Post-harvest services company Arya Collateral and Agriculture Insurance Company of India Limited (AICIL) have announced parametric insurance cover to mitigate utilisation risk for agricultural warehouses.
Arya, in partnership with AICIL, has developed a weather-based parametric insurance product that will protect professional warehouse operators against utilisation risk arising due to extreme weather conditions during the growth and harvest stages of the crop.
Utilisation risk deters professional warehousing operators from creating storage capacity for farmers at the farm gate. This invariably increases the cost of storage for farmers and other stakeholders. The arrangement will also help in mitigating the utilisation risk of warehouses aggregated through Arya’s a2zgodaam.com.
The insurance pilot has been executed across three States and 28 districts by Arya. Under this, Arya’s designated warehouses are mapped to block-level gridded weather data of the Indian Meteorological Department to enable the insurance coverage. This helps in protecting professional warehouse operators from the financial downside of paying rent despite low utilisation in case adverse weather leads to lower commodity arrivals.
According to Ritesh Raman, General Manager, Arya, the facility will give confidence to its warehouse business partners to offer competitive rates to its clients. “Further, it’s one of a kind solution started in India to avert the utilisation risk to warehouse owners arising from adverse climate conditions. Based on the pilot learnings and experience, we fully intend to further fine-tune and scale up the program offering with AICIL in association with Gramcover which worked closely with us on the product contours and structuring.”
Arya provides end to end post-harvest commodity management and financing services for smallholder farmers, FPOs and other stakeholders in remote agricultural markets enabling them to avoid distress sale of agri commodities.