Play the role of "insurance + futures" more accurately
Our reporter Zhu Huichun
On February 22, the Central No. 1 document was released, proposing to optimize and improve the "insurance + futures" model.
Since 2016, "Insurance + Futures" has been written into the Central No. 1 document every year.
For a long time, the agricultural product market has been "seeing the sky to eat", and there has been a lack of effective hedging methods for price risks.
The "insurance + futures" model is to integrate the respective advantages of the insurance industry and the futures industry, and integrate the futures market functions with agricultural risk management, so that agricultural-related enterprises, farmers' professional cooperatives and farmers can avoid price risks and ensure income through financial tools. , enhance the enthusiasm of production, and help the stable development of the industry.
The maturity of "insurance + futures" is not a one-time achievement, and it has entered a comprehensive promotion period. In accordance with the requirements of the No. 1 Central Document, it will continue to be optimized and improved by summarizing experience, in order to form an agricultural risk management model suitable for China's national conditions.
Crack the risk of planting and breeding to relieve farmers' worries
At the end of 2021, good news came from the futures industry: my country's natural rubber "insurance + futures" project was selected as the best case for poverty reduction in the world, and was included in the South-South Cooperation Poverty Reduction Knowledge Sharing Website - Sino-foreign Poverty Reduction Case Library and Online Sharing Platform .
The project is co-operated by the Hainan Baisha County Government, Xinhu Futures, and PICC Property and Casualty. With the support of the Shanghai Futures Exchange, the project uses financial derivatives to protect the income of rubber farmers.
In June 2017, the project created the first domestic natural rubber "insurance + futures" targeted poverty alleviation project insurance policy.
In the past five years, the total insured spot quantity is nearly 30,000 tons, and a total of 20.76 million yuan in compensation has been generated, helping Baisha County get rid of poverty.
The project also helped to upgrade the local rubber industry.
The Baisha County Government invested funds to develop the "Natural Rubber Production and Sales Management Platform", which uses QR code scanning and cloud storage technology to collect and summarize rubber collection data, and innovatively explore the digitization of rural industries.
This award-winning project is a microcosm of my country's "insurance + futures".
In recent years, "insurance + futures" has achieved positive results in targeted poverty alleviation and agricultural product price risk management.
In 2021, the Shanghai Futures Exchange's natural rubber "insurance + futures" and OTC options pilot projects will pay a total of 115 million yuan in compensation.
In 2021, Zhengzhou Commodity Exchange will support 21 projects in sugar, apple, red dates, peanuts and cotton varieties, with a total premium of 220 million yuan and a risk protection amount of 5.095 billion yuan.
Dalian Commodity Exchange has incorporated the "insurance + futures" pilot program into the "Dalian Commodity Exchange Agricultural Insurance Plan", and the number of projects has increased by 83% year-on-year, the most in the past years.
What's even brighter is that the futures prices in "insurance + futures" are recognized at the national level.
In June 2021, the three departments of the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, and the China Banking and Insurance Regulatory Commission jointly issued the "Notice on Expanding the Implementation Scope of Complete Cost Insurance and Planting Income Insurance for the Three Major Grain Crops".
It is reported that the provinces that have introduced income insurance schemes all use futures prices as the determining factor for the insured amount and claims.
Among the 13 pilot provinces, Heilongjiang, Shandong and Anhui carry out full cost insurance and income insurance, and Jilin and Inner Mongolia carry out full cost insurance.
The introduction of this policy and the adoption of futures price income insurance in some provinces indicate that the country has fully tested income insurance through direct subsidies from the central government, and the "insurance + futures" income insurance model has been incorporated into the strategic layout of the national policy-based agricultural insurance pilot.
Model innovation to improve service capabilities
During the interview, the reporter learned that more "insurance + futures" optimization models and related financial products have emerged in practice.
In the pig breeding industry, farmers are faced with the risk of rising feed prices at the cost end and falling prices of live pigs at the sales end. Traditional single-type risk protection cannot meet the industry's risk management needs.
According to the weight of live pigs, the ratio of feed to meat and the ratio of breeding feed, the pig, corn and soybean meal are fitted into a pig income index according to a certain proportion, which is used to comprehensively protect the price risk of enterprises on the cost side and the sales side.
Dadi Futures Co., Ltd. and its risk management subsidiary provide price insurance for 38 small and medium-sized farmers including Hu Guilong, Yancheng District, Luohe City, Henan Province.
Farmers purchase hog income index insurance from insurance companies; insurance companies purchase over-the-counter options from Dadi Futures Risk Management Subsidiary to realize reinsurance; after expiration, if the hog income index is lower than the target price, the participating farmers will receive the difference compensation.
The design of this model takes into account the cost side and the sales side of breeding enterprises, and provides farmers with more comprehensive price risk protection.
In the fruit industry, ZCE innovated the apple income insurance model based on "insurance + futures" and developed a three-dimensional agricultural risk management system.
