Securitizing the Climate Crisis: Racial Geographies of Empire and the Agri-Fintech Frontier

Abstract

Securitizing the Climate Crisis:Racial Geographies of Empire and the Agri-Fintech Frontier Aaron Eddens (bio) I was at the 2014 World Food Prize Conference when I first heard about a novel insurance technology designed to cover millions of farmers on the frontlines of the climate crisis. I had gone to the conference—the annual gathering in Des Moines, Iowa, centered upon the bestowal of the self-described "Nobel Prize in food and agriculture"—to learn how, backed by the U.S. government and the Bill and Melinda Gates Foundation, the world's largest agricultural biotechnology/seed companies were working to cultivate a "Green Revolution in Africa." They were targeting the continent's tens of millions of "smallholder farmers," who farm small plots of land largely outside of commercial seed markets. The most important crop for these farmers—and the focus of the Green Revolution projects I had traveled to Des Moines to research—was maize. So I was particularly struck by the argument of a panel called "the smallholder's lifeline," that the key to bringing Africa's smallholders into commercial maize markets was to "bundle" seed sales with a kind of microinsurance called weather index insurance. Marco Ferroni, the executive director of the Syngenta Foundation, the philanthropic branch of the third largest ag-biotech company, described how farmers in rural Kenya used their cell phones to enroll in his organization's index insurance project. As he explained, when farmers bought a five-kg bag of maize seed from their local agro-dealer, they would now find a small card with a code that they could enter into their phone, linking their phone to a nearby weather station and activating the insurance policy. If the weather station measured less than a predetermined amount of rain during the growing season, the farmer would receive an automatic payment for the value of the seeds through Kenya's [End Page 63] mobile money system, M-Pesa. The Syngenta Foundation was finding that insured farmers were much more likely to buy hybrid seeds, such as those sold by Syngenta. Ferroni explained that index insurance could also prove lucrative for multinational reinsurance companies (insurers who insure insurers), such as SwissRe and MunichRe. Most of the "risk" captured in his foundation's project was transferred to these companies, in which it held the potential to be securitized as a tradeable financial instrument—pooled together with risk captured from thousands of other microinsurance policies to form an insurance-linked security. For farmers, seed companies, and insurers, index insurance promised to be a triple win. The Syngenta Foundation's pilot project led to two Nairobi-based for-profit companies, Agriculture and Climate Risk Enterprise (ACRE) and Pula. These agricultural financial technology (agri-fintech) companies use digital platforms such as M-Pesa to link millions of smallholder farmers to broader data and risk transfer markets. They have garnered industry awards and glowing coverage in Western media outlets, such as The New York Times, The Financial Times, and The Economist (Bird 2018; "In Africa, Agricultural Insurance Often Falls on Stony Ground" 2018; Mayersohn 2019). In the words of Pula's mission statement, it aims to use "technology and parametric insurance to insure the previously unbanked, uninsured, untapped market of 1.5 billion smallholders worldwide" (Pula n.d.). This approach exemplifies the broader development paradigm of "financial inclusion" in which an increasing number of financial companies are using new digital technologies to tap into frontier markets (Gabor and Brooks 2017). Pula and ACRE's agri-fintech expansion operates along two fronts: first, they transform large pools of previously uninsured "risk" into commodities that can be traded by reinsurance companies, and second, they harvest data from farmers' phones, which they can sell to their "upstream" agribusiness partners. To date, both companies have partnered with some of the largest seed companies working in the region, including multinationals such as Corteva (the agricultural branch of the company resulting from the 2017 mega-merger of Dow and DuPont) and Bayer (which became the world's largest agricultural biotechnology company when it acquired Monsanto in 2018). Both companies explicitly brand their financial services in terms of the climate crisis, marketing their insurance products as tools...