Regenerative agriculture and agroecology are emerging as crucial pathways for the future, said AXA Climate in a white paper, as farmers contend with climate hazards, volatile yields, and rising sustainability expectations.
Climate change could cause severe yield losses for key crops such as maize (up to 30%) and vineyards (up to 45%) by 2050 if no changes are made, it said. But adopting multiple agroecological practices like reduced tillage, cover crops, and organic fertilisation can improve yields by 15-20% in some cases.
But the move to regenerative is not a one-size-fits-all approach, the paper emphasized, thanks to varying soils, climates and crops, meaning economic outcomes range from improved profitability to increased costs and risks.
Six case studies to reduce economic risks
The paper gave six examples of how AXA Climate is tailoring risk management solutions to demonstrate that sustainability can be achieved without compromising yields or financial viability.
One developed by Rémy Cointreau and AXA Climate in Cognac is a pilot scheme to help winegrowers adopt more sustainable farming practices while managing risks associated with reducing pesticide use.
This insurance covers potential loss in production for winegrowers who choose to reduce the use of pesticides, a risk not typically covered by traditional insurance products. It is linked to a decision-support tool called DeciTrait which tracks fungal disease risks in real time and provides guidance on optimal timing for spraying based on weather, disease cycles, and vineyard phenology.
If winegrowers follow the app’s recommendations but suffer a loss in production due to vineyard diseases, the insurance compensates them through expert-assessed payouts. The model encourages significant reduction of synthetic fungicides (by at least 20-30%) without exposing growers to the economic risks of disease outbreaks.
Another insurance tool developed by the CAVAC farming cooperative and AXA Climate in the Pays de la Loire region is a bespoke insurance product that covers the extra cost associated with implementing complex cover crops. This product specifically addresses the financial risk faced by farmers when adopting agroecological practices that require higher upfront investment.
If less than 20 mm of rain falls over 10 days between early August and mid-September – a critical window for establishing cover crops – the insurance reimburses the difference in cost between complex cover crops (€100/ha) and simpler ones (€30/ha). This mechanism provides direct financial support for farmers to transition to sustainable, soil-improving cover crops, helping reduce their exposure to weather-related risks during the shift to regenerative agriculture.
‘Transition insurance’ principle
AXA Climate supports the notion of ‘transition insurance’, the paper said, to guarantee that farmers who change their practices are not economically disadvantaged compared to those who do not. The mechanism compares actual performance (yield or margin) to a counterfactual benchmark (i.e., what would have been observed without the change). If the gap is significant, compensation is triggered.
Not only does the principle help clients adapt to changing environmental conditions, it helps meet AXA’s own commitments to net-zero greenhouse gas emissions by 2050 through more sustainable underwriting and investment decisions.
“Understanding the economic evolution of farms in transition is essential,” said AXA Climate CEO Antoine Denoix in the white paper. “Beyond yields, we must analyse how costs and investments change, in order to estimate margins – the true indicator of viability. The success of a large-scale transition will depend on our ability to maintain a profitable, resilient, and sustainable farming system, while ensuring food sovereignty, territorial vitality, and economic performance.”
Business case for bespoke insurance
From AXA Climate’s perspective, “bespoke agricultural insurance can help farmers manage the growing risks of climate change, pests, market shocks, change of cost structure, that standard products don’t cover,” a spokesperson told AgTechNavigator.
“At the same time, these products can deliver strong social and environmental impact by supporting resilience, food security, and sustainable practices.
“We also offer customers dedicated training and consulting services to help them understand as precisely as possible the risks they face. This support ensures they can apply insights effectively and build stronger, more resilient agricultural operations.”
