Since the beginning of this year, full cost insurance and planting income insurance have continued to expand——
Agricultural insurance props up a protective net for farmers
In early May, the Ministry of Finance and other departments announced that Guangxi sugar cane would be included in full cost insurance and planting income insurance; at the end of May, the Ministry of Finance made it clear that from 2022 to 2024, the pilot program of soybean full cost insurance and planting income insurance would be carried out in Inner Mongolia and Heilongjiang.
The expansion of China's policy-based agricultural insurance has accelerated to help farmers resist natural disasters and further increase farmers' enthusiasm for farming.
Become the country with the largest agricultural insurance premium in the world
"After a heavy rainstorm in the middle of last year, the 124 acres of early rice I planted fell seriously. In addition to the 106 acres damaged by rice blast, the natural disaster losses suffered by the rice planting that year were not small." Recalling the rainstorm on July 15, 2021 , Guo Tangsheng, a big grain grower in Yutian Town, Suichuan County, Jiangxi Province, was deeply impressed.
Fortunately, with policy-based agricultural insurance, Guo Tangsheng received a compensation of 41,400 yuan.
"The premium is 20 yuan per mu, and I only need to pay 1/4 of the premium, and the rest is borne by the finance at all levels. If the rice is damaged by natural disasters, the maximum compensation per mu can be 400 yuan." Guo Tangsheng said.
Today, the "safety net" of agricultural insurance is becoming more and more woven, and farmers have the confidence to face risks.
The staff of the rice planting insurance underwriting agency in Suichuan County told reporters that in 2021, 21,600 mu of damaged rice in the county will receive insurance compensation of 2.296 million yuan, and the relevant insured farmers will be paid in time, which fully reflects the compensation for agricultural insurance post-disaster losses. effect.
What is agricultural insurance?
To answer this question, we must first understand what agricultural risks are.
The benefits of agricultural production are approximately equal to income minus costs.
Among them, income is mainly determined by two factors: price and output, while costs include physical and chemical costs, land costs, labor costs and losses caused by disasters and accidents.
Fluctuations in the above factors are all agricultural risks.
Agricultural insurance is an insurance activity in which an insurance company assumes the responsibility of indemnifying the insurance money for the insured's property loss due to the insured object in the process of agricultural production.
Why develop financially supported agricultural insurance?
According to reports, this is due to the fact that agriculture is susceptible to large-scale natural disasters, the probability of agricultural insurance being in danger is high, the willingness of farmers to participate in insurance is low, the operating efficiency of underwriting institutions is not high, and purely commercial agricultural insurance is difficult to sustain. Agricultural insurance provides support.
In addition, replacing direct subsidies with policy-based agricultural insurance can also provide reasonable protection for agricultural production within the framework of WTO rules.
In recent years, China's agricultural insurance system and mechanism have been increasingly improved.
Since 2007, the central government has provided a certain premium subsidy for agricultural insurance farmers, which kicked off the development of policy-based agricultural insurance.
In 2021, the central government will allocate 33.345 billion yuan in premium subsidies, driving agricultural insurance to achieve 96.518 billion yuan in premium income and providing 4.78 trillion yuan in risk protection for agricultural production.
At present, the scale of agricultural insurance premiums in China has surpassed that of the United States, becoming the country with the largest agricultural insurance premiums in the world.
At the same time, the Ministry of Finance and other departments have taken various measures to continuously strengthen the management of agricultural insurance premium subsidies.
At the beginning of this year, the Ministry of Finance revised and promulgated the "Administrative Measures for Agricultural Insurance Premium Subsidy of the Central Finance" to optimize the proportion system of agricultural insurance premium subsidy for bulk agricultural products and the local characteristic agricultural product insurance incentive and subsidy policy, to promote the reduction of costs and efficiency of underwriting institutions, and to ensure accurate drip irrigation of agricultural insurance policies.
The "Measures" propose that agricultural insurance underwriting agencies should formulate agricultural insurance terms and rates fairly and reasonably, and the insurance rate should be determined in accordance with the principle of maintaining capital and small profits, and the comprehensive expense rate should not be higher than 20%.
The relevant person in charge of the Ministry of Finance stated that the "Measures" clarified the "red line" of 20% of the comprehensive expense ratio of policy-based agricultural insurance, which will promote agricultural insurance underwriting institutions to reduce costs and increase efficiency.
Agricultural insurance "expanding coverage, increasing products, and raising standards"
What fields and varieties does agricultural insurance "insure"?
It is understood that at present, China's agricultural insurance has basically formed an agricultural insurance product supply system that mainly focuses on cost-protected products, and jointly develops various innovative products such as yield insurance, income insurance and index insurance.
From grain crops, specialty agricultural products to forestry, animal husbandry and fishery products, the coverage of the policy-based agricultural insurance protection network is getting wider and wider, and a lot of exploration and practice have been carried out in various places.
Since the beginning of this year, the price of live pigs has continued to decline, and many farmers were once worried.
In Ningbo, Zhejiang, the policy-based hog price index insurance provides reassurance to hog farmers.
The insurance type is based on the "expected profit" monitored and released by the National Development and Reform Commission within the agreed period of insurance pigs. When the average value of the "expected profit" is lower than 0, the claim will be started, and the maximum loss compensation for a single pig is 1,000 yuan.
According to the relevant person in charge of Ningbo Agriculture and Rural Bureau, Ningbo is the first city in Zhejiang Province to fully implement live pig price index insurance.
The live pig price index insurance implemented by the city has a strong government guarantee, and the insurance premium is subsidized by 65% of the city and county finances. The agreed claim settlement method is also more innovative than similar products.
