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Iran tensions worry local farmers; here's why
The war involving Iran could affect Midwestern farmers in a way many people may not realize – and that could eventually mean paying more for food.
HARTLAND, Wis. - The war involving Iran could affect Midwestern farmers in a way many people may not realize – and that could eventually mean paying more for food.
What we know:
When it comes to fertilizer, like oil, prices can go up and down based on world events. A lot of the world’s fertilizer supply travels through shipping routes near Iran.
One Waukesha County farm raises beef cattle and in a few weeks will also plant corn and soybeans.
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Jim Renn, a Waukesha County farmer also involved with the Wisconsin Farm Bureau Federation, said he has already locked in the price for the fertilizer he plans to use this season, but there are still questions about supply and costs.
"I don't get a check every week. I don't get that check until I sell that product. And I don't know what that cost is going to be," Renn said. "But I know that fertilizers are going to cost me more, seed's going to cost me more, fuel is going to cost me more."
Even fertilizer that has already been booked may still be in transit.
"Even though we booked that, that doesn't necessarily mean that the co-ops in North America have all that material here, so it could be sitting on a ship," he said.
The American Farm Bureau Federation says countries in the region around Iran produce about 50% of the world’s urea fertilizer. Much of it travels through the contested Strait of Hormuz.
What they're saying:
"Even though we don't necessarily have to import a lot, it doesn't mean that it doesn't affect local prices," said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
The Farm Bureau says the price per ton of urea fertilizer has already spiked 25% since the end of February.
The question now is whether that could eventually show up in grocery prices.
"Whenever we see these types of shocks, it's actually a bit of a lagged effect, because if you think about the planting season, you're not going to start harvesting until probably August or September," Jacobsen said. "And so there could be a delayed effect, as far as when you see what is the quality and quantity of the crops, but it could be this thing that builds."
Fuel costs could also play a role.
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"All the food that we purchase at the grocery store, it gets there somehow, and if the cost of transporting there goes up, sometimes that gets built into the price," Jacobsen said.
Renn says farmers cannot simply raise prices to make up the difference. For crops like corn, the price is set through commodities markets such as the Chicago Board of Trade.
"The federal exchange. You know that's how it's set," he said. "But the fertilizer plants, the equipment manufacturers, the fuel stations, they can set their price, but farmers can't set their price."
However, Renn says he does set the prices he charges for beef and hay.
Dig deeper:
The concerns come as farmers across the Midwest are getting ready to begin planting crops.
The American Farm Bureau Federation is urging the U.S. to protect shipments of fertilizer and other agricultural supplies as they move through the Middle East.
The Source: FOX6 utilized information from the American Farm Bureau Federation and Annex Wealth Management, and also talked with Wisconsin farmers.