00:00The American Midwest may be 10,000 kilometers away from the Middle East,
00:03but farmers here are feeling an economic hit from the U.S.-Israel war on Iran.
00:08The Strait of Hormuz closure and the attacks on energy infrastructure in the region
00:12are driving up fertilizer and diesel prices.
00:16The fuel I will need to buy this spring will be in the 30% higher than before the war
00:23started.
00:24I already have purchased my fertilizer and it'll be put on,
00:28but it's still over 30% from higher than what I paid the year before.
00:34And now it's 30% plus that.
00:38So if things don't change, we'll be paying a lot more for fertilizer.
00:42If you pre-purchased last year your inputs to include your fertilizers,
00:46to include other important, your diesel fuel,
00:49then you're probably in a pretty good shape right now.
00:51But if you haven't, you're in a world of hurt.
00:55Farmers aren't all affected the same way.
00:57Some of them were able to lock in lower prices for their inputs before the war started,
01:01so they're set for the spring planting season.
01:04But they're already looking ahead to a longer period of higher input prices
01:07that could squeeze their margins for years to come.
01:10And remember, the effect of the war in the Middle East is just the latest thing
01:13that farmers here have to deal with.
01:15Commodity prices really haven't kept up with costs,
01:18and the trade war means that their biggest buyer, China,
01:21isn't buying at the volumes that it used to.
01:23Not to mention that there are still tariffs on the things that farmers might need from elsewhere,
01:27like machinery or chemicals.
01:29A lot of times our farmers are borrowing money from the bank
01:32to put all the inputs in, to put the crops in,
01:35and they're waiting for the crops to be sold to pay back that money.
01:40Well, if you have a terrible year like we had this year,
01:42our bins right here that we're setting aside,
01:44a lot of our bins remain full
01:46because we're holding those commodities until the prices rebound.
01:50And so if we were leveraged highly,
01:53then that means the bank's not getting paid.
01:56That means the interest on our mortgage is accumulating even higher.
01:59We used to say, what's the black swan event?
02:02And I go, there's no more black swans.
02:03They're all black swans now.
02:07So I'm just looking for a white swan somewhere to raise the flag.
02:12So the crises keep coming.
02:14And as is very often the case,
02:16how farmers will be able to weather them
02:18will depend on how bad they get and how long they go on for,
02:23however used to crises farmers may be.
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