Brazilian farmers have endured multiple challenges since 2023, including crop failures, commodity price declines, and intensified droughts, rain, and wildfires.
The result is greater caution, with two-thirds of producers expecting profits to remain stable or decrease in 2024, according to a McKinsey survey. Rising input costs were Brazilian farmers’ main concern when surveyed two years ago, but now extreme weather events are seen as the biggest threat. And to navigate the challenges they face, Brazilian farmers are focusing on what can be controlled within farm gates: increasing productivity. Indeed, 60 percent of surveyed farmers say they see productivity as the key to a more profitable future. The finding reinforces the importance Brazilian farmers place on productivity: between 1980 and 2023, Brazil became a global benchmark in agricultural productivity.1
These are among the findings of a survey of 750 Brazilian farmers, a regional slice of McKinsey’s Global Farmer Insights Survey of 4,400 producers fielded in early 2024 (a similar survey was conducted in 2022). In this article, we highlight some of the survey results, including common themes of boosting productivity, adopting new technologies, and securing agroeconomic resilience.
Brazilian farmers pursue sustainable practices
Brazil leads globally in sustainable agriculture. More than 60 percent of the surveyed Brazilian producers said they use biostimulants, biofertilizers, and biocontrols in their soil health protocols—more than double the usage in Europe and the United States, our survey found (Exhibit 1). More than half of their cultivated lands benefit from these biological products. Additionally, 70 percent farmers said they intend to maintain or increase spending on biologicals, irrespective of input price variations.
Regenerative agriculture and agricultural input efficiency practices are more widely adopted in Brazil compared with the global average (Exhibit 2). Techniques like no-till farming, cover cropping, and crop rotation not only preserve the environment and reduce emissions but also lower production costs and boost productivity, and they can generate a green premium in the final product’s price.
Facing the challenges of carbon capture
Although regenerative agriculture enhances soil and plant capacity to retain captured carbon, improving soil biodynamics and the water cycle, the ability to monetize carbon credits is still limited. The difficulty lies in proving additionality and permanence, given Brazil’s historical use of sustainable practices (Exhibit 3).
Agtech adoption is growing faster than in other geographies
Adoption of agriculture technology has grown considerably, especially across larger properties, positioning Brazil second among surveyed countries (Exhibit 4). However, a gap remains with the United States, suggesting substantial potential for growth. Differences in technology use cases are evident due to differences between tropical and temperate climate agriculture: Brazilian farmers focus more on disease and pest control, while American farmers emphasize productivity monitoring and autonomous vehicles.
Implementation and maintenance costs and operating expenses are still the main challenges for Brazilian farmers to adopt new technologies, our survey found. Nonetheless, when it comes to capital spending, a smaller number of respondents pointed to required investment as a barrier to adopting new technologies.
Mixed enthusiasm for digital channels
The survey found that use of digital channels for agricultural purchases stalled at about 40 percent of farmers postpandemic. Improving user experience could boost use of digital channels, given that farmers cite trust issues and lack of personalized advice as major drawbacks.
Farmers’ adoption of digital payments has doubled in two years to 54 percent, surpassing the global average. Technological maturity plays a role, with those using at least one agtech solution more inclined to adopt digital payments, particularly younger producers.
Farmers are seeking more financing and security
Cash payments for inputs have declined as farmers have become less capitalized, leading to increased reliance on third-party funds through distributors and suppliers. However, these sources have limited ability to extend credit in the current cycle.
In addition, farmers’ interest in insurance has grown, especially among cotton and grain producers, likely due to concerns about extreme weather events and input price volatility.
Echoing the Nobel laureate economist Paul Krugman’s sentiment that “productivity isn’t everything, but in the long run, it is almost everything,” Brazilian producers have long recognized the importance of productivity in today’s challenging farming environment. They are focusing on sustainable practices and innovative technologies within farm gates to increase productivity while seeking diverse financing and insurance mechanisms. Our survey shows Brazilian farmers are prepared to take necessary steps to ensure resilience and growth.
