Soaring fertilizer prices dim Brazilian farmers' edge over US rivals

B razil’s cheap and abundant land has helped its farmers create large, low-cost farms. This allowed them to take away export markets from U.S. Farmers who were hurt by China switching suppliers as a result of President Donald Trump’s tariff wars.

Brazil has become a major agricultural powerhouse, despite the fact that U.S. farm land hasn't grown in this century. ?But South America's edge will be tested by the U.S./Israeli war against Iran, which is sending fertilizer -prices soaring.

Since the beginning of the war, a third of all fertilizer flow has been trapped in the Strait of Hormuz. Brazil is heavily dependent on imported fertilizers while the U.S. relies on its own production. Many Brazilian farmers have reduced their fertilizer purchases.

Experts in the industry say that Brazil's farmers will still be in trouble even if the war ends tomorrow. They are already saddled with thousands acres of farmland that produce diminishing returns, or even losses. They are beginning to accumulate significant amounts of debt.

Many U.S. Farmers have enough land to produce good yields even if they don't apply fertilizer for an entire year. Few Brazilian farmers are able to do that.

The issue of varying growing seasons is also a concern. Brazil's spring planting begins in September, so its farmers are exposed to the soaring prices of fertilizers. The U.S. Farmers were almost finished with their purchases at the time of war.

Brazilian farmers are not eligible for government bailouts and generous support programs.

Murilo RabeloMartinsPereira, a Goias farmer in central Brazil, said: "Profitability is just not there."

Everyone is currently rethinking expansion.

Pereira, 34 years old, farms 800 hectares of soybeans, tomatoes, and corn. The rising production costs, he said, make expanding his farm too risky. He has been offered more land to lease.

Purdue University agricultural economic Joana Colussi is a Brazilian-born economist. She said, "We'll definitely not see the same trend" in agricultural growth.

She anticipates that growth will slow, at least temporarily as farmers invest more in fertilizer, fuel and seeds, and less in expansion.

HISTORIC GROWTH

China's booming agricultural demand prompted Brazil to begin its historic growth in agriculture. Brazil and the U.S. were forced to compete for vast areas of grassland that had been used for cattle grazing.

Brazil has always been the winner. Brazil has been among the biggest winners.

In 2000, U.S. sales of soybeans to China were nearly double Brazil's. By the end of 2025, Brazil will have sold twice as much soybeans to China.

Brazil's expansion was based on the acquisition of cheap, vast land. Many of the soils are degraded today because farmers move to new plots when their old ones fallow instead of investing in soil health.

DANGEROUS LAND, SEASONALITY

Large-scale industrial agriculture in Brazil is a costly endeavor due to the degraded land. It requires large quantities of pesticides, gm seed, and other expensive biological inputs.

Brazil is not the only country where farmers are struggling to make ends meet. You can survive a lower or even no fertilizer application if you have a better soil. "You can handle a shock such as this better", said Saswato das, global head for corporate affairs at Syngenta, a producer of seeds and pesticides.

Even if farmers in the United States skip a season when they apply key fertilizers such as potash or diammonium-phosphate (DAP), they can still achieve average yields. This year, thousands of farmers have taken this approach. Potash and DAP are only used for one season on many Brazilian farms.

Marshall Lee Davis, a farmer of peanuts and cotton who lives in Georgia, the southern U.S., says that U.S. farmers "just skimp out" on DAP. The price of DAP has roughly doubled since Iran's war began.

Davis stated that even U.S. farmers who are able to skip one application of fertilizer were worried that they would be hit by higher prices in the fall if they begin buying before their spring planting 2027 next March.

Since the Iran War began, Brazilian farmers have faced high fertilizer prices, as they still need to complete their spring planting for 2026 this September, and even plant a second crop in early 2027.

Murphy Campbell, an Expana analyst, said that North American farmers were in a much better position than Brazilian farmers because of seasonality.

FERTILIZER, FARMER PROTECTIONS

Brazil imports a large amount of DAP as well as nitrogen-based urea – the most commonly used fertilizer in the world.

Petrobras, Brazil's state oil company, is reopening some of its less profitable fertilizer plants that were idled by former president Jair Bolsonaro. It hopes to meet 35% the country's needs for nitrogen fertilizer in the coming years.

The price of corn and soybeans, despite high fertilizer prices, has not increased much since the beginning of the war. This is because large harvests over the past few years have led to global stock builds up. The result has been a squeeze on farmer margins around the world, particularly for those who depend on fertilizer imports.

Campbell, from Expana, stated that Brazil's soybean growers had purchased, as of late may, about 50% of their total fertilizer needs for 2026/27. Campbell noted that "in the past, over 60% of fertilizer is purchased by late May".

Farmers with increasing debt will suffer from lower yields, lower profits and even outright losses if they reduce their fertilizer applications.

Bruno Fonseca is an analyst at Rabobank Brazil. He said that the farmers of Brazil are "overleveraged".

Expana's Campbell says that the price of fertilizer will remain high for at least six more months, even if a peace agreement is reached in the Middle East.

Pereira, a Brazilian farmer, has to make tough decisions because of the grim future.

He said, "We planned to replace our harvesters this year. They are very old." "We decided to not go ahead."

(source: Reuters)