Global Parametrics, a parametric and index-based risk transfer startup backed by the UK and German governments, has partnered with Arbol Inc. and Propina to provide coverage to smallholder coffee farmers in Costa Rica.
Propina is a non-profit organisation with a platform that connects coffee consumers to coffee farmers around the world to promote ethically sourced supply chains.
Arbol, meanwhile, is a weather risk platform that leverages smart contract technology. The Arbol platform will enable Propina to support its network of farmers to hedge exposure to rainfall deficits and invest in resilience measures.
Additionally, NDF (UK) LP (also known as The Natural Disaster Fund), a risk transfer vehicle managed by the GP team, will provide risk capacity for this transaction.
This deal represents an initial pilot collaboration between the parties and is anticipated to form the basis for further partnership in historically hard-to-reach markets.
“Extreme weather and natural disasters are a key cause of an endemic poverty cycle in many emerging markets and with the onset of climate change, the situation can only get worse,” said Dan Bierenbaum, Vice President and Co-founder of GP.
“GP, through The Natural Disaster Fund and its commercial partnerships, is proud to champion a systemic change by providing both the innovative products and access to risk capital to organisations, such as Propina, that directly impact the lives of those on the ground,” Bierenbaum continued.
“We are pleased to take on this pilot cover in support of innovative disaster risk financing programs and to give the market additional confidence to support this and future initiatives.”
Crawford Hawkins, founder of Propina and producer-focused market, Harvest, also commented: “Agricultural producers in many emerging markets have limited access to traditional insurance products, which can be costly and inefficient.
“Our experience has shown that innovative parametric concepts with fast claims payment processes are most effective when it comes to mitigating the impact of extreme weather events and natural disasters that are particularly devastating in low-and-middle income countries.”
Hawkins added: “We are delighted to share a vision with GP for creating and offering sustainable financial solutions for disaster resilience in emerging markets and look forward to future collaborations.”
Siddhartha Jha, the CEO of Arbol further stated: “Arbol’s vision is to bring accessibility, transparency, and efficiency to the weather risk market, which so far has mostly been restricted to large clients.”
“Over the coming decades, rising weather volatility will increase challenges for farmers across crops and regions, especially coffee. Arbol aims to provide proactive solutions to changing weather patterns and help farmers achieve financial security in a cost effective manner.”
