Pioneering Crop Yield Prediction: HSAT's Data-Driven Approach to Mitigating Market Volatility

Background

The Contracts for Innovation funding received by HSAT allowed them to develop groundbreaking solutions for predicting crop yields on a global scale, providing vital data for financial markets and addressing the risks posed by climate change.

The competition, Climate and Environmental Risk Analytics for Resilient Finance (CERAF), used the Contracts for Innovation funding mechanism to award projects across two phases, and sought to demonstrate and deploy innovative solutions that integrate climate and environmental factors into financial services.

The Challenge

Climate change is increasingly affecting global crop productions, leading to significant volatility in financial markets.  Traders, insurers, banks, and consumers all feel the impact of fluctuating food prices, with the poorest of segments of the global population being hit hardest by rising costs. Extreme weather events like the 2022 floods in Pakistan and heatwaves in India, Europe, and the UK have resulted in billions in revenue losses, escalating insurance costs and higher risks for lenders.

HSAT recognised that the lack of accurate, timely data on crop yields contributes to this market volatility.  With more precise information, procurement teams at UK food and drink manufacturers can anticipate price increases and optimise their procurement of commodities.  Similarly, traders and insurers can act to mitigate risks, stabilise prices, and reduce the inflationary pressure on food costs.  Directly addressing these challenges, the company set out to create a unique, scalable solution to predict crop yields with unprecedented speed and accuracy.

The Solution

HSAT developed an innovative methodology to predict crop yields at a national level using a combination of satellite data, historical weather, and crowdsourced field data.  By defining regions with similar growth conditions, HSAT can create predictive models that are both accurate and scalable.

The team has conducted over 40,000 crop surveys globally, utilising mobile apps to collect field-level data.  This process included the urberisation of field data, whereby HSAT developed the ability for any qualified person close to the relevant fields to use an app to submit pictures of the crops being analysed. In so doing, crowd sourcing the capture of “ground truth” data, which also contributes to the local economy.  This approach has been particularly successful in challenging environments, such as during the Pakistan floods, where local data collection provided crucial insights into crop damage and recovery.

HSAT’s solution is built on advance machine learning algorithms combined with statistical analysis.  Billions of data points derived from satellite imagery, weather, climate models, and on-the-ground surveys are processed to build regional yield models, which can then be aggregated to create predictions at national level.  The system also includes a real-time monitoring component to alert traders to emerging risks, such as extreme weather events.

Rob Weston, Founder of HSAT, said: “We’re building a solution that has never been realised at this scale before.  The ability to predict global crop yields with this level of accuracy is invaluable to the financial services industry.”

The Opportunity for the UK

HSAT’s pioneering work has already attracted significant interest from global firms like Glencore, HSBC, Cargill, AB Foods and Heineken.  These companies see the potential of HSAT’s data to reduce market volatility and support more informed decision-making.  The company’s efforts have also brought over £1 million into the UK through Phase 1 and Phase 2 of the project.

The Contracts for Innovation funding has been foundational in supporting HSAT’s growth, allowing the company to scale its operations and continue refining its product.  This initiative aligns with the broader public sector goal of using government procurement to drive economic growth and support cutting-edge innovation.

The Results

HSAT successfully expanded its capabilities, achieving refined yield predictions across diverse geographies.  At the end of the project HSAT had surveyed over 100,000 fields and engaged with approximately 10,000 farmers to enhance its data models.

This work led to the creation of a comprehensive global database that supports accurate yield predictions in both data-rich and data-poor regions.  The platform now provides early indicators and warnings for traders, offering a critical tool for managing the risks associated with climate-driven market volatility.

The Future

Building on this success, HSAT is not focused on improving and scaling it solution further.  The next objective aims to deliver national crop yield models for any country with over 95% accuracy, back tested over decades of data, within just five days.  Achieving this goal will require enhanced integration of satellite data, weather data, financial data, and ground truth information.

This advances capability will empower a wide range of users, from traders to NGOs, to better understand and manage both local and global risks.  By providing faster and more accurate crop yield predictions, HSAT is poised to make an even great impact on global food security and financial stability.

Rob Weston added: “Our new goal is to deliver national crop models with unprecedented speed and accuracy.  This will enable our clients to respond swiftly to changing conditions and make better-informed decisions, ultimately contributing to a more resilient global food system.”

HSAT’s work exemplifies how innovative technology can address some of the most pressing challenges of our time. By leveraging data at an unprecedented scale, the company is not only supporting the financial services industry but also contributing to global food security and economic resilience.