Farmers Edge launches Heat Blast insurance

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This article was published 01/05/2021 (1629 days ago), so information in it may no longer be current.

Farmers Edge, the Winnipeg-based digital farming services company, has launched a completely automated heat damage insurance product for canola farmers, which CEO Wade Barnes said will be the first of other similar technology-based insurance offerings for farmers the company will be rolling out.

The Canola Heat Blast Yield Protection policy coverage would be triggered automatically when the insured areas are subjected to specific daytime and nighttime heat thresholds.

Farmers will receive an alert automatically and would receive payment automatically.

“There would be no requirement for the farmer to show proof of loss and there is no need for adjusters,” Barnes said. “If it hits the temperature, the farmer gets paid. If it does not, he doesn’t get paid. The farmer won’t have to worry about getting into an argument with the insurance company. It is clear cut.”

This policy is part of a growing number of so-called parametric insurance solutions offered in several different industry sectors, where the coverage is defined by specific parameters.

While she couldn’t comment on this brand-new insurance product, Cheryl Mayer, director of policy development for the Canadian Canola Growers Association, said it is part of a growing number of insurance offerings that are becoming available to farmers.

“It is a really good thing,” she said. “Farmers have to face all kinds of risks. There has been lots of different kinds of extreme weather in the last few years. The more options farmers have in their risk-management tool box to consider, the better.”

There are other public and private sector crop insurance options but often that coverage will not necessarily cover the kind of profits a producer would typically expect.

For instance, on Barnes’ own farm, his Manitoba crop insurance only covers yields up to a certain level.

Extreme heat, especially when canola plants are flowering, may not wipe out a crop but can drastically reduce yields. For instance canola farmers can now expect yields of up to 50 bushels per acre. But Manitoba crop insurance might only cover up to 30 acres.

The way Barnes describes it, extreme heat between the end of June to the third week of July can “steal the profit.”

Farmers Edge, which recently became publicly listed and raised about $120 million in an initial public offering, has been working with the international insurance company, Munich Re, for more than a year developing the product. It will cost about $10 per acre.

“They have been analyzing our data sets,” Barnes said. “They have a pretty good idea how to price it.”

Pricing will based on levels of coverage and will be specific to each farmer’s fields utilizing data from Farmers Edge’s own weather stations that are included in the digital offering that its farmer customers already have on site. Some have as many as 10 weather stations that digitally collect all sorts of weather data in real time.

Mayer said at about $10 per acre, it will likely be of value in many farmers’ risk-management scenarios.

And with canola prices on the rise — at around $15 to $16 per bushel — it would be the equivalent of about three-quarters of a bushel of canola.

“Farmers spill that much combining all the time,” Barnes said.

Farmers Edge’s digital platform, FarmCommand, collects all the data on temperature, field conditions and planting dates and would trigger a guaranteed claim when the weather and cumulative growing degree day thresholds are met.

Powered by a combination of connected field sensors, artificial intelligence, big data analytics, and agronomic expertise, Farmers Edge customers — who pay between $3 and $6 per acre for that package of technology — have grown steadily over the years.

In its recently released year-end results for 2020, global subscribed acres grew to 23.4 million, an increase of 42 per cent from the previous year.

martin.cash@freepress.mb.ca