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Innovative weather index insurance help small growers in Paraguay mitigate climate risk

feb. 2, 2018

Map of Paraguay showing estimated values of the index on January 28, 2018. Areas with green colors indicate wetter soils while yellow to red colors indicate regions where crops are subjected to some degree of water stress.

 By Dr. Clyde Fraisse, Lorena Rios and Nestor Robles

Climate plays an important role in the production risks that farmers face. Adverse climate conditions can set the stage for crop failures associated with either a lack or an excess of rainfall as well as the incidence of pests and diseases. Small sesame growers in Paraguay remember well the drought of 2011-2012, when average sesame yields in the departments of Concepcion and San Pedro dropped to below 400 kg/ha. The extreme drought affecting the country that year caused the Paraguayan government to declare a state of food security emergency on January 17 of 2012.

Crop insurance is one of the risk management tools available to farmers that covers crop losses caused by adverse weather. An alternative to traditional insurance products is index-based insurance, which shows promise for addressing weather-related risks. It removes some of the high costs of traditional insurance by estimating yield losses rather than requiring field visits to directly measure yield on individual farms. 

To help small sesame growers in Paraguay mitigate risk associated with drought, the Tajy crop insurance company developed an improved weather index-based insurance with the support from BID/FOMIN. This innovative index was developed by EnsoAg LLC a start-up company that provides weather and climate-based solutions to the agricultural industry.
EnsoAg LLC developed an advanced web-based platform  to provide growers, cooperatives and the Tajy technical staff with access to the Tajy weather stations network as well as a variety of climate and weather monitoring and forecast products. Growers can also check their current index accumulation and compare to insured thresholds. This information is also provided to growers via weekly SMS messages.

According to Dr. Clyde Fraisse, EnsoAg director and Professor of Agrometeorology at the University of Florida, the most common index used in weather index-based insurances is rainfall. Payouts are triggered when the amount of rain during a specified window of time falls below a previously specified threshold.  However there are challenges associated with index-based insurance, particularly the discrepancy between actual on-farm losses and payouts. Specifically in the case of rainfall, crop yields are correlated not only to the total amount of rainfall during the growing season but also to the distribution of rainfall events. The EnsoAg index quantifies plant water stress on a daily basis and is significantly more effective to represent crop losses due to drought than indices that rely only on rainfall. This innovative index is based on a water balance that better characterizes crop water stress during the season. The Drought Severity Index is accumulated during the season and payouts occur when it its accumulation overcomes triggers set for the season. Trigger values are based on the location of the fields, soil type, crop variety and planting date. 

 The Tajy platform designed for the project provides a series of tools to help growers and technical staff monitor and forecast weather and climate in Paraguay as well as track the EnsoAg index.

The agricultural micro insurance project for small growers in Paraguay has a duration of four years and is now in its third year. The first two years were dedicated to conduct an in-depth research of the needs of the growers and designing of the index. During the current sesame season that started in September of 2017 the index insurance was approved by the regulatory agency in Paraguay and a pilot test is being conducted in collaboration with two producers’ cooperatives in the Department of San Pedro. The Tajy micro insurance program includes agronomical workshops to improve the sesame production practices in the region as well as financial education opportunities to help small growers reduce risk. 

Based on the successful outcome of the project EnsoAg LLC is currently collaborating with Tajy to evaluate opportunities for expanding the index to other regions and crops. 


Lorena Rios

Lorena works in the MIF in Paraguay. She holds degrees in Commercial Engineering and Business Administration. Before, she coordinated the Financial Inclusion program through mobile phones in Personal. She is a social entrepreneur and a curator of Global Shapers in Asuncion.

Dr. Clyde Fraisse

Dr. Clyde Fraisse is an Associate Professor of Agrometeorology at the Agricultural & Biological Engineering Department, University of Florida. Dr. Fraisse’s research program focus on developing and providing climate information and decision support tools to help agricultural producers better cope with risks associated with climate variability and change. Dr. Fraisse is also the founder of EnsoAg LLC, a start-up company dedicated to develop weather-based solutions for the agricultural industry. 

Nestor Robles

Nestor Robles, is the coordinator of the Parametric Agricultural Microinsurance program of the MIF. He has more than seven years’ experience in project management in the areas of health, education, finance for private companies and international organizations such as the IDB and the European Union.


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