AUBURN UNIVERSITY, Ala. – Alabama farmers are hurting and now face even tougher economic times, as the war in Iran has increased the price of key agricultural inputs. Now more than ever, it is crucial for farmers to stay engaged with the changing economic landscape and make smart management choices.
“Farmers must be proactive in managing their input costs by efficiently using the resources already available and identifying opportunities to reduce unnecessary expenses,” said Rishi Prasad, an Alabama Extension nutrient management specialist at Auburn University.
Current market conditions
Other market disruptions, such as conflicts and tariffs, have caused steady increases to input costs throughout the past year. However, fuel and fertilizer prices have spiked even higher within the past month. The price of diesel fuel, for example, increased 51% — from $2.84 to $4.30 per gallon.
Wendiam Sawadgo, an Alabama Extension agricultural economist at Auburn University, said nitrogen is the major fertilizer nutrient affected by the war in Iran.
“In Alabama, nitrogen-based fertilizer prices are trending higher compared to both last year and since the war started in late February this year,” Sawadgo said. “This increase may have a sizable effect on producers who have yet to purchase or price fertilizer for this planting season.”
Approximately one-fifth of the world’s oil and one-third of the world’s fertilizer pass through the Strait of Hormuz.
War activities that essentially block the Strait of Hormuz are the main disruption to global markets. Located along the southern coast of Iran, this area is an important global checkpoint for oil and fertilizer. Sawadgo said major agricultural countries, including Australia, Brazil and India, rely heavily on imported fertilizer from the Middle East. While the U.S. does not rely on these same imports as heavily, the disruptions cause a domino effect on global markets.
“The effects the Iran war has on agriculture are complicated,” Sawadgo said. “While the U.S. produces most of the nitrogen fertilizer it uses, it imports natural gas used in nitrogen-fertilizer production from Canada. So, any disruptions to natural gas markets could, in turn, affect nitrogen fertilizer prices here in the U.S.”
Other fertilizer nutrients, such as potash and phosphate, have not seen an immediate price change from the war in Iran. However, Sawadgo said the U.S. imports some phosphate and urea through the Strait of Hormuz, so there is potential for future impacts.
Smart farm management
Under current economic conditions, Prasad suggested farmers evaluate their management strategies and focus on tactics that maximize farm profitability. For instance, continuing to soil test provides a baseline for nutrients needed while helping farmers avoid adding unnecessary fertilizers. In contrast, many farmers follow fertilization plans that build up excess nutrients in the soil. This year, instead, farmers should closely adhere to recommended rates from Alabama Extension and Auburn University professionals.
“In a year characterized by geopolitical instability and high fertilizer prices, it is wise to reassess this and other strategies used to see where costs can be saved,” Prasad said. “Operating at a loss is not a viable option. Profitability will increasingly depend on farmers making sound decisions rather than aggressively using inputs.”
Prasad and Sawadgo provide more in-depth information on this topic in the Extension Brief, “Strategies for Managing High Fertilizer Costs.” Farmers can find this resource on the Alabama Extension website at aces.edu.
For more assistance, farmers can contact the agronomic crops or farm and agribusiness management Extension agent in their areas.
