Nespresso
Weather index insurance for coffee smallholders
2018
For over 30 years, Nespresso has been seeking to embed sustainability into their everyday business. Since 2013, this has been called The Positive Cup – a strategy that remains at the heart of Nespresso’s business and reinforces a conviction that coffee must be a force for good. Blue Marble is proud to support Nespresso in this initiative, by building resilience to the impacts of climate change in coffee-growing communities through parametric insurance protection. Our partnership started in Colombia in 2018 and has since scaled to bring protection to Nespresso coffee farmers across Indonesia, Kenya, and Zimbabwe, with additional programs being designed in Honduras, Guatemala and Peru.
Nespresso aims to empower farmers and build greater resilience for their families and futures in coffee agriculture. The Positive Cup strategy is designed to accomplish this and includes a significant dimension to improve farmers’ livelihoods, prosperity and resilience through high-quality sustainable coffee. Crop insurance to protect from climatic risk is one of the income interventions in the portfolio of initiatives.
Farmers, and in particular smallholders, are vulnerable to climate risks. Adverse weather that damages the coffee harvest disproportionately hurts smallholder farmers and is a barrier to coffee farmers building economic resilience and achieving a sustainable living income. Farmers need financial stability to allow them to plan for the longer term and invest in sustainable agronomy. Building farmer financial stability provides benefits for all stakeholders and improves the supply chain’s resilience for coffee buyers. The challenge for Blue Marble was to design affordable crop insurance that pays out without delay when bad weather impacts coffee production.
The solution was pioneered in Colombia. In partnership with coffee buyer Cafe Export, and insurance partner Seguros Bolivar, Blue Marble innovated an affordable crop insurance through a programme named“Café Seguro” (“safe coffee”), to protect against the adverse effects of climate change for the Aguadas, Altoand Norte de Caldas coffee cooperatives. The insurance product uses satellite-based climate data to determine when coffee output has been impaired by either too much or not enough rainfall during each growing phase. When the satellite technology detects that there has been too much or not enough rainfall for a phase in a specific location, payouts are made directly to the registered coffee grower of the affected hectares, graduated according to the severity of the weather. No notices of loss, formalities or claims processes are required.
Adverse climate conditions in Colombia in 2022 resulted in a difficult year for coffee growers. Our original program, Café Seguro, delivered a country record of USD 3.0m in payouts for 6,475 Colombian smallholder coffee farmers. This record payout following the difficult weather conditions was a “moment of truth”, proving that the insurance works to give the coffee farmers the financial help they need, when they need it. Since its founding in Colombia, the program has been scaled-up with Nespresso’s support to reach their coffee farming communities in Indonesia, Kenya, and Zimbabwe, currently protecting approximately 12,000 farmers and impacting over 90,000 beneficiaries in total. Further scale-up in Honduras, Guatemala and Peru is in progress for launch in 2023.
We are proud to be innovating with Nespresso and Seguros Bolivar to provide affordable crop insurance and create a cost-effective safety net for smallholder coffee farmers and their families.
“With the last payout, I invested in fertilizers so that with good weather, I can have a good harvest. Else, we’d have needed loans, or our coffee production would’ve suffered.”
– Mario Davila Rios
“I have talked to my neighbors, friends and family members about how Café Seguro is a safety net that allows us to cultivate coffee with more peace of mind.”
– Luz Marlene Betancourt Galliano
Read more about Nespresso’s sustainability programme, The Positive Cup, here.
Let’s explore how we can support you to launch and grow microinsurance schemes for your business.
