Improving Agricultural Productivity in Brazil: The Unmet Potential of Price Risk Policy

This executive summary of a 2015 study by the Climate Policy Initiative (CPI) evaluates price risk mitigation policies for Brazil's agricultural sector. The authors argue that current government-led interventions, such as direct buyouts, are inefficient and fail to meet market needs, suggesting a shift toward market-based instruments like sell options and insurance to improve productivity and economic potential.

• Current price risk mitigation policies in Brazil are insufficient and fail to meet market demand. While current policies provide farmers with gains of approximately BRL 4 billion (8% of total production value), farmers would be willing to pay about BRL 50 billion (26% of total production value) to avoid price risk for the four most commercially relevant crops: soybean, sugarcane, corn, and coffee.
• Existing federal price risk mitigation policies are not cost-effective. In 2013, the federal budget for these measures was BRL 5.4 billion—with more than 40% spent on storage and government buyouts—yet the model indicates these policies only generated BRL 4 billion in gains.
• The study recommends that the Brazilian government move away from direct buyouts and determining the destination of output, as these activities create market inefficiencies and place a heavy burden on public spending. Instead, the government should incentivize market-based instruments, such as subsidizing sell options in the private market, similar to a program implemented in the state of São Paulo since 2011.
• The inefficiency of current policies is attributed to the fact that some were designed in the 1960s to prevent extreme poverty and hunger rather than to manage price volatility. Small farmers are identified as the group most vulnerable to output price risk and would benefit most from improved measures like insurance.

APA

Assunção, J., Gandour, C., & Hemsley, P. (2015). Improving Agricultural Productivity in Brazil: The Unmet Potential of Price Risk Policy. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/02/Improving-Agricultural-Productivity-in-Brazil-The-Unmet-Potential-of-Price-Risk-Policy.pdf

Chicago

Assunção, Juliano, Clarissa Gandour, and Pedro Hemsley. Improving Agricultural Productivity in Brazil: The Unmet Potential of Price Risk Policy. Climate Policy Initiative, 2015. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/02/Improving-Agricultural-Productivity-in-Brazil-The-Unmet-Potential-of-Price-Risk-Policy.pdf.

Wikipedia

{{cite report |last1=Assunção |first1=Juliano |last2=Gandour |first2=Clarissa |last3=Hemsley |first3=Pedro |title=Improving Agricultural Productivity in Brazil: The Unmet Potential of Price Risk Policy |publisher=Climate Policy Initiative |date=January 2015 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2015/02/Improving-Agricultural-Productivity-in-Brazil-The-Unmet-Potential-of-Price-Risk-Policy.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{assuno2015improving, author = {Assunção, Juliano and Gandour, Clarissa and Hemsley, Pedro}, title = {{Improving Agricultural Productivity in Brazil: The Unmet Potential of Price Risk Policy}}, institution = {Climate Policy Initiative}, year = {2015}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2015/02/Improving-Agricultural-Productivity-in-Brazil-The-Unmet-Potential-of-Price-Risk-Policy.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }