seek help.
"If you are struggling or just really down, make sure you talk to somebody, make sure you talk to your neighbor. Make sure you talk to someone that can help you figure things out,” McHargue said. “The last thing we need is a farmer doing something that's going to harm themselves or their family.”
Hansen, who also serves on the board of directors for the Nebraska Rural Response Council, directed farmers in crisis to a resource the council sponsors.
"If you're actually in trouble and you need help, call the farm crisis hotline at (800) 464-0258,” he said. “The sooner you can start trying to figure out what you can do with people who work with these kinds of issues every day, the better.”
He said that the industry’s measure of success for the season was to lose as little money as possible.
Despite the difficult outlook for the season, McHargue offered his optimism.
"Agriculture is resilient. We have been in this business for a long, long time, and we will make it through this," McHargue said. “But it's not going to be without probably further adjustments. And we will do what it takes to do that.”