By Brazil Stock Guide – BrasilAgro (AGRO3) has unveiled a major shift in its procurement strategy as it seeks to mitigate the challenges posed by market volatility and high interest rates. The Brazilian agribusiness giant, traditionally known for making early fertilizer purchases, has decided to adopt a more flexible, short-term approach to acquiring nitrogenous fertilizers, which have seen significant price fluctuations over the past year. This move comes as BrasilAgro seeks to reduce exposure to market risks while adjusting to the current economic landscape.
Speaking during a conference call with investors, CEO André Guillaumon highlighted the rationale behind the new strategy: “This year, we are buying nitrogenous fertilizers on a just-in-time basis. If it’s needed, we buy. With this approach, we will form an average price over time,” Guillaumon said, according to Agência Estado. This marks a departure from last year, when the company secured 65% of its nitrogen fertilizer needs by this point in the cycle. In comparison, only 35% of the required volume has been purchased thus far in 2025.
Despite this shift, the company has maintained its practice of making early purchases of phosphate fertilizers, as their storage costs remain more advantageous. However, the overall impact of the fertilizer strategy is clear: BrasilAgro aims to minimize exposure to rising input costs, which have directly impacted the cost of production for crops.
Guillaumon cautioned that reducing nitrogen fertilizer use could result in lower productivity. “If anyone says they will cut back on nitrogen, it means a loss in yield. Unlike phosphorus and potassium, nitrogen available in the soil cannot sustain crop yields,” he explained.
As part of its 2025/26 cycle, BrasilAgro is projecting a 21% increase in production, aiming for 442,600 tons. However, the company faces rising costs across its operations, including a 16% increase in production costs per hectare for sugarcane cultivation. Although the area planted with sugarcane will shrink by 4%, the cost of production per hectare is projected to rise to R$11,735 ($2,314), up from R$10,158 ($2,063) in 2024.
Despite potential price volatility from this new approach, Guillaumon remains confident in its strategic direction: “While we may look back at the end of the season and see that the average price ended up being higher, given the current capital costs, this strategy is the most prudent,” he said.
For the 2025/26 cycle, BrasilAgro is planning a capital expenditure (CAPEX) between R$120 million ($24 million) and R$130 million ($26 million), focusing on irrigation projects and the renewal of sugarcane plantations. These investments are designed to bolster the company’s ability to navigate an uncertain economic environment while strengthening its financial resilience.
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