By Ed White, May Angel and Oliver Griffin
WINNIPEG, Manitoba/LONDON/SAO PAULO (Reuters) June 8 - Brazil's cheap, abundant land has long helped the country's farmers create vast, low-cost farms, allowing them to wrest export markets from U.S. farmers hurt when China began switching suppliers during President Donald Trump's tariff wars.
While U.S. farm acreage has not grown this century, Brazil's has soared about 50%, making it an agricultural powerhouse. But the South American country's edge is being
tested as the U.S.-Israeli war with Iran sends fertilizer prices soaring.
About a third of the world's fertilizer flows have been bottled up inside the Strait of Hormuz since the war began. The U.S. produces much of its own fertilizers, but Brazil relies heavily on imports, so many of its farmers have cut back on fertilizer purchases.
Even if the conflict ends tomorrow, industry experts say Brazil's farmers are in trouble. Already, they are saddled with thousands of acres of farmland producing diminishing returns or even losses. Many are starting to accumulate significant debt.
In addition, many U.S. farmers have land rich enough to produce decent yields, even if they skip some fertilizer applications for a year. Few Brazilian farmers can do that.
Varying growing seasons are also an issue. Brazil's spring planting starts in September so its farmers are currently exposed to soaring fertilizer prices. U.S. farmers were mostly done with their purchases when the war began.
Unlike their U.S. rivals, Brazilian farmers cannot count on government bailouts or generous support programs.
“Profitability just isn’t there," said Murilo Rabelo Martins Pereira, a farmer in Goias state in central Brazil.
"Expansion is something everyone is rethinking right now."
Pereira, 34, farms soybeans, corn and tomatoes on 800 hectares. He said soaring production costs make it too risky to expand his farm, even though he has received offers to lease more land.
"For sure we'll not see the same trend" of agricultural growth in Brazil, said Purdue University agricultural economist Joana Colussi, a Brazilian native.
She expects growth to stall, at least temporarily, as farmers spend more on fertilizer, fuel, seeds and other inputs, and less on expansion.
HISTORIC GROWTH
Brazil's history-making growth in agricultural production began in response to booming demand from China. Vast areas of grassland were converted from cattle grazing to growing crops like soy and corn, putting Brazil and the U.S. into direct competition.
Brazil has generally come out on top. The tariffs Trump imposed on China during his first and second term prompted Beijing to seek alternative suppliers, and Brazil was among the biggest winners.
In 2000, U.S. soybean sales to China were almost double Brazil's. By end-2025, the ratio flipped and Brazil sold almost twice as many soybeans to China.
Brazil's growth was, however, predicated on expansion onto vast, cheap land. Much of it is these days degraded because farmers typically moved to new land once their plots became fallow, rather than investing in soil health.
DEGRADED LAND, SEASONALITY
With so much land degraded, large-scale industrial farming in Brazil requires substantial amounts of fertilizer, pesticides, genetically modified seed and other increasingly pricey biological inputs.
"Right now farmers everywhere, including Brazil, are operating on razor-thin margins. If you have better soil, you can weather lower fertilizer application, or no application. You can weather a shock like this better," said Saswato Das, global head of corporate affairs at seeds and pesticides producer Syngenta.
Many U.S. farmers can still get average yields even if they skip a season of applying key fertilizers like potash and diammonium phosphate, or DAP. Thousands have done so this year. But on many Brazilian farms, potash and DAP last only one season.
U.S. farmers are "just skimping out" on DAP, prices of which have roughly doubled since the Iran war began, said Marshall Lee Davis, who grows peanuts and cotton in the southern U.S. state of Georgia.
Davis said that even U.S. farmers who can skip one application were concerned that elevated fertilizer prices would hit them in the fall when they start buying ahead of their 2027 spring planting next March.
Brazilian farmers, who still have to get through their 2026 spring planting this September, let alone second-crop planting in early 2027, have been facing elevated fertilizer prices since not long after the Iran war began in late February.
"North American farmers are in a better spot than Brazilian farmers due to seasonality," said Expana analyst Murphy Campbell.
FERTILIZER IMPORTS, FARMER PROTECTIONS
Brazil relies heavily on imports of DAP, as well as of nitrogen-based urea, the world's most widely used fertilizer.
Brazil’s state-run oil producer Petrobras is restarting operations at some less-profitable fertilizer plants it had idled under former President Jair Bolsonaro. It hopes to meet 35% of the country’s nitrogen-fertilizer needs in coming years.
Despite high fertilizer costs, the price farmers can charge for corn and soybeans has gained relatively little since the war began as large harvests in recent years have allowed global stocks to build up. This has squeezed farmer margins worldwide, especially for those dependent on fertilizer imports.
Brazil's soybean farmers had, as of late May, purchased about 50% of their total 2026/27 fertilizer needs, said Expana's Campbell. He noted that historically "over 60% is booked by late May".
Lower fertilizer application means lower yields and lower profits or outright losses for farmers with rising debts.
"They are overleveraged," said Bruno Fonseca, an analyst for Rabobank in Brazil, of the country's farmers.
Fertilizer prices are expected to remain elevated for at least six months even if there is a peace deal in the Middle East, according to Expana's Campbell.
For Pereira, the Brazilian farmer, the grim outlook means taking tough decisions.
"We had planned this year to replace our harvesters, which are quite old," he said. "We decided not to go ahead."
(Reporting by Ed White, May Angel and Oliver Griffin. Editing by Emily Schmall and David Gregorio)
