Brazil’s agricultural sector faces a significant escalation in systemic risk for the 2026/2027 harvest after a R$530 million shortfall was confirmed in the budget for the Rural Insurance Premium Subsidy Program (PSR). The reduction means only R$473.8 million is available from the planned R$1.01 billion for the PSR, a cut that is expected to slash the area covered by subsidized insurance to just 2.69 million hectares, representing a mere 2.78% of the country’s total agricultural area. This dramatic contraction in safety net coverage occurs as meteorologists forecast a potentially strong El Niño event, exposing a major portion of global agricultural output to extreme weather losses.