Key Takeaways
- CoBank's Knowledge Exchange report reveals rural communities face disproportionate impacts from rising fuel costs due to longer driving distances and diesel-intensive farming operations.
- Teri Viswanath, lead power, energy and water economist with CoBank, warns that Strait of Hormuz closures and Persian Gulf attacks may have long-lasting effects not yet priced into U.S. markets.
- The 2026 Farm Bill passed the House Agriculture Committee on a bipartisan vote in March after over 20 hours of debate, containing over 800 pages of program improvements.
- Fuel and fertilizer prices have surged 20% to 40% since the Iran conflict began, potentially adding $2,000 in fuel costs per farmer according to CoBank analysis.
- U.S. hyperscalers spent an estimated $400 billion in 2025 on AI-related infrastructure, with expectations of $700 billion in spending for 2026.
CoBank Analysis Highlights Rural Energy Vulnerability
CoBank's latest quarterly report from its Knowledge Exchange division reveals that rural communities face heightened vulnerability to energy price volatility compared to urban areas. The cooperative bank's analysis shows that surging energy costs resulting from Middle East conflicts disproportionately impact rural economies due to structural dependencies on fuel-intensive activities.
“Higher diesel prices also raise the cost of moving food and goods into rural areas, pushing up local prices and amplifying the economic hit compared with urban areas that have more alternatives and competition,” said Teri Viswanath, lead power, energy and water economist with CoBank.
Agricultural Sector Faces Input Cost Pressures
The report indicates that fuel and fertilizer prices have increased 20% to 40% since the Iran conflict began, creating significant challenges for agricultural producers. CoBank estimates that diesel price increases could add $2,000 in fuel costs per farmer, with grain elevators facing hundreds of thousands in additional expenses.
Commodity markets have shown mixed responses, with soybean prices rising 11.8% and wheat climbing 21.5% late last quarter. However, improved commodity prices are not expected to offset higher input and production costs, according to the analysis.
CoBank Tracks Farm Bill Progress
The 2026 Farm Bill advanced through the House Agriculture Committee in March following extensive debate. Committee Chairman Glenn “GT” Thompson continues efforts to secure broader support for the legislation, which contains over 800 pages of program updates not revised since 2018.
Infrastructure Investment Surge
CoBank's report also examines massive technology infrastructure investments, with U.S. hyperscalers including Amazon, Microsoft, Meta and Google spending an estimated $400 billion in 2025. The bank projects close to $700 billion in AI-related expenditures for 2026.
“More broadly, the effects of the closure of the Strait of Hormuz and the stepped-up attacks on energy infrastructure in the Persian Gulf could be long-lasting and have probably not been fully priced into U.S. consumer markets,” said Viswanath.
