Analysis of the brazilian program of subsidies for rural insurance premium and the role of cooperatives to support this option of risk mitigation

Topic 4 – Stage 4 – Macro Rural insurance is inserted in the field of agricultural policies to mitigate risks that farmers face. It was an innovation for the Brazilian government from the implementation standpoint, despite... [ view full abstract ]

Topic 4 – Stage 4 – Macro
Rural insurance is inserted in the field of agricultural policies to mitigate risks that farmers face. It was an innovation for the Brazilian government from the implementation standpoint, despite the existence of similar programs in other countries. The purpose of this paper is to assess the recent evolution of the Brazilian Rural Insurance Premium Subsidy Program (PSR) and how cooperatives can support this options for its members. In order to evaluate the results of this program on agricultural policy, an exploratory and descriptive analysis was performed with the objective of studying the evolution of the Brazilian rural insurance in the context of PSR, using the information available in the Ministry of Agriculture, Livestock and Supply about the program. The information and data were collected between July and August 2015. The study was based on data collected from 2005 to 2013 with some general data of 2014 program included in the study. Even though the focus of the analysis was on the most recent years, 2009-2013. Data analysis revealed that the increased supply and demand for rural insurance is in the South and in the agricultural modalities for grains and fruits, with growth potential in other sectors and other regions in the country. PSR was responsible for the expansion of the rural insurance market, which is currently dependent on the subsidy. However, the country has achieved in 2013, most recent available official figures, 13.8% of the total agricultural area with rural insurance coverage, this reveals the need for expanding the program to popularize this important risk mitigation tool. It was verified that in the South region of Brazil cooperatives have supported insurance options for its members, providing institutional aid and financial resources in order to make this risk mitigation tool feasible. This support provided by cooperatives has the potential to popularize rural insurance among producers.