Iran is more than 6,000 miles from the U.S., but South Dakota farmers, as all American ag producers, are intimately feeling the catastrophic potential of our current war with that rogue Mideast nation.
Since Iran has vengefully halted the flow of oil through the Strait of Hormuz, that narrow Persian Gulf chokepoint through which about 20% of the world’s petroleum transits, farmers everywhere have been collectively holding their breath as the critical crop-planting season looms and the U.S.- and Israel-inflicted war rages on.
Crude oil, particularly diesel fuel refined from it, is the lifeblood of modern agriculture, powering virtually all the tractors, combines, spraying units and every other piece of heavy equipment farmers use. And refined gasoline powers their ubiquitous heavy-duty pickup trucks that haul bulky trailers to market carrying cattle, pigs and horses.
That collateral farming fuel-price premium from the war is worrisome enough, but there’s another essential agriculture input passing through Hormuz en route to the United States that is also being suppressed: fertilizer.
The world’s most popular ag fertilizer — urea — is refined from natural gas, which is a byproduct of crude oil production as well as produced in gas-only fields in countries lining the Persian Gulf. A fifth of the world’s natural gas and a third of its urea fertilizer pass through Hormuz.
Most commonly used in pellet form, urea is produced initially by reforming methane to create hydrogen and carbon dioxide. The hydrogen is then combined with nitrogen to form ammonia, which is then reacted with carbon dioxide to create urea. The end result is growth-stimulating nitrogen bioengineered so plants can use it.
The current blocking of unauthorized ships through Hormuz, thus promises manifold negative effects on South Dakota’s and other farmers.
Because the global supply of oil is now sharply constrained and not reliably reaching global markets, the price of a barrel of oil has risen from an average $70 to $100 since the start of the war, briefly spiking to nearly $120 soon after hostilities erupted.
That means fuel prices — for both gas and diesel — have soared in response. On March 22, the average price of gasoline was $3.94 a gallon, up a dollar from a month before and expected to peak around $4.36 in May. The average household would then be paying about $740 a year more in fuel costs, according to The Associated Press. So, it will also cost farmers more to operate their hefty, gas-guzzling pickup trucks.
The hit is far bigger on farmers’ diesel equipment, as the national average reached a five-year high of $5.25 per gallon on March 22, according to the American Automobile Association, dwarfing the $3.71 average one month ago, AAA data shows.
In addition and for the same reason — the war — urea fertilizer prices since February have spiked on average from 30-40% from under $500 to more than $700 per metric ton, Reuters reported in mid-March.
“I think prices will kind of keep soaring because if we bring in urea from the Middle East, especially a place like Qatar, where they’ve had a facility shut down because of the war, and they produced, I believe, over 15 million tons,” Kurt Bennett, general manager of Dell Rapids Grain Co-Op, told Dakota News Now. “It takes 50 days to get it from there to Port Neal in New Orleans. Then it takes another 30 to 40 days to bring it upriver to unload.”
This commentary was written by Rick Snedeker for SDSU Searchlight, an online news organization. Snedeker, a retired journalist living in Mitchell, is the author of a 2020 memoir about growing up in a Saudi oil camp in the 1950s, “3,001 Arabian Days,” and a 2022 historical overview of Christianity’s coercive evolution in America, “Holy Smoke.”
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