Rural insurance is one of the instruments of an agricultural policy which is intended to reduce the inherent risks in rural activities. In this article you will learn about the different types of government programs to ensure rural activities in Brazil.
Rural insurance protects producers against losses caused by adverse natural disasters. In addition to agriculture, the rural insurance also covers livestock activities, farmers properties, their products, credit to commercialize the production and the risk of death of producers.
Upon requesting rural insurance, the producer is able to recover the capital invested in their production in case of damages caused by strong rain or extended drought, for example. The rural insurance is offered for agribusinesses in economically viable regions, based on technical studies of soil conditions and climate.
Rural insurance provides coverage for agriculture, which is considered a high risk activity. Therefore as the cost of rural policies are so high, the government provides financial support to producers for the acquisition of this guarantee. In Brazil, we have the following types of government support available for rural activities:
- Proagro Mais
- Programa de Subvenção ao Prêmio do Seguro Rural
- Programa Fundo de Garantia Safra
The Agricultural Activity Guarantee Program, known as Proagro, is an insurance for small and medium producers provided by the government.
This program is designed for producers who have financing of rural credit and want to prevent from possible default if they have lost income due to losses caused by natural disasters, pests and diseases that affect livestock and crops. Farmers who apply for Proagro pay a contribution and its rate varies according to the size of the producer, the use of irrigation and location of the project. This fee guarantees the farmer’s indemnity. The federal government acts as if it were an insurance company, paying the expenses in case of damages. The insurance limit is BRL 300,000 per crop.
Rural credit is a financing offered by the government, which is meant for farmers, cooperatives or farmers associations. It aims to stimulate investment, fund the costs of production and increase the commercialization of agricultural products.
Both companies and family farmers can apply for Proagro, and it will be granted to properties that pass a climate risk evaluation, which is an agricultural policy instrument and risk management in agriculture. The study is developed in order to minimize the risks related to weather phenomena and allows each municipality to identify the best time for planting crops in different soil types. This procedure is determined by MAPA, short for Ministry of Agriculture, Livestock and Supply.
Proagro is administered by the Central Bank and operated by its agents, which represents the financial institutions that operate the rural credit. These agents are responsible for analyzing the Proagro insurance requests and decide if it will be approved or not. These agents are also responsible for finalizing and collecting payments from the insured individuals.
In case the financial agent denies the Proagro request, the producer can ask the Special Committee on Resources, known as CER, which is the Proagro administrative authority linked to the Ministry of Agriculture to review the decision.
Proagro is funded by resources provided by the federal government and from the contribution that farmers pay. The program rules are approved by the National Monetary Council and specified in the Rural Credit Manual, which is published by the Central Bank of Brazil.
This program is part of Proagro, but is intended only for farmers linked to Pronaf, short for National Program for Strengthening Family Farming. Proagro Mais also protects against the loss of income as a result of natural phenomena. In this case, the farmer is exempt from financial obligations related to rural credit and receives indemnification.
Programa de Subvenção ao Prêmio do Seguro Rural
Programa de Subvenção ao Prêmio do Seguro Rural or PSR is a government program that is intended to ensure the production by reducing the costs of agricultural insurance. The program is administered by the Management Committee of Rural Insurance within MAPA.
Admission to PSR can be differentiated by the type of crop, animal species, categories of producers and production regions. The percentage of the aid in agricultural activities vary between 40% and 70%, this percentage is related to the amount paid by the producer and varies according to the type, with a maximum annual grant of BRL 96.000 per producer. Beans, wheat and the second crop of corn, for example receive 70% of the subsidy. For livestock, forestry and aquaculture activities, the percentage of the subsidy is 30%, with a maximum annual grant of BRL 32.000 per producer.
To buy this rural insurance, the producer must get in touch with an insurer authorized by the Ministry of Agriculture in the PSR program. If the producer already has a crop coverage from any other insurance program, it will not receive benefit from PSR for the same crop.
To receive the benefit of the subsidy program, farmers can not default with payments to the State and submit to the insurance company a Rural Producer Responsibility Term signed along with the Insurance Proposal.
Programa Fundo Garantia Safra
The Programa Fundo de Garantia Safra is a program for family farmers who participate in Pronaf. The farmers that apply to participate in Pronaf must attend to several requisites, among them the family must live on the same property where the agricultural activities are performed or next to it. In addition, at least 50% of the family income must be obtained from farming activities.
The program Fundo de Garantia Safra is linked to the Ministry of Agrarian Development and its management is a responsibility of a steering committee composed of family farmers and representatives of federal, state and municipal governments. It is intended to support family farmer production in cities located in the states of Minas Gerais, Espírito Santo and the Northeastern region.
Farmers that are part of the Garantia Safra in municipalities where registered losses can reach at least 50% in crops of cotton, rice, beans, cassava or corn due to drought or excessive rainfall may receive compensation of more than BRL 700.00 annually in up to six monthly installments. This compensation is paid through electronic cards provided by Caixa Economica Federal.