Farmers across the US Corn Belt are confronting their most severe financial crisis in 40 years. Soaring diesel and fertilizer costs triggered by the Trump administration's military action against Iran, compounded by an ongoing drought, are driving American food producers to the brink of collapse, with projected industry losses of $31 billion this year.
According to research released on August 25 by the American Farm Bureau Federation (AFBF), without government intervention, growers of nine major crops including corn will suffer losses of $31 billion in 2025, with losses expected to widen further to $32 billion by 2027.
Corn growers are facing losses of $131 per acre this year, while soybean producers are losing $80 per acre. AFBF economist Faith Parum noted that 2027 will mark the sixth consecutive year of losses for most major field crops across the country.
John Hansen, president of the Nebraska Farmers Union, characterized the current situation as "the most severe financial downturn in agriculture since the 1980s."
This crisis is now rippling through broader American society. A recent poll shows that more than 53% of registered voters report their personal finances have worsened since Trump returned to the White House in January 2025. With just 71 days remaining until the midterm elections, the plight of farm states has emerged as a potential threat to Republican efforts to maintain control of Congress.
War's Toll: Diesel and Fertilizer Prices Surge
Following the US military strike on Iran in February, traffic through the Strait of Hormuz contracted sharply, directly elevating global energy and fertilizer prices and adding further strain to an already struggling US agricultural sector.
According to data from the US Energy Information Administration, the national average diesel price has jumped from $3.81 per gallon before the conflict to $5.45 per gallon, an increase of more than 43%. Diesel serves as the primary fuel for agricultural machinery, and this price spike has directly raised production costs for farmers.
The surge in fertilizer prices is equally striking. Matt Bailey, a corn and soybean grower in eastern Nebraska, noted that a common phosphorus-rich planting fertilizer, "11-52-0," which sold for $470 per ton a decade ago, now exceeds $900 per ton—effectively doubling in price. "Where do you even start? How do you budget?" he asked.
Brad Lubben, an agricultural economics professor at the University of Nebraska-Lincoln, pointed out that interest expenses, labor costs, and farm equipment prices have also risen substantially. "If you look at every component of a production budget, most have climbed significantly over the past few years."
It's worth noting that the upward pressure on fertilizer prices did not originate with the Iran war. The Russia-Ukraine conflict that began in 2022 had already severely disrupted global fertilizer supplies, and the Iran conflict has further exacerbated this situation.
Drought Compounds the Crisis: Extreme Weather Pushes Crop Failure Risk to Historic Highs
Beyond cost-side pressures, the US Corn Belt has also experienced severe drought this year, further squeezing farmers' income potential.
Nebraska is among the hardest-hit states. Data shows that from January to July this year, the state received only 11.86 inches of precipitation, approximately 3.1 inches below normal, marking the 18th driest such period since record-keeping began in 1895.
John Dittrich, who grows corn and soybeans near Meadow Grove, Nebraska, said extreme weather is becoming an increasingly serious threat.
"Our droughts are more severe, our heavy rain events are more severe, and our winds are more severe too," he said, adding that the operational pressure from weather risk and rising costs is "unlike anything in my 44-year career."
Recent rainfall has provided some relief, but for many farmers it has come too late. John Hansen of the Nebraska Farmers Union put it bluntly: "A lot of the crop damage is already done. It's like closing the barn door after the horse has bolted."
Matt Bailey also expects this year's yields to suffer. "Given all the dryland... going six consecutive weeks without moisture and getting beaten up, I don't think we're going to see a good harvest this year."
Rising Food Prices: Inflation Pressure Moves to Consumers
The combined impact of drought and war is pushing up grain prices, raising concerns about further inflation.
Traders have already begun lowering their 2026 corn harvest forecasts. US corn futures for December delivery have risen 10% this month to $5.15 per bushel, the highest level since 2023. Soybean and wheat prices have also rebounded in recent days.
Brian Choi, CEO of the Food Institute, a food research organization, warned: "This certainly means higher food prices." He noted that corn prices have risen nearly 20% this year, and "that will ultimately pass through to consumers."
This trend is complicating market expectations for the Federal Reserve's monetary policy path. With US inflation currently running above the Fed's 2% target, further increases in food prices could intensify pressure for policy tightening.
Political Pressure: Farm States Become a Midterm Wildcard
The agricultural crisis is translating into political pressure, putting Republicans in a difficult position ahead of the midterms.
Trump pledged in June that he would "never let farmers down," and his administration applied that same month for an $11 billion agricultural emergency assistance package covering producers of field crops and specialty crops. However, farm groups widely consider this amount far from sufficient.
Meanwhile, some of Trump's policy moves have sparked strong backlash within the agricultural community. Last week, he announced a 90-day tariff exemption on up to 300,000 tons of imported beef, a decision some ranchers have called a "betrayal."
The shadow of trade conflicts also looms large. Several farmers said Trump's tariff policies have hurt US agricultural exports, particularly soybean sales.
Republican Senator Thom Tillis acknowledged on Monday: "With 71 days until the midterm elections, we currently have no positive message to deliver to farm states, and that has been the case since last year's so-called 'reciprocal tariff day.'"
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