Café Seguro – Peru

Peru is the world’s leading producer of organic coffee and a major exporter, with the industry valued at $1 billion. Coffee cultivation supports approximately 223,000 families, 70% of whom are smallholder farmers managing between 1–5 hectares. Most farmers grow Arabica coffee, which commands a higher market price but is highly sensitive to climate variations. Consistently distributed rainfall is essential for healthy crop development, while prolonged heat exposure reduces yields. Rising temperatures are also increasing the prevalence of pests and diseases, such as coffee leaf rust and the coffee borer, further threatening crops. Given the high establishment and input costs of coffee farming, extreme weather events – including excessive rainfall, drought, and delayed precipitation – pose a significant risk to farmers’ livelihoods.

To address these challenges, the InsuResilience Solutions Fund (ISF) has partnered with Blue Marble as project lead, alongside the Government of Peru’s Ministry of Agrarian Development and Irrigation (MIDAGRI), local insurer La Positiva, agricultural credit provider Agrobanco, and coffee cooperative Norandino, to develop a new index-based insurance solution.

The initiative will provide climate risk protection for 25,000 coffee producers in Cajamarca, Villa Rica, Piura, and Puno—regions where poverty rates are among the highest in the country, ranging from 41.4% to 45.9%. The insurance will mitigate risks associated with heavy rainfall, which can erode soil and destroy crops, as well as temperature extremes that threaten yields and plant survival.

The insurance model will be an adaptation of Café Seguro, a programme developed in Colombia, and will be tailored to Peru’s specific climatic and agricultural conditions. It will provide coverage for heat stress and excessive rainfall during three critical stages of coffee production, with the potential inclusion of extreme heat and frost as additional risks. Using satellite-based weather monitoring, payouts will be triggered based on climate parameters linked to farmers’ geolocation and average production costs, ensuring timely financial support when adverse conditions occur.

By enhancing the resilience of smallholder coffee farmers, this initiative will not only protect livelihoods but also contribute to long-term economic development in Peru’s coffee sector. Supply-side partners will work closely with MIDAGRI to design an accessible and effective insurance solution, complementing or improving existing agricultural insurance options. Expanding financial protection to vulnerable coffee-growing communities marks a major step in mitigating climate risks and securing the future of one of Peru’s most vital industries.