Corn and soybean markets have been unstable since 2023 and now, experts say Michigan farmers may face more financial uncertainty as fuel and fertilizer prices rise following the war in Iran.
A key waterway in the Middle East known the Straits of Hormuz is blocked off because of the war, which is preventing large amounts of oil, natural gas and nitrogen-based fertilizer to get through.
Jonathan LaPorte, a farm business manager with Michigan State University Extension, said the blockage is causing shortages and price hikes up to 25% for oil and fertilizer. He said farmers who prepaid for fertilizer last year, may experience delivery delays.
Laporte said fertilizer used to grow corn is especially affected.
“We may be seeing a shift where farms are going to have to look at changing their cropping plan from corn acres to maybe something like soybeans that don't need the nitrogen,” LaPorte said.
That decision has to be made quickly, and there are many factors, Laporte said.
"Maybe they're limited on the type of soybeans they can plant because there are different varieties of soybeans that are better for certain climates, certain field conditions, different regions within, even within the state," Laporte said.
Eric Anderson, a soybean educator for MSU Extension said he doesn't expect many farmers to make that switch because crop rotations between corn and soybeans are usually predetermined.
"There may be some farmers who have the latitude to do that, assuming that certain fertilizers haven't been purchased yet, or if they have some ground that they feel could go either way." Anderson said. "But I think for the most part, farmers are going to continue with the rotation unless the profit margin is that tight for them for a given field."
Chad Hart, an agricultural economist for Iowa State University, says whether farmers have the means to shift their plans or not, the war is adding more stress to an already unstable market.
"We're talking about a sector of the economy that arguably has been in its own little sort of recession since 2023," Hart said.
According to an article from the American Farm Bureau Federation, commodity prices for corn and soybeans have dropped more than 50% since 2022.
“Since they were already feeling financially squeezed from the last two years," Hart said. "This is just putting a lot more financial strain on Michigan producers right now that they were hoping they wouldn't face.”
