Agriculture and Livestock Minister Carlos Favaro said this Tuesday that rural insurance has lost its effectiveness and is no longer fulfilling its role. He said the government was considering changes to update the current model.
Mr. Favaro met with Finance Minister Fernando Haddad to discuss the issue.
— I have told you this many times, but rural insurance is a very important tool, but it no longer serves its purpose in Brazil — he told journalists upon leaving the Ministry of Finance.
The agriculture minister said the government was discussing changes to make insurance more accessible to farmers.
— We also learned a lot over the past year about (Treasury Economic Policy Director) Guilherme (Mello)’s team and strategic planning. And I have a suggestion. You must submit a proposal. Parametric insurance must be introduced in Brazil and universalization of rural insurance for rural producers must be achieved.
The Rural Premium Subsidy Program (PSR) provides for insurance contracts (documents that formalize insurance contracts) with governments to help rural producers minimize economic losses in the event of crop damage caused by climate factors.
Favaro argues that policy prices are so high that they are inaccessible to most local producers. The minister said that without insurance, local debt would increase significantly.
— This minimizes the impact of debt negotiations, for example because the debt ultimately returns to the Treasury. When he has a problem and his insurance runs out, he comes here to renegotiate the debt, which affects the budget.
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