"The pig price index insurance solves the worries of the breeding main body and protects the advantageous production capacity of Ningbo pigs, which can be described as 'giving charcoal in the snow'." Wen Yaoxiang, president of Ningbo Pig Production and Marketing Association, said.
At the same time, agricultural insurance is transforming from cost-insurance to income-insurance, and from production-insurance to industrial-chain insurance.
According to Liu Xinli, Deputy Director of the Department of Risk Management and Insurance, School of Economics, Peking University, China Agricultural Insurance has actively explored the transition from "insured cost" to "insured income" in recent years, and has carried out pilot projects of different types of quasi-income insurance in different regions, mainly including Full cost insurance, price insurance, etc.
Among them, the pilot price insurance areas have been expanded to 31 provinces, autonomous regions and municipalities, with a total of 50 varieties in 4 categories including grain, vegetables, live pigs and local characteristic agricultural products.
In 2018, 6 provinces including Inner Mongolia, Liaoning and Shandong, and 24 major grain-producing counties carried out a pilot program of full cost insurance for wheat, corn and rice for a period of 3 years.
In 2021, the Ministry of Finance, together with relevant parties, will expand the scope of implementation of full cost insurance and planting income insurance for the three major grain crops in major grain-producing counties in 13 major grain-producing provinces.
This year, according to the deployment of the Central No. 1 document, the major grain-producing counties in the three major grain-producing provinces of rice, wheat and corn will achieve full cost insurance and full coverage of planting income insurance.
In Chongqing, 27 grain-producing regions (counties) such as Wanzhou and Qianjiang have started to carry out full cost insurance for three major grain crops, including paddy, corn and potato.
In Shanxi, while promoting the pilot program of full cost insurance and income insurance for staple crops, the financial department continues to expand the coverage of existing central and provincial policy insurance, and encourages and guides the development of county-level characteristic agricultural insurance.
The sugar cane, soybean and other crops are covered by full cost insurance and planting income insurance coverage, which are welcomed by farmers who grow sugar cane and soybeans.
Compared with traditional materialized cost insurance and price index insurance, full cost insurance and planting income insurance have many advantages.
Full cost insurance covers all production costs such as physical and chemical costs, land costs, labor costs, etc., and can protect the risks of natural disasters, major pests and rodents, accidents, and damage to wild animals, and improve the income (or output value) per unit area of crops. The degree of protection: Planting income insurance can simultaneously protect the fluctuations of price and yield, which is more comprehensive and easier to trigger claims, which will greatly increase the amount of compensation received by insured sugarcane farmers.
Improve "insurance + futures" and develop agricultural reinsurance
This year's No. 1 Central Document has made a number of deployments for the development of agricultural insurance.
Improving the "insurance + futures" model and developing agricultural reinsurance is becoming an important starting point for improving the quality and efficiency of China's agricultural insurance.
In terms of innovative agricultural risk transfer models, there are high expectations for optimizing and improving the "insurance + futures" model.
Liu Xinli introduced that China's previous "insurance + futures" pilot was mainly to deal with the risk of price fluctuations in the agricultural product market.
The pilot area of "insurance + futures" covers more than 20 provinces (autonomous regions and municipalities) including the three northeastern provinces, Xinjiang, Hebei, and Hainan, and the varieties include corn, eggs and other agricultural products.
Under this mode of operation, farmers purchase crop price insurance from insurance companies. When the expected crop price is lower than the agreed futures settlement price, the insurance company compensates the insured farmers to reduce their possible loss of income due to price drops; at the same time, the insurance The company transfers price risk further into the market by purchasing put options.
"This type of insurance covers the loss of crop income due to a drop in yield or price or both, usually equivalent to about 65% to 70% of the historical income per unit area. The pilot experience should be summed up, and this model should be further improved to help farmers Provide more stability guarantees." Liu Xinli said.
In terms of improving the agricultural risk diversification mechanism, this year's No. 1 Central Document proposes to actively develop agricultural insurance and reinsurance.
In the face of high-intensity and wide-ranging natural disasters, how does agricultural reinsurance diversify risks?
"As a market-oriented financial method, insurance is based on the law of large numbers. Faced with the lack of independence of regional agricultural disaster risks, it is necessary to expand the scope of dispersion horizontally and extend the chain of dispersion vertically." Liu Xinli said.
In 2020, in order to improve the agricultural reinsurance system, the Ministry of Finance and 8 financial institutions initiated the establishment of China Agricultural Reinsurance Co., Ltd.
Since its establishment, the company has integrated agricultural catastrophe insurance, full cost insurance and income insurance pilots to build a solid agricultural insurance catastrophe risk reserve system.
In 2021, the company signed a standard reinsurance agreement with 35 agricultural insurance underwriting institutions to undertake 20% of the industry's agricultural risk protection, with a premium scale of more than 19 billion yuan, providing nearly 1 trillion yuan in risk protection for agricultural production, and serving 188 million farmers. Second, comprehensively enhance the protection capability and resilience of China's agricultural reinsurance.
"The further development of agricultural reinsurance will help to prepare for the risk of agricultural catastrophe in the context of global climate change. The reinsurance mechanism is used to prepare for dispersing the loss of agricultural catastrophe risk, so as to buffer the impact of agricultural catastrophe on national finance. To undertake the key functions of market-oriented agricultural disaster risk management. Actively developing agricultural insurance and reinsurance policies is very important for the sustainability of agricultural risk diversification.” Liu Xinli believes that in the future, various data resources should be integrated to explore the basis of capital allocation models. The optimal reinsurance model enables the risk transfer function of reinsurance to be established on the basis of scientific, rational, and win-win for all parties.
Wang Wenzheng