The conflict in Iran is sending ripple effects across global markets, and farmers in Iowa are feeling it — with diesel fuel and fertilizer costs on the rise. Not everyone is seeing the immediate effects, though.
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Eighty-year-old Larry Buss has farmed in Harrison County since the early '70s. He says the immediate impact on his operation has been minimal so far.
"Immediately, I'll pick on me, immediately right now, there's been nothing. Zero. Other than, it's been a plus because our grain prices have gone up," he said.
Buss says he already purchased his diesel fuel for planting season and has his fertilizer secured, two big expenses for agricultural producers. If the conflict drags on, however, the economic outlook for Buss could change.
"Now, if this stays longer and longer and longer, and we've got to start buying fertilizer, that'll be higher; we've got to start buying fuel, that is higher…" he said.
Not every farmer is in the same position. Stephen Nicholson, an agricultural economist with Rabobank, says about 22% of the world's fertilizers travel through the Strait of Hormuz — a critical shipping chokepoint leading in and out of the Persian Gulf.
"Particularly nitrogen since it's a natural gas demander," Nicholson said.
Nicholson, an Iowa native with deep ties to the Hamburg area, says the timing is far from ideal. For farmers who have not yet purchased fertilizer, there may not be enough supply depending on how long the conflict continues.
"That's the last thing we need this time of year, to see that problem happen. So, it's both a fuel issue and it's also become a fertilizer issue," Nicholson said.
There is an upside, however. Grain prices — which have been low for the past several years — are rising alongside fuel costs. Nicholson says producers with grain still in storage may want to take notice.
"And here's an opportunity. Reward the rally," Nicholson said.
For farmers like Buss who still have grain in the bins, now may be a good time to go to market. It is a strategy he says he is already pursuing.
"There's opportunities, always," Buss said.
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