Drought generated legal demands in 2022; the situation could repeat itself in 2023

The drought that hit Rio Grande do Sul in the summer of 2022 punished farmers in Rio Grande do Sul and had consequences for lawyers specializing in the matter. The phenomenon that mainly affected soybean, wheat, corn and livestock farming, in general, had a huge impact on the sector and became one of the main topics of legal consultations.

"The tenant has to pay the value of the contract regardless of whether he has harvested something or not and many have had to seek renegotiation of their contracts, because if they don't pay, they could face eviction action", says Frederico Buss, from HBS Advogados.

According to him, in partnership contracts, which are another type of agrarian contract, as the name suggests, there is a partnership between the owner and the planter, in these cases there is also a reduction in income for both.

Losses also impact future delivery contracts that producers enter into to guarantee the price, explained the lawyer. “They do it before the harvest, already planning to deliver the product with a certain value to guarantee a price, price predictability, avoiding fluctuations in the market. These contracts must be fulfilled, which is why the producer who had losses and had difficulty delivering the adjusted quantity needed to seek renegotiation with the other party”, he explains.

Regarding crop financing contracts, Frederico Buss highlights the need for farmers to provide themselves with data to prove losses. “Rural credit contracts, these with controlled interest rates, the rural credit manual provides for the possibility of renegotiating these contracts, extending deadlines, in the event of crop loss due to adverse factors”, he teaches.

He explains that it is up to the producer to take some measures, such as providing a technical report proving the losses, requesting an extension before the expiration date and, with this information, requesting the extension of the contract, but in accordance with the payment capacity.

In 2022, what significantly increased demands and discussions was the topic involving agricultural insurance. For the HBS Advogados specialist, we still have a lot of room to improve.

“Because in the United States, for example, producers have 90% of the area insured. We, around 20%, maybe a little more. So, we still have a long way to go compared to countries that have agricultural production of the same size as ours”, he assesses.

He says that in addition to a very large increase in hiring, with the demands resulting from the drought, insurance companies were very active. “We faced a lot of problems with insurance companies. Negatives began to proliferate, for various reasons, type of seed, because it was planted with its own seed, type of soil, because it was harvested before the insurance company’s final inspection,” he reports.

However, there is a large volume of legal discussions in Rio Grande do Sul regarding agricultural insurance. “And in these cases, the producer's guidance is more or less similar to that of rural credit: when he suffers any adverse weather conditions, he has to document and quantify the losses, prepare a technical report with his agronomist”, he warns.

The lawyer teaches that the entire relationship with the insurance company must be documented and formalized, including by email. Furthermore, when the insurer presents the inspection report, if he disagrees with anything, do not sign or put your disagreement in writing. “And demand that periodic reports be made and also the report before he starts collecting, because after collecting, it makes proof difficult”, he says. Therefore, providing your own technical report is an excellent precaution.

Among the topics that also generated guidance for farmers were guidelines for joining Renagro. It is up to the owner of machines such as tractors to access the application so that they can travel on public roads, if necessary.

With some time off, until December 30th, it is possible for producers to settle tax debts related to the Rural Territorial Tax (ITR), Funrural and old rural credit debts. He recommends agility on the part of interested parties because, with the change of government, it is not possible to predict what will remain in force or will be changed.

For next year, Frederico Buss estimates that some themes should emerge, such as environmental issues, and others that depend on votes in the Federal Supreme Court (STF) and even those that will depend on the political orientation of the new government.

“For example, Incra over the last four years has dedicated itself more to carrying out land regularization and issuing property titles to those who had already been settled”, explained the lawyer.

He believes that processes of demarcation of quilombola and indigenous lands will once again be on the agenda. He highlights that the STF trial on the indigenous issue is underway. “It is fundamental, because, if we revoke the time frame, then we will have a return to extreme legal uncertainty in these issues”, he adds.