The Edge Malaysia (29/12/2025) - Southeast Asia’s agriculture sector stands at a crossroads. Just this month, record-breaking rains and flooding from back-to-back tropical storms have claimed hundreds of lives, with homes, farms and infrastructure swept away.

For agriculture - the backbone of Southeast Asia’s economy - the implications are profound. Climate shocks are eroding yields, destabilising supply chains and threatening farmer livelihoods. Malaysia, with its heavy reliance on palm oil, rubber and rice, is no exception.

Part of the answer lies in regenerative agriculture, a strategy that not only mitigates climate risk but unlocks a multi-billion-dollar investment opportunity.

The stakes are high. By 2030, the world must feed 300 million more people while reducing emissions and halting biodiversity loss. For Malaysia and its neighbours, this means transforming agriculture from a high-risk, high-emission sector into a resilient, nature-positive engine of growth.

The case for regenerative agriculture

The ‘Rooted in Resilience’ report by Howden, Boston Consulting Group (BCG) and the Climate High-Level Champions frames regenerative agriculture as a cornerstone of climate adaptation and mitigation, as well as a compelling investment case.

Unlike conventional farming, regenerative practices restore soil health, enhance biodiversity and improve water cycles - all while maintaining productivity and farmer livelihoods. Yet adoption remains marginal: globally, regenerative farming covers just 15% of cropland, far short of the 40% needed to meet climate goals [1]. Transitioning global food systems to regenerative practices requires $250 - $430 billion annually [2]. Based on its share of global agricultural output, Southeast Asia represents a significant share of this opportunity. This capital will fund soil restoration, agroforestry, water-efficient irrigation and farmer training.

Yet unlocking this capital depends on insurance. Finance will not flow at scale unless projects are insurable. Insurance can help derisk farmer transitions; safeguard assets; enhance carbon credit integrity, boosting confidence in nature-based solutions; and stabilise supply chains.

BCG analysis, included in the report, showed that $1 spent on insurance can unlock $3–$10 in additional lending, making insurability a precondition for financing [3]. For investors and corporates, regenerative agriculture is not just climate-smart, it is a bankable growth market that aligns profitability with resilience.

Climate vulnerability in Southeast Asia

Malaysia and its neighbours face mounting risks: extreme weather events, soil degradation worsened by flooding, and economic vulnerability, as agriculture employs millions and underpins export revenues.

The impact of recent extreme weather events illustrates the fragility of current systems. Analysis by Howden for the European Investment Bank demonstrates what is at stake in Europe. Weather-related agricultural losses in the EU average €28 billion per year. Modelling shows that this figure will rise to €40 billion annually by 2050 – assuming an intermediate scenario for future emissions and no practice changes – as damage from droughts, floods and frost all continue to increase.

Further, if a particularly severe weather year occurs, losses for crops alone are estimated to rise to €58 billion, an increase that will represent somewhere between 13% and 19% of the value of crop production. Only 20–30% of these losses are currently insured, leaving a large insurance protection gap. Whilst this analysis is for Europe, the quantification of this “cost of inaction” on food security, farmers and public finance support provides a powerful motivation to in agricultural adaptation and resilience globally.

The role of insurance: making finance flow

According to the report, insurance is the missing catalyst that converts risky business cases into investable opportunities. By derisking projects, insurance unlocks credit, lowers capital costs and accelerates adoption of regenerative practices.

Key mechanisms include yield and practice protection, catastrophe insurance, carbon credit insurance and supply chain covers. The report highlights case studies that Southeast Asia can emulate, including weather-index insurance protection for coffee farmers in Colombia, which enables regenerative practices like shade trees and mulching.

While fully integrated projects are still rare in Southeast Asia, momentum is building through crop insurance programs and climate resilience initiatives. Regenerative agriculture initiatives under the MADANI Economy framework and partnerships like Nestle’s with the Malaysian Cocoa Board (MCB), could integrate insurance to unlock finance and stabilise farmer incomes.

Policy and private sector action

As highlighted in the report, to scale regenerative agriculture governments must embed insurance in national adaptation plans and agricultural credit schemes. Banks and investors should treat insurability as a precondition for financing, and corporates must co-fund premiums to secure resilient supply chains. Finally, insurers need to innovate beyond traditional crop covers, offering transition-specific solutions and carbon credit protections.

COP30’s inclusion of insurance in its Climate Action Agenda signals growing recognition of its role. Southeast Asia should seize this momentum.

From vulnerability to resilience

Cyclones, floods, and droughts are no longer anomalies, they are the new normal. For Malaysia and Southeast Asia, regenerative agriculture is not just an environmental imperative; it is a strategic investment opportunity. By coupling farmer empowerment with smart farming and innovative insurance solutions, the region can build a food system that is resilient, profitable, and nature positive. Regenerative agriculture can deliver strong returns and resilience in Southeast Asia, it’s just a question of when.

References

[1] Action plan to scale regenerative farming. Sustainable Markets Initiative. 2022. Source.

[2] Climate Champions, Philanthropic commitment to scale and accelerate regenerative and agroecological food systems transformation (RAFT). Source

[3] BCG modelling. Key assumptions: The analysis is based on an average Cerrado farm archetype of 250 ha transitioning from moderately degraded pasture to regenerative soy and corn. Costs were represented using standard categories (fixed and variable), with insurance costs parameterised in line with indicative market terms (insured amount and premium share). These assumptions are illustrative and designed to capture systemic effects rather than farm specific outcomes.

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