It’s no secret that finances are tight for Utah farmers. According to the 2022 USDA Agricultural Census, the average Utah farm sold $135k worth of products like hay, meat, or milk in a year, but spent $113k in production costs like machinery, tractor fuel, and other chemicals. This thin margin between sales and expenses leaves farmers in a vulnerable position when those production costs increase even more.
“We've been operating at really tight margins for a while now," said ValJay Rigby, president of the Utah Farm Bureau, "and then commodity prices have gone down and our costs have risen.”
Rigby said that the conflict between the United States and Iran has led to sharp increases in the cost of important farm inputs like nitrogen fertilizer.
“I think we were just over $400 a ton in September. And fertilizer cycles a little bit," Rigby said. "And we've been cycling up, trending up a little already, up to maybe in the $450 range by the first of the year, early February. And now, as of a week ago, they were saying we were over $600 a ton.”
Such a sudden spike in costs will be difficult to stomach for many Utah farmers. For some, it will be impossible.
“I talked to a producer yesterday," Rigby said. "He normally grows about 600 acres of corn in southern Utah, and he said with lack of water and the price of fertilizer, he can't make it work, and he's not going to plant any corn. And normally, that feeds a lot of cows, and so it's going to impact more than just that producer, because now that feed for those cows is going to have to come from somewhere else. It's going to have impacts all through our system, all through our economy.”
How is it that a war on the other side of the world can have such a profound impact in rural Utah?
Dr. Ryan Larsen is an agricultural economist at Utah State University.
“It's that Strait of Hormuz," said Larsen. "You think about that shipping lane of oil, of energy, right? It's being hampered. It's not shut down completely, but we've seen that shipping lane — everything — slow down, and just the risk associated with it.”
Larsen said that the Strait of Hormuz is a major shipping lane for global energy and fertilizer networks. According to an analysis from the US Farm Bureau, 20% of the world’s petroleum products pass through the Strait. 30% of global ammonia and 49% of urea, two of the most important fertilizers, are produced in the Middle East. This means that any disruption to the Strait of Hormuz stands a chance of throwing global agricultural production into chaos. Even hay production in the high mountain valleys of Southern Utah.
Allen Henrie is a farmer and rancher in Panguitch, Utah.
"We run a 120 cow-calf operation," Henrie said. "We have about 70 acres of farm ground, and then we run on a lot of owned and leased pasture ground.”
Henrie said that it’s not just the costs of fertilizer that threaten the farmers in Garfield County.
“You know, diesel, since this conflict started, has increased over $1 a gallon," he said, "and that starts showing up in a hurry on your bottom line.”
According to USDA data, the typical Utah farm is 600 acres. That means that farmers are dependent on machinery to grow crops.
“And so every time you go to the service station," Henrie said, "you're paying an extra 20 bucks, and you're doing that several times a week, because this time of year, you're running your tractor about every day, planting crops, putting out fertilizer, doing just the normal things that farmers and ranchers do.”
Larsen said that the issues of fuel and fertilizer costs can’t be easily separated out, since fertilizer production is extremely energy intensive.
“Nitrogen, potash, phosphorus, those are really our three big [fertilizers], and all those are impacted by energy prices. When you think about conflicts, any impact on energy, we're going to see that eventually come to that to fertilizer.”
Larsen explains that rising input costs demand more of Utah farmers. As input prices increase, a farmer’s yield must increase to break even, so their sales at least match the cost of production.
“Take corn," Larsen said. "Corn is common across the United States. We use that a lot as our measurement. Take that from 170 bushel breakeven. Some are speculating that breakeven could be 200 bushels. So, farmers are going to need that additional yield to break even because of changing input costs.”
In Utah, where alfalfa is by far the most widely grown crop, farmers may not be able to realistically sell their hay for the sums that would see them break even.
“For alfalfa," Larsen said, "we typically see that breakeven costs right around $160 to $180 per ton. So, if we adjust fertilizer cost, energy cost, if we take that to $190, $200 per ton? There's not very many farmers receiving $200 per ton on their alfalfa right now.”
I asked Henrie if he or any other farmers in his area kept fertilizer or fuel stockpiled to buffer against situations of extreme input fluctuation like this.
“Very few, very few in our area have that stockpile of fertilizer. Now, there are a couple guys that I know of that bought their fertilizer early. Most of us, we're just starting to look at that cost right now.”
Luckily, one thing that Utah farmers have going for them is some amount of operational diversity.
“Of our operators here, very few are just straight farmers," says Henry. Most of them have cattle, and they run on both public and private land. So, a lot of our guys run on Forest Service and BLM and that kind of country, along with some their own irrigated pasture.”
Producing livestock and feed is one option that farmers have to try and mitigate market unpredictability.
“In a year like this," Larsen explained, "livestock may be the reason that their farm stays profitable because of that diversified nature. We're starting to see grazing more, converting that feed to protein, versus bailing it up and selling it.”
Still, Larsen said that options to further diversify operations are limited by a lack of established markets for other sorts of crops.
“You know, alternative crops are really hard in Utah, just because of market outlets," Larsen said. "We don't have a lot of those markets.”
Henrie said that even when the markets for livestock are hot, past years have shown that high input costs can still undercut farm profitability.
“Beef prices are real high right now," Henry explained, "and that's mostly what we grow down here. Crops that we grow support our beef operations. But in spite of having really good prices last year, the profit margins weren't what you think you'd see, because fertilizer was already high. We didn't make any money, you know? We made some, but not like we'd hoped to.”
As input costs continue to climb due to the conflict in Iran, the Utah Farm Bureau and their national counterpart have voiced the need for government support on behalf of small farm operations.
According to Rigby, “The American Farm Bureau has asked the White House to make priority for opening shipping lanes for fertilizer.”
The American Farm Bureau recently published an open letter to President Trump. Among other things, it requests that the US Navy accompany ships carrying fertilizer through the Strait of Hormuz. It also requests that tariffs be removed from imported fertilizer products sold to American farmers.
“Food security is national security," Rigby said. "It would be a terrible thing to have to beg to other countries for our food."
For Rigby and other agricultural activists, this threat to American farmers is an acute continuity of a concerning trend.
“If you look at the charts," Rigby said, "for the first time in decades, the US is a net food importer. We are bringing in more than we're producing.”
Larsen said that the combined pressure of spiked input costs, foreign conflicts, and climate change make farming harder than ever in Utah.
“The risk of weather, risk of policy, which could be both, trade policy, foreign policy, ... all of these risks, when we sum them all together, has increased the risk in agriculture,” Larsen said.
For Larsen, the enduring presence of Utah farmers is testament to their ability to ride out tough times, and adapt to changing economic, political, and environmental conditions.
“I'm always amazed," Larsen said, "those that are still in agriculture have weathered many of these risky environments. They are not in agriculture just out of luck. They've used risk management, they've used diversification. They are very smart and they have used every tool available to stay in agriculture. So, I think the producer nowadays has figured out that to remain in agriculture, they have to stay sophisticated with the risk management tools that they use. They can't just stay in the same box.”