Cattle production is a key economic sector in Uruguay, contributing nearly 50% of the value of exports. However beef cattle production is heavily exposed to the effects of weather events. On several occasions, droughts have resulted in livestock loss and reduction in productivity and fertility of surviving cows.
In 2011, the Government of Uruguay requested the World Bank to conduct a feasibility study for the development of a suitable index-based agricultural insurance product to protect cattle producers located throughout Uruguay against severe drought and other climatic losses in their pasture and natural grazing.
The World Bank