Crop insurance incentivizes farm investment and increases farmers’ ability to absorb shocks. However, to be effective at scale, technological tools like remote sensing and machine learning for better standardization and quality assurance of underlying crop data are needed to streamline decision making processes between insurance providers and farmers. This creates a barrier for emerging farmers because of increased cost above premiums for the extra services and a swap could be used transfer this this yield risk to third parties at a lower cost.

For smallholder farmers’ incomes, the keys to transformative growth are, among other things, the two areas of price and yield risk management and if both farmers and buyers could be able to purchase the necessary instruments on agricultural products directly from their banks it would transform the incomes and risk exposure of these farmers allowing them to be financially credible, financially liquid and financially secure enough for them to access necessary financial support from lenders and other investors.

IPOXCap CTRM (Commodity Trading and Risk Management) is designed to help businesses handle the buying and selling of commodities as well as the management of risk and commodity logistics.

IPOXCap has developed an instrument, a fusion of a forward contract and a yield swap, which represents a promise to supply all the agricultural produce yield from a project in the future at a fixed price or its future financial value. Farmers are able to sell their expected yield of their projects to future buyers and access these instruments from an online marketplace. These instruments allow them to raise financing at a competitive price, transfer the commodity price risk to the buyer and transfer yield risk to the buyer.

This instrument can be applied in the production of other commodities where there is expected production of the commodity and price volatility like in mining and in energy production.