In 2024, Australian farmers face unprecedented challenges due to low wheat prices and unpredictable weather conditions. Rain during harvest can devastate crop quality, downgrading wheat from milling-grade to feed-grade, which leads to significant income losses. Given the current financial pressures, Australian farmers must protect themselves from these risks.
CelsiusPro’s Parametric Insurance, in the form of Wet Harvest Weather Certificates, provides an innovative solution designed specifically to protect farmers against such weather-related risks. This form of insurance automatically triggers payouts when pre-defined weather conditions occur, such as excessive rainfall, ensuring that farmers can recover from the financial impact of crop downgrades without waiting for long claims processes.
This article will explore the benefits of CelsiusPro’s Wet Harvest Weather Certificates, explain how they provide coverage for harvest downgrades, and discuss why now is the time to act, given the economic conditions.
Topics Covered in this Article
What Is Parametric Insurance and How Does It Work?
Unlike traditional insurance that compensates based on damage assessments, parametric insurance is triggered by the occurrence of a specific event—in this case, excessive rainfall during harvest. CelsiusPro’s Wet Harvest Weather Certificates automatically issue payouts when a pre-determined rainfall threshold is met. This form of insurance is ideal for Australian farmers as it eliminates lengthy claims processes and directly addresses income loss due to weather-related downgrades in crop quality.
Key Benefits of CelsiusPro’s Wet Harvest Weather Certificates
1. Income Protection from Crop Downgrades
Wet weather during harvest can significantly downgrade the quality of grain crops, such as wheat, barley, and canola, reducing their market value by as much as 40%. CelsiusPro’s Wet Harvest Weather Certificates provide automatic financial protection if this happens. Once the rainfall threshold is breached, the certificate triggers a payout, helping farmers recover income lost from crop downgrades without the need for claims or damage assessments.
2. Automatic Payouts Based on BOM data
Unlike traditional insurance, which can involve lengthy claims processes and adjuster visits, CelsiusPro’s Wet Harvest Weather Certificates are parametric. This means a payout is triggered once rainfall exceeds the chosen thresholds. Farmers don’t need to prove crop damage or file paperwork—the process is streamlined and automatic.
3. Customizable to Your Farm’s Specific Risks
Every farm is different, and CelsiusPro’s Wet Harvest Weather Certificates are designed to be flexible. Farmers can choose specific rainfall thresholds and harvest windows that match their crop and location’s historical weather risks. Whether you need coverage for extreme rainfall or a cumulative total over the harvest period, you can customize the certificate to suit your specific requirements.
4. Affordable, Flexible, and Scalable
In a year where wheat prices are low and profit margins are tight, CelsiusPro’s certificates offer a cost-effective way to manage weather risk. Farmers can scale their coverage to match their budget, selecting affordable options that still provide robust protection. This flexibility ensures that even small and medium-sized farms can access this valuable financial protection.
How CelsiusPro’s Wet Harvest Weather Certificates Work
Defining your Risk and Parameters, including:
Location (Grid Reference or Local Weather Station)
Harvest Window Dates
Sum insured - How much a 30% downgrade would cost
Exposure - Identifying the exact triggers and thresholds where a rainfall event will begin downgrading the crop
Historical Analysis and Pricing
CelsiusPro analyses the historical events using BOM data over the last 100 years.
Parameters are tailored according to historical data, preferences and budget.
The Certificate is booked at least 30 days before the start of the risk period.
Monitoring
You'll be able to see rainfall data come in via the BOM and visualise the triggers as they happen in real-time.
Expiry and Payouts
Once the data settles from the BOM (this takes 15 days) a payout is determined based on what triggers and thresholds have been met.
An Automatic Payment is transferred into your account within 20 days of the end of the risk period.
In the Article How One Farmer Secured Over $1.2 Million in Payouts Using CelsiusPro’s Wet Harvest Weather Certificates, we outline a detailed case study that demonstrates the effectiveness and successful integration of a Wet Harvest Weather Certificate compensating for lost income due to a downgrade in 2022.
Why Australian Farmers Need This Protection Now More Than Ever
Declining Wheat Prices in 2024
Wheat prices have been in a downward trend due to global market conditions, with many predicting even lower prices as we move deeper into 2024. For Australian farmers, this presents a serious financial challenge. When wheat prices are already low, a downgrade from milling-grade wheat to feed-grade wheat can result in significant income loss. In some cases, the price difference between premium and downgraded wheat can be as much as 40%.
Farmers facing these razor-thin margins simply cannot afford to take a hit due to wet weather. By securing a Wet Harvest Weather Certificate, farmers can protect their income, even when market prices are working against them.
The Increasing Threat of Unpredictable Weather Patterns
Australia has seen a rise in unpredictable weather patterns, particularly in regions where grain crops are grown. With the effects of climate change causing more frequent and intense rainfall events, farmers are increasingly vulnerable to unplanned wet weather during harvest. A few days of excessive rain can mean the difference between a profitable year and a devastating financial loss.
In this volatile weather environment, CelsiusPro’s Wet Harvest Weather Certificates provide peace of mind, ensuring farmers are financially protected regardless of the weather
Farmer Testimonials
James from Moree:
“Weather forecasts were not promising, and we used weather certificates to balance financial risk with production risk to mitigate the worst-case scenario. The bank liked the idea of Weather Certificates and helped with refinancing... Partial payout of the [Wet Harvest] contract covered the losses”
Stuart from Western Australia
“The cover I took out meant that the downside to our financial position is not as poor as it would have been after securing a payout”
Frequently Asked Questions (FAQs)
1. What crops can CelsiusPro’s Parametric Insurance cover?
CelsiusPro’s parametric insurance can cover a wide range of crops, including wheat, barley, canola, and other grains that are susceptible to downgrades due to rainfall during harvest.
2. How is the payout calculated?
The payout is automatically triggered when rainfall exceeds the pre-determined thresholds during the harvest window. The amount paid depends on the certificate's structure and the extent to which the rainfall exceeds the agreed-upon level.
3. How does parametric insurance differ from traditional insurance?
Parametric insurance pays out based on the occurrence of a specific event (such as rainfall over a certain threshold), rather than requiring farmers to file claims and prove crop damage. This means faster, hassle-free payouts.
4. Why should I act now?
Given the current low wheat prices and increasingly unpredictable weather patterns, farmers face a higher risk of financial loss in 2024. Delaying coverage could lead to substantial losses if wet weather strikes during harvest.
Conclusion: Secure Your Farm’s Future with CelsiusPro’s Parametric Insurance
With falling wheat prices and the increasing threat of unpredictable weather, Australian farmers must take action to protect their income. CelsiusPro’s Wet Harvest Weather Certificates offer an innovative parametric insurance solution that ensures automatic payouts when weather conditions turn against you. Don’t wait until it’s too late—get a quote today and safeguard your farm’s future.
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