As spring planting season nears, Minnesota farmers feeling economic impacts of war in Iran

NINA MOINI: It's been one month since the war in Iran began, and financial concerns are growing for farmers as we inch closer to spring planting season. When the war began, we checked in with Dan Glessing, President of the Minnesota Farm Bureau Federation, about what impacts Minnesota's farmers could see. We're checking back in with Dan now as we approach a more critical time for the agriculture scene in Minnesota. Thanks so much for joining us again, Dan.

DAN GLESSING: Well, thanks for the opportunity.

NINA MOINI: When we last had you on told us, that you were hoping the war would not last. In particular, that the Strait of Hormuz would reopen. Unfortunately, those things have not happened as of this point. How are you doing now, Dan?

DAN GLESSING: Well, certainly this is going to have a larger economic impact than we had hoped. Obviously, when we talked last, some folks had locked-- farmers have locked in their input costs, fertilizer, seed, et cetera, but now we're to the point where there is still some spot buying there.

I'm hearing more and more concern because there was not a lot of funds last fall. Obviously, we're in a downturn in the farm economy, and we're going to go in the fourth year here with looking at a negative profit margin.

And so people last fall didn't have the funds to lock some in, and I'm hearing more and more of that where they were hoping that fertilizer and the input costs were going to come down, or they just didn't have the funds to purchase. So we're hearing about 80% to 85% locked in from the local cooperative is the number that I've got.

So you still have that 20%, 15% that need to spot purchase, and that's-- their prices on nitrogen, for instance, went up about almost $200. And so the potassium-- the P and the K didn't go up, but the nitrogen is the one that really moved.

NINA MOINI: Yeah. So the hardest hit fertilizer input, as you're talking about, is nitrogen. Can you explain the role that nitrogen plays for crops grown in Minnesota? Which crops are most dependent on it?

DAN GLESSING: Corn, largely, is the most dependent on nitrogen. Beans will fix their own nitrogen within the root system, but corn is probably the largest user of that nitrogen source to make sure that you get a healthy, strong, dark-green plant that produces a good amount of corn per acre.

And so some of the farmers I'm talking to are thinking about split applications where sometimes you put it all on in the spring, depending on your soil holding capacity, put it all on in the spring so the plant has it all throughout the growing season.

But there are another system where you put a little bit on in the spring, a little put a little on early summer, and then maybe even a third application just to try and push that expense out a little bit more, and use a little bit less fertilizer.

NINA MOINI: How does that impact the overall crop?

DAN GLESSING: So it depends. If you have a rain event or have weather that prevents you from getting one of those split applications on, then your crop is going to suffer negatively. And quite honestly, whether you put it on all in the spring or you-- we call it spoon feeding, if you spoon-feed it, the yield is going to be pretty similar. And so that part of it. But you run that risk when you don't get it on for that plant to use in a timely manner, that's the critical drawback to that system.

NINA MOINI: So you mentioned in here splitting it up or spoon feeding. Are there other options for farmers for fertilizer at a lower cost?

DAN GLESSING: Just putting on less and making less of that return on investment, which isn't something that a normal farmer wants to see is less. You always want to do better, whether it's soil health or crop return. That's not something, when you've farmed for-- in my case, my entire lifetime, I don't want to think I'm not doing the fullest potential that I can, whether it's that seed genetics or the resources that we have.

NINA MOINI: Sure. Do you think you could see farmers choosing to switch crops and plant soybeans, maybe, perhaps, and instead of corn or skip a growing season? Is that something that you would have to wait longer to see how much of an impact there might be? Or are those the type of decisions anybody would be making now?

DAN GLESSING: So we might see a little bit of crop switching, but I think a lot of these plans have been in place. And like I said, about 80% of those nutrient needs were locked in already. And so we might see some switching of crops, but I think that that likelihood, it won't be a huge percentage, I'll just put it that way.

NINA MOINI: OK. Let's talk about what's going on at the government level. So Senator Amy Klobuchar, along with two Republican colleagues in Congress, have introduced several bills aimed at lowering fertilizer costs. The first is the Fertilizer Transparency Act. Can you explain how, if you feel that might be helpful, how it would be helpful?

DAN GLESSING: So that bill in particular-- and there's a companion in the House that will be dropped here soon which Congresswoman Craig and Congressman Finstad are also on that.

NINA MOINI: OK.

DAN GLESSING: So that tells you just the bipartisan support of this.

NINA MOINI: Yeah.

DAN GLESSING: Yeah, yeah, it's kind of a rare thing these days, unfortunately, but the Transparency Act will basically call on the big fertilizer players to report their sales, the production, and basically the inventory that's out there. How much are we producing, how much is getting sold, and just to bring a little more transparency into that fertilizer pricing system.

Another way to look at it is just those businesses that might think that they want an opportunity to be in the fertilizer business, what it would help create some competition. And so we're on board with this. And it does exclude-- like, CHS is a major player in the state, or Cargill. It does exclude those cooperatives from reporting it. This is just at the where they get their fertilizer from level. So the big players-- think Mosaic or some of those.

NINA MOINI: OK, so you're going to be keeping your eye on the Fertilizer Transparency Act that's being proposed. There's also a bill that will create a grant and loan program aimed at increasing fertilizer production and competition in the United States. You mentioned increasing competition. Do you think this would be helpful in the long run? Do we need more competition in the US?

DAN GLESSING: It certainly wouldn't hurt when the marketplace has options. The grant program is also available for those cooperatives to build infrastructure that would hold a little more so they could buy it off-peak at times to-- most of the time you get a better price on it. And so that's really something that it helps in the long run if we can make these decisions and get the inventory in.

Because when we look at the fertilizer now, there's probably enough in our area, in our region for the spring season, but when we're looking at some of those mid-summer for maybe an alfalfa field or something like that, or when we go into fall, there's going to be a lot of P and K that goes on in the fall, and some nitrogen, too.

NINA MOINI: Yeah, and we don't what's going to happen. Congress is in recess for the next two weeks until April 13. What are you hoping to see from these leaders? How hopeful are you that farmers could get some relief soon? We talked about these proposed bills here, but would it be nice to get some relief in terms of funding or grants?

DAN GLESSING: Well, obviously we really don't know the extent yet of what it's going to cost. And ultimately, I sure would like to see this conflict come to a resolve, get the Straits of Hormuz moving again. Obviously because we're a global market.

And to get relief to the farmers, I think it's going to take more than just fertilizer prices. Obviously, when we talk about domestic use trade, and the input prices are probably the three legs of the stool that are needed to get farmers to some profitability. I don't think any one thing is going to solve the problem that we're in. Like I said earlier, over the past four years-- or this will be our fourth year of looking at potentially a negative profit margin.

NINA MOINI: Mm-hmm. Dan, thanks so much for coming on the show again and continuing to keep us posted on how things are going. Really appreciate it.

DAN GLESSING: Yeah, thank you.

NINA MOINI: Dan Glessing is President of the Minnesota Farm Bureau Federation.