Co-Authored by: Alec Sherod & Evelyn O’Brien
American farmers rely on supply chains that stretch far beyond the United States’ borders. Accordingly, geopolitics plays a critical role in determining the input costs that farmers face, from fertilizer and fuel to agricultural equipment. As geopolitical tensions rise and production prices remain high, farmers are faced with financial strain. However, this strain can be mitigated through legal and business planning practices that reduce the effects of market volatility.
Although some input costs have decreased since peaking in 2022, fertilizer has remained a high expense for farmers, making the global market a significant factor regarding profitability. For example, the United States imported 87% of its potassium fertilizer from Canada between April 2025 to March 2026. Additionally, nearly half of the phosphate, an essential ingredient for many fertilizers, comes from Saudi Arabia and Mexico.
Due to the interconnected nature of the global market, the conflict in Iran has had a negative impact on input costs for United States farmers. Since the conflict began in February, the media has largely focused on the disruption it has caused to the worldwide supply of oil. Although the rising cost of oil has affected the expense of diesel fuel for farmers, the conflict has even more dramatically affected the price of nitrogen fertilizer, which is paramount for the production of corn, wheat, and cotton. Additionally, approximately 44% of sulfur and 16% of phosphate fertilizer is shipped through the Strait of Hormuz each year. With the strait essentially shut down, impacts on fertilizer resources affect not just the United States, but nearly every major agricultural country in the world.
Due to rising fertilizer costs and corn being a more fertilizer-intensive crop, many farmers are gravitating towards planting soybeans instead of corn. Projections revealed that corn could potentially be down about 3.45 million acres, with almost every state in the Midwest planning to cut back on corn. Conversely, soybean acreage is expected to increase by 3.49 million acres, with nearly every state in the Midwest increasing its soybean planting. Additionally, wheat acreage is projected to be down 3%, while cotton acreage is predicted to increase by about 3%.
Despite the struggling market, there are several steps farmers can take to mitigate risk. Establishing contracts with guaranteed volumes and prices before harvest allows producers to stabilize their income and protect themselves against sudden price drops. Specialized loans and credits can also provide producers with the capital needed to cover costs during planting, and insurance can protect farmers from unforeseen events.
Furthermore, in response to rising fertilizer costs, an increased number of farmers in the Midwest, who specifically rely on corn and soybeans, pre-booked fertilizer in advance. Accordingly, many Midwestern farmers reported being able to secure fertilizer prior to recent price surges. Despite the higher pre-booking rates, 1/3 of Midwest farmers were unable to meet their fertilizer needs. Throughout the rest of the United States, pre-booking is far less common, with the Western region pre-booking at a 31% rate, the Northeast at a 30% rate, and the South at a miniscule 19% rate.
As geopolitical events continue to influence input costs for agricultural production, farmers must navigate an increasingly complex marketplace. However, contractual tools such as pre-booking agreements, financing arrangements, and supply contracts can mitigate risk in the presently volatile market. Although geopolitics will inevitably continue to shape the agricultural sector, thoughtful legal and business planning can position producers to not only endure these challenges, but adapt and thrive in the years ahead.
If you have any questions on the information above, please contact Alec Sherod at [email protected] or Evelyn O’Brien at [email protected].
