Risk solutions for Brazil

Farmers and the agricultural industry hold the key to increase food supply for a growing global population. However, farmers face financial risks related to the weather, diseases, and commodity prices. Brazilian farmers for example are aware of these risks, but only few have the insurance coverage that could financially protect them.

“Brazil is one of the world’s most dynamic agricultural markets, accounting for one fifth of global food production. For the agricultural sector to reach its full potential, it is crucial that its farmers can cover their production and price risks”, said Jürg Trüb, Head of Environmental and Commodity Markets, Swiss Re.

Brazilian farmers, as other farmers around the world, are exposed to financial risks related to weather, diseases and commodity prices. This keeps them from exploiting their full potential. The Brazilian farmers are well aware of these risks. However, not all take advantage of the insurance options available, as a study found out that was commissioned by Swiss Re. The study evaluated the risk perception and the risk management strategies of 240 larger sized Brazilian farmers and 30 cooperatives representing more than 130’000 members.

According to Swiss Re, the lack of agricultural insurance reduces the amount of operational credits available to farmers. Expanding insurance penetration is therefore key to unlocking the full potential of the agricultural sector. The proposed solutions include:

Expanding the spectrum of agricultural insurance solutions. such as new revenue coverages and index-based solutions.
Encouraging the government to enhance and restructure its support. For example, increase the total amount of premium subsidies and increase the maximum subsidy limit per farmer.
Redefining the government’s catastrophe insurance fund to stimulate insurance companies’ participation.

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