# Squeezed margins and soaring input costs: Middle East geopolitics corners Brazilian farmers

Escalating international conflicts and rising energy commodity prices are driving up the cost of fertilizers, forcing Brazilian agribusiness to recalculate the exchange ratio between inputs and grain to protect the profitability of the harvest.

- Section: Agribusiness
- Published: November 10, 2026
- Address: https://ceoone.com.br/en/article/squeezed-margins-and-soaring-input-costs-middle-east-geopolitics-corners
- Em português: https://ceoone.com.br/artigo/margens-sufocadas-e-insumos-nas-alturas-a-geopolitica-do-oriente-medio.md

![Aerial view of an apple orchard, with a farmer on a red tractor pulling a crate full of apples between the trees](https://pub-b80e49b2737940b3ab5d3f20d0578192.r2.dev/artigos/margens-sufocadas-e-insumos-nas-alturas-a-geopolitica-do-oriente-medio-foto.webp)

Photo: Adem Albayrak/Pexels

## Key points

- Brazil imports about 93% of the fertilizers it uses, leaving farmers exposed to the exchange rate and to crises in the Middle East.
- Tensions in the Strait of Hormuz drive up oil and gas, the feedstock for ammonia and urea, and push up ocean and road freight.
- Corn is among the hardest hit crops, and producers are turning to barter, smaller installment purchases, precision agriculture and bioinputs.

## A perfect storm over production costs

As planning for the grain harvests moves forward in the field, Brazilian agribusiness faces a scenario of mounting financial pressure. The combination of stabilizing international prices for agricultural commodities (such as soybeans and corn) and a surge in the cost of imported inputs has sharply narrowed farmers' operating margins. At the center of this financial strain is volatility in the global fertilizer market, which now demands a larger outlay of capital to sustain the same level of productivity per hectare.

## The geopolitical bottleneck and the energy route

Geopolitical instability in the Middle East is the main driver behind the rising cost of synthetic fertilizers, directly affecting the global supply of essential raw materials. Because the region is one of the world's largest producers and exporters of oil derivatives and natural gas (the fundamental feedstock for synthesizing ammonia and urea), any logistical or operational turbulence in the Strait of Hormuz immediately reverberates through the price lists of chemical manufacturers. The resulting rise in the price of a barrel of oil simultaneously pushes up international ocean freight rates and domestic trucking charges, making it more expensive to deliver products to the farm gate.

## The vulnerability of Brazil's dependence on imports

The impact of these global crises on Brazil's agricultural ecosystem is all the more dramatic because of the country's heavy reliance on foreign nutrients. Brazil imports roughly 93% of the fertilizers applied to its soil, leaving farmers' decisions highly exposed to exchange rate swings and the mood of international markets. Because the Middle East accounts for a large share of the supply of nitrogen fertilizers, any disruption in supply lines forces the country to seek alternative suppliers along longer routes, with significantly higher operating costs.

## An unfavorable exchange ratio and the impact by crop

The margin squeeze is felt most acutely in farmers' loss of purchasing power. To buy the same ton of NPK fertilizer (nitrogen, phosphorus and potassium), producers must now hand over considerably more bags of grain than in previous seasons. Corn is among the hardest hit crops, given its high physiological demand for mineral nitrogen to reach its yield potential. Although soybeans benefit from biological nitrogen fixation, the steady rise in the price of phosphate and potash compounds means the crop is not immune to the budget squeeze.

## Risk management, inventories and alternatives in the field

Unable to pass the full increase in costs on to the final price of grain, producers are being forced to adopt tough risk mitigation strategies. Cooperatives and large agricultural groups have prioritized buying fertilizer in smaller installments, using barter arrangements (the direct exchange of inputs for future production) and applying precision agriculture to make the most of every kilo of input spread on the soil. At the same time, integrated soil management, the use of residual fertilizer left over from the previous harvest and the complementary use of bioinputs and regional rock dust remineralizers are gaining ground as ways to cut the bill for imported products.

## Financial resilience and the future of competitiveness

The current moment calls for a thorough overhaul of input management strategy across Brazilian agribusiness. The ability to weather cycles of tight margins without undermining the financial health of farms will necessarily depend on rigorous financial planning, currency hedging and greater efficiency in nutrient use. Ultimately, the volatility triggered by conflicts in the Middle East renews the urgency of strengthening the Plano Nacional de Fertilizantes (National Fertilizer Plan), reaffirming that global food security and the competitiveness of Brazilian agribusiness depend directly on self-sufficiency in the supply of basic inputs.

## Sources and editorial notes

- Reference reports and publications: Portal CNA Brasil, Agrolink, Click Petróleo e Gás, Hub do Café / Cooxupé and Agência iNFRA.
- Sources interviewed and institutions cited: Confederação da Agricultura e Pecuária do Brasil (CNA, the Brazilian Confederation of Agriculture and Livestock), Banco Central do Brasil (Central Bank of Brazil), Itaú BBA and the International Fertilizer Association (IFA).

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