Agriculture Risk Management

This report analyzes the landscape of climate finance for agricultural risk management in Brazil between 2021 and 2023, focusing on public and private instruments used to protect rural production from extreme weather events. It details the financial flows of key programs like PROAGRO and PSR, highlighting a shift toward increased spending on loss and damages due to intensifying climate events, and discusses the role of Agricultural Climate Risk Zoning (ZARC) in improving resilience and sustainability.

• Between 2021 and 2023, agricultural risk management instruments aligned with climate objectives averaged US$ 2.6 billion per year. Public sources provided 55% of this total, amounting to US$ 1.4 billion per year, largely driven by US$ 1.2 billion per year dedicated to loss and damages through federal programs like PROAGRO and the Crop Guarantee Fund.
• Climate finance for agricultural risk management is primarily used for adaptation, totaling US$ 1.4 billion per year, which constitutes 54% of Brazil's total climate finance for land use adaptation. The Rural Insurance Premium Subsidy Program (PSR) is the largest contributor to adaptation flows at US$ 1.1 billion per year (78%), while PROAGRO contributes US$ 0.3 billion per year (22%).
• The Agriculture Guarantee Program (PROAGRO) has seen a sharp increase in budget expenses for compensations, rising from US$ 0.4 billion in 2021 to US$ 1.9 billion in 2023 due to more frequent climate events. However, the program faces governance challenges, including a lack of transparency and potential fraud, which prompted an audit by the Brazilian Court of Accounts (TCU).
• The Rural Insurance Premium Subsidy Program (PSR) and the Crop Guarantee Fund serve distinct roles: the PSR subsidizes private rural insurance policies (averaging US$ 287 million in annual subsidies), while the Crop Guarantee Fund provides conditional benefits to family farming in semi-arid regions, averaging US$ 40 million per year in government contributions.
• To address the unsustainability of current risk management models, Brazil uses Agricultural Climate Risk Zoning (ZARC) to define planting windows and reduce risks. New updates for the 2024/2025 Agricultural Plan include reducing PROAGRO compensations for high-risk planting dates (25% reduction for 30% risk and 50% reduction for 40% risk) and lowering the mandatory limit to R$ 270,000 (US$ 54,050) to prioritize small and family farmers.

APA

Climate Policy Initiative (2024). Agriculture Risk Management. https://www.climatepolicyinitiative.org/agriculture-risk-management-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/

Chicago

Climate Policy Initiative. Agriculture Risk Management. 2024. https://www.climatepolicyinitiative.org/agriculture-risk-management-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Agriculture Risk Management |date=7 November 2024 |url=https://www.climatepolicyinitiative.org/agriculture-risk-management-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2024agriculture, author = {{Climate Policy Initiative}}, title = {{Agriculture Risk Management}}, institution = {Climate Policy Initiative}, year = {2024}, month = nov, url = {https://www.climatepolicyinitiative.org/agriculture-risk-management-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }