by Arbol Team
To all of our stakeholders
We know that this has been a painful and challenging time for our communities around the world. We hope that everyone receiving this update is well and keeping safe along with family.
Through these disruptions, critical sectors such as agriculture continue to provide essential commodities and farmers are hard at work starting planting in the US. At Arbol, we continue to grow our product lineup, platform features, and user base to support farmers and agribusiness by providing products to help manage their risks to adverse weather. Building financial resilience to unforeseen events is especially crucial in these times as margins shrink and room for unexpected losses is minimal.
Arbol has a culture of operating in a decentralized manner with employees working from different locations in a seamless manner since its formation. Consequently, the lockdown in NYC and other places has had minimal impact on workflow. Nevertheless, we continue to closely monitor the COVID-19 pandemic in real-time and will keep our investors updated with any changes.
Progress and Initiatives, Q1 2020
Despite the disruptions from COVID-19, the Arbol platform has been rapidly growing and onboarding crop insurance agents. Crop insurance agents are an efficient distribution channel in the US as each agent represents on average 100 farmers, helping our footprint expand to nearly 20,000 farmers. The transaction volume of weather products has grown strongly with over $500k USD in premium, representing over $2mn in notional risk. To continue our strong user base and transaction volume growth we continue to add new products geared to different weather risks and incorporating the agronomic features of different crops. These products are designed to pre-load parameters specific to particular crops and their varieties which enables agents to rapidly execute transactions on behalf of clients with a few clicks. On the reinsurance side, our ability to bring forward the top reinsurers in the space allows us to offer deal-ready pricing instead of clients having to wait for quotes. We will be adding more new products over the coming weeks and will keep improving the workflow and user interface of the platform. Please see our products at www.arbolmarket.com/products, and our platform at www.arbol.app!
eWeatherRisk Asset Acquisition
During Q1, Arbol acquired the assets of eWeatherRisk, a weather structuring firm that has been focused on the US farming sector for the past decade. eWeather’s expertise in product development and distribution amongst agents combines well with Arbol’s technology expertise and scalable platform. The integration of the eWeatherRisk team has been flowing seamlessly and helping Arbol rapidly increase its presence in the US agriculture space.
USDA Application Progress
We are also happy to report yet another major milestone in Arbol’s USDA Application for a Federally subsidized program for weather data based insurance for watermelons. Our application has passed the initial review stage and, following our presentation in Washington D.C., Arbol has passed the RMA board review stage. The current and final stage before the approval of the proposal is expert review whereby experts in the field scrutinize the application. The decision will be delivered late May and we expect approval of the proposal. A subsidized product with the US Government will offer a strong moat for Arbol against competitors and provide a stable, independent source of revenue in the coming years.
Throughout Q1, we have made significant headway in our international efforts. Last week, we finalized our first international deal in Costa Rica with a coffee farmer group. Coffee is one of the most susceptible crops to increasingly varying weather patterns and we believe weather coverage for coffee growers will be a key component of risk management for the farmers, roasters, and other supply chain participants. We see our Costa Rica pilot program as a first step towards making inroads in the global coffee complex and plan to expand across other coffee regions over time.
We also have a number of other weather risk hedging initiatives in regions ranging from Australia to South America to Asia. The scale and efficiency of our platform enables us to expand across regions quickly as similar weather risks impact many crops. We have found ourselves in the unique position to launch new programs much more rapidly than established companies in the space.
Stay tuned for updates in the coming quarters!