If unpredictable weather conditions negatively affect crop production, cooperatives may face:
Revenue Loss:
Decreased sales and income impacts the cooperative’s financial stability
Increased Input Costs:
May incur higher costs by purchasing crops in the open market to compensate
Debt Servicing Challenges:
Affects ability to repay loans or meet financial obligations, leading to default
At a glance
Risk Covered
Financial loss from a significant drop in crop production
Client Profile
Agricultural Cooperative
Reference Yield
Olympic average of official reports from the past 10 years
Index
Payouts based on official regional average yield
case study example
Case study
A wheat cooperative experiences unpredictable weather like droughts or heavy rain that can cause a sharp decline in yield. This can jeopardize their crop collection, finances, and ability to fulfill commercial obligations.
Solution
A policy specified to wheat and based on regional data, rather than the individual performance of each farm.
If the reported crop yield in the cooperative’s region falls below average, the policy begins to pay according to the cooperative’s customized payout structure.
Result
Following a year of unfavorable weather, the policy provided quick financial relief, allowing the cooperative to offset their losses from a reduced yield.
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