Farmers Brace for Fall Harvest with Diesel Costs at an All-Time High

The national average price of diesel climbed to an all-time high of $6.05 a gallon over Labor Day weekend — and it hasn't stopped climbing. The national average is now nearly 56% higher than it was before the U.S.-Iran war began in February, when prices sat around $3.76 a gallon. For American farmers, it's one more blow in what is shaping up to be one of the most punishing years in recent memory.

The latest price spikes are hitting as agricultural producers prepare to fire up fuel-hungry equipment for round-the-clock harvest work this fall. That alone would be enough to rattle farm budgets. But diesel costs aren't arriving in isolation — they're landing on top of a trade war with Canada, retaliatory tariffs on American agricultural products, and an energy crisis tied directly to the conflict with Iran that shows no sign of a quick resolution.

A Bad Year Getting Worse

For farmers, soaring diesel is a double whammy: the war is also driving fertilizer costs higher, putting inflationary pressure on anything Americans buy that's carried by truck — which includes a massive share of goods.

The Agriculture Department raised its forecast for 2026 farm earnings earlier this year, citing higher receipts for key crops and government payments. But renewed attacks between Iran and the U.S. in the Middle East have pushed fuel prices back up, threatening to erase those gains. "The rise in diesel fuel is going to probably eat up what was able to be made there in the margins," said Bradley Guse, Wisconsin-based director of BMO's Agribusiness Group. "

One Texas farmer said his diesel bill went up $23,000 in just one month. Kinser Jensen, a corn and soybean farmer from north-central Iowa who farms 3,400 acres, said he had been hoping prices would come back down before harvest. "Although we've been taking the wait-and-see approach, we're just going to have to bite the bullet and start buying fuel," he said. "There's little things we can do, but at the end of the day it's not going to change the big picture."

Tariffs Add to the Pressure

Diesel costs are only part of the picture. Trump's ban on Canadian dairy imports — set to take effect September 29 — drew immediate retaliation from Ottawa, which imposed a 50% tariff on American dairy ingredients and a 25% tariff on U.S. cheeses. American farm groups warn the move will lower prices for U.S. producers while raising them at the grocery store, compounding the squeeze farmers are already feeling at the pump.

Darin Von Ruden, president of the Wisconsin Farmers Union, said market disruptions tend to hit farmers and consumers simultaneously — farmers see lower prices for their product while processors and distributors raise retail prices. Wisconsin, the nation's top dairy state, has already watched its farm count fall from roughly 43,000 operations in 1990 to just under 5,000 today.

No Relief in Sight

The outlook suggests Americans could face elevated fuel costs well into 2027. President Trump acknowledged Wednesday that oil prices may not fall until after November's midterm elections. The latest Energy Information Administration outlook expects retail diesel to average $4.40 a gallon in 2027 — up from a previous forecast of $4.07.

Patrick De Haan of GasBuddy said demand has shown few signs of slowing despite record prices. "We have not seen much meaningful decrease in demand yet," he said. "We've seen very little, if any, diesel demand destruction so far, which tells you the economy is essentially preparing to pay these prices because it still needs the fuel." De Haan warned that if diesel hits $6 a gallon nationally, that's likely when consumption begins to slow — and that threshold is now within reach.

For farmers already squeezed by tariffs, trade retaliation, and four years of thin or negative margins, this year is only looking harder.