In 2021, my country's first "insurance + futures" income insurance for apples landed in Huangling County, Shaanxi Province, providing 607 fruit farmers with an insurance amount of 8,747 yuan/mu with double insurance on the output side and the price side, helping fruit farmers to effectively avoid production reduction due to natural disasters It not only accumulates experience for the income insurance project of characteristic forest and fruit crops, but also has reference significance for accelerating the transformation and upgrading of agricultural insurance from "insured cost" and "insured price" to "insured income".
In 2021, the Shanghai Futures Exchange will innovate 14 natural rubber "insurance + futures" OTC options pilot projects. Leading industrial enterprises such as Hainan Rubber, Yunjiao Group and Guangken Rubber will pass the positive income generated by OTC options through "secondary settlement". The subsidy to the rubber tapping farmers not only ensures the income of the rubber tapping farmers, but also ensures that the rubber enterprises have a stable source of rubber raw materials, so as to play the leading and radiation role of the leading enterprise industry and promote the development of the local rubber industry.
Although model innovation has brought about the improvement of insurance service capabilities, "insurance + futures" also faces some challenges in practice.
Since the main body of the "insurance + futures" model is the vast number of farmers, farmers and various new types of agricultural business entities, and the participating entities involve insurance companies, futures and risk management subsidiaries, the pilot process often requires the full participation of government departments. .
The implementation of a project involves a wide range of personnel and a long business process chain. The products and business models involved in the model are innovative, which requires a process of popularization and learning for the government, insurance companies and farmers.
At present, there is no business process criterion for interconnection and efficient sharing. This is one of the challenges that the future "insurance + futures" model needs to face to continue to grow bigger and stronger.
Secondly, most of the current “insurance + futures” projects are subject to futures contracts, and the futures price is used as the key basis for underwriting and claim settlement, which leads to the problem that the basis risk cannot be completely avoided, the amount of income insurance coverage is difficult to reasonably determine, and insurance The guarantee period and option period cannot be completely matched, and the reinsurance channel is relatively simple.
Industry experts said that rural revitalization requires "insurance + futures" to play a more precise role.
In 2022, the "insurance + futures" model will be optimized and improved, focusing on enriching the variety of projects, expanding the scale of projects, optimizing the design of project contracts, and enhancing the influence and benefits of projects.
In addition, it is necessary to further expand the sources of premiums, introduce financial support, establish a stable financial capital investment mechanism, and enhance the sustainability and reproducibility of "insurance + futures". This is also an important guarantee for the expansion and quality of the "insurance + futures" project. .
Provide "menu" insurance service
The sources of premiums for "insurance + futures" projects generally include government subsidies, self-payment by service entities, subsidies from other channels, and support from futures exchanges.
Structural optimization is currently underway on the fly.
Taking ZCE as an example, the total project premium in 2021 is 220 million yuan. ZCE supports 54.5% (12.6% lower than 2020), 27.33% financial subsidies (14.4% higher than 2020), and farmers pay 11.3% ( 4.2% more than in 2020).
It can be seen that the capital leverage of the exchange is prominent, and it also demonstrates the local government's full recognition of "insurance + futures".
At present, the relevant departments of finance, agriculture and rural areas in Hubei, Hunan, Guangxi and other provinces have made it clear that in 2022, they will arrange financial funds to actively cooperate with futures exchanges to focus on supporting the implementation of the "insurance + futures" project in the region.
According to industry insiders, if the "insurance + futures" project is to achieve greater coverage and higher order of magnitude promotion, under the premise of reasonable burden on farmers, the central and local governments at all levels need to provide better financial support.
This requires vigorously promoting the central government to integrate policy-based agricultural insurance and catastrophe insurance and other subsidy funds, flexibly adjust financial funds to income insurance according to farmers' insurance needs, provide farmers with "menu-style" insurance services, and increase farmers' willingness to buy insurance.
In addition, it is also necessary to deepen the public's understanding of futures.
Although some provinces have adopted futures prices to implement income insurance, there are still few areas where the central government pilots income insurance, and the basic logic of applying futures prices in some provinces has yet to be improved.
Therefore, in the process of developing income insurance, insurance companies should be encouraged to refer to or use futures prices as the basis for pricing and claim settlement of insurance products based on the "price discovery" function; promote middle peasants to deal with the risk of income insurance claims in a unified manner, and form a closed loop of income insurance operations. Provide a business foundation for the expansion, deepening and summary of pilot projects.
The relevant person in charge of Zhengzhou Commodity Exchange said that in 2022, it will focus on optimizing and improving the "insurance + futures" model, continue to consolidate the results of previous project construction, promote the innovation and upgrading of business models based on better use of futures pricing and risk diversification functions, and actively cooperate with provincial farmers. Insurance or financial authorities implement projects to expand the coverage of "insurance + futures" and benefit the main body.
DCE will focus on serving the country's "Soybean Revitalization" plan and comprehensively consider the layout of corn income insurance and full cost insurance, and continue to explore effective models of income insurance to better help farmers maintain and increase income; increase the "insurance + futures" policy for live pigs The support of the project, especially the risk protection effectiveness of small and medium-sized farmers.
Our reporter Zhu Huichun