00:00Climbing amid the U.S. war with Iran, driving up costs for American farmers just before spring
00:06planting season when fertilizer is needed most. And here is how farmers say they're dealing with it.
00:13There's been some predictions that fertilizer will go up another $100 a ton on top of losing
00:19money as it is. So it's really sad that the farming has got to the point where we're losing
00:24money to even be doing it. And then with things going on like it is, there's so much
00:29uncertainty. We're used to dealing with markets going up and down. But when we see such a large
00:34increase in such a short span of time is what really what really makes it harder, harder to
00:38deal with. We have a lot on the line from day to day. And at nighttime, sometimes it can be
00:44hard to
00:45sleep. A lot of guys have just said, I'm done. We're going to quit. They're hanging it up. There's
00:49sales everywhere. Lots and lots of farm sales. Financially, it's causing a lot of mental health
00:55problems as well. Farmers have not had a good so far this administration. Joining us now,
01:00CNBC co-anchor Brian Sullivan. Brian, really good to have you. Explain why fertilizer is being
01:05impacted. Yeah. And I know the story is a little bit wonky, but it is important. And a side note,
01:11before I got into broadcasting, I actually traded chemical fertilizers. So this is not horse manure,
01:17for lack of a better term. It's not the old chemical, the fertilizers we used to think of.
01:21These are chemicals. They're like small gumballs, effectively, or large BBs. They're round pellets.
01:27And it's one of the biggest markets in the world. And they're critically vital for growing
01:31food around the world. And while oil is getting all the headlines around the Strait of Hormuz,
01:36about 30 to 50 percent of either the fully produced fertilizers or ingredients, Katie,
01:44in those fertilizers goes through the Strait of Hormuz. We think, oh, it's just an oil tanker going
01:50through. No, it's not. It is these large bulk carriers filled with these little pellets,
01:55which are critical. All the voices that you just heard from farmers here in the United States,
01:59but also around the world. The price has gone up by about 30 percent in one week. So these fertilizers
02:06that we use to produce food, not just here, but in major food producing nations all over the world,
02:12prices are going up because supplies are being constrained. And listen, here in the United States,
02:17the farmers are irritated because their costs are going up. But in many parts of the world,
02:22you've got farmers that are operating on such low budgets or low margins, Katie,
02:27that they wonder, will they stop producing food because they simply can't afford the fertilizer?
02:32There is the chart. Again, it's a little bit wonky of a story. Urea is what it's called. There's
02:36phosphates, nitrates, whatever. Forget about the names. Just know that this war is about a lot more
02:43than just oil. So can you price it? Can you price it out for me? I mean, with gasoline going
02:48on,
02:48going up, we now see a 20 percent increase on average at the pump. I mean, and that might be
02:55more if you're in California or in New York, where some prices are getting above $5. Can you price out
03:01how the rising cost of fertilizer is going to affect groceries?
03:07Well, yeah, I'll say this. Beef prices. Okay, forget about like a fancy steak. I mean,
03:13like just the beef, ground beef. Anything cattle related is either at or near record highs. Now,
03:19there's a lot of reasons for that. There's been droughts. There's been culled herds. Just fewer
03:23cattle out there. But think about this. You're layering on. You think, well, why is he talking
03:28about fertilizer if we're talking about cattle? Because here's why. What do cattle eat? Okay,
03:33they eat corn. They eat hay. They eat wheat. They eat things that are grown. So anything in that
03:39supply chain, that food chain that goes up in price, whether it's the urea chemical fertilizer,
03:45Katie, or whether it's water or shipping or trucking, by the way, diesel fuel, all those cattle
03:51products, all those food products, they're probably put on a train or a boat or a plane or a truck,
03:57which are put in with diesel fuel or jet fuel. So I just I wanted to come on. I appreciate
04:02me on
04:02because I wanted to make clear that while we talk a lot about oil, as we should. Okay,
04:08there's a lot of other things, even potable drinking water, a lot of those regions of the
04:12Gulf. I've actually been at the Strait of Hormuz have actually swum in the Persian Gulf. And you
04:18can by the way, you can see Iran, it's not that far of a gap. A lot of the stuff
04:23that passes through
04:24there is not stuff we think about, but we have to start thinking about, because they're critical to
04:29the stuff that we use and buy and need every day. It's not just an American problem. I mean,
04:35this could contribute to a global food crisis. Jose Andres has been really talking loudly about this.
04:43Chef would know. I mean, he obviously not only has great restaurants, but also is doing great work
04:47feeding people in nations hit by disasters and things like that. But you're exactly right. I'll
04:52give you I'll give you an example. Real world back 100 years ago, literally, you know, we use coal to
04:57light can't whale oil when I was first getting started and trading these commodities. Pakistan was
05:03a massive buyer of chemical fertilizers because they have a huge agricultural area. Ukraine, by the
05:10way, Ukraine is not only a huge breadbasket for things like wheat, whatever, but they're also a
05:15massive consumer and supplier in some ways of fertilizer. So it's the countries that can least
05:20afford it, because here's how the markets work. And we know this, right? If there is something that is a
05:25true commodity. And these these fertilizers, the reason I described them, Katie, the way I did is
05:29because they're fungible, right? If I have one here, it's the same as one that's halfway across
05:34the world. It's going to go where they can afford to be bought. And so what's going to happen is
05:39that
05:39the market goes up. Countries, suppliers, food producers that are able to better afford these
05:46chemicals, they're going to be the buyer of choice. And it's going to disproportionately impact
05:52countries that maybe can't afford to compete as much of the global market.
05:57It's a big deal. As you're saying, it's not just oil.
