Shortly after the Iran war began four weeks ago, agriculture chief Bikram Hundal was at his side.
The vice president of operations at Sequoia Nut Co. had shipped 15 containers of almonds, walnuts and pistachios from the port of Long Beach, and was not sure where they were on the high seas.
Their destination was Dubai’s port of Jebel Ali, a major commercial hub, but jets, missiles and rockets criss-crossing the skies of the Middle East diverted one ship to the Netherlands and another to Algeria.
Finally, the rest of the 300 tons of California nuts worth $1.7 million were unloaded at the port of Fujairah, also in the United Arab Emirates but in the Gulf of Oman, a little further from the fighting.
Now, shipping costs to the county have tripled to $7,500 per container, and Hundal isn’t sure when the Tulare County company will get its money back.
“They will be late to pay for those goods, and tell us that any goods have already been sold to them [that] which have not been sent, please do not send them,” he said. We must pay the farmers.”
Since the war began, the average price of a liter of diesel in California has reached $7.26. Fertilizer prices have increased.
As the war rages on in Iran, farmers like Hundal are hit with forces beyond their control, including the cutting off of key export markets and a sharp increase in the cost of doing business.
The war has driven up the price of diesel fuel for trucks and farm and farm equipment, as well as fertilizer, which is crucial to increasing crop yields – leading to fears that if the conflict drags on for too long it could drive up market prices.
The average price of a liter of diesel in California reached $7.26, up more than $2 compared to last month. The diesel that powers tractors and other non-road vehicles and engines is usually $1 cheaper as it is exempt from certain taxes.
Tara Gallegos, spokeswoman for Gov. Gavin Newsom, blamed the farm economy’s difficulties on President Trump’s “recklessness” in starting the war.
“California farmers have been hit twice by high fertilizer costs and high fuel costs. Every American is going to end up paying for that at the grocery store because these things cost the world,” he said.
Trump has made conflicting statements about rising fuel prices, saying it’s “a small price to pay” to pursue his war aims to end Iran, but also saying he wants to end the war quickly.
Even before the war, California farmers were struggling with the disruption caused last year by Trump’s tariffs, which hit farmers hard as trade partners responded with their jobs.
California is the largest agricultural state in the nation as measured by the value of its crops, which increased by $60 billion for the first time in 2024 – and was hit with a correspondingly large loss last year.
The value of the country’s top 13 agricultural products exported to China – including almonds, pistachios and milk – will drop by 64%, or $1 billion, by 2025, according to the latest UC Davis estimate.
Faith Parum, an economist at the American Farm Bureau Federation, said the increase in fertilizer and diesel prices follows last year’s price-related trade disruptions and several years of natural disasters, including drought and cold.
“How do we ensure that we keep farmers in business? Because it’s a matter of national security and food availability,” he said.
Parum noted that farmers who grow crops such as corn, soy, rice and cotton will lose $90 billion across the country from 2023.
Key ingredients for some fertilizers come from the oil- and gas-rich Middle East, where the war has fragile markets and supply chains.
There are now reports that some fertilizers are increasing by a factor of three or more. This increase is occurring in California and across the US even though the state produces most of the nitrogen-based fertilizers, which are important for improving crop yields.
Fertilizers are used by American farmers as liquid nitrogen, liquid ammonia or as urea pellets, which are the most common nitrogen-based fertilizers in the world, said Veronica Nigh, an economist at the Fertilizer Institute.
Although most of the liquid nitrogen and ammonia is produced domestically, the US imports almost half of its urea, making it vulnerable to Middle East shocks.
All nitrogen fertilizers are derived from ammonia, which is made using natural gas – half of all urea exports come from the Mideast rich in oil and gas, where it must pass through the disputed Strait of Hormuz, he said.
Prices are rising worldwide, and fertilizer plants are closing in Bangladesh, raising the prospect of a urea shortage. That would lead to food shortages first in less wealthy countries, and American consumers could see higher food prices unless the war slows down quickly, Nugh said.
Food prices rose sharply after Russia invaded Ukraine in 2022, but that was largely due to the countries being major grain exporters.
“This is different than anything we’ve experienced before, in that it’s not happening in a single market, and it’s something that’s very important to farmers around the world,” he said.
Sunrise over 14,000 acres of Sequoia Nut Company walnuts and almonds and Custom Almonds.
The war is hitting Midwest farmers as they enter the growing season for crops like wheat, corn and soybeans, and need to apply more fertilizer.
