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Middle East conflict squeezing farmers on multiple fronts

A farm management specialist with the University of Illinois says the conflict in the Middle East is financially impacting farmers that are already facing tight margins or negative returns.

Gary Schnitkey says the immediate impact of the closure of the Strait of Hormuz is not necessarily being felt in spiking fertilizer costs.

“Many farms have already purchased their fertilizer.”  He says, “That’s probably less so for diesel fuel. Probably the stocks are there already for most of the planting season, but you know, the harvest season probably is not locked in.”

In a recent FarmDoc webinar, he says if the disruption of fertilizer continues into the fall, then it’s likely to have an impact on corn production in 2027.

“That’s going to make a difficult decision environment because many farmers often price their ingredients then,” he says, “and continuation of current prices would make the economics of growing corn a bit more difficult.”

Schnitkey says another effect of the conflict is increased federal spending, and thus less likelihood of long-term interest rates declining, which could impact the agricultural lending environment.