Climate Smart Coffee by Sprout

Over 500 million smallholder farmers are facing the risk of production loss due to climate change. 12.5 million coffee farmers around the equator are exposed to the risks of climate change on production. Their production is at risk due to climate change: decreased yields due to increased frequency of pest and disease and extreme weather events such as drought. 

Farmers will need to farm differently in order to overcome these increased risks to their livelihoods. Today, farmers cannot afford the total cost alone on their low incomes as coffee is not very profitable due to low production volumes. 

At the same time, only 1% of smallholder farmers in Africa were insured in 2016/2017. The gap in the market is an opportunity to bring in wholesale, low-cost products. 

Sprout tackles the climate change challenges facing smallholder farmers with an innovative approach to building climate resilience over time. Sprout offers integrated crop insurance that is both affordable and commercially viable. Sprout reduces farmer climate change risk by both lowering the cost of designing and processing of insurance, as well as reducing on-farm risk by providing inter-seasonal advice direct to farmer mobile phones.

To make insurance more affordable while still commercially viable, Sprout bases insurance payouts on predetermined, explicit conditions, commonly known as index insurance. Index insurance lowers claims processing costs and increases trust with smallholder farmers. Sprout also provides weather event-prompted information and advice to farmers via mobile phones, such as guidance for dealing with unexpected weather patterns, to enable farmers to manage more climate risks themselves. Satellite data and other digital tools help keep risk profile assessments and claims processing costs low as well.

Sprout works with farmer groups to collect granular production data and correlates it to climate data collected and analyzed from satellite images. A variety of climate indexes are analyzed, such as rainfall, soil moisture or Normalized Difference Vegetation Index (NDVI), indexes shown to highly correlate to crop yields. Instead of relying on yearly farm-level data, Sprout monitors the climate index throughout the season. 

Working with partners like NASA Harvest, Sprout leverages AI to improve its insurance design process and climate data accuracy. This includes creating first-ever coffee cropland maps and predicting coffee production. 

Sprout is an all-in-one digital solution, we digitize and automatize the entire insurance process. No action is required for farmers to claim payouts, if any. When weather impacts yields, policies are automatically triggered on the Sprout platform, which facilitates timely and fair pay-outs. Long-term, this can lower the cost of issuing a policy by 40%, and in turn lower farmer premiums by 30%.

Sprout Alerts are messages sent to farmers when climate starts to increase their risk. Temperature, rainfall and other climate variables can impact the risk of production directly or by inviting pests and diseases. Sprout works with local agronomists and global quality standards in our chosen value chains to design unique agronomy advice for protected farmers. These alerts help farmers make smart, sometimes costly decisions when climate unexpectedly creates risks on their farm.

Sprout has an obsessive focus on smallholder farmers in the tropics that grow export crops. That often means farmers with incomes of less than $10 per day and who experience extreme weather events from climate change. This is also a population that has less access to information, formal education and financial services. 

Our target customer is coffee cooperatives who represent approximately 1,500 farmers on average in Kenya. We acquire coffee cooperatives through connections from 1) their buyers and 2) through providing free online profiles for cooperatives on sproutprotect.com. An example here.

Cooperatives enjoy a premium discount in the first three years of insurance through contributions from the Climate Smart Coffee Fund. This allows them time to understand the insurance, have farmers start to invest in their farmers and increase production before needing to pay for premiums. 

Sprout engages coffee importers and roasters in the US to fund the Climate Smart Coffee Fund. In exchange they receive the rights to display the Climate Smart Coffee sustainability label on sold coffee and products. 

Farmers benefit from an increase in resilience, coffee buyers benefit from sustainable, reliable production from farmers. 

Our team is the most compelling part of our offering. Our CEO, Ashley is a second time founder and has helped unicorn companies scale and grow (in Africa). She runs Sprout’s technology and business development team from our HQ in San Francisco. 

Sprout's Operations Lead, Washington Wachira, has supported farmer agroforestry programs planting nearly 1 million trees with farmers. The Climate Smart Coffee team have decades of experience in designing insurance and technology solutions for farmers around the world. 

Sprout's advisory board includes leaders in finance, technology, nutrition and micro-insurance. This acumen allows us to implement our solution directly with farmers and alongside international partners at scale. 

Climate Smart Coffee was first piloted with a set of Sprout Alerts for an entire year with 1,000 coffee farmers in Kenya. With the learnings from that pilot, we improved our Alerts and designed more tools and insurance for the region. USAID DIV funded our impact study to evaluate the implementation of a full suite of climate tools with farmers this year. 

In 2024, we have onboarded 10,000 farmers across a number of coffee groups in Kenya. Most farmers are on the waitlist as we provided 1,000 of those farmers with the full subsidized program of insurance and Sprout Alerts. 

Sprout is experienced in piloting and community engagement, particularly with coffee cooperatives. We are now seeking ways to grow our farmerbase and expand into new countries and crops.

The Climate Smart Coffee program is just the first of many at Sprout. Inherent in its design, Sprout aims to scale to more export crops such as cocoa, tea, rice and cotton across Africa, Latin America and South East Asia.

Being a Solver will allow Sprout to scale with new partnerships, both in Kenya, but also in new countries and crops around the tropics. From joining programs with non profits to working with global food companies that buy from and invest in farmers, Sprout is eager to get connected and explore building programs. 

