Americans are feeling the impact of the conflict in Iran when they fill up their vehicles, but they’re likely to see it on their grocery bill as well in the coming months. 

The region is also one of the largest suppliers of nitrogen fertilizer, which is critical to modern farming. As American farmers are starting the growing season, they’re being faced with large increases in the cost of farming. As a result, the nation’s food supply could be impacted by farmers reducing acreage or producing lower yields.

Traffic moving through the Strait of Hormuz, a thin waterway connecting the Persian Gulf and Arabian Sea through which 20% of the world’s petroleum is exported, has been reduced to a trickle as a result of the conflict. 

“There were a lot of farmers taking losses on crops last year, probably this year again. So it's something that needs to be addressed at probably all levels,” Arthur Erickson, CEO of agriculture drone manufacturer Hylio, told Just the News. 

Natural gas converted to plant fertilizer

Nitrogen fertilizer starts out as natural gas, and through the Haber-Bosch process, the gas is converted into ammonia. The ammonia is then made into urea and other nitrogen products. Writing in Forbes, Robert Rapier, a chemical engineer, said that “nitrogen fertilizer is natural gas transformed into plant food.” 

Approximately half the global food production depends on synthetic fertilizers, and without it, yields will sharply decline. Countries that are impacted by the trade disruptions in the region around the Strait of Hormuz produce nearly half of the global exports of urea and 30% of the global exports of ammonia.

American farmers are starting early field preparation and initial fertilizer applications. They’ve already planned out what they’re going to plant and calculated the inputs they’ll use this year. This means their ability to make adjustments is limited. 

Farmers are experiencing a lot of fatigue

Since the conflict in Iran began at the end of February, prices for urea rose 25%, according to economist Dr. Faith Parum of the American Farm Bureau. 

Erickson said that the recent increases are just part of a series of hits farmers have taken in the past several years. First, there was the COVID pandemic and the resulting inflation. Then, the Russian invasion of Ukraine drove up fertilizer prices. Tariffs over the past year have impacted the price of many inputs farmers import, and now they’re again facing steep increases in fertilizer prices. 

Farmers are experiencing a lot of fatigue as these problems get piled on their shoulders, Erickson said. To deal with this, they’re cutting back on acreage and taking other steps to try to keep the farm going. “They can’t make it pencil out,” Erickson said. 

Not just a farm issue

Zippy Duval, president of the American Farm Bureau, said American farmers today are operating in one of the toughest economic environments farmers have ever faced.

“We're experiencing a generational decline in farm income driven by out-of-control inflation and declining crop prices. Now we're seeing additional pressures from disruptions in the global fertilizer supply routes that flow through the Strait of Hormuz,” Duval said in a recent Farm Bureau briefing on the fertilizer situation. 

The fertilizers, he explained, aren’t optional for farmers. They determine crop yield and ultimately the American food supply. “It's not just a farm issue. It's a food security issue and an economic issue for the entire country. When farmers face supply shortages or major price increases, those impacts ripple through the entire food chain,” Duval warned. 

Farms also use a lot of diesel, and prices rose over $5 per gallon for the first time since 2022, according to AAA. A month ago, prices were less than $3.75 per gallon. 

Harry Ott with the South Carolina Farm Bureau said that a week before the conflict in Iran, farmers were already looking at a break-even year. Now, besides rising fuel costs, farmers are paying a premium of $150 to $200 more per ton for urea. The costs of liquid nitrogen as well as sulfur fertilizer have also gone up. “A lot of farmers are not going to be able to finance putting a crop in,” Ott said. 

Dr. John Newton, vice president of public policy and economic analysis at the American Farm Bureau, said the problems could have “dramatic implications on food prices.” 

Globally integrated markets 

As with petroleum, fertilizer markets are globally integrated, according to Dr. Faith Parum, an economist with the American Farm Bureau. And so impacts on supplies in one region impact the price globally. The U.S. produces fertilizer domestically, but American farmers rely on imports to meet all their demand. 

Parum explains that approximately 50% of nitrogen applied to corn, 28% applied to cotton and 42% applied to spring wheat is done in the spring. This means that disruptions in the fertilizer supply chain at this early part of the season have an outsized impact on the availability of supplies and prices. This could impact crop yields and farm operational schedules during the most critical months of the season. 

The American Farm Bureau wrote to President Donald Trump earlier this month, asking for help with the situation, including U.S. Navy protection for maritime shipping of fertilizers out of the Strait of Hormuz, suspension of duties on imported fertilizer products, and a waiver of the Jones Act, which requires that goods moved between U.S. ports must be carried on ships built, owned, and crewed by Americans. 

On Wednesday, Trump agreed to waive the Jones Act requirements. 

Long-term decline in farming 

Erickson, with Hylio, is pursuing long-term cost reductions for farmers. Implements are large capital expenditures to the American farm, and he said drones offer a low-cost solution. Besides the lower costs, the precision applications create efficiencies, which lower the amount of inputs needed. Since Hylio drones are produced in the U.S., they also don’t run afoul of “buy American” regulations. 

“We're in a good position where demand for our product keeps growing, even though ag itself is contracting,” Erickson said. 

The number of farms in America has continued to decline. As less food is produced domestically, the U.S. could become more dependent on imports for its food supply. “Some of my younger farmers in South Carolina are facing some real decisions on whether or not they will be able to continue to farm in this economy,” Ott said. 

Kevin Killough is the energy reporter for Just The News. You can follow him on X for more coverage.