Agriculture plays an important role inthe state of Santa Catarina, Brazil. Most of its productiondepends on small family-owned farms, which are greatlyexposed to climatic and price shocks. In order to help smallfarmers to manage risks, the federal and state governmentshave been carrying out several programs and measures toreduce and transfer agricultural risks. Santa Catarina ranksseventh out of 26 Brazilian states in terms of agriculturalproduction. The states most important perennial crops arecorn, soybean, tobacco, rice, beans, onions, and wheat.About 20 percent of the population lives in rural areas, ofwhich some 90 percent are farmers. The most prominentclimatic challenges are floods in the coastal region anddroughts in the western plateau. Of these extreme weatherevents, floods are the most visible, because they receivewidespread media coverage and sometimes cause deaths.However, drought poses a much more significant challenge toagricultural productivity. Given that most farms in SantaCatarina are small and that agricultural production ismainly rain fed, weather risks play a key role in theproduction variability and farmers income. In addition togovernment-funded preventive measures, farmers take otheractions to protect themselves from weather risks. Onetraditional method is the diversification of income. Farmersin Santa Catarina often cultivate several crops withdifferent growth and harvest cycles. When drought does occurit may damage some crops but it is unlikely to last longenough to affect all crops. Moreover, many farmers also farmanimals, especially cows, pigs, chickens, and turkeys as asavings mechanism against the whims of the weather.
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