Specifically, the parametric insurance policies cover higher-than-expected rain and drought during the periods of the year when coffee beans are young and most susceptible to weather shocks.
The trigger levels are based upon measurements from “satellite technology,” according to Nespresso, and have been set in cooperation with local farmers “based on their knowledge and historical yields.”
If the rain levels seen during the covered periods fall below or above the threshold levels, the coverage payments made to farmers will be “automated and quick.”
The pilot program, which was founded with support from local farmers from the Aguadas and Norte de Caldas cooperatives in the department of Caldas, has started with 1,975 participating farmers with territory covering 5,724 hectares.
Nespresso and Blue Marble stated that they “intend to expand this program to other regions” outside of Caldas in the future and that the National Federation of Coffee Growers of Colombia (FNC) “has expressed interest in extending this program to other coffee regions.”
In crafting the coverage, the Lausanne, Switzerland-based company, a division of the Nestle Group, cited the lack of other weather policies and the need for farmers to manage risk now more than ever as climate change makes weather conditions and harvest yields increasingly unpredictable.
“This pilot initiative helps to establish a support mechanism for smallholder coffee farmers in Colombia so that they can continue to thrive in the face of climate change,” said Guillaume Le Cunff, president and CEO of Nespresso USA.