End of the 'perfect storm': why agriculture already foresees difficulties with El Niño and more expensive fertilizers

GDP: Agriculture grows 2% and drives growth in the Brazilian economy in the 1st quarter
After starting the year on a high, Brazilian agriculture is expected to lose strength in the coming months and enter a downward trajectory until 2027. The scenario is pressured by the risk of crop losses due to El Niño and the increase in production costs, especially fertilizers.
"You don't have a record harvest in an El Niño year", says the economist Felippe Serigati, researcher at FGV Agro.
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"The last El Niño of great intensity, similar to what is expected for this year, was in 2014 and 2015. For producers, it left a bad memory, as the country faced the biggest crop failure in its history", highlights Carlos Cogo, from Cogo Intelligence in Agribusiness.
The climate phenomenon, which causes intense droughts in the Center-North of the country and heavy rains in the South, is on the rise likely to form between June and July. If confirmed, it should delay this year's planting and reduce harvests in 2027.
"El Niño should be declared from the first or second week of June", highlights Cogo, explaining that the phenomenon has not yet been officially confirmed. highlights.
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End of the 'perfect storm'
Despite the prospect of retraction, agriculture grew 2% in the first three months of the year, compared to the last quarter of 2025, according to IBGE. The result was driven by the increase in grain production, especially soybeans, whose harvest is concentrated at the beginning of the year.
The result came after a year in which agriculture recorded growth of 12%, considered "outside the curve". "It was that perfect storm: favorable weather, record harvest and large volumes of animal slaughter, mainly cattle", says Cogo.
"The basis of comparison for this year is high and the current scenario is quite different. There is an ample global supply of grains and high stocks, which puts pressure on commodity prices. Furthermore, the appreciation of the real against the dollar tends to reduce the revenue of producers in Brazilian currency, especially those producing soybeans, corn, cotton and coffee", he adds.
In livestock farming, a well-known movement is taking place as "turn of cycle". After three years of record slaughters, including females, producers began retaining cows on farms to increase calf production. This is a natural movement in the sector, which is repeated from time to time.
Serigati, from FGV, predicts that agribusiness GDP should fall by 0.9% this year. In addition to the factors already mentioned, he highlights that high interest rates increase producers' debt and make credit more expensive.
"This leads producers to reduce the planted area or to use less efficient technologies, such as less concentrated fertilizers, which reduces productivity potential", he highlights.
Image of grain storage.
National Confederation of Agriculture (CNA).
El Niño and fertilizers
If confirmed, El Niño should not affect the harvest this year, as much of the grain harvest has already been planted. The immediate impact tends to fall on rural producers, who may be forced to postpone planting due to droughts or excessive rainfall.
"The impact of El Niño on the volume harvested and on GDP will be felt mainly in 2027. This year, the effects fall on the producer's pocket, who faces greater expenses with replanting and delays", says Serigati.
Cogo explains that the phenomenon causes intense droughts in the Matopiba region, formed by Tocantins and areas of Maranhão, Piauí and Bahia, an important hub for soybean, corn and cotton production.
The drought caused by El Niño also strongly affects states such as Mato Grosso, the country's largest soybean producer and reference in cattle farming, and Pará, which also has a strong presence in these sectors.
"Excessive rain in the South is very harmful for rice cultivation, which is concentrated in Rio Grande do Sul", says Cogo.
In addition to climate risks and the increase in rural debt, Brazilian producers also face rising fertilizer prices, driven by the war in the Middle East.
Serigati highlights that the effects of rising fertilizers on food prices should reach the consumer only in 2027. This is because the crops harvested this year were planted with fertilizers purchased before the conflict began.
In the field, however, the increase in costs is already a reality. This is because producers are now purchasing fertilizers that will be used in the next planting cycles.
"If the producer is unable to afford the necessary volume of fertilizers, he may apply a lower than ideal amount, which reduces the potential productivity of the crop", he says. Serigati.
Another alternative is to reduce the quality of the fertilizer. Serigati.

Source: G1