This is the case in the Central-West, where the protected soybean area increased by 500 thousand hectares
The occurrence of extreme weather events in the country in recent years and the greater difficulty in predicting bad weather and its effects on the countryside have gradually increased the demand for rural insurance in regions that traditionally did not seek protection.
The insured area of soybeans, the main product served by the insurance market through the Rural Insurance Premium Subsidy Program (PSR) in the country, has already surpassed that of 2023. Glaucio Toyama, president of the Rural Insurance Commission of the National Federation of General Insurance (FenSeg), stated that there are already 3.8 million hectares of soybeans insured for the 2024/25 harvest, compared to 3.1 million hectares in the last cycle.
Soybean producers from Mato Grosso, Mato Grosso do Sul, Goiás and the Federal District have taken out policies to insure 1.6 million hectares, up from 1.1 million hectares in the 2023/24 harvest. This is the case of Dieicson Siqueira Serpa, who planted soybeans on 1,500 hectares, an area that will be occupied by corn and sorghum after the oilseed is harvested, in Goiatuba, Morrinhos and Panamá, in southwestern Goiás. Part of the crops are insured. “The insurance provides stability to keep me in the market. Due to the climate, it is difficult to risk money from your own pocket or financing without any type of insurance, subject to everything: rain, drought, hail”, he says. In recent years, he has had specific losses and claims filed in the second sorghum harvest. For Serpa, the price is still an obstacle to expanding the purchase of insurance. “When the producer has his own resource area, he does not take out insurance, as it is very expensive and makes the business unviable,” he states.
Brasilseg, which leads the rural insurance segment in the country, reported increases of 719% and 134% in the purchase of policies for forest and livestock insurance, respectively, between January and August compared to the same period in 2023. The insured area of planted forests increased from 52,000 to more than 426,000 hectares. The protected pasture area increased from 4,000 to more than 10,000 hectares.
Even with the increase in coverage, the year has been challenging for insurers that operate with or without subsidies. Until August, the volume of revenue from rural insurance fell 3.2%, to R$9.6 billion, according to data from Susep compiled by the National Confederation of Insurers (CNseg). The figures also consider life insurance and rural pledge.
The entity reduced its growth projection for the rural insurance market in September to 1% this year. In June, the expectation was for an increase of 7.9%. By the end of 2023, 23.1%. The justification for the cut was the delay in disbursing the PSR subsidy.
Another reason is the drop in the average price of rural insurance (premium) from 7.47% to 6.86%, in line with the increase in contracts outside Rio Grande do Sul and Paraná — historically the main consumers of the instrument —, which helped to spread the risk. The data, from FenSeg, considers only crop insurance.
The result is below market expectations, which saw potential for expansion with greater interest from farmers in the policies, according to Toyama.
The exhaustion of the PSR budget, even if later than usual, slowed down a possible stronger recovery of the market. Almost R$890 million was invested after cuts and freezes, the lowest amount since 2020, without considering R$210.8 million that will start to be released for policies in Rio Grande do Sul.
In an official letter sent to the Ministries of Agriculture, Finance, and Planning and Budget at the end of October, the FenSeg committee demanded the release of R$52.9 million from the PSR budget and requested a supplement of R$197.8 million to meet the stock of policies still without subsidies and the estimated demand until the end of the year.
The request has little chance of succeeding at a time when discussions are being held about cutting government spending. The Secretary of Agricultural Policy at the Ministry of Agriculture, Guilherme Campos, says that, despite the appeal of climate change, competing for the budget with other areas has become more difficult.
“The problem is that the resource is very small. It helps, but it doesn’t solve anything. But we are looking at the government’s cash flow situation, it’s just a case of cutting back,” he says. According to him, there is a commitment to return the R$52.8 million blocked throughout the year to the Ministry’s coffers by December.
The situation has alerted insurers to the upcoming winter harvest, which involves greater climate risk, in 2025. Demand for policies is accelerating, but there are uncertainties about the budget for next year.
The 2025 budget bill provides R$1.06 billion for the PSR. The sharp increase in the rates of the Agricultural Activity Guarantee Program (Proagro) may force the public to migrate to rural insurance and increase competition for funds, assesses Toyama, from FenSeg. The scenario should be one of scarcity of resources, especially for the winter harvest.
“This affects the entire situation. If there is no very clear proposal, either the producer is left without insurance, compromises the margin and buys with a rate of 20% to 30% in Proagro or buys insurance between 10% and 15%. If there is no subsidy, it reduces the technological level of the crop, which impacts productivity”, says Toyama.
“We are working to raise awareness in the government about the need to increase the allocation to at least R$2 billion, but we still do not have a positive response regarding this demand”, says Esteves Colnago, director of institutional relations at CNseg.
What is worrying is that, even with this increase in insurance take-up, the country is at the same levels seen a decade ago and far from the peak seen in 2021, says James Hodge, director of agribusiness and construction at brokerage WTW. “There is still little uptake in rural insurance if we consider that between 10% and 15% of producers are insured”, he says.
This year, Hodge noticed specific increases in interest in rural products after the fires in August and September. “We had peaks in demand for citrus, for example, and a search because of the drought”, he reports. But with the prospect of the arrival of La Niña and increased rainfall, interest has returned to normal levels, he says.