“Any time we see higher oil prices, it increases the cost from farm gate to retail,” Brown said. “So much of the food dollar now comes from that part of the equation, that the real impact to producers is going to be the higher diesel fuel cost on all of this (and) the lack of production of agriculture commodities.”

Dairy farmer Jim Good, farm manager of Michigan State University’s Dairy Cattle Teaching & Research Center, pointed to a surge in diesel prices that, Good says, is putting the hurt on him.

Everything burns diesel fuel on a dairy farm — everything from tractors to semi-trucks, Good said.

“Everything is freighted in and freighted out (by semi trucks) on the dairy farm,” he said. “We’ve got feed coming in. We’ve got milk going out. The whole world revolves around diesel fuel, so when it goes from $3 a gallon to $6 a gallon, it gets to be pretty pricey.

“Some of our products — if you’re not raising your own grain products, those all have to be trucked in. We don’t have processing on site, so we’ve got to haul that milk out.”

The Iran war’s disruption of global energy production has led to steeper petrol, diesel and jet fuel prices. Diesel, which was averaging more than $5.70 a gallon in Michigan and Indiana as of May 1, according to AAA, remained above $4.40 on average following Memorial Day weekend. If the higher energy prices continue, that will also put pressure on Missouri producers.

“We are starting to see higher energy prices feed into the inflationary pressures,” Brown said. “Part of the expectation would be that if this continues, we’d see higher interest expenses for producers later in the year.”  

During an April 13 visit to Michigan State University’s Dairy Cattle Teaching and Research Center, U.S. Agriculture Secretary Brooke Rollins brought some help for Michigan’s specialty crop sectors — an increase from $165 million to $275 million in Specialty Crop grants.

Taking the long view

If the war with Iran continues, there will likely be impacts on Missouri producers next season, Brown said. Higher fertilizer prices would result in producers having to make changes to their crops.

“We’ll probably see a bit of higher fertilizer prices if (the war is) still around,” Brown said, which will likely result in farmers shifting “to the less fertilizer-dependent crops; reducing fertilizer, which potentially has an impact on yield — those would be things we expect for next year.”

The Illinois Soybean Association’s Holst finds hope in a push within Congress to let gas stations sell E-15 — gasoline blended with 15% ethanol — nationwide and year-round to ease fuel costs without forcing stations to overhaul their equipment. The U.S. House passed the legislation May 13 but it faces an uncertain future in the Senate.

The Environmental Protection Agency has issued temporary emergency fuel waivers to allow nationwide sales of E-15 in past years, but Holst said he and other farmers want it to be permanent.

“They were worried about that becoming a smog problem, but there’s been lots of queries and studies with more modern vehicles and how the gasoline system is now,” he said. “There’s not really a concern for that, so it’s just kind of the slow grinding cogs of the government. Technology’s advanced a lot faster than we can advance the legislation that’s out there.”

If fertilizer prices don’t come down for farmers by the middle of summer or this fall, Holst said, there will be noticeable “acreage shifts” — a move away from planting corn to planting soybeans, which require less nitrogen fertilizer, meaning lower production costs. 

That would be felt in Illinois, the nation’s largest soybean producing state and second-largest corn producing state.

In a recent survey of 4,000 farmers across 26 states, Chicago-based Farmer’s Keeper LLC found considerable sentiment for such a shift.

“Since March 1, 21% of farmers said they plan to decrease their corn acres,” Farmer’s Keeper CEO Nick Tsiolis said in a recent episode of Ag Marketing IQ in Depth.

The Farmer’s Keeper survey tracks with findings from a recent Farm Futures Q1 survey, which showed 43% of farmers planning to grow less corn. But it also clashes with a March 31 USDA Prospective Plantings report that predicted only a 3.4% decrease from last year’s corn plantings.

Tsiolis told Ag Marketing IQ in Depth that farmers must make future cropping decisions with great care.

“Soybeans could fall out of bed really quickly if oil prices drop and diesel costs come down,” he said.

“Farming is a long-term game,” Tsiolis said. “Profitability comes from balancing agronomic and budgeting decisions, not making drastic swings year to year.”

Looking ahead, Purdue’s Colussi and Langemeier say the U.S. and Brazil — the world’s largest soybean producer and exporter — must better protect themselves in the future from “external shocks” like the conflict in Iran. They called on the two nations to more aggressively expand their fertilizer production.

“This is a long-term challenge, but it is becoming increasingly necessary for both countries to remain competitive in the global grain market,” they wrote. “Greater supply security would reduce vulnerability to geopolitical disruptions and provide more stability in input costs for producers.”

News-Leader reporter Susan Szuch contributed to this story.