By Emily Alpert, Managing Director, WINnERS

A Gold Medalist in Training
 

You’ve probably been consumed recently by the summer Olympics, but athletics are not the only arena to look for the mastering of exceptional feats. There’s a future gold medalist winner of a different ilk that you might want to keep your eye on: a project called WINnERS (Weather Index-Based Risk Services) that is working to build climate change-resilient food supply chains. 

While the majority of climate change adaptation efforts look to securing the resilience of food producers, farming isn’t just risky for farmers, but for everyone involved in the food supply chain from traders to banks, buyers, processors, and retailers. Everyone depends on a good harvest, consistent quality, affordable prices, and reliable market access. Climate change and extreme weather events, however, threaten all aspects of a food supply chain. In fact, more than 50 percent of food and fiber supply chain disruptions are due to storms and droughts.

In response to climate change, all actors need to be supported to increase their resilience against climate- and weather-induced losses. To create more climate-resilient supply chains, the WINnERS project offers insurance services and products that offer protection to everyone from the smallholder to the global retailer along against climate and weather related losses.

WINnERS Is Bringing Its A-Game
 

The WINnERS project is spearheaded by Imperial College London in partnership with The University of Reading, The University of Hamburg, Ecole Polytechnique, and a number of other global institutions, insurance industry experts, and food buyers. Together these organizations are working to develop state-of-the-art weather and climate modeling technology to measure the risk exposure that retailers, buyers, banks, and smallholder farmers will face in the future. At the farm level, the likelihood of an extreme weather event and its severity can be predicted across areas as small as 5 by 5 kilometers. This information is then integrated into agricultural insurance contracts that share risk between the various actors of a particular supply chain.

WINnERS builds resilience along supply chains by innovating on what might be considered a traditional agricultural insurance model. First, instead of establishing a threshold for rainfall over a large geographical area based on historical rainfall patterns, the project integrates multiple rainfall data sets, satellite monitoring, and predictions of the likelihood of extreme weather events into the design of an insurance contract. This allows the team to more accurately estimate the likelihood of production losses due to weather and enables banks and buyers to agree on more favorable loan terms and purchase prices for the commodity.

Second, weather-driven risk is viewed as a shared problem that needs to be tackled collectively, rather than by placing the burden solely on the producer. By distributing producer risk across the supply chain, everyone can be protected against climate and weather related losses. So, if it rains too much, not enough, or not at the right times: the buyers are shielded against price surges from short supplies, the farmers against price plunges from bumper crops, or saturated or unavailable markets, and the banks against widespread and simultaneous loss with backing from re-insurers.

Third, and perhaps most crucial—the smallholder is not envisioned as the policyholder. One of the criticisms levied against micro-insurance, for example, is its failure to scale-up. Amongst other factors, this has largely been attributed to the risk adversity of smallholders and their limited understanding of how insurance works. WINnERS, on the other hand, anticipates that larger and more established entities such as cooperatives, banks, or food buyers that are better able to manage and afford insurance will be the policyholders and the farmers will be protected through guaranteed markets for their products and debt relief or pay-outs if their production is drastically affected by weather. As the rainfall thresholds for triggering a form of relief will be based on micro-climates, the likelihood of basis risk—a mismatch between expectations and performance—is significantly reduced.

From Rio to Tokyo
 

The project also focuses on improving the well-being of smallholder farmers. WINnERS is partnering with the Patient Procurement Platform to offer its services—improved inputs, training, finance and market access—to participating farmer’s organizations. Over the course of the next 5 years, WINnERS, alongside the World Bank and International Finance Corporation, will be monitoring the impact of these efforts on traditional measurements of well-being in farming communities such as income and yield growth, but also on some less frequently investigated indicators such as risk aversion and the impact of scarcity on cognitive function.

Further, the project also includes a component to assess and improve the regulatory environment for the use of insurance products in developing countries. The team is investigating potential barriers to and requirements for the sale of insurance products in project countries as well as seeking solutions to enforcing contracts and protecting the rights of participants, in particular for smallholders.

While WINnERS is still in its training phase, it aims to expand into another 3 countries in 2017 and hopes to reach hundreds of thousands of farmers over the next 3-5 years through its partnership with the Patient Procurement Platform. By the time the next Olympic Games roll around, the project expects to be generating a lot of new medalist WINnERS—farmers, cooperatives, banks, buyers, and retailers who are better equipped to withstand the uncertainties of farming and the challenges posed by climate change.