FAYETTEVILLE, Ark. (RFD-TV) — Higher diesel and fertilizer prices tied to disruptions in Middle Eastern shipping routes are expected to add more than $343 million in costs for Arkansas farmers in 2026, according to an analysis from the University of Arkansas Division of Agriculture.
University of Arkansas Extension Economist Ryan Loy says the estimate represents costs above what farmers had already budgeted for the growing season. He cautioned that the total could be significantly higher if current prices persist.
Diesel and Fertilizer Costs Pressure Farm Margins
In his interview with RFD-TV, Loy said the analysis examined how much diesel and fertilizer prices had increased compared with assumptions used in farmers’ original 2026 budgets.
The analysis assumed diesel prices of about $2.50 per gallon. Loy said farm diesel prices have increased approximately 72% above that budgeted level.
“That’s cost on top of what we had already budgeted for in our 2026 budgets,” Loy said.
The report also examined rising urea fertilizer costs around planting, when prices surged following the start of the conflict.
Loy said the added expenses are putting further pressure on farm profitability at a time when many producers are already operating with thin margins.
“Those were just kind of an extra cost that is biting into those margins even more,” he said.
Rice Farmers Face the Largest Per-Acre Impact
Loy said rice production has been hit particularly hard by the combination of higher fuel and fertilizer expenses.
The estimated additional cost approaches $120 per acre for rice, compared with roughly $100 per acre for corn and $75 per acre for cotton.
He said those increases are adding to existing challenges for Arkansas rice producers, who have also faced lower commodity prices.
Arkansas farmers had already shifted some acreage toward soybeans before the conflict began, responding to production costs and rice prices.
With input costs remaining elevated, Loy expects that shift could continue into the 2027 growing season.
“I would suspect that the crop mix would go towards what we kind of call the lowest-loss crop,” Loy said.
He explained that farmers are considering which crops offer the best chance of breaking even under current market conditions.
“Soybeans are kind of that picture-perfect situation there, where lower inputs, especially compared to rice,” he said.
Current Prices Could Push Costs Above $500 Million
Loy described the $343 million estimate as conservative because researchers used average prices across the growing season rather than the most recent prices or periods of peak fuel use.
Using current diesel prices alone, he said, could push the estimated impact above $500 million, although he emphasized that figure was an illustrative calculation rather than a completed analysis.
“We haven’t crunched those numbers to the same detail that we have here,” Loy said.
He warned that persistently high prices could make it increasingly difficult for farmers to establish budgets and plan for next year’s crop.
Price Relief Could Take Time
Even if shipping routes reopen and supply disruptions ease, Loy said farmers should not expect fuel prices to return to earlier levels immediately.
He described the pattern as the “rocket and feathers” effect, in which prices rise rapidly when supply is disrupted but decline more slowly when conditions improve.
“Prices go up like a rocket in response to these things, but they fall like a feather very slowly when tides turn,” Loy said.
He explained that crude oil must still be transported and refined before it becomes available to users. Refining capacity and the need to rebuild strategic reserves could also affect the pace of recovery.
“I would suspect that it’s going to stay this way for a little while longer,” Loy said.
