Price Index Insurance is a New trend of Animal Husbandry Policy Insurance

At present, the policy insurance of livestock and poultry breeding in our country mainly provides risk protection for production risk, but there is no protection for another kind of risk in livestock and poultry production and operation-market risk or price risk. In fact, with the development of market economy, market risk has more and more influence on animal husbandry production, and the fluctuation of animal products, especially the market price of live pigs, not only affects the income level of producers, but also directly affects the consumption and welfare level of the general public.

Jiangsu officially launched Pig Price Index Insurance

A few days ago, the author learned from the office of Jiangsu Agricultural Insurance leading Group that Jiangsu Province Pig Price Index Insurance, led by Pacific property Insurance, has been officially implemented since December 10, 2014. Domestic pig price index insurance takes "pig-to-grain ratio" as the frame of reference. At present, the break-even point of pig production in China is "pig-to-grain ratio" 6 ∶ 1. According to the calculation and analysis of the break-even point of pig farming in Jiangsu Province over the years, the standard pig grain specific price of the Jiangsu pig price index insurance contract is set at 5.8 ∶ 1, that is, if the average monthly pig grain specific price is less than 5.8 ∶ 1 during the insurance period, the insurance company will compensate the farmers. At present, the insurance amount is set at RMB 600,800 and 1000 yuan per head, and the premium rate is 5%. The provincial financial premium subsidy is implemented according to the standard of 20% in southern Jiangsu, 30% in central Jiangsu and 50% in northern Jiangsu. According to the terms and conditions, if the specific price of pig food in the current month is less than 5.8 ∶ 1, the insurance company should immediately start the claim settlement procedure, notify the farm households to provide the pig production certificate and relevant sales certificate materials, and compensate within 10 days. The insurance contract uses different compensation proportion coefficients under different price fluctuations. When the pig grain price is between 5.3 and 5.8, it is 80% when the pig grain price is between 4.8 and 5.3, and when it is less than 4.8, it is compensated according to the insured amount.

Pig price insurance is a good way to stabilize the city.

Price fluctuations in the pig market are normal and unavoidable. How to effectively slow down the impact of pork price fluctuations? Live pig price insurance is a kind of insurance which takes live pig as the subject matter of insurance and takes pig price index as insurance liability. During the insurance period, when the average price index of live pigs is lower than the price index agreed upon by the insurance liability, the insurance company will compensate according to the contract. Pig price index insurance actually establishes a minimum income level for farmers. Even if the pork price is too low, farmers can still have a certain income and remain in the pig farming industry, so as to make the future market supply relatively stable and avoid sharp fluctuations in market prices.

In the countries with developed foreign futures market, the futures market price is generally regarded as the "price index" of livestock and poultry product price index insurance products, but our country has only opened egg futures, and the livestock and poultry product futures market is not very developed. Choosing to run pig price index insurance is not only an effective means to regulate pig production and market, but also provides a risk management tool for pig farmers. And compared with options, pig price index insurance has three advantages: first, the trading volume of each hand of futures options is too large, the average pig farmers can not reach the amount needed for futures trading, and it is impossible for farmers to make direct use of the futures options market, but it is easy to buy product price insurance. Second, futures options are professional, and livestock and poultry producers generally do not have the relevant knowledge, but the relationship between agricultural insurance companies and farmers is often close, and they will establish cooperative relationships other than price insurance, so it is more conducive to cooperation; third, although the principle of price or income insurance is very similar to put options, the cost is not higher than options, but the cost of income insurance is lower.

Price Index Insurance is a New trend of Livestock and Poultry Policy Insurance

Price index insurance is mainly based on the futures market price and spot market price of agricultural products, which can minimize the basic risk of the insurance market, and is necessary and feasible under market conditions. its advantages are mainly shown in the following four aspects: first, it can break the original record of agricultural production, that is, the restrictions on the rate determined by the data such as the time and type of disaster and the situation of disaster loss. Second, it does not need to know the loss of the insured, which effectively reduces the business cost; third, the insurance method uses random variables which are closely related to the loss of the aquaculture industry, which are easy to observe and difficult to intervene, and solve the problem of information asymmetry, which is conducive to the prevention of moral hazard and adverse selection. Fourth, the purchasers of index insurance are not limited to farmers, but can be purchased by anyone else, which helps to disperse agricultural risks in a larger range and make the operation of agricultural insurance more in line with the law of large numbers.

The practice of developed countries has long proved that in modern agriculture, the dominant factor that determines agricultural efficiency and farmers' income is market demand. Therefore, agricultural policies in Europe and the United States focus on the protection of farmers' interests under surplus conditions. at present, the United States and Canada have set up corresponding price index insurance to protect the interests of growers and farmers. At the same time, the relevant departments in China are also exploring the possibility of using price index insurance to regulate and control the market price of agricultural products. Beijing, Shanghai, Sichuan, Zhejiang, Jiangsu and other places in China have tried to carry out pig price index insurance and off-season leafy vegetable price index insurance. these explorations and practices provide useful experience for trying to carry out price index insurance for milk, eggs, broilers and Miao chickens in the field of livestock and poultry breeding. Therefore, price index insurance will be a new trend in the development of animal husbandry policy insurance.