Nov 30, 2015

Brazil Announces Reduction in the Crop Insurance Program

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

President Rousseff recently announced reductions in the Brazilian government's funding for crop insurance. In the new Plan for Rural Security (PSR), the Brazilian government will allocate R$ 400 million for crop insurance subsidies in 2016, which represents a reduction of 43% compared to the R$ 700 million allocated in 2015. For 2017 the plan allocates R$ 425 million and R$ 455 million in 2018. The funding level in 2016 will be approximately the same as it was in 2013.

The director of the National Society of Agriculture, Fernando Pimentel, recently stated that the reduced level of funding would not even cover 10% of the cultivated area in Brazil. The level of subsidies were reduced from as high as 60% in 2015 (depending on the level of coverage), to 30-45% in 2016. The maximum amount of losses an individual farmer may claim was also reduced from R$ 184,000 per year in 2015 to R$ 144,000 per year in 2016.

Crop insurance in Brazil has never been a priority for the federal government. The most it ever covered was approximately 13-15% of the crop acreage in Brazil. The level of coverage in Brazil for an individual farmer has also been less than in the United States. The Brazilian government's main farm program continues to be low interest subsidized production loans.