Addressing the crop yield volatility risk
Climate volatility poses severe challenges to crop production across the globe. Recent phenomenons such as France's extreme drought in 2022 and Australia's spring frost danger to grain growers (costing $360 million) are two prolific examples of such issues. The overall impact of climate stress to agriculture and related corn production losses is estimated in the billions each year.
Compounded by climate change, the combination of extreme weather-related risks significantly impacts crop production, taking a direct financial toll on the agricultural industry, particularly large agribusinesses and smallholders, as well as food & beverage companies, co-operatives and vineyards.
Descartes’ parametric yield cover simplifies crop protection. Following the client’s specific exposure, crop, and location needs, we insure crop yield losses due to climate risks with a single, straightforward, data-based solution.
Assess
We assess and evaluate the respective crop yield volatility, leveraging certified and public data from trusted sources.
Customize
Design a customized cover, fit to the client's needs, in which payout structures are indexed according to annual crop yield statistics and reports.
Monitor
Upon policy inception, we monitor and review the public crop yield data to determine whether a qualifying yield drop has occurred.
Payout
Insured clients receives a payout within days of the public yield data release, stabilizing their balance sheet and boosting their liquidity ahead of next season.
Our parametric approach to crop yield volatility
Our parametric crop yield product leverages official and certified yield data from trusted sources on a regional level to provide an intuitive form of insurance protection.
In collaboration with the broker and client, we design a customized parametric cover based on third-party official data available at a regional level. After assessing the risk profile and historical loss data from the client, we deliver our quote based on crop types, the valuation per ton and the available budget.
Descartes’ product seamlessly enables agribusinesses to cover their yield in either one or multiple territories. With minimal data requirements needed, agribusinesses obtain a policy ahead of the agricultural season, gaining peace of mind amidst volatile weather conditions. Moreover, our parametric yield cover allows commodity traders, conglomerates and other actors in the agricultural supply chain to fully protect their balance sheet if crop yields fall low. With the swift payment at the end of the season, clients can cover their own losses or credit their farmers.
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