The Iran war is jacking up fertilizer prices and forcing farmers to make tough calls

Preston Arrington began renting land from his father in Sunflower County, Miss., a quarter-century ago to grow cotton and grains — becoming the fourth generation of his family to choose a career in the fields.

The 49-year-old Arrington has always been attuned to when his business needs to pivot. Early on, he realized that cotton wasn’t profitable, so he stopped growing it. The latest challenge facing his 2,100-acre farm: a surge in fertilizer prices driven by the war in Iran. His cost for liquid fertilizer climbed to $435 per ton this year, he said, up from $265 a year ago — an increase of more than 60%.

To cope with the uptick in costs, Arrington said he’s “micromanaging” many aspects of his operations. He’s closely analyzing how much of a nutrient such as nitrogen each crop needs and when it needs it. In the past, he could simply provide the crops with whatever he thought they might need, regardless of the timing.

But that doesn’t work anymore. Without the close monitoring, “you can’t afford to stay in business,” Arrington said. “It’s a fundamental change in how we’re having to operate.”

The rise in the price of fertilizer puts farmers “on the verge” of crisis, Arrington added, describing the situation as “tolerable” for one to two years but not sustainable.

A war playing out half a world away is forcing many U.S. farmers to adjust how they operate and produce the food that feeds the nation and the world. Experts expect fertilizer costs to go up by an average of 30% this year as the war in Iran drags on, and an April survey from the American Farm Bureau Federation estimated that 70% of U.S. farmers can’t afford the fertilizer they need for the season.

When the U.S. and Israel began military strikes on Iran on Feb. 28, Iran halted the shipping of goods through the Strait of Hormuz in retaliation. Before the conflict, about one-third of the world’s fertilizer trade moved through the strait. And while markets and ordinary Americans have focused on the rise in oil prices, fertilizer also gotten caught in the crossfire.

Prices for fertilizer — essential nutrients for the crops that underpin our food supply — are expected to increase by 31%, driven by a 60% jump in the price of the nitrogen-based urea fertilizer that is widely used in agriculture, according to the World Bank. U.S. affordability of fertilizer is slated to fall to its lowest level since 2022, and that will erode farmers’ incomes and threaten future crop yields, the World Bank said.

Progress toward an end to the Iran war has been shaken recently by renewed attacks between the U.S. and Iran. But even after the war ends, there won’t be an overnight fix to supply shortages for Persian Gulf products.

Arrington blames this uncertainty for his farm’s struggles, because it’s difficult to plan around fluctuations in global markets that he can’t control or predict. “I’m not opposed to the war in Iran, but I can’t outguess what’s going to happen over there — today, tomorrow or the next day,” he said.

Arrington recalled a decision he made early this year to not hedge his fuel costs — or lock in a potentially cheaper price for the fuel his farm needs. A broker had told him that fuel prices were expected to fall following the U.S. capture of Venezuelan leader Nicolás Maduro, he said. The capture was expected to free up more oil production from Venezuela, which is home to the world’s largest oil reserves.

Instead, over the next two months, fuel prices roughly doubled because of the Iranian conflict, said Arrington, and his farm has been forced to buy fuel at higher prices after using up its stored inventory. Now he’s worried that if he doesn’t find the right ways to lower fertilizer and other farming input costs, his bottom line will suffer again.

“Whatever happens is going to directly affect us in the markets, and if I guess right, it’s great — but if I guess wrong, I lose the farm,” he said.

Echoes of an earlier crisis

The rise in fertilizer prices is ushering in an immensely challenging period for farms that rivals the struggles of the 1980s, said Jake Hanley, chief growth officer and director of investments at Teucrium, a company that offers exchange-traded funds tied to agricultural markets. He was referring to a time when a surge in interest rates, a collapse in export markets and widespread droughts dealt a devastating blow to American agriculture.

The difference now is that “land values are holding up fine, but the operator making a living off the margin is feeling every cent of this,” Hanley said.

“It’s not just about producing the food we eat — it’s about producing the food that feeds the animals that we eat,” said Hanley. “Those animals are fed corn. Corn is fed nitrogen.” That’s a key component of fertilizer.

If fertilizer prices stay high, it will likely push grocery prices up for an extended period, he said. “It’s shaping up to be a 2027 issue.”

Farmers have few options to deal with rising costs, and whatever they decide to do will have consequences for the quality and quantity of crops they produce.

