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Thomas Heintz: That would be nice but it is not necessary. From 2013 the Earth’s surface will be fully scanned every week by European Space Agency satellites. A special software developed by the Swiss company sarmap decodes the radar data and visualizes the biomass in the fields. It will be possible for the first time to continuously observe from space how crops are developing.
We make use of our exclusive access to this technology to develop insurance solutions for farmers. In a second step, the technology can be used in precision farming applications. On this project we work together with a developer of software for farmers.
Thomas Heintz: In the developed world this new technology allows farmers to observe their crops. With the help of radar images users can pinpoint gaps that appear in a field or retarded plant growth due to drought, late frost or insufficient fertilizer. Such data will enable farmers to take early remedial action such as adding fertilizer, water or seed.
Small-scale farmers can monitor their fields on their own and react in time. Owners of five or ten thousand-hectare farms can’t. The time window for crop saving measures is just too short to walk over all the fields for inspections and still react in a timely manner.
Thomas Heintz: In the developing world remote sensing could make a significant contribution to food security. Because governments don’t know exactly the scale of agriculture they can’t respond properly to a looming disaster like the drought in the Horn of Africa. Once governments discover they’ve got a problem it’s often already too late.
Our technology could be used as an early warning system. Months before the harvest, governments would be able to estimate whether crop yields are sufficient to feed the population.
They could prepare for crises without being dependent on money or food supplied by international institutions like the World Food Organization. In the case of a disaster, countries would get immediate compensation from the insurer if such risk transfer mechanism was agreed and linked to this technology.
The early warning system would also make countries more independent from price fluctuations. The earlier you stock up your warehouses, the cheaper the crop is. Once the disaster strikes, prices soar.
Thomas Heintz: No, not yet. It’s still in its development phase. However, we are currently preparing to cover the Philippines, Vietnam, Bangladesh, Thailand, Java, and the south Indian state of Tamil Nadu.
We will analyze what kind of crops are grown and where. As part of a national disaster relief plan our insurance could be triggered; for example as soon as 10 or 20 percent of the national area is threatened by crop loss.
Thomas Heintz: For a farmer living in Bangladesh, insurance would be very expensive due to the high frequency of flood events in that region. Any profit margin would be wiped out by the amount of premium to be paid.
But even in less exposed areas crop insurances in most cases can only be offered if governments support the premium. In the United States, India and China premium rates can reach up to 15 percent of the sum insured and are usually subsidized by up to 60 or 70 percent to render it affordable.
The Chinese began subsidizing crop insurances five years ago. Since then the volume has increased from 100 million to two billion dollars with subsidies skyrocketing far beyond the one billion mark.
The EU has announced it will subsidize 65 percent of crop insurances.
Thomas Heintz: In China farmers receive only seven or eight dollars per year through crop premium subsidy. That’s no more than a drop in the ocean compared to the direct payments that farmers receive in countries in Europe.
To get the most out of each subsidized dollar we have to make crop insurances even more cost efficient. So far four to five percent of premium income is used for infield loss adjustment only. This will change with our technology as crop loss adjustment can be largely hugely supported by these images.
The cause and extent of loss can be precisely determined without hoards of claims adjusters swarming over the fields. With a satellite “resolution” of 15 meters we will even be able to have a look into fields or every size and measure crop development and biomass.
But the higher the resolution of the observed area the higher is the cost of the satellite data. Countries could hedge against crop failure by concluding group policies for small farmers. That’s one way to reduce costs.
Thomas Heintz: Farmers adapt to a changing climate by going back to traditional risk management which is handed down through the generations, for example using drought resilient crops or varying the time of growing. But still the risk will remain.
The question is rather whether governments directly support farmers by subsidizing insurance rates. So far, apart from commercial hail insurance, crop insurances against multiple natural perils are only available where states help to make tariffs affordable.
Thomas Heintz: It can, especially when associated with precision farming. Even if farmers already work with GPS-based technology that precisely instructs them on the use of fertilizers you have still got to move the tractor and consume fuel to monitor the field.
I envisage this radar-based sensing to become a model for precision farming. As such our technology can optimize agricultural process chains further and bring efficiency gains to the fleet management on big farms.
Rice breeders also now offer new rice varieties that use less water (dry rice varieties) and thus produce less methane. Hence those dry rice varieties generate carbon credits for the farmers. The benefit is such that it covers half the cost of the seed and herbicides. For compliance reasons one should monitor the rice fields to see if less water was indeed used. Our technology could help to do that monitoring and assist in policing this carbon credit compliance request.
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