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December 29, 2016

Crop Insurance in Brazil Covers only 15% of Crop Production

Crop insurance in Brazil has never been as popular as it is the United States. It is estimated that Brazilian farmers have only enough crop insurance to cover approximately 15% of the total crop production in Brazil. Even though there are government subsidies, farmers complain that the costs are too high and the coverage is too low.

The government subsidizes for crop insurance are in the range of 35% to 45% of the cost of the premiums. The Ag Policy Secretary announced earlier this week that the government released R$ 100 for the Program to Subsidize Rural Credit (PSR) and for all of 2017, the government will spend R$ 400 million to subsidize the premiums for crop insurance. Crop insurance is available in Brazil for grain production as well as fruit production such as apples and grapes.

The state where the crop insurance coverage is the greatest is Rio Grande do Sul where an estimated 50% of the state's crops are covered by crop insurance. The reason why it is higher in the state is because of the large amount of irrigated rice produced in the state.

Three years ago, a program was created by Tovese Seguradora specifically designed for irrigated rice production. The plan includes protection for replanting due to excessive moisture as well as damage from hail and wind. For example, the plan will pay for up to R$ 5,000 per hectare for hail damage (approximately $600 per acre). The state of Rio Grande do Sul produces approximately 60% of Brazil's rice and virtually all the production in the state is irrigated.