The Minister of Agriculture and Livestock, Carlos Fávaro, defended this Tuesday (11) the adoption of new rules for the Rural Insurance Premium Subsidy Program. Upon leaving a meeting with the Minister of Finance, Fernando Haddad, he said that the proposals aim to expand protection for producers and avoid constraints on the program’s resources.
According to Fávaro, the ministry’s proposal foresees three main measures: the prohibition of budget cuts, the expansion of the use of parametric insurance (based on automatic parameters) and the obligation to take out insurance for producers who have access to credit with subsidized interest.
Rural Insurance covers default on credit lines in case of unforeseen events and production losses.
“Rural insurance is a very important tool, but it no longer fulfills its purpose in Brazil,” said the minister. According to him, the proposal seeks to provide predictability to the sector and prevent blockages of resources, which currently total around R$350 million.
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Parametric model
The parametric model uses previously defined indicators, such as rainfall volume or temperature, to automatically determine compensation payments in the event of extreme weather events. In this format, direct proof of loss of production is not necessary, reducing bureaucracy and accelerating the granting of insurance, by dispensing with procedures such as inspections on the rural property.
“We want to guarantee a fixed and non-contingency budget, so that the producer can be sure that the insurance will work when he needs it most”, explained Fávaro.
He informed that the sources of tax compensation – resources that will compensate for the absence of contingencies – have already been presented to the Ministry of Finance.
Mandatory insurance
Fávaro also defended that taking out insurance is mandatory for producers who obtain rural credit with reduced interest rates. According to the minister, the measure aims to avoid debt resulting from crop failures and reduce the need for debt renegotiations with the National Treasury.
“Producers who have access to credit with subsidized interest must also have insurance. If they already have the benefit of credit, they need to have protection”, he explained.
Processing
The government intends to incorporate the proposal into a bill by Senator Tereza Cristina (PP-MS), which is already being processed in the National Congress and deals with improving the Rural Insurance Premium Subsidy Program.
Currently, the federal program subsidizes between 20% and 40% of the cost of rural insurance contracted, depending on the type of crop and region of the country. The producer bears the rest of the value. The objective is to reduce the risks of agricultural losses and avoid debt renegotiations in the event of adverse weather events.
