The Parametric insurance reshaping Mexico’s climate future

For decades, coffee growers in Mexico learned to read the sky. By listening to their

grandparents, they knew when the first rains would come, when to plant, when the

coffee trees would flower, and how strong the season would be.

Today, those same farmers agree that “the weather has gone crazy and unstable.”

Seasons are shifting: rainfall comes earlier or later than expected, extreme heat

events are becoming more intense, and pests like coffee leaf rust and the coffee

borer beetle are appearing and spreading into areas that were once unaffected.

Coffee production has been hit by low yields, disease, and at times total crop losses

caused by extreme events such as droughts, floods, hurricanes, wildfires, and early

or late frosts. These events not only threaten production stability but also seriously

reduce farmers’ incomes, increasing their economic vulnerability.

In response to this reality, we launched a pioneering project in Mexico: the

implementation of parametric insurance for coffee growers. This initiative is led by

Ensambles Cafés Mexicanos and our sister company the Instituto Bios Terra, the

insurer Micro, and the NGO Nuup, making it one of the first pilot programs of its kind

in Mexico’s coffee sector.

Why parametric insurance?

Unlike traditional insurance, which requires field visits, physical assessments,

inspections, and long verification processes, parametric insurance works faster by

relying on satellite data.

The policy is triggered when predefined critical thresholds are exceeded. Once an

anomaly is confirmed using data from satellite sensors, weather stations, and

certified sources, the payout is released automatically—without the need to prove

physical damage on the farm.

This model is especially useful in rural areas where physical access is difficult and

where farmers often cannot meet the requirements of traditional agricultural

insurance.

Insured regions and project scope

In its first phase, the project covered 58 coffee growers in two particularly vulnerable

regions:

Sierra de Flores Magón, Oaxaca (48 producers)

Communities such as Xochitonalco, Loma Alta, San Lucas Zoquiápam, and the Ñuu

Davi cooperative in San Juan Coatzóspam were prioritised due to:

• Recent severe losses caused by wildfires

• Areas with recurring droughts

• Ecosystems highly exposed to extreme heat

Los Altos de Chiapas (10 producers)

Specifically, in Tenejapa, in the communities of Sibactel and El Patch.

The insured plots range from 0.25 to 0.5 hectares, which is typical for small-scale

coffee growers whose economic margins are limited, but whose climate risk is high.

A collectively funded project

The model was designed with a three-way financing structure:

• Producers contribute a portion, derived from their insurance premium or from

quality-based price differentials.

• Ensambles Cafés Mexicanos contributes an equivalent share.

• Buyers contribute through a small percentage built into each commercial

transaction.

This approach ensures that climate protection does not fall solely on producers but is

shared by all actors along the value chain.

In this pilot phase, Ensambles covered most of the insurance premium, while the

producers’ contribution came indirectly from quality premiums. These funds were

channelled through a newly created community savings fund and reinvested in

collective projects like this one.

The project is technically managed by the Instituto Bios Terra, which ensures

compliance with the protocol, accurate risk measurement, and impact monitoring.

How were producers selected?

Selection was based on vulnerability, commitment, and active participation,

including:

• Producers previously affected by wildfires, droughts, or landslides

Consistent participation in technical training programs

• Producers who have received premiums for yield and cup quality

• Communities with a recent history of severe climate-related damage

The goal is not just to insure plots of land, but to strengthen the most exposed

producers so they can continue farming without falling into cycles of debt or being

forced to abandon coffee altogether.

Impact measurement and policy activation

The policy covers damage caused by droughts, excessive rainfall, and earthquakes.

To determine whether a climate event is affecting the area where an insured plot is

located, the insurance provider relies on satellite measurements from several

Mexican meteorological organizations. Based on these reports and the terms of the

coverage plan, the insurance is triggered.

Payouts depend on the severity and intensity of each event, as defined by the

insurer. For example, a high-magnitude earthquake results in higher compensation

than a lower-intensity event. The same applies to rainfall and droughts: the longer or

more extreme the event, the greater the financial support provided.

Why does this project matter?

Beyond insurance payouts, this model sets a new precedent for Mexico and for

specialty coffee. It introduces a broader way of understanding sustainability—not

only as regenerative agriculture or fair prices, but also as financial security and

climate protection.

“Producers see it as a safety net, almost like life insurance. They hope they never have to use it, but knowing it’s there gives them peace of mind. Most importantly, it helps make visible what’s happening in rural communities. Climate change is no longer a future issue—it’s our present reality,” says Osiris Martínez, Purchasing Coordinator at Ensambles.

This project also opens the door for buyers, roasters, and end consumers to actively

help protect the people who grow their coffee, sharing both the costs and the

responsibility of ensuring long-term sustainability.

If you’d like to join this initiative and explore potential ways to collaborate, get in touch with our London office. We want to hear how you’d like to get involved and how we can build something together. This effort only makes sense as a community.