Brazil’s fertilizer sector struggles with defaults

A world-renowned Norwegian fertilizer producer, Yara International, reported delays in payments from distributors and cooperatives, including AgroGalaxy and Belagrícola, owned by Chinese company Dakang.

The non-payments are linked to a BRL250 million Agribusiness Receivables Certificate (CRA) issued by Yara. The CRA ended on June 20, with nine companies defaulting on nearly BRL84 million, or one-third of the total.

Yara stated the delays are market-related and not defaults, assuring compliance with its guarantor and securitization responsibilities, and expressed confidence in a short-term resolution.

AgroGalaxy described the delays as “normal in agribusiness,” attributing them to mismatches in payment cycles, and is negotiating payment terms with Yara.

Ecoagro, the CRA issuer, announced that five companies intend to pay their dues in July. If not received, Yara will cover the amount for CRA investors. In 2023, Yara’s net revenue was BRL18.1 billion, a 40% sales drop from 2022.