Azernews.Az

By Qaiser Nawab | AzerNEWS | Guest columnist

Drive through Iowa or Kansas this summer, and conversations are as likely to revolve around diesel prices as the weather. That is unusual in America’s farm belt, where droughts, floods and hail have traditionally dominated discussions over coffee. Yet the pressures confronting U.S. agriculture today stem as much from volatile energy markets as from the climate. Escalating tensions in the Middle East have exposed a structural reality that often goes unnoticed: modern American agriculture is deeply dependent on fossil fuels, making every shock in global energy markets a shock to food production as well.

Diesel powers tractors, combines and irrigation systems. Natural gas provides the feedstock for nitrogen fertilizers. Petroleum is embedded in pesticides, plastics, packaging and the transportation networks that move grain from farms to domestic markets and overseas ports. For decades, inexpensive and abundant energy enabled remarkable gains in agricultural productivity. Today, however, that dependence has become a vulnerability.

The relationship between energy and agriculture has grown even more complex because American farms no longer produce food alone—they also produce fuel. Nearly half of the U.S. corn harvest is processed into ethanol, while almost half of American soybean oil is used in biodiesel and renewable diesel. Biofuel policies were designed to strengthen energy security, reduce dependence on imported oil and support rural economies. They have succeeded in creating new markets for farmers, but they have also tied agricultural profitability to fluctuations in oil prices.

When crude oil prices rise, demand for ethanol and biodiesel often follows, offering higher returns for some producers. Washington has attempted to capitalize on this by expanding access to E15 gasoline, a blend containing 15 percent ethanol, with proposals to allow year-round sales. For corn growers, these measures promise additional demand and stronger prices.

Yet higher biofuel demand offers only partial relief because the same forces that increase energy prices simultaneously raise production costs. Fertilizer, fuel, electricity and transportation have all become significantly more expensive. Nitrogen fertilizer, produced primarily from natural gas, has experienced repeated price increases following disruptions in global energy markets. Farmers therefore find themselves trapped between rising input costs and uncertain commodity prices. Higher revenues from biofuels rarely compensate for the broader escalation in expenses.

This pressure has altered planting decisions across the Midwest. Corn requires substantially more nitrogen fertilizer than soybeans, prompting many growers to shift acreage toward soybeans whenever fertilizer prices surge. Such decisions reflect rational risk management rather than confidence in market conditions. Farmers increasingly make planting choices not according to soil or long-term strategy, but according to the latest movements in energy and fertilizer markets.

Wheat producers face an equally difficult reality. Higher production costs, adverse weather and disease have reduced profitability even when harvests decline. Lower domestic output eventually filters through the economy in the form of more expensive flour, bread and livestock feed. At the same time, elevated feed costs contribute to higher prices for beef, poultry and dairy products, placing additional pressure on household budgets already strained by inflation.

Transportation has become another casualty of geopolitical instability. Higher marine fuel costs and congestion in major shipping routes have increased freight expenses and reduced the competitiveness of American agricultural exports. Every additional dollar spent transporting grain erodes margins for producers already operating under tight financial conditions.

The challenges confronting soybean growers illustrate the broader predicament. Earlier trade tensions encouraged many farmers to increase corn production, only for soaring fertilizer prices to reverse those decisions. Now many producers face a combination of higher input costs, uncertain export demand and commodity prices that have failed to keep pace with inflation. For many family farms, financial resilience has become increasingly difficult to maintain.

Political consequences are emerging alongside economic pressures. Rural communities have become increasingly vocal about rising production costs, trade uncertainty and the growing financial burden on family farms. Federal policymakers have responded through expanded farm assistance, investments in domestic fertilizer production and efforts to strengthen competition within agricultural input markets. While these measures may ease immediate pressures, they do little to address the underlying problem: American agriculture remains highly exposed to global energy volatility.

The current crisis also raises broader questions about the balance between food and fuel. Biofuel production has undoubtedly strengthened rural economies and diversified energy supplies. However, diverting large shares of corn and soybean production toward fuel inevitably influences food prices, livestock feed costs and export markets. As energy prices fluctuate, policymakers must continually balance environmental objectives, energy security and food affordability—an increasingly difficult task in an uncertain geopolitical environment.

There are reasons for cautious optimism. American farmers have repeatedly demonstrated remarkable resilience through technological innovation, precision agriculture and improved resource management. Advances in fertilizer efficiency, alternative energy, biological crop protection and digital farming offer opportunities to reduce dependence on volatile fossil fuel markets over the long term. Continued investment in agricultural research and infrastructure could strengthen resilience while preserving productivity.

Trade policy will also remain critical. Stable commercial relationships with major importers provide farmers with predictable demand, while affordable access to fertilizers, pesticides and farm equipment helps contain production costs. Agricultural competitiveness depends not only on what happens inside the farm gate but also on predictable international markets and reliable supply chains.

The lesson extends well beyond the United States. Energy security and food security have become inseparable. Geopolitical conflicts that disrupt oil and gas markets now reverberate through global agricultural systems, affecting producers and consumers alike. Countries dependent on imported food or agricultural inputs have every reason to diversify supply chains, invest in sustainable farming practices, and strengthen international cooperation rather than deepen economic fragmentation.

America's farms remain among the most productive in the world, but they now operate within an economic landscape where energy markets shape agricultural fortunes as profoundly as rainfall and soil conditions. The challenge ahead is not merely producing more food; it is building an agricultural system resilient enough to withstand the energy shocks of an increasingly uncertain world. In an era of geopolitical instability, the future of farming will depend as much on energy policy as on agricultural policy, and recognizing that reality is the first step toward safeguarding both rural livelihoods and global food security.

---------

Qaiser Nawab is Chairman of the Belt and Road Initiative for Sustainable Development (BRISD), an international platform fostering cooperation and innovation across Asia, Africa, and Latin America.

---------

The views and opinions expressed by guest columnists in their articles may differ from those of the editorial board and do not necessarily reflect its views.