JUANA SUMMERS, HOST:
Farmers in the American heartland are hoping the Iran war ceasefire holds, but even if the Strait of Hormuz reopens, it will still take months for fertilizer and diesel prices to go down. Geopolitics is just the latest stressor on row crop farmers who are going into their fourth straight year in the red. NPR's Kirk Siegler has the view from North Dakota.
KIRK SIEGLER, BYLINE: Here's Justin Sherlock's business model right now - how can he get through the year losing as little money as possible? Driving his pickup on a country highway bisecting fields of melting snow, he glances at his phone checking the commodity markets and the latest news from Iran.
JUSTIN SHERLOCK: We really need this to be resolved soon and for the oil and energy markets to try and stabilize if we can.
SIEGLER: Sherlock grows corn and soybeans on a checkerboard of land near Dazey, North Dakota, a tiny town on the remote, windy prairie west of Fargo.
SHERLOCK: So we'll go put some of this high-dollar diesel fuel in (laughter).
SIEGLER: High diesel and fertilizer costs due to President Trump's Iran war is capping what's really been a slow burn in the heartland since COVID. Soybean prices have been flat for four years while inflation is up.
SHERLOCK: You know, a lot of our costs skyrocket at 30, 40, 50, 100%. And they have never come back down.
SIEGLER: And then there's Trump's second trade war in a decade. Historically, half of all the soybeans grown in North Dakota are exported to China. The on-again, off-again tariffs have upended that market. Now, China did start buying beans again late last year, but there's no deal in writing yet for this next year.
SHERLOCK: Right now, a lot of farmers are having to pledge all the assets they have as collateral just to get an operating loan to stay in business, hopefully for one more year.
SIEGLER: Literally betting the farm, he says. The only reason they can still get a loan is that land prices are so high, and banks are using that as collateral.
DON MORGAN: Well, I say, you know, in banking, we used to be able to forecast the next 12 to 24 months pretty easy. Now, post-2020, you can't do that because it's been one unprecedented event after another.
SIEGLER: Don Morgan is president of the state-owned Bank of North Dakota. His bank's debt restructuring programs have been a lifeline for the farm economy in a state where one of every five jobs is tied to agriculture. Now, just listen to the demand for millions of dollars in loans.
MORGAN: Our historical largest program was about 190 million. This year, we had to cap it at 500 million. So that gives you an idea on the depth and breadth of the stress in agriculture and specifically row crop agriculture that's occurring right now.
SIEGLER: These are low-interest loans, not direct cash assistance like the federal government just doled out in bridge payments to farmers this year. The Trump administration is weighing a second aid package. At a recent press conference, Agriculture Secretary Brooke Rollins would only say they're working on the fertilizer crisis.
(SOUNDBITE OF PRESS CONFERENCE)
BROOKE ROLLINS: The challenge is only a handful of companies in the world supply fertilizer to the world. It is a worldwide market.
SIEGLER: Rollins acknowledged fertilizer costs have risen by 40% since the U.S. and Israel invaded Iran.
(SOUNDBITE OF PRESS CONFERENCE)
ROLLINS: The silver lining is it has shined a light that has long needed to be shined on this particular input and how difficult it has been for farmers.
SIEGLER: In North Dakota, it's estimated about half of farmers pre-bought their fertilizer before the war started. North Dakota Farm Bureau President Val Wagner is urging fellow farmers to try to stay positive and focus on what they can control, like what they're about to put in the ground.
VAL WAGNER: We're seeing a lot of things playing out that we have no chance. They do not tend to call, you know, the North Dakota farmer and say, hey, what's the impact of this going to be? If we make this decision, what happens to your farm? We're just along for the ride.
SIEGLER: One more year of this ride could be make or break for farmers.
SHERLOCK: The phosphate for...
SIEGLER: At Punky's Bar & Grill in Dazey, a for sale sign hangs in the window. There's one woman taking the orders, grilling the patty melts and cleaning up. After lunch, Justin Sherlock, who's 38, walks outside. His hometown used to be a lot bigger.
SHERLOCK: Yeah, like across the street, that's the old cafe.
SIEGLER: The last decade of turmoil, like the on-again, off-again trade deals, has been tough. Something has to give. Otherwise, Sherlock worries a crash is coming.
SHERLOCK: We're hanging on right now, just barely hanging on. And yeah, if we start losing farmers, if the 1980s comes back and we start losing farmers in large numbers.
SIEGLER: That's the end, he says. We'll lose small towns like this. Kirk Siegler, NPR News, Dazey, North Dakota. Transcript provided by NPR, Copyright NPR.
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