Government blocks 42% of rural insurance budget and threatens coverage of millions of hectares

The Ministry of Agriculture and Livestock (Mapa) has blocked R$445.17 million of the 2025 budget allocated to the Rural Insurance Premium Subsidy Program (PSR). The figure is equivalent to 42% of the allocation provided for in the annual Budget Law (R$1.06 billion).

The freezing of resources has been harshly criticized by the agricultural sector, which has been advocating for an increase in the amount allocated to the program in light of an increase in adverse climate risks in recent years. In the PSR, the government provides a subsidy for the contracting of guarantees against losses that varies from 30% to 35% of the insurance costs for agriculture, livestock, aquaculture and forests.

The measure is part of the R$31.3 billion budget cut announced by the federal government at the end of May with the aim of ensuring compliance with the fiscal target.

Of the total, R$354.64 million were blocked and R$90.53 million were contingent, according to the Federal Budget Panel of the Integrated Planning and Budget System (Siop) of the federal government.

According to the fiscal framework, although both measures mean the retention of budget funds, the blockage is carried out when expenditure grows more than 70% of the growth in revenue plus inflation, while the contingency is adopted when there is a lack of revenue to meet the primary surplus.

The interim president of the FAEP System (Federation of Agriculture of the State of Paraná), Ágide Eduardo Meneguette, classified the measure as “absurd”. “The resources were already below what the agricultural sector needs. Now the situation has become even more complicated, leaving rural producers uncovered in the middle of the harvest”, he stated.

The entity advocated an increase in resources for the PSR to R$4 billion. “Once again, the federal government has turned its back on the sector that sustains the economy and on rural producers who generate income and jobs,” it said.

Federal deputy Pedro Lupion (PP-PR), president of the Parliamentary Front for Agriculture (FPA), also criticized the blockade, which he classified as “another hard blow” for the sector, after government proposals to increase IOF rates and tax income from securities such as Agribusiness Credit Letters (LCA), Agribusiness Receipt Certificate (CRA) , in addition to Investment Funds in Agroindustrial Production Chains (Fiagro) .

“Now comes more news, about a cut of more than 40% in rural insurance, which provides security for financial operations, makes credit cheaper and is obviously extremely necessary,” he said, in a video published on his social networks.

“To our surprise, less than ten days before the launch of the new Harvest Plan, this cut has come. We are still trying to understand why, to understand what the reasons are, but it really is another hard blow to our sector,” he continued. The parliamentarian also stated that he is studying a proposal to change the rural insurance law.

Insurance companies also criticize the blocking of rural insurance resources

The blockade also had a negative impact on the insurance sector. The National Federation of General Insurance (FenSeg) and the National Confederation of Insurers (CNseg), which represent insurers operating rural insurance in Brazil, released a statement expressing concern about the news.

“The entities warn that, if confirmed, the blockade will represent a severe blow to the policy of protection against agroclimatic risks, especially for producers who are unable to fully cover the cost of insurance,” says the statement.

According to the entities, the insured area in the country has already suffered a strong contraction in recent years, falling from 14 million to 7 million hectares between 2023 and 2024. “With the support of the federal government, insurers have expanded their capacity to assume risks and improved products and services, with the aim of reaching the target of 20 million hectares protected.”

If the blockade is maintained, say FenSeg and CNseg, the projection is for a new drop in the insured area, which could fall below 5 million hectares in 2025. The insurers had already requested an additional budget of R$2.8 billion from Mapa for next year.

Mapa was contacted, but did not respond until the publication of this report. The text will be updated if the department responds.