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February 24, 2017

Crop Insurance Covers 4.4% of Grain Production in Mato Grosso

Crop insurance has become an integral part U.S. farmer's production plans, but Brazilian farmers continue to be reluctant to spend money on crop insurance.

According to the Brazilian Ministry of Agriculture and the Crop Insurance Subsidies Program (PRS), farmers in Mato Grosso purchased crop insurance for 621,000 hectares of grain and fiber production in 2016. This equated to 4.4% of the total grain and fiber production in the state. During the 2015/16 growing season, Mato Grosso farmers planted 14 million hectares of soybeans, corn, cotton, rice, dry beans, and sunflowers.

Farmers in Mato Grosso paid R$ 30 million in premiums in 2016 for their crop insurance and the Brazilian government subsidized the premiums with R$ 21 million. Therefore, the farmers paid 59% of the cost of the insurance and the government paid 41%.

For all of Brazil, farmers in 2016 purchased 76,346 crop insurance contracts covering 5.6 million hectares of crop production out of a total of 58.6 million hectares. In Brazil, 9.6% of the crops were covered by insurance in 2016. Irrigated rice production in the state of Rio Grande do Sul had the highest percentage of crop insurance due to a specific program in the state to increase insurance coverage.

One of the reasons for the low participation rate in Brazil is the feeling among Brazilian farmers that the climatic risks in Brazil generally do not justify spending the money on crop insurance. That has not turned out to be the case for the last two growing seasons. During the 2015/16 growing season, hot and dry weather significantly impacted the crops in Mato Grosso and this year heavy rains have impacting the crops.