Aftermath: The Hormuz Farm Crisis

This story was first featured in the Aftermath newsletter, a series from David Dayen exploring the economic consequences of the war in Iran. To have these stories delivered to your in-box as soon as they are published, sign up for the newsletter here.

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When we had shipping expert Sal Mercogliano on our Organized Money podcast, he said that for every day the Strait of Hormuz is shut down to traffic, it’ll take a week to untangle the problem afterward. Yesterday was day 52 of the crisis, so that’s a year on the back end, even if it ended imminently.

So get used to more from us at Aftermath, as we detail the consequences before the fighting even stops. Tell your friends and scroll through previous editions at prospect.org/aftermath.

Are We Still at War?

We are. My colleague Bob Kuttner ran down the latest as of yesterday afternoon. The fundamental problem is that this war turned the Strait of Hormuz into a bargaining chip, and both sides want to use that chip by closing the strait, which continues to punish the global economy with price spikes and shortages. I agree with Paul Krugman that analysts are being way too sanguine about this, almost acting the way investors are to Trump’s bravado promoting an imminent end. This is looking bad, and completely self-induced.

The View From the Heartland

I was in Omaha, Nebraska, last week, and you’ll get more from me about that trip in some non-Aftermath articles at prospect.org. But I talked to a couple of candidates about how the Iran war is affecting them at home.

Gas prices were a little less than $3.50 on average in Omaha. This is among the lowest rates in the country, and Douglas County (home to Omaha) in particular is among the lowest in the state; elsewhere, prices are as high as $4.19. But that’s still up nearly a dollar compared to Christmas, in line with price changes across the nation (see the country’s scariest chart).

The bigger impact in Nebraska is out in farm country, where planting season has begun and fertilizer prices are shocking the system. “I was talking to a row crop farmer who farms 1,900 acres,” said Dan Osborn, the independent candidate for U.S. Senate who far outpaced Kamala Harris in Nebraska in 2024 and is running again this year against billionaire scion Sen. Pete Ricketts (R-NE). “And he said his inputs for fertilizer, because it’s anhydrous, which is just compressed natural gas, because the natural gas is coming from Iran, is $50,000 more than it was going to cost him without this war.” Anhydrous ammonia prices are up 39 percent from this time last year.

“I said, ‘Dude, are you gonna go broke?’” Osborn continued. “He’s like, ‘I’ve been doing this a long time so I’m OK, but a lot of the younger kids, they’re going to have to go get loans to fertilize their property.’”

The Prospect has written about fertilizer spikes since the war, because up to a third of the global supply passes through the Strait of Hormuz, which has been mostly closed since the end of February.

The crisis, which could move swiftly from price spikes to shortages, will have an uneven effect across the country, and Nebraska may be one of the luckier states. While 70 percent of farmers across the country said in an American Farm Bureau Federation survey that they wouldn’t be able to afford all the fertilizer they need for this year’s crops, in the Midwest region that dropped to 48 percent. More than location, good fortune depends on whether farmers purchased in advance, which is more prevalent in the Midwest than other regions, particularly the South. And crop selection could shift, as soybeans require less fertilizer than corn, for example.

But Nebraskan farmers were already feeling the pinch before this latest hazard, says John Cavanaugh, a state senator who is running for Congress in Omaha. “[Trump’s] erratic tariffs have cut off the Chinese market from American soybeans,” Cavanaugh explained. “When they lose those markets, it takes a generation to earn them back, and they get supplanted by Brazil or Argentina.”

Cavanaugh added that Nebraska is expecting drought conditions this year, with the biggest wildfire in state history burning last month. So fertilizer prices are just a culmination on the end of a long trend hitting farmers. “So then they have to make decisions, what are we going to plant this year?” he said. “And now that they’ve started planting, they’re getting hit with the higher prices for the fertilizer.” President Trump promised to made farmers whole from the tariff losses with a $12 billion bailout, but Cavanaugh said that, on average, farmers are taking back only 25 percent of their losses.

This not only hurts farmers, but companies in adjacent districts like the Omaha seat Cavanaugh is running for. “There are commodity companies here, ethanol companies. And then food processing companies,” Cavanaugh said. “If the feedstocks aren’t coming in, they’re affected too.”

Agricultural bankruptcies rose 46 percent year over year in 2025, which intensifies the farm consolidation that has boosted consumer prices and squeezed independent farmers and farm communities. Osborn described a domino effect in rural America. “Agriculture suffers, Main Street Nebraska starts to suffer, businesses close, people move,” he said. “And the only people left to pick up the pieces are the people who have the money to be able to do it.” That means agribusiness, private equity, and wealthy absentee farm owners.

The impact could be generational, Osborn said: “If you’re a young kid coming out of high school or you even graduated college with an agronomy degree or botany and you want to go be a farmer, I don’t know how you can.”

Beercan

(I’m showing my age with that reference in the heading.)

One of the side effects of the war has been packaging. Plastic is derived almost entirely from oil and gas, and reductions in movement of those commodities have damaged the plastic supply chain. The reason aluminum prices are soaring is a bit different: Iran directly attacked two giant aluminum smelters in Bahrain and Abu Dhabi late last month and took them offline. The Abu Dhabi plant could take a year to fully repair. A Norwegian-owned smelter in Qatar has also cut down output.

Prices on trading markets climbed to a four-year high last week.

That means higher prices for, yes, your beer can. But aluminum is also used in making airplanes, cars, solar panels, and lots of other goods. Temporary shutdowns of production lines that utilize specialized aluminum could ensue.

While the Gulf only produces about 9 percent of global aluminum, supplies were already constrained, with few options to make up for the losses. And one-fifth of aluminum supply in the U.S. comes from the Gulf, making us particularly vulnerable despite at one point being the world’s largest aluminum producer, with 24 sites as recently as 2000. There are only four today.

That makes the expected launch of a new American smelter in Inola, Oklahoma—the first in the U.S. since 1980—even more important. The smelter is being helped along through a Biden-era infrastructure grant. But while when finished the Oklahoma site would more than double U.S. aluminum smelting capacity, construction won’t start until the end of this year and take three years to build. In a dark irony, the co-owner of the smelter is Emirates Global Aluminum, the same firm whose Abu Dhabi smelter is offline.

Oh yeah: There’s also a 50 percent Trump tariff on aluminum. Good times.

UPDATE: An earlier version of this story asserted that Pete Ricketts is a billionaire. He is in fact the son of a billionaire, TD Ameritrade co-founder Joe Ricketts. Pete Ricketts, by one account, is worth a mere $207 million.

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