The dual shock of war in Iran and trade friction is pushing the U.S. agricultural sector into its most severe financial predicament in decades.
Since the outbreak of conflict in Iran this February, the blockade of the Strait of Hormuz has dealt a heavy blow to the global fertilizer supply chain. According to data from the American Farm Bureau Federation (AFBF), the price of urea, the globally traded nitrogen fertilizer with the largest volume, has surged by 47% year-to-date, marking a record-breaking increase; overall nitrogen fertilizer prices have risen by more than 30%; and agricultural diesel prices have jumped by 46% over the same period.
Meanwhile, the trade war triggered by tariffs from the Trump administration remains unresolved, with escalating international tensions continuing to erode the U.S. soybean export market share.
These two headwinds are crushing U.S. farmers. An AFBF survey conducted earlier this month revealed that approximately 70% of surveyed farmers stated they cannot afford all the fertilizer they need. &#34;Farmers are now facing headwinds unseen for generations,&#34; said AFBF President Zippy Duvall. &#34;The agricultural outlook is very bleak, and rural America needs help.&#34;
<h2>Strait of Hormuz Blockade Sends Fertilizer Prices to Record Highs</h2>
The Strait of Hormuz is not only a vital chokepoint for one-fifth of global oil supplies but also a critical channel for fertilizer trade. AFBF data shows that countries in the Middle East affected by the blockade account for nearly half of global urea exports. The outbreak of war led to a sudden tightening of supply, causing prices to skyrocket.
This shock has been particularly direct for corn growers who rely on anhydrous ammonia. John Yeley, a farmer near Marshall, Illinois, who cultivates 3,500 acres of corn and soybeans, told the UK's Financial Times that before the conflict began, he paid $800 per ton for anhydrous ammonia; today, the price has risen to $1,050 per ton. This means his expenditure on this key input will be $53,000 higher than pre-war levels. &#34;This was an entirely unexpected cost increase,&#34; Yeley said.
Gerald Mashange, an agricultural economist at the University of Illinois Urbana-Champaign, characterized this price shock as a &#34;systemic shock.&#34; More troublingly, the price spike coincides with the critical spring planting season. &#34;The timing couldn't be worse,&#34; said Philip Nelson, president of the Illinois Farm Bureau. &#34;This is a very sensitive period.&#34;
<h2>Costs at &#34;Historical Highs&#34; Amid Low Grain Prices Make Situation Worse Than in 2022</h2>
Persistently high fertilizer prices are not a new problem. Following the Russia-Ukraine conflict in 2022, natural gas prices—key raw materials for ammonia and urea—surged, driving fertilizer prices up sharply. Prices have since failed to fall significantly. &#34;Since fertilizer prices rose in 2022, it has been squeezing everyone here,&#34; said Lance Lillibridge, a corn grower from Vinton, Iowa.
However, John Newton, AFBF's Vice President for Public Policy and Economic Analysis, pointed out that the current situation is actually more difficult than in 2022—while the absolute price increase is smaller than then, corn prices are now far below their 2022 levels. Data from the National Corn Growers Association shows that, measured by &#34;corn purchasing power,&#34; farmers currently need to sell 185 bushels of corn to buy one ton of urea, a historical record. Nelson noted that, adjusted for inflation, current corn and soybean prices are comparable to the mid-to-late 1970s, while production input costs such as fertilizer and fuel have nearly quadrupled during the same period.
<h2>Tariffs Add Insult to Injury; Farms Face Financial Emergency</h2>
Even without the war in Iran, Midwest states like Illinois have already suffered heavily from Trump's trade policies. Trade tensions accelerated the loss of U.S. soybean market share internationally, benefiting Brazil. Although the Trump administration launched a $12 billion rural aid plan late last year to cushion the trade impact, farmers generally view it as insufficient. &#34;It's just a drop in the bucket, putting lipstick on a pig,&#34; Yeley said.
Newton of AFBF stated that many farmers have been operating at a loss since 2023, and some have had to seek federal financial assistance. &#34;Some are going bankrupt.&#34; Bart Morgan, Yeley's neighbor who farms about 1,000 acres near Marshall, was forced to give up 2,000 acres last year due to a rent hike by his landlord. He now supplements farm income with part-time work selling agricultural insurance and clearing snow in winter. &#34;Unless you own your own land and machinery, there's almost no point in continuing to farm right now,&#34; Morgan said.
<h2>Slow Supply Recovery Raises Concerns for Autumn Outlook</h2>
Even if the Strait of Hormuz eventually reopens, the decline in fertilizer prices will be a long process. &#34;Reopening the strait doesn't mean fertilizer will arrive at your port the next day,&#34; Newton pointed out. &#34;It takes time.&#34; Bart Morgan estimates that fertilizer prices may take one to one-and-a-half years to normalize, while diesel may require about six months.
This means high cost pressures could extend into the autumn harvest season. &#34;Autumn this year will be terrible,&#34; Yeley predicted. By then, many farmers will be unable to afford autumn fertilization. &#34;People will start using less fertilizer, and yields will drop.&#34; He warned that falling yields could transmit to food prices, &#34;creating a vicious cycle.&#34;
In the long run, financial pressure is shaking the confidence of the younger generation in agriculture. Lillibridge said that young people see their parents falling into financial distress due to geopolitical tensions and monopolistic practices by agricultural giants. &#34;They see a boot constantly pressing down on farmers' necks. Why would they choose this path?&#34;

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The blockade of the Strait of Hormuz has disrupted global fertilizer supply, causing urea and agricultural diesel prices to surge by nearly 50%. Compounded by trade friction eroding export shares, U.S. farmers are facing a double squeeze of rising production costs and depressed grain prices. About 70% of farmers report being unable to afford necessary inputs, with many farms facing financial distress or even bankruptcy risk. Analysts warn that if high cost pressures persist into autumn, reduced yields could trigger a chain reaction in food prices

- The ongoing Iranian conflict and trade tensions are pushing the U.S. agricultural sector into its deepest financial crisis in decades, with fertilizer prices surging due to the blockage of the Strait of Hormuz.  
- Fertilizer prices, including a 47% increase in urea, combined with trade wars, are severely impacting farmers, leading to a situation where 70% report being unable to afford necessary fertilizer.  
- This financial strain threatens both crop production and food prices, potentially creating a vicious cycle as farmers face unprecedented costs during critical planting seasons.

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Fertilizer Prices Soar! U.S. Farmers Face 'Double Squeeze': Missiles from the Middle East and Trump's Tariffs