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

The report finds that Brazil's current agricultural price risk policies are inefficient and cost-ineffective, providing only BRL 4 billion in gains despite a BRL 5.4 billion budget in 2013. It suggests that farmers would be willing to pay BRL 50 billion to avoid price risk for soybean, sugarcane, corn, and coffee. The authors recommend that the Brazilian government move away from direct output buyouts and instead incentivize market-based tools like sell options, similar to programs in the United States, the European Union, and the state of São Paulo.

• Current price risk mitigation policies in Brazil are insufficient to meet market needs. While current policy provides approximately BRL 4 billion in gains for farmers (8% of total production value), farmers would be willing to pay approximately BRL 50 billion (26% of total production value) to avoid price risk for the four most commercially relevant crops: soybean, sugarcane, corn, and coffee.
• Brazil's 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% allocated to storage expenses and government buyouts, yet the model indicates these policies only yielded BRL 4 billion in gains.
• The report recommends that the government stop purchasing farmers' output and deciding its destination to avoid market inefficiency and high public expenditure. Instead, it suggests subsidizing market-based instruments such as sell options, citing a program used in the state of São Paulo since 2011 as a model.
• Small farmers are identified as the group that would benefit the most from improved price risk mitigation measures, such as insurance, due to their higher vulnerability to output price risk.

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} }