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US Farmers Face Fertilizer Affordability Challenges Amid Hormuz Closure, Survey Shows

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US farmers are facing fertilizer affordability constraints as supply disruptions caused by the effective closure of the Strait of Hormuz have pushed prices higher, according to the American Farm Bureau Federation.

A survey conducted by the advocacy group between April 3 and April 11 showed that about 70% of more than 5,700 farmers surveyed couldn't afford all their fertilizer requirements.

The ongoing fertilizer affordability challenges appeared to be "most acute" in the South and Northeast regions, with farmers also hit by soaring farm diesel prices, according to a Tuesday report posted on the Farm Bureau's website.

"Nearly six in 10 farmers report worsening finances, reflecting rising fertilizer and fuel costs during spring planting and underscoring the urgent need for immediate economic assistance to keep farms gates open," said the author of the report, Faith Parum, who is an economist at the American Farm Bureau Federation.

Shipments through the Strait of Hormuz have been disrupted as Iran prevented commercial vessels from passing through the narrow waterway since the war with the US and Israel started at the end of February. The strait carries around one quarter of global seaborne oil trade and about one-third of all seaborne trade in fertilizers, according to a recent UN Trade and Development report.

A US navy blockade of Iranian ports in the strait has been enforced after the US-Iran peace negotiations in Pakistan over the weekend ended without a deal. Still, a two-week ceasefire between Washington and Tehran holds.

"Fuel and fertilizer markets are the most volatile since Russia's invasion of Ukraine, and the duration of disruptions in the Middle East and closure of the Strait of Hormuz will ultimately determine farm production expenses in the months ahead -- a variable that significantly impacts farm margins given historically low crop prices," Parum said.

The survey showed that just 19% of farmers in the South were able to secure their fertilizer purchases ahead of the spring planting season, compared with 67% in the Midwest.

Farm diesel prices have surged 46% since the start of the war, Parum said.

"Higher energy prices also increase the cost of producing nitrogen fertilizer, which relies heavily on natural gas as feedstock," she said. "These overlapping increases in fuel and fertilizer expenses help explain why more than 90% of farmers surveyed reported that their financial conditions have worsened or remained the same since last year."

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