After breaking a record number of tons delivered last year, Brazil’s fertilizer sector could shrink by up to 15% in 2026 due not only to the worsening external scenario – with the effects of the war in the Middle East adding to those of the conflict in Ukraine – but also due to tax and freight pricing changes, which are underway.
The alert comes from the Agricultural Fertilizer and Corrective Industry Union of Paraná (Sindiadubos-PR), which demands measures from the federal government to contain soaring prices in the agricultural sector.
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Aluísio Schwartz, president of Sindiadubos-PR, comments in a note that the expectation is that global geopolitical conflicts and national tax and fiscal issues will reduce production and increase food prices. “Fertilizer imports are showing a drop in the first four months; while companies fear the current high cost, farmers prefer to postpone purchases, hoping for some improvement in the future”, he reports.
Schwartz projects a reduction in the use of fertilizers worldwide due to the high cost. He details that, in Brazil, due to the last excellent harvests, there was a depletion of fertilizer reserves in the soil, causing the reduction in fertilization to be replaced by a reduction in area. As a consequence, there will be a decrease in food production, which will inevitably make the consumer pay the bill through increased prices, he assesses.
“The decrease in production, if it occurs, should lead to an increase in the prices of soybeans, corn, chicken, beef, sugar, coffee… worldwide. The final equation is overpricing”, he predicts.
Last year, the sector had a record 49 million tons of fertilizers delivered to Brazil, but with the expected situation, the expectation for this year is a decline of between 10% and 15%, due to high costs and logistical difficulties at the ports.
The analysis is that Iran’s closure of the Strait of Hormuz could result in the loss of 5 million tons of phosphate fertilizer production. This estimate is for a month of interruption, as the region is responsible for the output of around 40% of all sulfur in the world — an essential input for the production of soluble phosphates.
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Added to this is the fact that the price of sulfur increased significantly before the war due to strong competition in the market for battery production. In addition to the factors already mentioned, Brazil is also being impacted by a sharp drop in the import of Chinese phosphates due to export bans by that government. “A drop in fertilizer prices is not expected in the short term, even if the war ends”, says the president of Sindiadubos-PR.
In Schwartz’s assessment, although Brazil has time to import fertilizers for the soybean harvest that begins in September, the large volumes of imports retained could result in long queues at ports, which could cause delays in planting. “Producing plants around the world are being affected by conflicts between Ukraine and Russia and Israel and Iran, and the resumption of production takes time, indicating a great difficulty in supplying several products”, he comments.
Shortages in gas supply have led India, a major producer of urea, to reduce its urea production. In turn, Russia banned the export of ammonium nitrate, of which Brazil imports around 2 million tons annually. With the increase in the price of oil, which increased international freight rates, potash, which had been showing price stability, has also registered increases.
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“There is concern about a possible shortage, which has never occurred to date, but the expectation is that the market will adjust, raising prices, and farmers will reduce the use of fertilizers”, ponders the president of Sindiadubos-PR.
Federal agenda
But it is not just the effects of the war that the sector is concerned about. There is also a fear about the PIS/Cofins taxation on fertilizers from April 1st, due to the Tax Reform Law; and also with the effects of Provisional Measure (MP) 1343/2026, on minimum freight.
In addition to Sindiadubos-PR, other entities in the sector, such as the National Association for the Diffusion of Fertilizers (ANDA), the Association of Fertilizer Mixers of Brazil (AMA) and the Agricultural Parliamentary Front (FPA) are mobilized in negotiations with the federal government to mitigate these risks of further damage to Brazilian agribusiness.
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The Union says that the joint work is to encourage the Union to postpone the collection of PIS/Cofins, review the minimum freight table criteria and negotiate with the Chinese government the urgent reopening of phosphate exports to Brazil, one of the largest exporters of soybeans to China.
“Despite criticism regarding the import of certain phosphates from China, which totaled more than 2 million tons last year, the response in the field was a record harvest, dispelling any doubts regarding these fertilizers”, highlights Schwartz. If China’s bans continue this year, he projects that farmers will pay much higher prices without Chinese phosphates.