Sprout has an interest to derisk investments in Climate Smart Agriculture in coffee, such as agroforestry and regenerative agriculture. Our team is looking for programs and funds to collaborate with at scale. 

Climate Smart Coffee could change the landscape by being a plug-n-play solution to desrisk climate financing to build climate resilience for millions of coffee farmers around the world. 

Sprout is an insurtech rooted in solving climate resilience with low-cost, accessible technologies. Climate Smart Coffee leverages makes use of internet and satellite technology to accurately assess climate risks for crops. An example is our AI-driven digital coffee farm map, which we co-developed with NASA Harvest. Incorporating historical production data, we craft tailored insurance and climate products usable for any crop worldwide.

Sprout also deploys a unique business model to fund the cost of climate resilience for coffee farmers through the Climate Smart Coffee. Climate Smart Coffee is a US-based fund, financed by commercial partners, with an early blended structure with concessional financing from government, coffee farmers and foundations. Contributions made to Climate Smart Coffee subsidize protection for farmers for 5-year period until production levels increase where farmers can pay for the protection themselves. 

It is also a unique offer in that it integrates intra-seasonal risk mitigation through its early warning system, which improves farmer knowledge of climate risk and allows them to act on these risks with precision. Overtime, this builds climate resilience and decreases the cost of insurance. Given the dearth of agricultural insurance in Sub-Saharan Africa, other insurance products have all approached insurance for for direct sale to exclusively with subsistence grain farmers (low premium volumes), or lack technology (high costs) or work exclusively with government (unlocked capital). 

There is up to 10x more production capacity for smallholder farmers, particularly in coffee. Climate change threatens this even further with varying weather patterns and extreme weather events. Sprout has heard from farmers that they want solutions to not only overcome the climate, but also increase production. 

The real solution is to build on-farm climate reseilience through changed farming practices. That requires new education, new inputs and time to see the progress. That transition takes at least 3 years and requires climate financing. 

Low-income farmers often do not have extra income to invest in farming changes. In order to derisk the investment in building resilience, Sprout offers its low-cost solution. 

This year, Sprout is conducting an RCT with 1,000 coffee farmers to understand how farmers' perception of risk and interest in on-farm investment in climate smart agriculture when they have access to insurance and Sprout Alerts through the Climate Smart Coffee program. The goal is to see a 3x return on investment for farmers -- for every one dollar invested, farmers earn $3 more. 

Impact at Sprout is 10-20-30. Sprout was endorsed by the Climate Finance Lab for our innovative insurance solution for climate change adaptation for smallholder farmers. Sprout aims to increase farmer incomes by 10%, reduce greenhouse gas emissions by 20% and increase farmer climate resilience by 30% with our products. 

Sprout measures its impact by observing farmer income over time, carbon credits sold by farmers in the program, and the reduced economic impact of climate shocks on farmers. Sprout has a direct relationship with farmer groups and is able to collect ground-truth data from the source. 

USAID DIV is funding Sprout to understand the true financial impact on farmer investment when they have Sprout insurance. The DIV team selected Sprout due to its build-in scalable technology and cost reduction.

2 Full-time

4 Contractors

3 Advisors

Sprout, Inc was registered less than 3 years ago. Ashley has been working on the solution since inception. The current team has worked on the solution from 2021 and also from 2024. 

Climate Smart Coffee is only successful if we work with team members that understand directly the challenges we aim to solve. Therefore, our team in Kenya is Kenyan, has some knowledge of coffee farming and speaks the local language. This aids in empathy with farmers, but also allows us to collect feedback from farmers in a comfortable way. Farmers feel more open when our team reflects their culture. 

Climate Smart Coffee was chosen as a winner in the ICTforAg Inspire Challenge to increase women's participation in our agtech solution, Sprout Alerts, to 35%! This is an important undertaking as agtech solutions are not often designed with women in mind. Sprout is building new technology channels, and tailoring our product to make it more inclusive for women in coffee. 

Sprout is 100% women owned and 50% of our team are women. The majority of Sprout's team are people of color.

Sprout manages the entire process of funding and delivering our products to farmers. Due to our multifaceted role, Sprout earns revenue in three ways. 

We collect a percent fee to manage the Climate Smart Coffee Fund, a fixed fee of per farmer for in-house agro advisory alerts, and a percentage fee to manage the insurance product (negotiated successfully with insurance partners). 

Each revenue stream can be independently scaled up.

Funders of the Climate Smart Coffee are coffee buyers (roasters), foundations and government partners. Sprout provides links on its coffee cooperative profile pages to directly fund from the US and others can make large sum contributions. Sprout engages coffee importers and roasters in the US to fund the Climate Smart Coffee Fund. In exchange they receive the rights to display the Climate Smart Coffee sustainability label on sold coffee and products. Coffee Exporters provide support to verify coffee farmers and their global buyers, as well as connect them to Climate Smart Coffee. Coffee Producers receive the climate protection products directly to their mobile phones, via SMS, Android or mobile money.

Sprout aims to provide its climate solutions to 1 million farmers by 2030, as this level of scale is self sustaining. The revenue generated from managing Climate Smart Coffee is sustainable as farmers increase productivity. 

The original funding strategy for Sprout was laid out in the Climate Finance Lab endorsement document, where Sprout funded its R&D through concessionary funds. To reach scale, Sprout will raise investment capital. 

Funding to date has included a Phase 1 USAID DIV award, business plan competition winnings and other government grants.