At first glance, good news: the allocation of a budget of R$ 50 million to a subsidy program of up to 60% of rural insurance exclusively for small producers has worried family farming leaders. Entities representing the sector see in the pilot project an attempt to end ProagroMais – a program that guarantees the payment of installments of agricultural financing in case of bad weather.
“The government is taking it for granted since ProagroMais will cease to exist. Their files are all aimed at private Rural Insurance”, says Arnaldo Brito, advisor for Agricultural Policy at the National Confederation of Rural Workers and Family Farmers (Contag), citing conversations between the entity and the director of the Risk Management Department of the Agricultural Policy Secretariat of the Ministry of Agriculture, Pedro Loyola.
“Although he is saying that this year is a year of investment in a pilot project, in all the conversations we had, especially with director Pedro Loyola, he takes it for granted that ProagroMais will cease to exist very soon and, who you know, your days are no longer numbered,” adds Brito, pointing out that, to be able to access agricultural financing, producers need to take out insurance coverage – whether maintained by the government or the private sector.
When contacted, the Director of Risk Management at the Ministry of Agriculture Pedro Loyola informed, in a statement, that “the government is encouraging family farming producers to learn about rural insurance with the pilot that started last year and served more than 10,000 family farmers” and that there is no definition about the end of ProagroMais.
Unlike the Rural Insurance Subsidy Program (PSR), ProagroMais is maintained with resources from the national treasury transferred to financial institutions that finance family farming through lines subsidized by the government – such as Prof. In case of losses caused by the weather, ProagroMais guarantees the payment of installments to the bank. Rural insurance, subsidized by the Union, is operated by private insurance companies and can include both the cost and financing installments and production – indemnifying the producer’s losses.
According to the coordinator of the Insurance and Risk Management Group (GESER) at Esalq-USP, Vitor Ozaki, Proagro has a welfare nature, with only one rate for the whole country determined by the Central Bank – while insurance companies determine the value of the rural insurance premium based on the risk assessed in each region. “The products are different. The program, for example, covers pests and diseases, while private insurance is not for a straightforward matter: pests and diseases can often appear due to inadequate management by the rural producer”, observes the professor at Esq.
Another critical difference between ProagroMais and the Rural Insurance Subsidy is that the former cannot be contingent upon as it is an official credit operation. Therefore, it can generate expenditures above those foreseen in the public budget if problems occur during the harvest. “In several years, Proagro had a surplus, but when compensation is greater than the budgeted amount, that’s where the problem lies for the government because it has to increase the budget limit, and this is a somewhat complicated maneuver, especially in a moment like the one we’re going through right now,” explains Ozaki.
There is still concern about the profile of producers who can access private insurance for family farmers, as insurance companies assess the risk on a case-by-case basis. “That intermediate family farmer, who is still starting his infrastructure, runs a serious risk of being left out because it is not interesting for insurers to invest in people who are starting the activity or are in a hazardous activity,” observes the advisor of Agricultural Policy of Contag.
The president of the Rural Insurance Commission of the National Federation of General Insurance (FenSeg), Joaquim Neto, denies that insurance companies will no longer serve producers that represent a more significant risk. But it recognizes that the value of private insurance is not always within reach of family farmers. “It’s these smaller farmers that they don’t have this resource. For them, then, the subsidy percentage has to be higher”, highlights the executive.
Ozaki, from Esalq, points out that small producers are numerous and spread across the country, increasing insurance companies’ operating costs, requiring greater government control over the amounts charged. “Some questions are important because, if a big weather event affects family farmers, there are many small areas to be inspected,” observes the professor.