Diesel price spike threatens farm margins as harvest nears (Agri-Pulse): U.S. diesel prices have reached record highs just as farmers prepare for the fuel-intensive fall harvest, putting additional pressure on already strained crop-farm margins. The national average reached $5.94 per gallon on Sept. 9, up 61% from a year earlier, while prices in major agricultural states such as California, Iowa and Nebraska also set records. The increase follows a rise in crude oil prices above $100 per barrel amid renewed U.S.-Iran conflict and concerns about disruptions to oil shipments through the Strait of Hormuz.
The surge threatens to offset recent improvements in crop markets and farm income, with higher corn and soybean prices providing farmers some relief after several difficult years. BMO Agribusiness Group’s Bradley Guse said higher fuel costs could absorb much of those gains, while National Corn Growers Association President Jed Bower said he does not expect his farm to turn a profit for the fourth consecutive year. Economists also warn that disruptions to global fuel production, transportation choke points and conflicts in the Middle East and Black Sea are contributing to a broader energy and food-price crisis.
Higher fuel and fertilizer costs could cause farmers to delay purchases and reduce investment ahead of the 2027 growing season. The broader rural economy could also feel the effects as higher diesel prices raise transportation costs and potentially weaken consumer demand for food. Guse said a major concern is “demand destruction,” as higher energy costs could alter consumer spending and ultimately weigh on agricultural markets.
Trade tensions with Canada create uncertainty for U.S. agriculture (Food Navigator): Canada’s retaliatory tariffs on U.S. goods are adding uncertainty for food and agriculture companies on both sides of the border. The duties, which reach as high as 50%, cover a range of products including dairy, sweeteners, milk proteins, packaging materials, steel and agricultural equipment. The measures came after the U.S. imposed its own 50% tariffs on Canadian products, escalating tensions between the two major trading partners.
The dispute has drawn mixed reactions from agricultural and food industry groups. Some U.S. dairy and steel organizations support tariffs as a way to pressure Canada over market-access issues, including its administration of dairy tariff-rate quotas under USMCA. Other farm groups are calling for negotiations, warning that retaliation could threaten important export markets. Canada and Mexico together account for roughly one-third of U.S. pork exports, highlighting the potential consequences for producers if trade barriers continue to expand.
The tariffs are also raising costs for food manufacturers that rely on imported inputs and materials. Higher steel and tin prices, for example, are increasing packaging expenses, while broader disruptions could add costs throughout North American supply chains. With negotiations still unresolved, the trade dispute is leaving companies and farmers to weigh the potential benefits of greater market access against the risks of higher production costs and lost export opportunities.