How War in Iran Will Squeeze America's Farmers Even Further

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, there's a running joke on this podcast. There's a few of them. But one of the running jokes is, farmers are always complaining about something.

Joe Weisenthal (0:30)

They are. They are always complaining about something. But you know what, it's okay. We need to eat to live. Food is pretty important for sort of human civilization, flourishing, et cetera. So if the worst is that they complain a little bit about how much they're getting for their corn or whatever, I'm okay with that.

Tracy Alloway (0:48)

Well, to be fair, we also know that one of the defining news stories of the past few decades has been the hollowing out of America's small scale agricultural industry and farmers. So if you are an independent farmer, there is a lot to complain about, to be fair.

Joe Weisenthal (1:05)

Totally. And again, with the caveat that it's always tough, very recently, a couple weeks ago, we did the episode about surging fertilizer prices. In that conversation, you know, we talked about the fertilizer to corn chart, and it is not a good ratio.

Tracy Alloway (1:21)

No.

Joe Weisenthal (1:21)

You know, there are many ways to represent an industry. But if you just wanted one, that's a very clean way. Fertilizer prices weigh up, obviously, given the situation in Iran. Corn prices not nearly anywhere close to their all time highs or anything like that. So just by at least one measure, that is a clear squeeze.

Tracy Alloway (1:39)

Right. So we recorded our fertilizer episode, I guess, a week or two ago at this point. I think at the time when we were discussing it, the possibility that the closure of the Strait of Hormuz could actually push up fertilizer prices. A lot of people weren't necessarily that aware of this dynamic. Since then, it has gone very mainstream and you have officials in the US government talking about sourcing alternative fertilizer from Morocco or Venezuela to try to offset some of the pain. There is some slightly good news if you are a farmer, which is that we are seeing grain prices start to go up. But to your point, again, it is not at all clear that it's going to be enough to offset higher input costs like fertilizer or oil.

Joe Weisenthal (2:23)

Totally. Well, anyway, we did that episode several weeks ago about what it was like to do agribusiness in tough markets, like particularly Venezuela, Ukraine and so forth. And I recall at the very end of that conversation, and this was obviously before the fertilizer spike, our guests who we were talking to said, we got a good history lesson about Venezuela and Ukraine. But they also said, at some point, we should talk about the pain that American farmers are in right now. And so then, so that was already the condition, there was sort of this tease, things weren't great. Then you get the fertilizer spike. So it's like, it seems like a good time to have that conversation.

Tracy Alloway (3:01)

We were going to wait a little bit to do that episode, but it turns out that now is actually the perfect time for the perfect guests. Once again, we are going to be speaking with Jeff Kazin and Mike Rohlfsen. They are the founders of Agris Academy. So Jeff and Mike, thank you so much for coming back on Odd Lots. Really appreciate it. First question, you know, when we spoke to you last time, we were very focused on Venezuela and Ukraine and your experience working at Cargill earlier. But can you just tell us what Agris Academy actually does? Jeff, why don't we start with you?

Jeff Kazin (3:32)

Yeah, thanks for having us on again. So Agris Academy is not a broker and advisory business.

Mike and I each have 30 years of in-depth, either commodity or involvement in the ag industry. And we decided we wanted to start an education and consulting business. So we educate, we have a producer practice where we educate producers on one level, how to manage risk and understand the future side of risk. And on another level, how to merchandise like a professional grain operation, because a lot of farms have become effectively elevator managers. There was a gap and still is a tremendous knowledge gap in farmers around the world. We generally have North American students and clients. And then we also have a commercial business where we work with businesses that work with various all kinds of commodities, where we help them understand the risk, walk through how they're consolidating that risk, how they're managing that risk in best practice form in a boutique consulting type of arrangement. So we have both practices and a super rewarding business, kind of a second career for both of us as we kicked it off. And we wanted to be in a very differentiated part of the market that wasn't well covered. And that's been fantastic. We've been in business now for four years and grow very, very steadily each year.