INTERVIEW: Mosaic Brazil chief describes complex, challenging year for agriculture

High interest rates and other challenges in Brazil have led to more farmer debt, delaying fertilizer purchases and investment decisions across the agriculture value chain, according to Eduardo Monteiro, The Mosaic Co.'s country manager.

"We see throughout the agribusiness chain a very high level of caution, as important stakeholders, large agroindustry and large distribution chains, are being very cautious in releasing credit and causing delays," Monteiro said.

Monteiro said farmer payment and cash-generation capacities are compromised because crop input costs were not matched by a proportional increase in overall grain prices following the Iran-US war.

Additionally, risk management and approaches to optimizing spending are becoming increasingly important as Brazilian fertilizer demand is expected to decline amid high input costs and climate challenges.

"The issues are associated with major uncertainties and price volatility," Monteiro said. "Farmers' purchase decision-making is increasingly difficult, since inputs must be bought at the right time and in the right moment."

However, the impact of the drop in demand has not been sufficient to trigger a price correction, owing to high current phosphate production costs, which are prompting phosphate producers to reduce their production capacity, he said.

Tampa, Florida-based Mosaic idled its fertilizer production assets in Brazil amid the sulfur crisis, having already used most of the inventory it had acquired before the Iran-US war.

"We have geopolitical conflicts, causing a certain challenge in the supply chain," Monteiro said. "Additionally, sulfur has been used in a new segment, which is the issue of batteries for electric cars, electrification, data centers and artificial intelligence."

Monteiro believes that if the US-Iran war, along with the Russia-Ukraine war, which has resulted in Russia banning its own sulfur exports, were to end now, it would take six to 12 months to equalize the sulfur supply-and-demand imbalance, adding that the extent of refinery impacts is not yet fully known.

After reducing phosphate fertilizer production in Brazil, Mosaic's distribution business in the country is being impacted by a smaller Brazilian market, from 49 million metric tons to 42 million-45 million mt currently, based on indications from external consultancies, Monteiro said.

"We estimate a 20% to 25% reduction in phosphate application in Brazil year over year," he said. "Technology reduction in our view can reduce Brazil's agricultural productivity by 6% to 7% on average."

Biological inputs

Due to the high cost of phosphate fertilizers, farmers have notably reduced applications for this year's crop season amid affordability issues.

"As a consequence of this, a potential reduction in productivity, which makes this cycle reverse to lower productivity and higher grain commodity prices," Monteiro said.

In contrast, he dismissed the possibility of a fertilizer shortage influenced by geopolitical conflict, which disrupts key logistical flows, and noted that it was counteracted by a decrease in the domestically fertilizer demand.

Mosaic's distribution business in Brazil has been working in an integrated manner, using much of its North American production capacity and bringing its products to Brazil, Montiero said. The company has been finding opportunities on precision agriculture, biological solutions and products with innovative technologies to offset lower Brazilian phosphate demand and crop productivity issues, replacing an important part of Brazilian production that "temporarily stopped," he added.

"Brazil imported 85% of its fertilizer needs in 2025; this year it will be above 90% due to reduced fertilizer production," Monteiro said. "Now, biological inputs are strategic. If there is one thing in which we can be self-sufficient here, it is biological inputs. In fertilizers, we will not be self-sufficient. Our entire fertilizer production base is located in the Americas."

Platts, part of S&P Global Energy, last assessed monoammonium phosphate Aug. 20 at $859/mt CFR Brazil, lower week over week.