Cow insurance contributes to social security of Brazilian farmers
For small Brazilian farmers cattle-dying could mean the end of their farm. Therefore, partner of Trias, Cresol Baser, a savings and credit cooperative governed by farmers, successfully introduced a “cow insurance”.
© Trias
Despite the economic growth in Brazil, there is poverty in the countryside. The family farmers in the state of Paraná are part of the poorer population of Brazil, of which 80% is low-skilled. Trias and its partner organisations improve the positions of farmers.
Trias partner Cresol Baser provides agricultural credit, savings and insurance products to family farmers. The so-called 'cow insurance' is in great demand. Cresol recently developed this insurance out of sheer necessity. The cattle of dairy farmers, often bought using microcredit, is their main capital. Should they lose a cow because of diseases, an accident, or because of a natural death, they lose their capital and their income. As a result, they are unable to pay off their loans and will be unable to continue developing their business.
Cresol’s target group consists primarily of small family farmers who own about 10 to 15 dairy cows and 15 to 20 hectares of land. The purchase of a cow is incredibly expensive to these farmers and without insurance a risky investment. For a small percentage of the purchase price, the cow is insured for various causes of death every year.
The demand for the cow insurance is high. Currently 10,000 cows have been financed with the help of Cresol, of which 200 have been insured. It is expected that this last number will rise significantly in the near future. “The farmers in question are experiencing a better standard of life and can now count on a more consistent income”, says Trias advisor for the dairy industry Daniela Nascimento.
“So far, Cresol is the only provider of the cow insurance, though other insurance companies have expressed their interest in also offering this insurance product,” Nascimento says. This interest and the high demand for cow insurances show the product’s big success. “That’s why Cresol has decided to make the insurance available for non-members as of August 2011 and to cover both dairy cattle and cattle for slaughter”, Nascimento states.
A similar insurance product is no longer to be found in Flanders. Around 1880 there was a compulsory cow insurance in West-Flanders, which entitled cattle farmers to compensation when a cow died. The Boerenbond (Farmer’s Union, founded in 1890) did not support this ‘compulsory insurance’ and preferred to leave this to the own initiative of the local cattle farmers, which resulted in a ‘mutual livestock insurance’. This turned out to be a great success, which led the minister of agriculture to abolish the compulsory livestock insurance and start subsidising mutual livestock insurance in 1892.
In Flanders, the livestock insurance has become redundant because of, among other things, prevention measures of the government and a sanitary fund to compensate in case of disasters or cattle plagues. Besides, the loss of a cow is less of a threat to a cattle farmer’s income if he has 100 cows, compared to small farmers. For the Brazilian farmers, who own considerably less cattle than farmers in Flanders do, and whose government barely gets involved in suppressing animal diseases, the cow insurance is a very useful insurance product.