Brazilian farmers face another profitability squeeze in the 2026/27 season as higher fertilizer costs, tight credit and increased weather risk offset firmer agricultural commodity prices, according to Agroconsult.
The consultancy expects the EBITDA margin for a soybean-corn production system in north-central Mato Grosso to fall to 12% from 19% in the 2025/26 season. It also projects net debt-to-EBITDA across soybean, corn, cotton and wheat operations at 2.8 times, up from 2.1 times in the previous season and marking a second consecutive annual increase.
“Prices should be a little better, but that does not mean profitability will improve,” Agroconsult Chief Executive André Pessôa said Tuesday at a fertilizer conference organized by ANDA, Brazil’s fertilizer industry association.
Pessôa is also cautious on the forward price curve. Prices above $12 a bushel are already higher than Agroconsult’s projection, he said.
Depending on the region and production model, EBITDA margins could fall below 10%, well short of their historical range of 20% to 25%.
With little prospect of improved macroeconomic conditions or a significant decline in Brazil’s benchmark interest rate, growers are likely to remain heavily leveraged, Pessôa said.
“Lenders are clearly uneasy about the perception of rising risk in the credit system,” he said. “As a result, some growers were unable to access credit.”
Pessôa said measures announced this year to ease farm debt were insufficient.
“I heard today that a solution to farm debt is already out there,” he said. “I don’t know where ‘out there’ is, but the measures announced this year will not solve the debt problem.”
Eduardo Monteiro, Mosaic’s country manager for Brazil and Paraguay, also described credit availability as the sector’s biggest challenge. He raised the issue in a meeting last week with Agriculture Minister André de Paula.
“The damage from withholding credit may be greater than the impact of potential defaults because yields could suffer,” Monteiro said, linking financing shortages to the risk that growers reduce fertilizer application rates.
Price Rally Reaches Few Growers
Jeferson Souza, a market intelligence analyst at Agrinvest, said cash-market quotations paint an overly optimistic picture because many farmers sold their crops before the recent rally.
Soybeans at the port were quoted at about $30.10 per 60-kilogram bag (155 reais), or roughly $502 per metric ton, Souza said. By the time prices began rising in Mato Grosso, however, 80% of the crop had already been sold.
Farmers with stronger balance sheets were the main beneficiaries because they could hold inventories and wait for better prices, he said.
“When we hear that soybean and corn prices are rising, we assume everyone can benefit,” Souza said. “That is not the case. Farmers have bills to pay, those bills have increased in recent years, and carrying soybean inventories in Brazil is extremely difficult.”
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
