Insight Focus
Brazil faces another bumper grain harvest, but farmers remain cautious. Rising input costs and high interest rates, currently at 15%, are weighing on profit margins. The expanding adoption of domestically produced bio-inputs, however, could help ease some of these cost pressures.
Bumper Crop in Sight, But Challenges Persist
Favourable weather in Brazil’s Midwest has accelerated planting, with more than 34% of the soybean area already sown and 40% of the first-crop corn planted under equally favourable conditions — giving farmers reason to be optimistic.
At this pace, Brazil should harvest another bumper crop. The first survey by Conab forecasts grain production of 354.5 million tonnes in 2026 — almost 1% more than this year — a new record.
Source: Conab
For farmers, however, it is still too early to pop the champagne. Factors such as Brazil’s high interest rate of 15% per year, which makes credit more expensive, and the increase in input prices may threaten profit margins.
The price of urea, for example — one of the main components of fertilizers — has risen by about 23% since 2024. This year, the warning light began flashing in July, when urea prices began to rise again.
Source: Comex.
The conflict in the Middle East has impacted production in countries such as Iran and Egypt, which play a significant role in the global urea supply. In Egypt, production has fallen due to a shortage of natural gas — an essential raw material for fertilizer manufacturing — part of which the country imports from Israel.
In Iran, some plants have had their production reduced due to war-related risks. Maritime freight rates on routes passing through conflict zones have also increased, driving up costs.
In the short term, prices are not expected to change significantly. Geopolitical factors should continue to influence this scenario — and the fact that Russia is one of Brazil’s main suppliers of chemical fertilizers doesn’t help. With the country under sanctions because of the war in Ukraine, maritime insurance and other costs have risen considerably.
Source: Comex.
Bio-Inputs Gain Ground
To circumvent the high input costs — and to strengthen their sustainability efforts — farmers have been increasingly adopting domestically produced bio-inputs.
These products are developed from microorganisms such as bacteria, algae, yeasts, and plant extracts, and are used for nutrition and pest control in crops. One important advantage is that they can be produced on farms, with guidance from specialised professionals, optimising costs. Bio-inputs that help fix nitrogen, an essential nutrient for plants, increase the efficiency of nutrients present in the soil.
A study by CropLife, a non-profit organisation representing companies engaged in research and development of inputs for sustainable agriculture, shows that the use of bio-inputs grew by 13% in the 2024/25 crop season. Fertilizers and pesticides of biological origin, produced from microorganisms such as bacteria and fungi, as well as plant extracts, were used on approximately 156 million hectares.
Companies in the sector have been investing in launching new bio-inputs — which must be registered and approved by the Ministry of Agriculture before reaching the market. In recent years, the bureaucracy for registering new products has been reduced, making the process more agile.
Source: CropLife.
Public Spending Puts Pressure on the Economy
However, dependence on imported inputs is not expected to decline significantly in the short term. The economy also remains a concern. In this case, attention has been focused on the increase in public spending and its impact on key variables such as the interest rate.
Source: National Treasury of Brazil
Part of this public spending has been directed toward expanding social programs that put more money into circulation, stimulating consumption. To contain inflation, the Central Bank has maintained a high interest rate.
Source: Central Bank.
As a result, credit becomes expensive, impacting agribusiness — which accounts for a quarter of Brazil’s GDP — as well as other sectors of the economy. The cost of rural credit, for instance, has already increased.
Interest rates under the Plano Safra, a federal government program that finances agribusiness through credit granted by Banco do Brasil, have been readjusted for the next harvest, averaging between 8.5% and 14%. More than ever, sharp financial management and new productivity gains will be essential.
