Climate hits the pivot — the way forward in agri risk management
The devastating storms that wreaked havoc across Punjab on May 24, 2025 are a blunt reminder of our agriculture sector's vulnerability in the wake of intensifying climate crises. The extensive damage to crops, high-value irrigation systems, and power supply infrastructure highlights the pressing need for a concerted effort towards building a robust agricultural risk management framework.
This disaster was not a standalone event, as it is linked to a systemic worsening of the national climate in recent years. 2022 saw calamitous floods that inundated vast belts of Punjab's agricultural land, while the 2024 heatwave severely impaired seedling emergence across a range of vulnerable Kharif crops, including sesame, which holds rising potential for export to China.
These recurring weather hazards have exposed the fragility of our preparedness to anticipate and effectively cope with adversity. One fundamental gap lies in the absence of a comprehensive, transparent, and technology-enabled insurance framework, which is customized to overcome the climate vulnerabilities of our agricultural sector.
Seeking interventions for structured risk management reforms has become increasingly crucial with the evolution of industrial agriculture that the country has seen over the last half a decade. These corporate farms, with valiant investments in technology and scale, bear an excessively high exposure to potential climate-related losses, which requires urgent attention to sustain investment momentum in this emerging sector.
One tested solution lies in replicating cutting-edge insurance systems that have successfully worked in the west. These systems are privately owned but rigorously overseen and subsidized by the government to ensure uptake, transparency, and efficient processing of claims.
The US government's Federal Crop Insurance Programme (FICP) is a working demonstration of a delivery model that augments the perks of private sector efficiency with government sponsorship and oversight. FCIP leverages a network of actively regulated private insurance companies authorized by the United States Department of Agriculture's Risk Management Agency.
The programme offers a range of insurance products, which include coverage against multiple perils, including crop losses due to bad weather. There are separate policies, other than the ones offered under FCIP, which offer comprehensive insurance against damage to farm property, infrastructure, and irrigation systems. The government often subsidizes on average up to 60% premiums which has encouraged widespread uptake and resulted in significant loss mitigation. Use of satellite-based remote-sensing analytics combined with extensive in-situ weather monitoring has enabled insurance providers to minimize delays and disputes, and reinforce participation.
Likewise, the Australian government supports a private sector-led drought insurance programme, which uses undisputed weather indices instead of traditional actuarial frameworks, to determine payments or regulate disbursements.
This allows the farmers to quickly reinvest and bounce back from climate shocks. Similar to the US model, this programme also involves use of multiple-source sensor data to enable quick and transparent claim processing. In other words, according to the Department of Primary Industries and Regions, the Australian government's support includes programmes that offer funding and resources to help with drought preparedness and resilience.
Furthermore, to act as a unified voice for successful risk mitigation, the industrial agriculture companies should organize into a dedicated association or a collaborative platform. This would enable coordinated interactions with authorities and other stakeholders to advocate and undertake pressing risk management reforms. Such an outlet would also ensure that the evolving needs of these large-scale farms are adequately represented and the risks arising from their scale and process complexity are hedged.
This writer's own losses in the May 24 storm which include damage to center pivot system, farm power supply infrastructure, and standing crops are an agonizing testament to the dangers of climate risks, which have led to setbacks with lasting financial consequences.
The recent devastation in Punjab emphasizes the criticality and urgency of these and other measures, which are aimed at integrating resilience and protecting crops, machinery, infrastructure, and human life from the recurring climate offensive.
Development of a comprehensive and transparent risk management framework, enabled by proactive and generous government backing, reorientation of private insurers toward adoption of fact-finding technology, and a unified industry voice, is indispensable to the sustainability and modernization of our agricultural ecosystem.
(The writer is the CEO and Founder of an industrial agriculture company, which specializes in technology-driven desert agriculture on a corporate scale)
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 days ago
- Business Recorder
Australian shares wipe out early gains as banks drag
Australian shares gave up early gains to close lower on Friday, as losses in heavyweight financials offset a rise in mining stocks, but the benchmark still posted a weekly gain. The S&P/ASX 200 index ended 0.4% lower to finish the session at 8,514.2 points after rising as much as 0.6% in the early hours of trade. The benchmark gained 0.1% for the week and was poised to log its third consecutive monthly gain. Banking stocks fell 1.5% after hitting a fresh peak for the fourth straight session, with the 'big four' banks losing between 1.6% and 2.8%. However, the sub-index marked its strongest week in nearly a month. 'Financials have taken a breather after a strong run. This looks like a classic case of profit-taking rather than a shift in fundamentals — banks remain well-supported by stable credit conditions and a resilient domestic economy,' said Hebe Chen, market analyst at Vantage Markets. Healthcare stocks also fell 1.4%, with biotech firm CSL losing 2%. The sub-index lost 1.5% for the week, its weakest since early May. Australian shares close lower as tech stocks weigh 'As appetite for defensives fades and investors rotate into more cyclical names, CSL's lackluster performance continues to deter any meaningful dip-buying,' Chen said. Real estate stocks fell 1.2%, while the industrial sector was down 0.7%. Bucking the trend, heavyweight mining stocks rose 2.5% and posted their strongest session since April 10. The sub-index rose 0.3% for the week, its best weekly performance in more than a month. Dalian iron ore futures rose and were poised for a weekly gain on falling iron ore and steel inventories. Sector giant BHP rose 3.9%, closing at its highest level since June 12. Rio Tinto and Fortescue added 4.6% and 3.6%, respectively, on the day. New Zealand's benchmark S&P/NZX 50 index closed the session 0.8% higher at 12,583.59 points, extending gains for the week.
