The trouble currently happening in the Middle East is creating shipping issues that have an impact on farmers and elevators. Mike Steenhoek, the executive director of the Soybean Checkoff-supported Soy Transportation Coalition, puts it this way.
“Supply chains do not like turmoil, they do not like uncertainty. And we're seeing that manifest itself currently with some of the supply chain challenges with the conflict in Iran,” Steenhoek told the South Dakota Soybean Network in a recent interview.
The war is an immense tragedy, of course, in its cost of human lives. Where it will be felt in agriculture, according to Steenhoek, is in its effect on the movement of farm inputs, such as fuel and fertilizer.
“While our oceans are vast and expansive, there's a lot of areas on the globe where shipping really consolidates and has to fit through a very narrow conduit,” he said. “And the Strait of Hormuz is one of those places.”
Although many farmers have locked in fuel supplies for spring planting, Steenhoek says the choking off of one of the world’s most prolific oil shipping lanes is bound to cause financial pain for farmers.
“When you're seeing these kind of fuel cost escalations, that's not just a number on a sign. It has real relevance to the profitability and the bottom line of an individual farmer,” Steenhoek explained. “It's kind of like, just one more leak in the profitability bucket that farmers are experiencing.”
Farmers who are buying fuel following the attack on Iran will, on average, pay $2,000 more for fuel, said Steenhoek, while grain elevators will be on the hook for $100,000 in additional costs.
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