“Climate and weather are significant factors affecting agriculture production around the world. Both seasonal and regional variability in weather directly influence crop yield potential.”

– USDA’s Major World Crop Areas and Climate Profiles report

Food producers around the world, be they subsistence farmers or multinational enterprises, face a fiercer battle with the weather than ever.

The perennial concerns of rising production costs, stricter rules on use of agrochemicals, and insecure supply lines are dynamics that are increasingly understood and managed. The battle with weather volatility has often been one-sided with the only defense being good farming practice.

With tight margins and often grave consequences, weather volatility must be guarded against. And increasingly, growers, large and small, are extending their management practices to the arena of ‘weather’. Advances in technology have enabled growers to integrate the use of high-yield seed varieties and planned applications of fertilizers, herbicides, and fungicides; yet for many weather remains the intractable problem.

Weather is the single greatest threat and catalyst to the health of a grower’s yield.

From planting to harvest- precipitation, temperature, sunshine hours, and wind will affect the quality and quantity of the crop. When those parameters deviate significantly from the norm a farmer’s skill and planning may count for little. A successful harvest or financial and humanitarian disaster may follow.

For more than a decade, weather risk management tools (including futures contracts, reinsurance, and weather derivatives) have been used to minimize the financial effects of climatic fluctuations.

Losses due to too much rain, too little rain, excessive heat or cold, can be mitigated by using appropriate weather risk management tools.

Increasingly this technology has also been utilized by the humanitarian sector to safeguard smallholder farmers in volatile climates against the perils of famine.

Weather Index Insurance
Global Uses