Soaring fertilizer prices dim Brazilian farmers' edge over US rivals

B?razil’s cheap and abundant land has helped the country’s farmers create large, low-cost farmland, allowing them wresting export markets from U.S. Farmers?hurt by 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. The 'South American country is now being put to the test as the U.S. - Israel war with Iran has sent fertilizer prices soaring.

Since the beginning of the war, a third of all fertilizer 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 different growing seasons also pose a problem. Brazil's spring planting begins in September, so Brazilian farmers are exposed to high fertilizer prices. Farmers were almost finished with their purchases by the time?the conflict began.

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

Murilo Martins Rabelo, a farmer from Goias in central Brazil, said that "profitability is just not there."

Everyone is currently rethinking expansion.

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

Purdue University agricultural economist Joana Colussi is a Brazilian-born native. She said, "We'll definitely not see the same trends" 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 production. Brazil and the U.S. were forced to compete for vast areas of grassland that had been used for cattle grazing.

Brazil is generally the winner. Brazil was among the largest winners as a result of tariffs Trump imposed against China in his first and second terms.

In 2000, U.S. sales of soybeans to China were almost 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.

LAND AND SEASONALITY DEGRADED

Large-scale industrial agriculture in Brazil is a costly endeavor due to the degrading of 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 they miss a season, many U.S. growers 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 could skip one application were concerned about the high prices of fertilizer when they started buying in advance of their spring planting 2027 next March.

Since the Iran War began late February, Brazilian farmers have faced high fertilizer prices. They still need to complete their spring planting for?2026 this September and prepare for second-crop plantings 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 and urea-based nitrogen, which is the most commonly used fertilizer in the world.

Petrobras, Brazil's state oil company, is restarting some of its less profitable fertilizer plants that were idled by former president Jair Bolsonaro. It hopes to satisfy 35% of the country's nitrogen fertilizer needs within the next few years.

The price that farmers can charge for soybeans and corn has not increased much since the beginning of the war, despite the high cost of fertilizer. This is because large harvests have been allowed to accumulate in the last few years. 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 producers had purchased, by late May, about half of their total 2026/27 fertiliser needs. Campbell noted that "in the past, over 60% of fertilizer is purchased by late May".

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

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." Reporting by Ed White and May Angel. Oliver Griffin. (Editing by Emily Schmall, David Gregorio and David Gregorio.)

(source: Reuters)