War and High Prices Put Pressure on Farmers with Another Tough Start to Planting Season

Grant Kimberley, Senior Director of Market Development, Iowa Soybean Association: “We already have very high costs, and that's been a big problem. We've been under this cost squeeze for several years. But now with fertilizer prices rising, with the uncertainty and also fuel prices rising, that creates additional concern.”

Grant Kimberley is the Senior Director of Market Development for the Iowa Soybean Association. Those uncertainties he’s talking about include a war with Iran that is starting its fifth week. The pressure is adding to already expensive inputs, land, labor and capital.

Grant Kimberley, Senior Director of Market Development, Iowa Soybean Association: “Now, fortunately, most farmers probably had some of these costs locked-in earlier this year, mostly, but if this lasts longer, this could have an impact.”

The Iowa Soybean Association, funded in part by check-off dollars, advocates for Iowa’s 37,000 soybean producers facing one of the toughest spring planting seasons on record. Kimberley is one of those producers. He also grows corn in the state that produces the nation’s second largest output of soybeans. 

Grant Kimberley, Senior Director of Market Development, Iowa Soybean Association: “We're still in a very challenging economic environment. Last year was probably the worst it’s been in quite a while. This year, it looks like we are starting to turn the corner and come out a little bit, but now you have the other uncertainties on the cost side of things.”

The Strait of Hormuz, the pathway for 20% of the world’s oil, 50% of its nitrogen and 40% of its phosphorus, has been too dangerous to traverse for more than a month.

Over the course of the war, the price for anhydrous is 25% higher and urea is 40% higher than a month ago. The increased costs may have some farmers switching crops. The higher price might also have some producers cutting back on inputs that could cause reduced yields. Kimberley doesn’t think that will be a problem here at home.

Grant Kimberley, Senior Director of Market Development, Iowa Soybean Association: “I think it's going to be more pronounced in other parts of the world than it is here in the U.S., because we're a little bit more self-sufficient on some of these things…we're a little bit earlier in our planning production cycle window. Places like South America might see impacts, down the road because they're, less self-sufficient, especially when it comes to fertilizer.”

A little relief may come from recent changes to the Renewable Fuel Standard that increase the annual production of biodiesel and renewable diesel to more than five billion gallons annually, an increase of more than 60%. Kimberley is also the executive director of the Iowa Biodiesel Board. 

Grant Kimberley, Senior Director of Market Development, Iowa Soybean Association: “Now that we have, an increase, we will have an increase in production because the, the targets that are put in place in the Renewable Fuel Standard program. And also once we get the final rule on the 45 Z production biofuel production tax credit program, that's another piece of the puzzle. Once that's finished, that'll help.”  I think, further incentivize additional, production of domestic biofuel feedstocks to make more available to the marketplace.

For Market to Market, I’m David Miller.

Contact: miller@iowapbs.org