Changes approved in April tightened the rules of the Agricultural Activity Guarantee ProgramPixabay
Proagro is used to help small and medium-sized producers in the event of extreme weather events, pests or diseases and, in these cases, the beneficiary is exempt from paying financing contracted with banks or cooperatives, and the cost is assumed by the Union.
Report from the Federal Audit Court (TCU), from 2023, drew attention to this issue. “The value of the compensation will be calculated based on the losses supported and proven by the expert, who must carry out a technical and independent assessment; but, in the current design of the policy, these characteristics may remain compromised”, says the document, which is still in the analysis at the Court of Auditors.
In light of the alert, the economic team is studying ways to replace, or at least supervise, the expertise function performed by banks, in order to avoid this conflict. The change must require the approval of a law in the National Congress, although members of the Treasury assess that this could be done directly by the Central Bank (BC), which is the manager of Proagro.
Estadão/Broadcast found that one of the options is the creation of a structure in the Ministry of Agrarian Development (MDA) to receive and evaluate Proagro’s reports and coverage demands. For members of the economic team, even though there is progress in the use of satellite images to prove losses, which helps to reduce fraud, remote monitoring does not eliminate the role of experts and banks in the short term.
Members of the financial sector recognize that the changes could lead to a reduction in conflicts of interest, but say that the proposal needs to be well-founded and discussed jointly with banks and cooperatives. Furthermore, they point to concern about the operational part, that is, that the changes will increase the time for analyzing and granting compensation — which, in the sector’s view, would cause more problems than solutions.
MDA interlocutors say that a 2023 decree already allows the supervision of experts and even provides for the creation of an area to coordinate this work. However, in this case, proof of losses would remain the responsibility of the banks, with the MDA only being responsible for monitoring insurance authorizations.
Tightening the rules
At the beginning of April, the CMN modified the Proagro rules. The adjustments, which are criticized by the production sector, especially the limitation of the public eligible for insurance (more information on page B2). The measures became part of the economic team’s spending review plan and are expected to generate savings of R$935 million in the second half of this year and R$2 billion in 2025.
Agribusiness complains that the changes left part of the producers unattended and do not resolve the issue of banks. “Proagro needs revisions. We are willing to curb practices and together discuss new methodologies, but the recent change was a palliative measure to save resources in compensation and not to improve public policy”, said the technical advisor of the National Commission of Agricultural Policy of the National Confederation of Agriculture, Guilherme Rios
For the special advisor to the Ministry of Agriculture and Livestock (Mapa), Carlos Ernesto Augustin, Proagro “is poorly managed and subject to fraud and, therefore, must be reviewed”. “Today, it’s almost welfare. The farmer doesn’t pay and the bank does everything to get Proagro. There is a case of the same farmer who used the program for 20 years in a row”, says the minister’s advisor Carlos Fávaro, who defends a broad system reformulation.