Record Crop Insurance Claims in Brazil
Banco do Brasil e Mapfre, a major joint venture of crop insurance in Brazil, revealed this week that the country has set a new record of crop insurance claims from December of last year. Since then, 2,000 claims were made generating payments totaling R$ 275 million (nearly U.S. $117 million) to approximately 5,000 farmers.
The main reason attributed to the record is the drought in grain planting areas of the southern part of the country. In 2012, a year that saw huge drought on soybean fields, 5,000 claims were made in the whole year.
“The drought is more severe than previously thought. This is a new record of claims," Luis Carlos Guedes Pinto, director of crop insurance of the group, said in a press release. The latest National Supply Company report reduced the Brazilian production of soybeans by 5 million tons to 85.4 million tons.
According to Bruno Kelly, an insurance broker based in Rio de Janeiro, there is a huge trend of growth of crop insurance in Brazil in the next few years and, therefore, claims if there are climate issues. His projection is that the country will triple insured farmers in 10 years - currently, 8% to 10% of the area of Brazilian farms are insured.
"It is a natural process. The Brazilian insurance programs are very similar to the U.S. programs. The big difference is that the government subsidies just started in the middle of 2003 in Brazil. It takes a while to grow, but indeed that will happen. The country has an agricultural vocation," Kelly said in an interview with Agriculture.com.
Kelly also says that the culture around insurance in the country needs to change. "Brokers are still a lot more informed about car insurance. They need to get more interested about rural life to sell crop insurance. And farmers need to see insurance as a necessity, not a cost. It cannot be cut," summarized the broker, mentioning that price insurance started in Brazil as a product just two years ago. Currently, the Brazilian government pays up to 75% of single crop insurances – a total budget of R$ 700 million (U.S. $298 million).
Brazil's new agriculture minister
Brazil's president Dilma Roussef announced this week the country's new minister of agriculture. Neri Geller was raised in Selbach, Rio Grande do Sul, and then moved to Lucas do Rio Verde, Mato Grosso, becoming a corn and soybean grower and a councilman of that municipality. Prior to taking the office, he was the secretary of agricultural policy and already was a member of the board of directors of Brazil's National Supply Company.
For former minister Roberto Rodriguez, Geller represents a continuity of the Brazilian agricultural policy. Carlos Fávaro, president of the Association of Corn and Soybean Growers of Mato Grosso, commemorated the choice and stated that Geller has great skills on pressuring for the release of new agricultural products in the market.