Farmers Feel Squeeze From Higher Fuel Costs, Fertilizer Shortages

Why It Matters

Rising input costs and supply shocks threaten farm profitability and could sustain higher grocery prices, reshaping consumer choices and supply chains across proteins, produce and processed foods. Policy responses or easing geopolitical tensions would quickly move markets, but structural forces—wage inflation and tech adoption—will determine longer-term costs and industry resilience.

Summary

U.S. farmers and food companies are grappling with higher fuel and fertilizer costs and supply disruptions tied to geopolitical risks such as tensions around the Strait of Hormuz, which have driven up commodity prices ahead of actual product shortages. Consumers are shifting purchases—trading down on some staples while paying premiums for perceived health attributes like protein—keeping demand uneven across categories. Dairy and eggs may offer some consumer relief as production recovers, but fruits and vegetables face continued pressure from weather, labor and transport (diesel) costs. Farmers themselves are unevenly affected: some posted strong returns last year while many face margin pressure from rapid technological change and persistent input and wage inflation.

Original Description

Michael Swanson, chief agriculture economist at Wells Fargo's Agri-Food Institute, said that fruits and vegetables are facing the most pressure from global events, as higher fuel prices and supply chain disruption squeeze both farmers and consumers. Swanson also said that he doesn't expect the protein craze to go away anytime soon, as obesity drugs send consumers looking for higher nutritional value in fewer calories.

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