California also grows those crops, but the biggest investment is in nuts, produce and other “specialty” crops, resulting in a constant need for fertilizer. “You have prices and purchases throughout the year,” Nugh said.
Sal Parra Jr., who helps manage his family’s 1,500-acre farm in Fresno County and is director of operations at Bowles Farming Co. with more than 10,000 acres in nearby Merced County, he is the type of farmer Nigh is talking about.
The two farms grow many crops, including peanuts, corn, wheat, cotton, alfalfa and fruits and vegetables – all of which require a variety of fertilizers and other nutrients.
The cost increase is bad enough, but now there are fears that an important liquid fertilizer, UAN-32 – which contains three forms of nitrogen, including liquid urea – could be in short supply.
“We’ve actually taken the initiative in Bowles to fill as much storage as we have with fertilizer to try to reduce the pressure,” he said, noting that his family’s farm does not have the capacity to store much fertilizer.
There are techniques to extend resources by applying fertilizers more efficiently, Parra noted, such as managing soil fertility, although they are expensive.
Despite rising fuel costs, farmers in the Central Valley say they are hoarding fertilizer and looking for other ways to fertilize their crops.
“I think that in a year like this, when you see the prices of fertilizers going the way they are going, it may be justified to use other methods,” he said. “I’m going to be more creative with our fertilizer programs.”
At the same time, he said farms must bear the high cost of diesel, which uses pumps, tractors and heavy machinery to transport crops to the market.
Most of the farm sales are under contract and prices have been set, meaning those costs will have to be absorbed now, said Parra, who worries that many of the government’s crops could see lower sales as prices eventually rise in the market.
“Most of what we grow are good melons, or carrots or tomatoes, and depending on the price, people may or may not buy them,” he said.
The economic shock caused nationwide by extreme weather events, the disruption of export markets and now the war has caused industry, including California farmers, to seek government assistance.
A driver pulls almonds from a tractor trailer to be weighed at Sequoia Nut Company and Custom Almonds in Tulare, Calif, on Thursday.
Trump’s massive tax cut and repeal bill last year increased payments to farmers. In December, Trump approved $12 billion in emergency aid, including $1 billion for produce, peanuts and other specialty crops grown in California.
And last week, the administration issued an emergency fuel freeze to continue nationwide sales of E15 — a gasoline blended with 15% ethanol, almost all of which is produced from corn grown by American farmers.
“That’s very helpful,” said Parum.
Normally, gas sales are limited in the summer due to the volatility of ethanol and its contribution to smog, but the Farm Bureau maintains that new studies show the compound is not a pollutant.
Other relief sought includes reducing long-standing duties in countries that export fertilizer products to the US, such as Morocco, a supplier of phosphates.
The war also disrupts important markets for farmers such as Sequoia.
Although the Middle East is not a major export market for California farmers and growers like Canada, the European Union or Mexico; the United Arab Emirates ranks in the top ten as peanuts, strawberries and other products are exported and distributed throughout the region.
Eric Andrade and Bikram Hundal, Vice President of Operations at Sequoia Nut Company and Custom Almonds discuss quality control at the company’s offices in Tulare, Calif., on Thursday.
Along with almonds and pistachios, walnuts are a staple of the Mideastern diet — and those grown by California farmers are considered the “gold standard,” said Robert Verloop, chief executive of the California Walnut Board and Commission.
The war struck in the middle of the holy month of the Islamic calendar, Ramadan, which began on February 17 and ended on March 19, when consumption is at its peak.
About 70,000 tonnes of walnuts were on their way or will be shipped to the region in the period leading up to and including Ramadan. That accounts for about 10% of California’s production, which is expected to reach $1 billion this year.
Other ships have been temporarily moved to ports in China, India and Europe until new customers can be found. Many shipments are now canceled before they are loaded onto ships, creating backlogs, Verloop said.
Harpal Singh, left, an employee of Sequoia Nut Company and Custom Almonds, loads almonds into bulk bags.
The war has also shut down Mideastern markets as citizens fearing rocket attacks stay at home. That has contributed to reduced consumption of peanuts, forcing some peanuts to be sold elsewhere at a lower price, he said.
Also, the expected wave of orders that usually follows Ramadan has not materialized, hurting California farmers who may not be able to recoup losses, he said.
“Life is different, and it’s not business as usual,” said Verloop. “There’s a saying in the industry. If you don’t eat it in February, you don’t need twice as much in March.”
