How War in Iran Will Squeeze America's Farmers Even Further - Odd Lots Recap

Podcast: Odd Lots

Published: 2026-03-19

Guests: Jeff Kazen, Mike Rolfson

What Happened

The closure of the Strait of Hormuz could significantly impact American agriculture by raising fertilizer prices. With about 75% of the needed fertilizer already purchased, the US is looking into alternative sources such as Morocco and Venezuela to mitigate potential supply disruptions.

Despite rising grain prices, they are not sufficient to offset the increased costs of inputs like fertilizer and oil. Farmers, therefore, face a challenging economic environment, with land and equipment costs having risen sharply since 2016, while futures prices for crops have remained stagnant.

Federal crop insurance, which is highly subsidized, plays a crucial role in helping farmers manage risk. It encourages them to hedge against downside risks and has been a contributing factor to the rising land prices, as outside investors find the sector more attractive.

Jeff Kazen and Mike Rolfson, co-founders of Agris Academy, help educate producers on risk management and merchandising strategies. They emphasize the importance of farmers adopting disciplined risk management approaches, similar to those used by commodity companies.

External factors such as trade disputes, particularly with China, have led to increased investments in non-American farms, affecting American soybean sales. These geopolitical tensions are also influencing farmers' decisions on what crops to plant, as they balance economics with crop rotation and disease prevention.

Farm bankruptcies, especially in the dairy sector, have increased due to structural changes and the efficiencies of mega dairies. Interest rates for farm loans remain competitive, but farmers continue to express concerns about inflation and fertilizer prices, which they feel are beyond their control.

Key Insights

• The Strait of Hormuz's closure could lead to increased fertilizer prices, causing the US to explore alternative suppliers like Morocco and Venezuela.
• Grain prices are rising but are not high enough to cover the increased input costs such as fertilizer and oil, leading to economic strain on farmers.
• Federal crop insurance, with its significant subsidies, allows farmers to hedge downside risks and has contributed to higher land prices due to increased attractiveness to investors.
• Trade disputes, especially with China, have resulted in greater investments in non-American farms, impacting US soybean sales and influencing crop planting decisions.