Canadian farmers pushed to the limit by this summer’s heat and drought

corn

It’s a hot, dry summer for most of Canada, which is great for trips to the cottage and dog days by the beach. After two years of unusually cool, wet summers, it seems like a welcome change. But hot, dry weather is for farmers just another iteration of abnormal weather conditions. Farmers rely on normal weather, and it’s nowhere to be found in Canada again this year.

Droughts have been declared in coastal British Columbia and conservation authorities in regions of southern Ontario and Quebec have issued water advisories. Agricultural land in New Brunswick and Nova Scotia is parched, just as in the interior of British Columbia. In Toronto, Ontario there have been more than a dozen days of temperatures exceeding 30 degrees Celsius, where the average is four such days. Where 71.5 mm of rain is expected there, they have received 26.4. Canadians say they are suffering from “weather whiplash”, seeing opposite scenarios of unseasonal and unexpected weather back-to-back each year.

In 2012, the extremely dry summer and early autumn led to crop yield shortages, unable to meet supplier contracts. That’s already been the case for strawberry crops in the Ottawa valley this year, where drought conditions led to strawberry stands closing early across the region. Strawberries are particularly weather sensitive, needing approximately 25mm of rain per week to grow well. Only 26.2mm of rain fell in Ottawa during the entire month of May. Similarly, late-summer Ontario corn, requires sustained rainfall able to penetrate the soil or it loses its sweetness, and the taste of milk from some dairy cows in southeastern Ontario has been reportedly altered by the dry conditions.

A lack of rain can have widespread implications. Without substantial rain, fertilizer cannot penetrate the ground, for instance, crop growth can be stunted, running irrigations systems cuts into profits for the farm, and sufficient animal feed is not grown.

Making matters more complicated, the abnormal weather hitting Canada has appeared in pockets, just as it did in 2012. County to county, the weather varies so one area experiences dryness whereas nearby sees full drought conditions. What rain that has fallen has appeared in turbulent summer storms that dissipate too quickly.

Unfortunately, climatologists are not forecasting a hopeful outlook. Weather models suggest that July and August are going to continue to be very hot across the country, and the need for precipitation will only increase. All but the most resilient crops and farms have any likelihood of pulling through.

For these farmers, the only solution is index-based weather insurance, which provides compensation when unfavourable weather conditions reduce profits or generate additional costs. Meteo Protect has developed a platform to price and underwrite fully customized index-based weather insurance, for any business, anywhere in the world using a web-based app. With Vivaldi, farmers are able to choose each parameter of their weather policy including geo-location, coverage period, and index variable (including any weather parameter, yields, prices, and production). All parameters are adjusted by the client to support its individual risk profile and pricing preferences.

Farmers risk up to 30% of their annual revenue due to unfavourable weather conditions, and this risk is not adequately covered by other insurance schemes. As a result of being able to put in place Meteo Protect’s hedging solutions, they can increase their investments and know they’ll be able to cover their staff salaries and fixed costs even in the face of prolonged unfavorable weather. Best of all, with Vivaldi, index-based weather insurance is now available to cover any crop, peril, and plot, anywhere in in the world.

Farmers protected with index-based weather insurance solutions have the opportunity to improve margin sustainability, generate additional revenues, and control costs. As a result, they can test adaptive measures to climate changes (such as modifying sowing and harvesting times, crop types, and labour management practices), invest in new agrotechnologies (including purchasing heat-tolerant crop varieties, and installing post-harvest storage facilities for a warmer climate). For Canadian farmers seeing yet another year abnormal weather, this is particularly welcome news.