Arrington has been finding old-school ways to better insulate his farm from the problems affecting far-flung supply chains. He uses mostly poultry litter, an organic fertilizer comprised of bird manure, feathers, bedding material and spilled feed, and he buys a lot of it — 3,125 tons each year. This year, prices were up by about 53%: Arrington is paying $52 per ton this year for poultry litter, compared with $34 last year. When prices rise for synthetic fertilizer, demand for alternatives, like poultry litter, may increase even further.

He cited elevated fuel prices, however, as the biggest reason poultry litter, which is transported by truck, is so expensive.

Arrington said his current fuel cost was about $4.13 a gallon. Last year, his average cost was around $2.25.

In addition to the higher prices for poultry litter, Arrington is contending with price hikes for synthetic fertilizer. He uses liquid fertilizer as a supplement, mainly to meet the crops’ nitrogen requirements, and prices for that product have risen about 64%.

The higher prices for fuel and fertilizer have prompted him to take more measures to save on costs. In the past, utilizing older farming equipment for longer helped do the trick. That works even better now because the equipment he already has still includes modern technology such as guidance systems — automatic steering to avoid overlap and save on fuel — that help improve productivity.

“Just like clothes, our equipment is back in style,” Arrington said, adding that he’s just trying to use his “God-given sense to see and make small changes to do a little bit better.”

Price takers, not makers

Even as farmers have little control over their operational costs, they also have little say in how much they can sell their crops for.

“Farmers are price takers, not price makers,” said Ron Binaghi, who runs the 18-acre Stokes Farm in Old Tappan, N.J. He grows about 60 different crops, including herbs such as rosemary and thyme, heirloom tomatoes and cucumbers, and pick-your-own strawberries and flowers.

Having to be a “price taker” is especially true when it comes to the sale of Binaghi’s goods at the Greenmarket in New York City, a producer-only farmers market run by nonprofit organization GrowNYC. “Everyone else is setting the price,” he said.

“It’s become a struggle — and we’re doing OK,” Binaghi said. But the costs are “just piling on,” he added. “Our prices for tomatoes aren’t going up, but our expenses are getting a little out of control.”

Binaghi has been doing what he can to manage his fertilizer costs. For years, he’s relied on an agronomist — a scientist who helps optimize crop production and soil management — who comes around in December to test the soil on each field of his farm.

The results deliver readings for specific nutrients such as nitrogen, phosphorus and potassium so that each field can get the right fertilizer, with the right amount of nutrients it needs for more efficient production.

“We adjust our fertilizer according to the field needs,” Binaghi said. That helps ensure that he spends only what he needs to on fertilizer.

Still, fertilizer costs for his small farm have doubled from last year. He spent $8,500 for the same amount of liquid and granular fertilizer as he bought last year for $3,000 to $4,000. “For a little farm like us, that’s a lot of money,” Binaghi said.

That leaves him with tough choices. Binaghi said he had to reduce the number of hired hands out in the fields to save some money on payroll. That’s “more on me to get work done, and I don’t mind, if we’re saving money,” he said.

Changing the playbook

Farmers are finding other ways to reduce fertilizer costs, as well, but those efforts can have an impact on the quality of their crops.

Some farmers may reduce how much fertilizer they use in response to the higher prices, said Josh Maples, associate professor in the department of agricultural economics at Mississippi State University Extension.

Producers growing hay, for example, may decide to reduce or forgo some fertilizer applications, he said. That could lead to lower production and lower-quality hay, which could require cattle producers to buy supplemental feed for their livestock to provide the nutrition the animals need during the winter, he said.

Then there’s the approach Arrington is taking — using an alternative fertilizer like poultry litter.

“The times are changing, and we’ve got to change too,” Arrington said. “We feel like if you keep doing the same thing in this current environment, people that aren’t willing to change may not get to continue playing in this current age of farming.”

But change can come with challenges. Poultry litter only becomes available when chicken houses are cleaned, not necessarily when a farmer needs it, said Maples.

Using litter also can be “logistically troublesome” and involves additional transport costs, Arrington said. It’s “bulky” and takes longer to spread on the fields than liquid fertilizer.

Even so, Arrington said using organic poultry litter has put him in a better position to deal with the rise in prices for synthetic fertilizers. He is “willing and able to take this opportunity to try some ‘out-of-the-box, new-age’ thoughts and concepts to fertility” for his crops, he said.