Soaring Fertilizer Prices Could Pressure a U.S. Agricultural Industry That Supports 50 Million Jobs and Over $10 Trillion in Output

Fertilizer prices have nearly doubled in recent months, driven by the war with Iran and the resulting supply chain disruption through the Strait of Hormuz. This has put significant pressure on U.S. farmers, who face rising costs for nitrogen-based fertilizers, a key input for corn production. Prices for New Orleans nitrogen have climbed from $350 a short ton in late December to over $600 by late March.

The increase in fertilizer costs has been further exacerbated by global sulfur price spikes, which have led to plant closures in key regions like Brazil and China. Phosphate fertilizer prices remain near five-year averages, but supply constraints and export restrictions are causing volatility.

U.S. agricultural groups have warned that the crisis poses a threat to food security. Rising fuel and fertilizer prices are compounding issues from inflation, trade uncertainties, and weak crop prices. These groups have called for policy support, including additional financial assistance and tax incentives, to stabilize the food supply.

How Is the Government Responding to Rising Fertilizer Costs?

To address the growing concerns over fertilizer pricing, U.S. Senator Tammy Baldwin introduced the Fertilizer Transparency Act of 2026. This legislation would require the USDA to collect and publish fertilizer price data on a weekly basis, replacing the current annual voluntary survey.

The bill is led by Senator John Thune and co-sponsored by Senators Amy Klobuchar and Chuck Grassley. The initiative aims to provide farmers with better tools to navigate the volatile market, as one-third of global fertilizer passes through the Strait of Hormuz and prices have risen 25% since the conflict began.

Federal subsidies have provided some relief to farmers. The USDA has offered $12 billion in bridge loans to help farmers manage costs, turning a bad year into a mediocre one for some. However, with crop prices already weak, the current rise in fertilizer prices could severely impact profitability.

What Are the Broader Economic Implications of the Conflict?

The closure of the Strait of Hormuz is described as an economic blockade with global consequences. The Gulf Arab producers have warned that the disruption will have a domino effect across industries and economies worldwide. Kuwait has declared force majeure on its delivery contracts and is producing oil only for domestic consumption.

The economic impact extends beyond the Gulf. The disruption is affecting global trade and economic stability, with full production expected to take three to four months to restore even if the conflict ends immediately. This has raised concerns about global supply chains and food inflation.

U.S. agricultural groups have emphasized that food security is a national security issue. They have called for additional policy measures, including support for specialty crop growers and expanded Farmer Bridge Assistance Program payments, to stabilize the domestic food supply.

The U.S. agricultural industry supports 50 million jobs and contributes over $10 trillion to the economy annually. Fertilizers alone contribute $37 billion in wages and $140 billion in economic impact. The current timing is particularly challenging, as farmers are finalizing fertilizer purchases ahead of the planting season.