De-Risking coffee from climate disasters: Upscaling coffee climate protection insurance for Vietnamese smallholder coffee producers

Vietnam is one of the most vulnerable countries to climate change, facing extreme weather events including heatwaves, droughts, tropical cyclones, and intense flooding. These climate challenges pose significant risks to Vietnam’s agricultural sector, particularly for the 600,000 households cultivating Robusta coffee, 90% of which are located in the Central Highlands region. To enhance the resilience of vulnerable smallholder coffee farmers against climate change, the InsuResilience Solutions Fund (ISF) is co-funding the development and implementation of an index-based insurance product in collaboration with Willis Towers Watson (WTW) as the project lead; Atlantic Commodities Vietnam (ACOM), a private coffee processing and trading company; the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), a local government organization; Bao Minh Insurance Corporation, a local insurance company; the Alliance of Biodiversity International and CIAT, a public research organisation, and the University of Southern Queensland (USQ).

The project’s objective is to refine and scale up existing insurance products, currently covering 100 Robusta coffee farmers against extreme rainfall and drought, in five regions in the Central Highlands of Vietnam.

The German Federal Ministry for Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) funded the De-Risk project (2018-2022) has developed climate risk management strategies and insurance products to shield smallholder farmers from the physical and financial disasters associated with climate change. A pilot index-based insurance scheme for smallholder Robusta coffee farmers ‘Coffee Climate Protection Insurance (CCPI)’ was launched in February 2021 in the Vietnamese Central Highlands. Under this pilot, two index-based insurance products—for drought and excess rainfall—were tested in Dak Lak and Lam Dong.

To build on the pilot’s success, the Project Partners plan to refine those products and extend them to three additional coffee-growing regions: Gai Lai, Dak Nong, and Kontum. Furthermore, in collaboration with smallholder farmers, traders, roasters, government advisors, and re/insurance experts, the Project Partners will test and identify the most effective and sustainable upscaling approach for the CCPI.