Big Data Helps Farmers Weather Droughts

In recent years low rain fall numbers and the resulting severe droughts have caused severe damage to crop yields for farmers across the nation. These farmers do have some assistance federally when it comes to recovery of lost profits. But, there is a brilliant upstart company that is trying to lend a helping hand, to those struggling farmers, by allowing them to privately ensure their farms and protect their potential profits.

            The name of this company is The Climate Corporation. They offer Total weather insurance which “is the only full-season program that enables you to protect potential profits by insuring against bad weather that can cause yield shortfalls.”(1) What does this have to do with big data you may ask? Well, they use big data analytics to create models for precipitation, heat, freeze, and drought. These models are then used to create the coverage costs that farmers pay for their policies. The Climate Corporation also uses this data to determine if and when a farmer can collect on their policy. This use of micro predictions and hyper local weather forecasting is revolutionizing the way farmers can insure themselves in case of lost profits. In the second reference The Climate Corporation offers an example of how they utilize their immense amounts of data to help a farmer in need in Kay County, north-central Oklahoma. The company used some very sophisticated algorithms to determine that any day over 98  would qualify as a heat stress day resulting in a $1-$2 payout per acre of farm land. If the heat stress days continue for 3 consecutive days or more it then qualifies as a heat wave and the payout doubles.  Below is a chart developed by the company that illustrates the drought and that the farmer encountered crop damaging temperatures for more than half of the year.

The company says that this if this type weather was to befall a 1000 acre farm then they could receive up to $150k this year paying only $31k in premiums.

            Farming is massive industry in the United States and the profit potential for companies utilizing big data to insure farmers is also massive. Being able to understand and decipher the data and make accurate predictions will allow this company and I am sure many others in time to make millions in annual revenue.  For more information on the company please see reference one. For more information/details on the example please see reference 2.   

References:

1.      http://www.climate.com/growers

2.      http://www.wired.com/business/2012/09/big-data-drought/