Iran war drives up fertilizer, diesel costs for Idaho farmers

TWIN FALLS, Idaho (KMVT/KSVT) —The war with Iran is driving up the cost of diesel and fertilizer for Idaho farmers at a critical time in the growing season.

The closure of the Strait of Hormuz has disrupted global supply chains, with Saudi Arabia alone accounting for nearly 20 percent of global phosphate trade. According to Xiaoli Etienne, professor at the University of Idaho, nitrogen has taken the biggest hit.

“We have seen as much as 40% increase at the farm gate level for producers. And so for southern Idaho, the number might be a little different, but I suspect it’s very similar magnitude,” Etienne said.

The price increase is affecting farmers’ operating costs. Over 30 percent of operating costs are used to purchase fertilizer, Etienne said.

“You think about your operating costs, over 30% is used to purchase fertilizer. And we see 30 to 40% increase in the fertilizer prices. And combined, that’s a very big impact on the farmers,” she said.

The war with Iran is not the only factor affecting prices. China halted exports of fertilizer to secure their domestic planting season and stopped exporting phosphate as of a couple months ago, Etienne said.

While the U.S. doesn’t directly import phosphate from China, the reduced Chinese supply affects the global market, which ultimately impacts prices in the U.S.

Diesel is another commodity hit by the war that farmers are already feeling at the pump.

“For diesel, that’s a different story. This will probably have a more immediate impact for the producers,” Etienne said.

While farmers can battle fertilizer prices by planting different crops or reducing applications, diesel is different. There’s no substitute.

“They will need to reallocate, right? To make up this added cost, the higher expenses for the diesel. And I think, even a very small percentage change in prices, and let alone there’s a dollar or more than a dollar increase in diesel prices. This war, it’s a very tough situation for the farmers this year,” Etienne said.

Etienne said while 80 percent of farmers secured their fertilizer supply before the war started, a ceasefire won’t immediately solve the issue.

“Even with a ceasefire, or even if the war stops, the production time for fertilizer has already been lost. And that’s a very long supply chain. The impact will show up, still show up. It’s not going to go away,” she said.

Despite the current hardships for farmers, Etienne is optimistic.

“Farmers are resilient. We have seen over and over again farmers are able to overcome all those shocks they’re putting on them,” she said.

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