Allianz expanding agribusiness in Brazil

25 July 2008

Brazil's farming sector is booming, and it already accounts for almost one-third of the country's GDP. This is also why Allianz, Brazil's top insurer of farm equipment, is planning to expand its agribusiness.

57 million tons of soybean were produced in 2007, making Brazil the world number two producer and exporter . Brazil is the fifth biggest country by land mass, after Russia, Canada, the US and China, covering 8.5 million square kilometers.

A quick aerial scan over Brazil will reveal acre upon acre of farmland devoted to growing big volume crops: soybean, cotton, rice, corn, wheat, sugar cane, coffee and fruits. Add sales of agricultural equipment, chemicals, fertilizers and related agribusiness products and services and you're looking at the source of 28 per cent of Brazil's GDP. Planted forests also count as agribusiness in Brazil, as do the large amounts of meat and poultry which are produced.

With 100,000 pieces of farm machinery insured, Allianz is the top insurer of farm equipment in Brazil, having 26 percent market share, as measured by premium income. Impressive as this may sound, it's only a fraction of the potential agri-market: only a minuscule two percent of the potential market has crop insurance.

This is changing: in part due to government subsidies to support farmers in buying crop, bovine, forest and fish insurance, and in part due to better educated farmers who bring a business approach to farming and have a clearer appreciation for the risks they run.

Allianz has plans to increase its farm business – equipment, crop and property – by as much as 30 per cent this year and has a three-year strategy which will see it consolidate relationships with farm equipment dealers. In addition, it will start selling crop insurance through banks, penetrate further into new regions, and make greater inroads into rural property insurance, which it began targeting last year, gaining business from sugar processing plants – key players in the manufacture of ethanol, the fuel on which 70 per cent of cars in Brazil now run.