Category: South Dakota | Agriculture
Why It Matters
South Dakota farmers are facing a compounding agricultural crisis tied directly to the ongoing U.S.-Iran war, with fuel and fertilizer costs surging at the worst possible time — just as the critical spring planting season approaches. The disruption of oil and natural gas shipments through the Strait of Hormuz is sending shockwaves through South Dakota’s agricultural economy, threatening farm budgets and crop yields across the state.
For a state where agriculture drives billions in annual economic activity, the downstream effects of a conflict more than 6,000 miles away are anything but abstract. South Dakota producers of soybeans, corn, wheat, cattle, and hogs are all directly exposed to the cost pressures now radiating from the Persian Gulf.
What Happened
Since Iran halted unauthorized ship traffic through the Strait of Hormuz in response to U.S. and Israeli military action, a critical chokepoint for global energy and agricultural inputs has been effectively closed. The Strait of Hormuz is the narrow Persian Gulf passage through which approximately 20% of the world’s petroleum transits on any given day.
For South Dakota farmers, the blockade creates a two-front problem. First, diesel fuel — the primary energy source for tractors, combines, sprayers, and all other heavy farm equipment — has become significantly more expensive as global crude oil supplies tighten. Second, the blockade is also restricting the flow of urea, the world’s most widely used nitrogen fertilizer, which is produced from natural gas originating in Persian Gulf nations.
Approximately one-third of global urea fertilizer production passes through the Strait of Hormuz, along with roughly one-fifth of the world’s natural gas supply. With both commodities constrained simultaneously and spring planting approaching, South Dakota producers are caught between rising input costs and uncertain access to the supplies they need most.
By the Numbers
- $70 to $100: The rise in the average price per barrel of crude oil since the war began, with a brief spike to nearly $120 shortly after hostilities erupted.
- $3.94 per gallon: The average gasoline price recorded on March 22, up approximately $1.00 from just one month prior.
- ~$4.36 per gallon: The projected peak gasoline price expected around May 2026, directly overlapping with the height of spring planting operations.
- 20%: The share of the world’s petroleum supply that transits the Strait of Hormuz under normal conditions.
- 33%: The share of global urea fertilizer production that moves through the Strait of Hormuz, now disrupted by Iran’s blockade.
Zoom Out
South Dakota is not alone in absorbing these agricultural shocks. Farmers across the Midwest, Great Plains, and Gulf Coast states are facing identical pressures as diesel and fertilizer prices climb in tandem. The current situation echoes disruptions seen during the 2022 Russia-Ukraine war, when natural gas shortages in Europe caused global fertilizer prices to spike dramatically, forcing some American farmers to reduce application rates and accept lower yields.
The Strait of Hormuz has long been identified by energy analysts and agricultural economists as one of the most critical single points of vulnerability in global food production supply chains. Nations including Qatar, the United Arab Emirates, and Kuwait — all major natural gas and urea producers — rely on the strait for export access, meaning a prolonged blockade could affect fertilizer markets well beyond the immediate conflict timeline.
At the national level, the U.S. Department of Agriculture has historically stepped in with emergency support programs during periods of severe input cost inflation, though no formal federal relief package specific to the current war’s agricultural impact has been announced as of late March 2026.
What’s Next
With the 2026 spring planting season set to begin in earnest across South Dakota in April and May, farmers face immediate decisions about fuel procurement, fertilizer purchasing, and whether to reduce planted acreage in response to shrinking margins. Input cost projections will likely be updated as the military conflict evolves and oil market conditions shift week to week.
Agricultural lenders and farm bureaus in South Dakota are expected to monitor the situation closely, with potential calls for state or federal assistance if prices remain elevated through the planting window. Any diplomatic resolution affecting Hormuz shipping lanes would provide near-immediate relief to global energy and fertilizer markets, though no ceasefire timeline has been established.
In the meantime, South Dakota farmers are preparing for one of the most expensive and uncertain planting seasons in recent memory.