Betting the Farm

Emily Holbrook


November 1, 2009

Though Brazil accounts for one-fifth of global food production, few of the country's farmers take out insurance on their crops. Swiss Re's recent report on agricultural risks in Brazil highlights the need for risk management within the country's agriculture industry because of the financial impact of extreme weather and fluctuating commodity prices.

"We believe that the findings of this report are relevant not only to the stakeholders of the Brazilian agricultural sector, but also to other emerging agricultural powerhouses faced with a similar mix of issues," states the report. Brazil is likely to have more crops at stake in the future as the global population continues to grow and the demand for protein-rich foods continues to rise.

Swiss Re offers possible solutions such as building awareness among farmers, strengthening the capacity of local insurers and "developing a robust agricultural insurance framework under the lead of the public sector." Brazil's entire economy is dependent upon the country's agricultural output, as it accounts for as much as 25% of its GDP. As the report states, for Brazil to achieve its full potential, farmers there must understand and take advantage of its most important risk management tool-agricultural insurance.
Emily Holbrook is the founder of Red Label Writing, LLC, a writing, editing and content strategy firm catering to insurance and risk management businesses and publications, and a former editor of Risk Management.