Farmers seek parametric insurance after catastrophic losses across France linked to climate volatility

As the leading producer of wheat across Western Europe, France’s catastrophic losses in yields at their highest in over half a century have been met with alarm in the region. Researchers at three leading think tanks recently came together to research the link in production shortfalls to climate volatility. Their findings have put into question the viability of existing agricultural production systems and the sustainability of future crop yields, while at the same time signifying the urgent need for new financial protection for producers.

«Right up to the disastrous harvest, forecasts predicted average yields close to the five-year average»

France experienced a high number of extreme weather events in the last several years in the form of heat and cold waves, excessive precipitation and drought, which have together had significant impacts on wheat crop yields.  In fact, in 2016, wheat crop yields were reduced by up to 50% in the breadbasket of France (a region comprising 27 departments in central northern France).  This comprised a shortfall of 8 million tonnes usually harvested in the region and a 2.3 billion dollar loss for France’s trade balance. Such losses had not been seen in over 60 years. Just as worryingly: no one had seen this coming… right up to the disastrous harvest, forecasts predicted average yields close to the five-year average.

Researchers quickly set out to discover exactly what climactic conditions, individually and combined, led to such extraordinary losses, the likelihood of this happening again, and how we can improve our forecasting systems to prepare us in time.  Three leading think tanks across France, the INRA, CNRS, and CEA, came together to analyse data from October 1958 through July 2016.  For the first time, they analysed the conditions at the scale of both the month and the season, including minimum and maximum temperatures, precipitation, and radiation potential evapotranspiration. They also looked at precipitation between October and July, the number of days the maximum temperature exceeded 34°C, or was between 0°C and 10°C (the cold period required for the plant to move from the vegetative stage to the reproductive stage).

In their startling report published in the journal Nature Communications this week, researchers indicate that a compound of abnormally warm autumn temperatures followed by abnormally wet spring conditions together provides the worst possible conditions for the development of wheat and the most favourable to the development and spreading of pests, vector-borne viruses, and fungal diseases. These were exactly the conditions seen in winter 2016 in France, resulting in the losses in crop yields not seen since 1958.

Source: https://www.nature.com/articles/s41467-018-04087-x

Unfortunately, researchers suggest that the warming trend observed in France over the last several decades, in part attributed to human-induced climate change, has already increased the probability of 2016-like climate conditions occurring.  Autumn temperatures are set to increase by 2050, and whilst there is no clear trend for spring precipitation, this means the conditions for 2016’s record losses are projected to become increasingly frequent in the years to come since one of the two conditions is set to be more frequently in place.

«Experts were not trained to look for compound climate conditions, and thus ignored the red flags»

The increased likelihood of compound extreme events such as seen in 2016 poses the challenge that our production systems and yield forecasting systems are ill-equipped to manage in the face of climate extremes.  Firstly, researchers explain that France’s wheat growing in the breadbasket region is overwhelmingly composed of wheat monocultures, which are less resilient to abnormal climate events and more sensitive to diseases outbreaks than more complex cropping systems. Secondly, experts were not trained to look for compound climate conditions, and thus ignored the red flags in the 2015-2016 growing period.

Thus, some farmers have taken matters into their own hands. One of France’s biggest grain cooperatives, Axereal, which collects five million tonnes of grain from farmers across the country’s vast Centre Val de Loire region, uses Meteo Protect’s pricing platform to secure fully customized weather insurance to protect its farmers from increased costs and reduced revenues deriving from unseasonal weather.

For the third year in a row, all 16,000 members of the Axereal cooperative can purchase affordable customized weather insurance from the cooperative using an online app that allows them to choose each parameter of their weather policy, including crop, period of coverage, specific weather event and intensity, and even the amount of payment, based on their unique risk profile and budget.

This coverage allows farmers to be compensated in the case of losses in revenues due to climate volatility, implement adaptive measures to climate change (such as modifying sowing and harvesting times, crop types, and labour management practices) and invest in new agrotechnologies (eg. installing post-harvest storage facilities for a warmer climate). As the needs and risks of the agriculture continue to evolve, so does the insurance industry.