Business Recorder
2 days ago
- Business Recorder
Dollar hovers near 3-1/2-year low as traders wager on US rate cut
SINGAPORE: The U.S dollar wobbled on Friday, hovering near its lowest level in 3-1/2 years against the euro and sterling, as traders wagered on deeper U.S. rate cuts while awaiting trade deals ahead of a July deadline for President Donald Trump's tariffs. With the geopolitical tremors of the Israel-Iran conflict in the rear view after a ceasefire that appeared to be holding, market focus this week has been on U.S. monetary policy. The prospect of Trump announcing the next Federal Reserve chair, expected to be more dovish, earlier than usual to undermine the current Chair Jerome Powell has raised the odds of the central bank cutting rates. Powell, whose term ends in May, was also interpreted as being more dovish this week in testimony to U.S. Congress, adding to expectations of more rate cuts. Traders are now pricing in 64 basis points (bps) of easing this year versus 46 bps expected on Friday. 'The sooner a replacement is announced for Powell, the sooner he could be perceived to be a 'lame duck',' said Carol Kong, a currency strategist at Commonwealth Bank of Australia. Trump has not decided on a replacement for Powell and a decision is not imminent, a person familiar with the White House's deliberations told Reuters on Thursday. 'For now, expectations President Trump will choose a more dovish chair will keep downward pressure on FOMC pricing and the USD,' CBA's Kong said. Dollar down against euro, sterling Trump has repeatedly attacked Powell and called for rate cuts this year, stoking investor worries about the slow erosion of U.S. central bank's independence and credibility. The euro eased to $1.16885 after hitting $1.1745 in the previous session, its highest since September 2021. Sterling last fetched $1.3725, just below the October 2021 top of $1.37701 touched on Thursday. The dollar index, which measures the U.S. unit versus six other currencies, was lingering near its lowest since March 2022 at 97.398, on course for a 2% decline in June, its sixth straight month in the red. The index has dropped more than 10% this year as Trump's tariffs stoke U.S. growth worries, leading investors to look for alternatives. The yen was slightly weaker at 144.56 a dollar, while the Swiss franc was last at 0.8013 a dollar, perched near its strongest level in a decade. Tariff deadline looms Investor are also looking for signs of progress on new trade deals ahead of the July 9 deadline for Trump's 'reciprocal' tariffs as nations scramble to get an agreement over the line. German Chancellor Friedrich Merz said on Thursday the EU should do a 'quick and simple' trade deal with the United States rather than a 'slow and complicated' one. A White House official said the U.S. has reached an agreement with China on how to expedite rare earths shipments to the United States. The U.S. dollar's weakness pushed the Australian dollar , often considered a risk proxy, to a seven-month high of $0.6564 on Thursday. It last fetched $0.65435 on Friday and was set for a 1.6% gain for the week, its strongest week since early April. Emerging market currencies also got a lift from the beaten-down U.S. dollar, with the Taiwan dollar surging to its strongest level since April 2022. 'Everyone is selling U.S. dollars - foreign investors are selling, and exporters are selling too,' a Taiwan based trader told Reuters. 'Even now, we have big clients who sold their U.S. dollar positions early this morning.' The next key event for markets will be the release of the core PCE price index in the U.S. on Friday, which could offer additional clues on the Fed's rate trajectory. 'A softer print can potentially reinforce recent dovish Fed rhetoric and further dovish repricing cannot be ruled out,' said Christopher Wong, currency strategist at OCBC. 'This should also add to broad USD weakness.'
Business Recorder
3 days ago
- Business Recorder
Vietnam coffee prices down further
HANOI: Domestic coffee prices in Vietnam dropped below the 100,000 dong per kg milestone this week, pressured by a sharp decline in global prices and sluggish trading activity due to limited supplies, traders said on Thursday. Farmers in the Central Highlands, Vietnam's largest coffee-growing region, sold beans at 94,500-95,000 dong ($3.62-$3.64) per kg, down from last week's 103,000-103,500 dong range. LIFFE robusta coffee hit a fresh one-year low of $3,524 a metric ton as of Wednesday's close, down by 4%, according to data compiled by LSEG. 'There is no factor that can support the price at the moment,' said a trader based in the coffee belt. 'Some farmers haven't sold all of their stocks yet. Given the current prices, it is very unlikely that they will release the remaining beans.' The United States Department of Agriculture, in a report this week, projected that global production will grow by 4.3 million 60-kg bags from the previous season to a record 178.7 million bags, while consumption is estimated at a new peak of 169.4 million bags. Traders offered 5% black and broken-grade 2 robusta in the range of $140-$165 per-ton premium to the September LIFFE contract, compared with last week's $109-$129 premium range. In Indonesia, Sumatra Robusta coffee beans were offered at $330 premium this week to the September contract, compared with $235 premium last week as 'an adjustment to the sharp fall on London terminal,' one trader said.
