American farmers are feeling the squeeze

Jay Coker grows enough rice each year for every American to have half a helping. In April he will begin planting his paddies in the prairies of Arkansas. But this season’s harvest will cost more than usual. In the almost three weeks since the war with Iran broke out, the price of the fertiliser he uses has jumped by $50 an acre, adding an unexpected $200,000 to his costs. “We’re very concerned right now,” he says. “Margins are razor-thin.”

Markets have been rattled by surging energy prices since Iran basically closed the Strait of Hormuz on March 2nd. The waterway is a crucial transit point for oil, but it carries other commodities too. Around a third of the world’s seaborne supplies of fertiliser, much of it made from oil and gas by-products, passes through it. Since the closure, the price of urea, the most common nitrogen-based fertiliser, has risen by 20% at the port of New Orleans. Other such chemicals have also become more expensive (see chart). Farmers across America are feeling the squeeze.

Some farmers locked in fertiliser contracts earlier this winter, shielding themselves from the volatility. But others are now scrambling. Without the chemicals, yields can fall by as much as half. Many say they plan to pivot this spring from fertiliser-hungry crops, such as maize, to less intensive alternatives, such as soyabeans. “We’re out here trying to figure out how to get the cattle fed, keep the ice broken on the water and pay next year’s bills,” says Heather Hampton Knodle, a fifth-generation farmer in Illinois. “Then the United States bombs Iran and we’re supposed to hedge against that?”

Even before the war, many farmers were struggling. Rice, soyabeans and maize (corn to Americans) have not generated profits for years. Inflation has pushed up the cost of machinery and land, and Donald Trump’s tariffs have added further pressure. (Soyabean growers are still reeling from China’s retaliatory cuts to purchases.) Meanwhile, crop prices have slumped. Good weather has boosted supply, while competition from countries such as Brazil, India and Russia has intensified. In September the head of the National Corn Growers Association warned of a figurative “four-alarm fire in the countryside”. A poll conducted last year found that 12% of members were considering retiring or leaving the business this year.

America’s rural heartland is unusually loyal to Mr Trump. In counties where farming generates at least a quarter of earnings, he won 78% of the vote in 2024, improving on his margins in the previous two presidential elections. But a war that makes farmers’ jobs harder may test that allegiance. In a letter to the White House, the American Farm Bureau Federation, an agricultural lobbying group, thanked the president for putting farmers “on better economic footing” with $12bn in emergency aid. But it also warned that high fertiliser prices could add to farmers’ financial stress, and urged him to suspend countervailing duties on fertiliser and send the navy to escort shipments through the strait. (Experts do not think such escorts would solve the problem.) Ms Hampton Knodle reckons the problems now run too deep for a single stimulus package to fix.

Even if the war were to end tomorrow, much of the damage has already been done. Stephanie Roth of Wolfe Research, an economics consultancy, estimates that disruptions to the fertiliser supply chain will push food prices up by 2% for American consumers. If the conflict proves longer-lasting than expected, the impact could be worse. But unlike an oil shock, where prices at the pump rise within a week, these increases will take three to six months to reach grocery-store shelves. By then Republicans will be campaigning across the country for the midterm elections and will need to explain why high prices are not their party’s fault.

Mr Coker, the rice farmer, does not blame Mr Trump. He says the president, in waging war on Iran, is responding to threats to American security and trying to steady a volatile region. Still, he worries. Perhaps Mr Trump will find ways to compensate farmers for the effects of his military adventure. Otherwise, their problems will become everyone else’s problems. ■