Farmers growing increasingly desperate amid rising energy and fertili…

Midwest Farmers Confront Higher Energy and Fertilizer Costs Amid Geopolitical Tensions and Trade Shifts

Farmers across the Midwest are entering planting season under increased financial pressure as diesel and fertilizer prices have risen following the closure of the Strait of Hormuz during the U.S.-Iran conflict. The developments have compounded challenges in the agricultural sector that some observers compare to conditions in the 1980s.

The price increases affect farm operating costs, contribute to upward pressure on food prices, and add strain to rural economies already facing trade disruptions, inflation, and variable weather patterns.

Mark Mueller, a northeast Iowa farmer and president of the Iowa Corn Growers Association, stated that current conditions present greater difficulties than any period since the 1980s farm crisis, when high interest rates and reduced exports led to agricultural bank failures. Reports indicate rising farm bankruptcies and greater caution by lenders in extending operating loans. Mueller noted that fewer farmers are expected to continue operations into the following year.

Farmers face several overlapping factors. Energy prices increased after the Strait of Hormuz, a key route for oil shipments, was closed amid the U.S.-Iran conflict that escalated earlier in the year. Fertilizer prices rose and supplies tightened after shipments through the strait were halted. Export markets have been affected by U.S. tariffs and restrictions on imports by China. Drought conditions and other weather events have also reduced yields in multiple regions.

Cornell University agricultural economist Wendong Zhang observed that farmers have limited ability to adjust production decisions rapidly in response to sudden cost changes. Available tools, such as altering crop mixes or seeking alternative suppliers, require time to implement.

Conditions vary by state. In Arkansas, higher energy and fertilizer expenses have added pressure on operations already receiving lower crop prices. Ohio farmer Michael Kilpatrick reported that his fuel costs rose from $400 to $700 per period and container shipping expenses increased 30 percent, with the added amounts absorbed by the farm. In Iowa, soybean prices have declined from the $13–$15 range to approximately $10 per bushel as shipments to China decreased amid trade measures. In Minnesota, the state farm and rural mental health helpline recorded 314 calls in fiscal year 2025, the highest total in five years, and has already received 279 calls in the first nine months of the current fiscal year.

Diesel prices averaged $5.67 per gallon as of May 14, an increase of 60 percent from the same date one year earlier, according to AAA data. The American Farm Bureau Federation reported that 70 percent of farmers indicated they could not afford required fertilizer quantities at current prices. USDA figures show the national cattle herd at its lowest level in decades, influenced by extended drought across multiple regions. Bureau of Labor Statistics data recorded average ground beef prices at about $6.90 per pound in April, 19 percent above the prior year.

Zhang noted that lower-income households face compounded effects because they allocate a larger share of income to food purchases and have experienced reductions in SNAP benefits following changes enacted in recent legislation.

Agriculture Secretary Brooke Rollins outlined on April 28 a set of measures that include $900 million in grants to independent fertilizer producers, expedited permitting, and support for legislation aimed at reducing fertilizer expenses. These steps followed an $11 billion payment program announced by President Trump to assist row-crop producers with tariff-related and price pressures. USDA data show that $9.7 billion of the funds reached 510,520 recipients, with 42 percent allocated to corn growers and 24 percent to soybean growers.

U.S. Bank Asset Management senior investment strategy director Rob Haworth stated that additional federal support specifically addressing higher oil prices has been limited for the agricultural sector.

President Trump reported that Chinese leader Xi Jinping agreed during recent talks to purchase billions of dollars in U.S. soybeans, though no detailed purchase agreements have been finalized.

American Farm Bureau Federation president Zippy Duvall wrote in a recent letter to the president that supply shortages or price increases at the farm level transmit effects through the broader food supply chain.

Contributing reporters: Worth Sparkman in NW Arkansas, Monica Eng in Chicago, Casey Weldon in Cincinnati, Jason Clayworth in Des Moines, Arika Herron in Indianapolis, Torey Van Oot in the Twin Cities, and Kelly Tyko in Florida.