March 25, 2014
Insured Crop Acreage in Brazil Expected to Triple in Ten Years
Brazilian farmers are expected to triple the number of hectares covered under crop insurance over the next ten years. That is the assessment of an insurance broker for Correcta, a Rio de Janeiro based insurance provider. Only 8% to 10% of the cropping area in Brazil is currently insured.
Crop insurance in Brazil has a much shorter history than in the United States. Whereas American farmers have been purchasing crop insurance for decades, the Brazilian government only started subsidizing crop insurance in 2003. Prior to that, high inflation and currency devaluations made it very difficult for farmers to purchase crop insurance, even if it was available.
The insurance industry and the agricultural community have been rather slow to embrace crop insurance, but that is slowly changing now that the hyper-inflation seems to be a relic of the past. Even with a more accepting attitude toward insurance products, Brazilians in general are much less likely to purchase any type of insurance compared to their American counterparts.
The Brazilian government covers 75% of the cost of the crop insurance and they spent approximately R$ 700 million on the insurance during the past growing season.