Iran War and Drought Push US Farmers Into Worst Crisis in 40 Years: Fertilizer Prices Double, $31 Billion Loss Expected

The American Farm Bureau Federation estimates that, hit by a triple shock of a 43% rise in diesel prices triggered by the Iran war, a doubling of fertilizer prices, and persistent drought, farmers will lose $31 billion this year, with losses reaching $32 billion in 2027. Corn futures have surged to a four-year high, intensifying food inflation pressures. Analysts believe that with only 71 days until the midterm elections, the plight of agricultural states is becoming a major variable in Republicans' bid to retain control of Congress.

Farmers in the US Corn Belt are facing their most severe financial crisis in 40 years. The surge in diesel and fertilizer prices triggered by the Trump administration's war on Iran, compounded by persistent drought, is pushing American food producers to the brink of collapse, with industry losses expected to reach $31 billion this year.

According to a Financial Times report on Aug. 25, the latest research from the American Farm Bureau Federation (AFBF) shows that, in the absence of government assistance, farmers growing nine major crops including corn will lose $31 billion this year, with losses widening to $32 billion in 2027.

Corn growers are losing $131 per acre this year, while soybean growers are losing $80 per acre. AFBF economist Faith Parum noted that 2027 will mark the sixth consecutive year of losses for most major US field crops.

John Hansen, president of the Nebraska Farmers Union, described the current situation as "the most severe financial downturn in agriculture since the 1980s."

The crisis is spreading to broader American society. A recent Financial Times poll shows that over 53% of registered voters say their personal finances have worsened since Trump returned to the White House in January 2025. With only 71 days until the midterm elections, the plight of agricultural states has become a potential threat to Republicans' hold on Congress.

War Impact: Diesel and Fertilizer Prices Soar

After the US launched military strikes on Iran in February this year, traffic through the Strait of Hormuz shrank sharply, directly pushing up global energy and fertilizer prices and adding to the woes of an already stressed US agricultural sector.

According to data from the US Energy Information Administration, the national average diesel price has surged from $3.81 per gallon before the war to $5.45, an increase of over 43%. Diesel is the primary fuel for agricultural machinery, and this price hike has directly raised agricultural production costs.

The rise in fertilizer prices is equally alarming. Matt Bailey, a corn and soybean farmer in eastern Nebraska, said that a common phosphorus-rich starter fertilizer, "11-52-0," sold for $470 per ton a decade ago but now costs over $900, a doubling in price. "Where do you start? How do you budget?" he said.

Brad Lubben, an agricultural economics professor at the University of Nebraska-Lincoln, pointed out that interest expenses, labor costs, and agricultural machinery prices have also risen sharply. "If you look at all the components of a production budget, most of them have climbed significantly over the past few years."

Notably, the upward pressure on fertilizer prices did not begin with the Iran war. Global fertilizer supply had already been severely disrupted after the Russia-Ukraine conflict erupted in 2022, and the Iran conflict has further exacerbated the situation.

Drought Compounds: Extreme Weather Pushes Crop Failure Risk to Historic Highs

Beyond cost pressures, the US Corn Belt has also faced severe drought this year, further squeezing farmers' income.

Nebraska is one of the hardest-hit states. Data shows that from January to July this year, the state received only 11.86 inches of precipitation, about 3.1 inches below normal, marking the 18th driest such period since records began in 1895.

John Dittrich, who grows corn and soybeans near Meadow Grove, Nebraska, said extreme weather is becoming an increasingly severe threat.

"Our droughts are more severe, our heavy rainfall events are more severe, and our winds are more severe," he said. The operational pressure from weather risks and rising costs "is unlike anything I've experienced in my 44-year career."

Recent rains have brought some relief, but for many farmers it is too late. John Hansen, president of the Nebraska Farmers Union, said:

"A lot of crop damage has already been done. It's like closing the barn door after the horse has bolted."

Matt Bailey also expects yields to be affected this year. "Considering all the dryland... going six weeks without moisture and getting beat up, I don't think we're going to have a good crop this year."

Rising Grain Prices: Inflation Pressures Pass Through to Consumers

The twin shocks of drought and war are pushing up grain prices and raising concerns about further inflation.

Traders have begun lowering their expectations for the 2026 corn harvest. US December corn futures have risen 10% this month to $5.15 per bushel, the highest level since 2023. Soybean and wheat prices have also rebounded in recent days.

Brian Choi, CEO of the Food Institute, warned: "This certainly means higher food prices." He noted that corn prices have risen nearly 20% this year, "and that will eventually be passed on to consumers."

This trend is complicating market judgments about the Federal Reserve's monetary policy path. US inflation is already above the Fed's 2% target, and further increases in food prices could intensify pressure for policy tightening.

Political Pressure: Agricultural States Become a Midterm Election Variable

The agricultural crisis is turning into political pressure, putting Republicans in a dilemma ahead of the midterm elections.

Trump promised in June this year to "never let farmers down," and his administration applied for an $11 billion emergency agricultural aid package that month, covering field crop and specialty crop producers. But agricultural groups widely consider this effort far from sufficient.

Meanwhile, some of Trump's policy moves have sparked strong backlash in the agricultural community. Last week, he announced a 90-day tariff exemption on up to 300,000 tons of imported beef, a move some ranchers called a "betrayal."

The shadow of trade conflicts also lingers. Several farmers said Trump's tariff policies have hurt US agricultural exports, especially soybean sales.

Republican Senator Thom Tillis admitted on Monday:

"With 71 days until the midterm elections, we currently have no positive message to deliver to agricultural states, and that has been the case since last year's so-called 'reciprocal tariff day.'"