Fertilizer Costs For Farms
Last week, this column highlighted the impact of higher and likely increasing diesel fuel cost due to the conflict in the Persian Gulf for farm operators in Rockbridge. Fertilizer costs have also risen following the onset of conflict with Iran but the direct impacts to Rockbridge agriculture are not as great as the fuel price.
Petroleum, specifically natural gas (methane), is used to make nitrogen fertilizer by providing the hydrogen necessary to turn nitrogen that is naturally present in the atmosphere into ammonia, which can then be converted into solid or liquid fertilizer. This process is known as the Haber-Bosch process and it is a logical business for the Persian Gulf countries because of the abundant natural gas associated with oil deposits. The United States also has abundant natural gas resources and produces nitrogen fertilizer domestically. But just like fuel, fertilizer is an internationally traded product and deficits elsewhere in the world influence prices here at home.
Based on analysis from the University of Illinois, corn producers may see smaller impacts in 2026 due to pre-purchased inputs but the full effect of these price increases will be felt in 2027.
Nitrogen fertilizer prices have increased sharply since February 28, 2026, with the onset of hostilities with Iran. Prior to the conflict, a pound of nitrogen fertilizer available in Rockbridge was around 70 cents and now its $1.
In contrast, increases in the cost of phosphorus and potassium fertilizers have been negligible and probably more the result of increased transportation costs. These fertilizers are not so dependent on Persian Gulf resources; however, the Middle East does supply sulfuric acid, which is used to make phosphate fertilizers. Extended supply disruptions could lead to higher phosphate fertilizer prices in 2027.
What does this mean for agriculture in Rockbridge? Rockbridge agriculture, generally, benefits from low corn prices because the chickens, turkeys, beef cattle, and dairy cows that occupy our countryside depend directly or indirectly on corn produced regionally or (more often) imported from the Corn Belt states. Here I am careful to acknowledge the few farms in Rockbridge that annually rely on income from selling corn to the feed mills in the Staunton and Harrisonburg but most of these farms also have corn-dependent livestock operations.
Following the high grain prices associated with post-pandemic demand inflation and the Russian invasion of Ukraine, corn prices have fallen sharply as world production expanded to exceed demand. Most corn producers have struggled to cover variable costs for the past three years and have generally not covered their fixed costs (machinery and other overhead costs). So, while media reports feature interviews with financially strapped Corn Belt grain producers, our poultry and livestock industries are benefiting from the low prices.
Ultimately, corn prices will rise as Midwest corn growers are forced to reduce input costs or stop planting some fields all together. More significant for Rockbridge is the persistent drought that is impacting all aspects of local farming. The majority of local farms depend on utilizing pasture and hayfields as do our orchardists and market gardeners that market products locally.
Portions of this column are based on agriculture market analysis by Extension specialists at the University Illinois.
