Authors: Josh McBee

Brazil’s Agribusiness Future Depends on Changing Its Relationship with Fertilizer Efficiency

For Brazil, growing more food with fewer emissions is a major challenge during this century requiring greater fertilizer efficiency becoming a national priority

Brazil faces a dilemma. As a global “breadbasket,” Brazil provides the world a significant portion of its cattle, soy, corn, and other crops, and the country will need to produce even more of its agricultural commodities to feed the world’s growing population. Yet, with President Lula having committed to ending deforestation by 2030, the country has limited pathways to increased production that doesn’t involve clearing more of its tropical forests.

The solution is to increase yields, producing more food without using more land for agricultural production. This goal is not feasible without synthetic fertilizers. Yet fertilizers carry their own set of risks for producers, investors and food sector companies. These risks stem from excessive or inefficient use of synthetic fertilizers, which pose significant climate and environmental threats to these actors and are highly sensitive to global politics.

Even though synthetic fertilizers are a leading source of nitrous oxide (N₂O), the third most important greenhouse gas, they are more well known for associations with air and water pollution. Producers also suffer from reduced profits due to their overreliance on these expensive synthetic fertilizers, and these costs are increasing due to geopolitical tensions and trade volatility impacting prices.

Fertilizer and Geopolitics

One of the greatest material risks for the vitality of Brazil’s agribusiness sector is its dependence on foreign supply of fertilizer, which exposes the sector to sharp price fluctuations associated with geopolitical upheaval and other trade disruptions.

Russia is a major global producer of key fertilizer components, and when Russia invaded Ukraine in 2022, a combination of sanctions and export bans disrupted supply chains. These disruptions led to a drastic reduction in global supply of fertilizer, sending shockwaves through the agricultural sector. Brazil, which imports about 80% of its fertilizer supply, was severely affected: Prices soared, uncertainty reigned, and farmers were left scrambling.

In response, Brazilian policymakers developed a national plan to ramp up domestic fertilizer production. It’s a sensible step—more local production means less vulnerability to foreign conflicts.

But domestic production has limits. Fertilizers require specific minerals, such as potash, that are highly geographically concentrated. At least for now, Brazil is not producing nearly enough: even its highly ambitious national fertilizer plan envisions reducing import dependence to only 45% by 2050.

With trade dynamics only becoming more volatile, Brazil should take further steps to insulate its agricultural sector from geopolitical upheaval and other trade disruptions. It would also benefit from reduced financial risks associated with Climate Transitions impacting the use of fertilizer use. The country’s best option is to complement the push to increase domestic production by working to make sure it is making the most of the fertilizer it has.

The Case for Fertilizer Efficiency

For nitrogen fertilizers, the key metric is what’s known as nitrogen use efficiency (NUE), the ratio between the amount of nitrogen applied to soil and the amount that actually makes it into crops. NUE varies widely between countries, as shown in the chart below, but the global average is around 55%.

This statistic means nearly half of applied nitrogen through fertilizer is lost, either leached into waterways as nitrate, where it fuels harmful algal blooms; released into the atmosphere as N2O; or volatilized as ammonia or NOx, both harmful air pollutants. Models show that global average NUE can increase by to nearly 78% with the right measures.

The more efficiently nitrogen in fertilizers is used, the less of it is required to grow the same amount of food. That’s a win for farmers (lower costs), a win for the environment (less pollution), a win for food security (greater resilience to supply shocks) and a win for stakeholders across Brazil’s agribusiness chain (reduced financial risks). One study found that if farmers in the United States’ Arkansas-White-Red River basin increased their NUE by just 20%, their profits would rise by 1.6%, while nitrate pollution in freshwater would drop by nearly 6%.

Strategies for Optimizing Fertilizer Efficiency

How can Brazil improve NUE amongst its own farmers? The toolkit is broad, ranging from high-tech solutions to low-cost, widely accessible methods:

1. Precision Agriculture — Farmers with the means to do so can deploy sensors, variable rate technology, and other tools to fine-tune fertilizer application, ensuring nutrients go where they’re needed, when they’re needed.
2. Leaf Color Charts — For those without access to high-tech tools, simple visual guides can help determine whether crops actually need more nitrogen, preventing unnecessary applications.
3. Crop and soil management practices — Cover cropping, crop rotations, and incorporating crop residues can enhance soil structure and nutrient retention, reducing fertilizer waste.
4. Advanced Fertilizers — Slow- and control-release formulations, microbial fertilizers that extract nitrogen from the air, and coatings that inhibit nitrogen loss can significantly improve efficiency.

Brazil’s Opportunity to Lead on Fertilizer Efficiency for Climate and Food Security

As the host of COP30, Brazil is positioned to expand its leadership by elevating this conversation to the global stage. The upcoming climate conference in November is expected to spotlight nature and agriculture, with Brazil aiming to show leadership on sustainable land use. Ahead of June’s Bonn Intersessional, Brazil is signaling that a focus on a global just transition—one that supports developing countries’ farmers and its rural communities—will be central to its COP30 agenda. Achieving this goal will require significant support to raise agricultural yields without further expanding land use.

Brazil should consider making improving fertilizer efficiency a priority to meet both food production and climate targets. Brazil has the technical expertise and growing political will to act, but scaling adoption would require action by policymakers and targeted investments, particularly in optimizing fertilizer use to avoid climate-warming emissions and environmental degradation while boosting output on existing farmland. Brazil can align COP30’s goals to unlock international finance, technical assistance, and long-term support for farmers to utilize fertilizer more efficiently.

The Role of Investors and Companies

The private sector also has an important role to play. Food companies and retailers can push for higher NUE within their supply chains, rewarding farmers who adopt smarter fertilizer practices. Investors can accelerate the adoption of NUE-enhancing technologies and practices by creating favorable financing terms for farmers who utilize NUE-smart practices. As well as, investing in businesses developing better fertilizers, precision agriculture tools, and scalable training programs for farmers.

For companies and investors, the incentives aren’t just ethical or environmental—they’re financial. A more efficient, resilient agricultural sector is better positioned to weather future geopolitical issues and trade shocks. Such measures would also help to mitigate climate transition risks for companies and investors and position them to take advantage of emerging opportunities.