Brazil Races to Rebuild Its Fertilizer Industry After Decades of Neglect

RioTimes Deep Analysis | Series: Latin America Guide

The country that feeds a significant share of the planet cannot feed its own soil. Brazil — the world’s largest exporter of soybeans, corn, coffee, sugar, and beef — imports nearly nine out of every ten tonnes of the Brazil fertilizer industry’s most critical input. Three global crises in four years have each exposed this vulnerability, and each time the structural response has been too slow.

The Rio Times, the Latin American financial news outlet, reports that Brazil’s fertilizer reconstruction effort now has a concrete industrial plan — four Petrobras plants either reactivated or under construction — but the math remains daunting. Even if everything goes right, the country will still import roughly two-thirds of its nitrogen fertilizers and virtually all of its potash and phosphate into the next decade.

President Lula framed the problem bluntly in an interview with Der Spiegel published April 16. He said Brazil should have built up production capacity two or three decades ago, blamed his predecessor for closing factories, and declared that the government is now trying to rebuild. The remarks coincide with his trip to the Hannover Messe industrial fair this weekend alongside German Chancellor Friedrich Merz.

How Brazil Became the World’s Most Vulnerable Agricultural Power

Brazil consumes approximately 47 million tonnes of fertilizers annually — the fourth-largest volume in the world — while domestic production covers only about 7 million tonnes. The gap is filled by imports from Russia, Canada, Morocco, China, and the Persian Gulf states. For nitrogen-based products like urea, which Brazilian farms consume at roughly 8 million tonnes per year, import dependency approaches 100%.

The roots are economic, not geological. Nitrogen fertilizer production requires cheap natural gas as feedstock, and Brazil’s gas remains expensive by global standards while the Persian Gulf nations that dominate urea exports sit atop essentially free gas. For potash, the picture is even starker: Brazil imports 98% of its needs, and the deposits that exist — primarily in the Amazon — face environmental and political obstacles.

The country’s agriculture ministry has classified the fertilizer supply outlook as “extremely high risk” to the 2026/27 harvest. Roughly 41% of Brazil’s urea imports transited the Strait of Hormuz before it closed, and Persian Gulf nations supplied approximately 36% of total urea shipments in 2025.

Three Crises in Four Years

The Ukraine war in 2022 was the first shock. Russia is one of the world’s top three producers of nitrogen, phosphate, and potash fertilizers, and the conflict disrupted trade routes, spiked prices, and exposed Brazil’s dependence on a single geopolitical adversary of its Western trading partners. Brazil spent over US$4 billion on Russian fertilizers in 2024 alone.

China provided a temporary escape valve during the Ukraine crisis, doubling phosphate exports to Brazil. But the second shock came when Beijing reversed course: Chinese producers requested export restrictions on MAP through at least August 2026, prioritizing domestic supply. MAP prices at Brazilian ports surged to approximately US$720 per tonne, up 13% since January.

The third and most severe shock has been the Iran war and the closure of the Strait of Hormuz. Global urea prices surged more than 35% in days, with Egyptian benchmark urea climbing from US$485 to US$665 per tonne. At current exchange rates, a soybean grower now needs nearly 29 sacks of grain just to buy one tonne of MAP fertilizer.

The Shutdowns That Made It Worse

Between 2018 and 2022, Petrobras under its previous management exited the fertilizer business entirely, shuttering ammonia and urea plants in Bahia (FAFEN-BA), Sergipe (FAFEN-SE), and Paraná (FAFEN-PR). The half-built UFN-III plant in Três Lagoas — where R$3.5 billion had already been spent — was abandoned and placed in hibernation in 2015.

A National Fertilizer Plan launched in 2022 under Bolsonaro aimed to reduce import dependency from 85% to 45% by 2050, but progress stalled almost immediately. The Senate Agriculture Committee passed the Profert bill in March 2024, channeling R$30 billion into fertilizer development by 2030 — but legislative authorization and actual construction are separated by years of execution.

Petrobras Returns: The Four-Factory Revival

The Lula government has pushed Petrobras back into fertilizers through a phased reactivation. The FAFEN plants in Bahia and Sergipe were reactivated in 2024 and have signed their first urea sales contract for the Matopiba agricultural frontier. FAFEN-PR resumed ammonia production on April 14, 2026, after more than four years of closure.

The centerpiece is UFN-III. Petrobras’s board approved the US$1 billion construction restart on April 13, with commercial operations targeted for 2029. The plant will produce approximately 3,600 tonnes of urea and 2,200 tonnes of ammonia per day — making it the largest nitrogen fertilizer facility in the country.

Its location in Três Lagoas gives it a logistics advantage, sitting near the agricultural heartland of the Center-West, South, and Southeast. Construction is expected to generate approximately 8,000 jobs during the build phase.

Source: FUP estimates (Albérico Queiroz), Petrobras filings. Nitrogen fertilizers only; potash and phosphate dependency remains near 98% and ~60% respectively.

What the Revival Cannot Fix

Even at full capacity, UFN-III’s projected annual output of roughly 1.2 million tonnes of urea covers approximately 15% of national demand — meaningful but not transformative. Combined with the three FAFEN plants, Petrobras would supply roughly 35% of Brazil’s nitrogenous fertilizer consumption.

The potash problem is harder. Brazil’s known deposits sit beneath environmentally sensitive Amazonian territory, and the largest project faces opposition from indigenous communities and environmental regulators. No major potash production is expected before the 2030s.

The execution risk is real. Petrobras’s fertilizer track record includes the original UFN-III abandonment after billions had been spent, and the FAFEN plants required years of rehabilitation after being mothballed. The company must now run a deepwater mega-project and a greenfield industrial plant simultaneously under election-year political pressure.

What This Means for Investors and the Agricultural Supply Chain

For agricultural investors and traders, the near-term reality is unchanged: Brazilian farmers will continue to depend on imported fertilizer for the 2026/27 and 2027/28 planting seasons. Rabobank projects 2026 demand at approximately 47.2 million tonnes, slightly below the 49 million recorded in 2025.

The medium-term signal is more positive. If UFN-III delivers on schedule by 2029, it would represent the single largest reduction in Brazilian fertilizer import dependency since the pre-salt oil basin transformed the country’s energy position.

The fundamental tension is between the pace of reconstruction and the frequency of crises. The Ukraine war, Chinese export bans, and Iran-Hormuz closure have arrived in rapid succession, each testing a supply chain designed for peacetime globalization. Brazil’s fertilizer revival is real — but it is a 2029 solution to a 2026 problem.