| MAP

Government releases 100% of the budget for rural insurance in 2019

With the reduction of the Ministry's budget, subsidy for rural insurance premiums will reach R$440 million this year

27.11.2019 | 20:59 (UTC -3)

MAP

The Ministry of Agriculture, Livestock and Supply (Mapa) informs this Wednesday (28) that the remaining portion for the full execution of the planned budget for 2019 of the Rural Insurance Subsidy Program (PSR) was released, totaling R$ 440 million.

In March of this year, the budget was reduced by R$70 million, which reduced the initial availability to R$370 million. At the end of October, R$50 million was released, and now the remaining R$20 million has been released.

With this 2019 budget, it will be possible to cover around 100 policies, 58% more than in the previous year, when producers had access to subsidies in 63.241 policies.

For the director of the Risk Management Department of the Mapa Agricultural Policy Secretariat, Pedro Loyola, the federal government has given consistent signals that rural insurance will be one of the main instruments of agricultural policy in the coming years.

“The execution of 100% of the budget foreseen in the Budget Law must be celebrated by the entire sector, as this has not happened since 2013. This demonstrates the commitment to agricultural risk management policies”, he said.

“For next year, a resource of R$ 1 billion is planned for the PSR, which still depends on the approval of the 2020 Annual Budget Law Project (PLOA), currently being processed in the National Congress”, he adds. The amount predicted for 2020 will be the largest for subsidy since the program was created in 2004.

What is rural insurance?

The rural producer purchases an insurance policy for the crop/activity with financial assistance from the federal government. In the event of a crop failure due to an adverse weather event (drought or excessive rainfall, for example) or price variation, the producer's financial obligations will be paid by the insurance company.

With this mechanism, the producer obtains lower interest rates, as the risk of defaulting falls. Insurance also minimizes the chances of possible government financial assistance and debt renegotiation after the harvest.