Input prices continue to rise as the Iran conflict heads into its third week. According to data compiled by AAA, gas prices have risen more than 20% since the Iran war started on Feb. 28. As of March 17, the average price paid at the pump now stands at $3.79 per gallon.
Diesel fuel prices are up nearly 25% since the war began. Some locations are now selling diesel fuel for more than $5 per gallon.
A recent analysis by the Soy Transportation Coalition highlights just how much higher prices may impact agriculture. If the higher diesel prices of the past month are still in place during fall harvest, a farmer who planted 500 bushels of soybeans and 500 bushels of corn would pay nearly $2,000 more for diesel fuel alone. A grain elevator that handles 2 million bushels of soybeans and 4 million bushels of corn would pay nearly $100,000 more for diesel fuel.
Fertilizer pricing and availability is also a growing concern. According to a report from the North Dakota State University Center for Agriculture Policy and Trade Studies, Persian Gulf countries account for about 43% of seaborne urea exports, 44% of seaborne sulfur trade and more than 25% of global ammonia exports. These critical components of nitrogen and phosphate fertilizers are almost entirely on hold.
Iran has blocked traffic on the Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea and Indian Ocean. As the NDSU report notes, many global shipping companies suspended passage through the strait following the withdrawal of war risk insurance coverage by major protection and indemnity clubs. This left commercial shipping economically and legally unviable.
Rollins hints at action
During a March 13 press conference, USDA Secretary Brooke Rollins said around 25% of farmers have not purchased fertilizer for the spring planting season. She said those farmers would be most affected by fertilizer price hikes. According to her, the Trump administration is looking at “every potential avenue” to keep fertilizer prices down as farmers head into the planting season.
“No big announcements yet, but it is coming,” Rollins told reporters. “I have been in conversation with the Hill on that as they’re looking at additional funds for our farmers. At this point, everything is on the table.”
Rolins added that President Donald Trump is “resolute” and will “stand with our farmers.”
What has Trump done since war began?
On March 12, Trump issued a 30-day waiver of sanctions on Russian crude oil and petroleum products. Those sanctions were levied in 2022 following Russia’s invasion of Ukraine. The waiver applies only to products that were already at sea.
Trump said the waiver is intended to keep energy prices from further rising in the wake of the war. About 20% to 25% of the world’s oil supply flows through the Strait of Hormuz.
Thus far, the move has had little impact. Gas prices have risen nearly 6% in the five days since Trump’s announcement. Oil prices are up around 3.4% over the same time period.
What about tariffs?
Sen. Chuck Grassley, R-Iowa, an Ag Committee member, said lifting sanctions on Russia is the wrong move, contending it “fuels Putin’s war and prolongs suffering in Ukraine.” Instead, he called on Trump to remove tariffs on all fertilizer products.
“I think the best thing I can say about fertilizer is to get those tariffs off,” Grassley said on a call with reporters today. “And for the president, use any emergency power he has to get those tariffs off fertilizer. And where there may be some restrictions on imports from certain countries, … we should take those restrictions off. We’ve got to do everything we can to get the costs of inputs down.”