A wheat field near Lewiston, Id. U.S. farmers are contending with a new challenge: the closing of the Strait of Hormuz has blocked flows of crude and fertilizer, sending prices higher.Nathan VanderKlippe/The Globe and Mail
In the more fertile parts of the United States, those who work the land sneer at the dryland farmers who wrest crops from the arid expanses of the West.
“They would joke about wheat as poverty grass,” said Idaho wheat grower Jeff Kaufman. In any given year, his family, which has been farming in the state since 1899, prepares for the possibility that drought will cut production in half. In that environment, the basics of farming are tough enough.
But for the Kaufman family and countless others, the past four months have added a new complication. In the daily decisions on which a farm is built, it’s no longer enough to consider the weather, seasons and global demand.
Geopolitics has now become an unavoidable part of choosing when to buy diesel or how much fertilizer to store. To farm today is to wrestle not just with rain and sun, but with the fate of the Strait of Hormuz, whose closing has blocked flows of crude and fertilizer, elevating prices by a third to a half.
“What do you do? You take the year off? No. You cannot do that. And you have to make decisions today,” said Mr. Kaufman, who with his two brothers cultivates 14,000 acres around Lewiston, Idaho.
Jeff and Steve Kaufman’s family has been farming in Idaho since 1899.Nathan VanderKlippe/The Globe and Mail
Timing has always mattered to the business of crops. Diesel prices tend to dip around Christmas, typically making that a good time to buy. Fertilizer can be bought in advance. Many months before harvest, crops can be sold on futures markets.
The trick is to decide when, a calculation that offers a critical piece of autonomy for those whose livelihoods are otherwise largely dependent on factors they cannot control.
For the Kaufmans, that meant contracting for all of their spring fertilizer needs in February, “right before the whole Iran thing kicked off. So we came out all right,” said Steve Kaufman, another of the brothers.
That timing included a healthy measure of good fortune. But it was also built on a reading of world events.
The U.S. “invaded Venezuela and then we were building warships up around Iran. We just start hearing those rumblings, then it’s sometimes a good time to take a little risk off the table,” Steve said.
In some ways, the vulnerability of farmers to geopolitical vicissitudes is nothing new.
“Politics has been a part of the farm life since Jimmy Carter,” said Ben Barstow, a wheat farmer in eastern Washington State’s Whitman County, which road signs declare “the nation’s leading wheat producing county.” In 1980, Mr. Carter, then U.S. president, embargoed grain shipments to the Soviet Union after its invasion of Afghanistan.
“If an administration is involved in foreign policy, there’s a likelihood that we’re going to be hurt, at least in the short term,” Mr. Barstow said. He is retiring from the business this year, freeing him to focus primarily on short-term considerations. “It’s wonderful,” he said.
Iran conflict drives up fertilizer costs during busy planting season
Others, though, have remade their routines as they navigate modern realities. South Dakota farmer Tanner Hento now starts his day with a scan of The Wall Street Journal, The New York Times and BBC. At a moment when a single social-media message from the President could erase a season’s profits, anyone who fails to keep up with global affairs “will be left in the cold,” he said.
Weighing the effect of sea mines on shipping around the Arabian Peninsula has not historically been a skillset required of farmers.
But “my general gut feeling is any time you start having unrest in the Middle East – and any time there’s a whisper of a tariff – nine times out of 10, it’s better to act and take some action,” Mr. Hento said.
Yet the most important questions for farmers have no obvious answers, and seeking better information is no panacea.
“You want to hear the war is going to end tomorrow, you can read that. You want to hear the war is going to end in 10 years, you can read that, too,” said Ed Chvatal, who oversees a large operation growing wheat, alfalfa and seed near Walla Walla, in southeastern Washington.
His plan for this year is simply to avoid big bets.
“I’ll just be hand-to-mouth through harvest, just get what I need for a week at a time,” Mr. Chvatal said.
The Kaufman family has for nearly a century worked the land around Lewiston, named after one of the leaders of the early-19th-century Lewis and Clark expedition that camped in the area.
But new realities are forcing new ways of doing business. The brothers have begun building larger storage facilities for both diesel and fertilizer. Being able to keep large volumes on their own property allows them to buy at more favourable times, rather than being vulnerable to wild price gyrations. They are building enough capacity to store nearly a season’s worth of fuel.
“If we think we’ve got a good price, we’re going to just try to buy more and stockpile it, so we can ride out the crazies,” Steve said.
The savings can be considerable: Late last year, they bought farm diesel for US$2.20 a gallon. It now costs nearly double that.
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They’re buying more fertilizer in advance, too, hoping the borrowing costs to secure large quantities are outweighed by discounts for buying in bulk and the certainty of locking in a particular price.
The Kaufmans have also begun detailed survey work, towing a probe across some fields to map soil depth and other characteristics. Those data are then used to vary the rates of planting seeds and applying fertilizer, extracting the greatest crop volumes from the most prospective places. Roughly 2,000 acres have already been completed. They plan to do another 1,000 this year.
The variable-rate fields have, so far, shown a 5-per-cent lift in yield – enough to matter, even if it feels like a small victory relative to the potential losses from events on the other side of the planet.
“It’s better for the environment. It’s better for our pocketbook,” Steve said. “But none of it would make up for a 50-per-cent increase in fertilizer prices.”