With satellite images, S4 generates climatic indices that allow the transfer of productive risk to capital markets. Santiago González Venzano, one of its creators, describes the business.
In recent months we have seen the technological ecosystem change by leaps and bounds in agricultural production. Statups are proliferating and large-scale data management is no longer an unknowns to be solved by producers, but is managed from increasingly agile tools. Perhaps the point on which developers should continue to focus the most is to reach more user-friendly environments for their use.
S4, an Argentine company that develops technologies to reduce climate risk in crop production, is working along these lines. Through satellite images and big data analysis, it generates climatic indices that allow the transfer of productive risk to capital markets. Santiago González Venzano, its founder, talked to PROFILE about the tool.
-How would you define S4?
-S4 is the first service in the world to cover the negative effects of droughts and floods through capital market coverages. It does so based on indices generated from satellite images provided by NASA and the Space Agency.
and algorithms developed based on Deep learning and Artificial Intelligence methodologies.
-What is the level of adoption of the tool?
-In just three years, this index already covers more than 82 million dollars in ten Argentine provinces, equivalent to 1% of the total agricultural working capital. To measure it, we have already surpassed the adoption of multi-risk insurance that reaches 1%.
-What area does S4 cover?
-In the first instance we cover the producer, then the chain and finally the State through programs.
-What would be an example?
– The Cordoba Good Agricultural Practices Program that says “For me a protected/covered farmer is a responsible actor within an agribusiness chain and a rural community”,
because it somehow stops that domino effect that is generated when a crop does not come to fruition. By being covered, the producer can fulfill his commitments. We develop projects where companies such as Indigo and Bayer (Dekalb) participate. As a marketing action, they put this service inside their product, selling seeds with cover.
-How is it contracted today?
– Today we arrive through the Futures and Options Market, but to operate there you need a client and it is quite complex. That’s why we’re moving forward with the insurance companies to be able to arrive with a policy. We already have a marketing agreement with El Norte, Seguros Province, Nación Seguros, Paraná Seguros, La Segunda.
How indexes are constructed. The indexes S4 works with are built with a database of satellite images of the entire planet and has a history that begins in the year 2000. “With Machine Learning processes, algorithms could be developed that recognize crops: each crop has its spectral signature as if it were a bar code,” explains Santiago González Venzano. And he adds that, in addition to knowing which crop it is (soybean, corn, wheat, etc.), “another algorithm allows us to take the pulse and know how it is growing, at what stage of development it is and what its vigour is”.
In this way, indexes are constructed that reflect the growth of each crop in each locality. Then, knowing the history of the index in each locality, the mathematical risk model is developed. This calculation of risk allows a “risk taker” to charge a premium in exchange for compensating farmers when the Index falls below an agreed value. And all this in an automated way, without experts or field inspections.
It should be noted that these indices apply equally in Argentina, Brazil, USA, Uruguay, and are being piloted in Paraguay, Ukraine and Russia. With respect to the costs of adopting one of these coverages, it is of the order of 3% of the invested capital, since, being a financial tool, what is covered is not an area but a sum of money, thus allowing any actor in the agro-industry to be covered.
Among the great novelties of S4 it is worth mentioning that they implemented a Scoring for producers who contract coverage. “It is a grid of 20 Km x 20 Km, so that
We went from having 200 departments in Argentina to 1700 grids, this means that the product is customized to the reality that the producer has,” said González Venzano. In addition, S4 is a technology partner of Google, who believes that “S4 can help innovate faster, scale services and improve strategies,” said the firm.
By María Lorena Rodríguez for Super CAMPO.