MySheen

China's agricultural insurance subsidy policy needs to be improved.

Published: 2024-11-06 Author: mysheen
Last Updated: 2024/11/06, With the leverage effect of the subsidy policy initiated by the central finance in 2007, China's agricultural insurance has developed rapidly, which has not only played an increasingly active role in domestic agricultural natural risk management, but also jumped to become the second largest agricultural insurance market in the world after the United States the following year.

With the leverage effect of the subsidy policy initiated by the central finance in 2007, China's agricultural insurance has developed rapidly, which has not only played an increasingly positive role in domestic agricultural natural risk management, but also jumped to become the second largest agricultural insurance market in the world after the United States the following year. However, with the continuous expansion of the scale, there are many problems in China's agricultural insurance market, most of which are directly related to the subsidy policy. In order to prevent agricultural insurance from subsidizing both success and failure, and to promote the sustainable development of the green box system encouraged by the WTO, it is necessary to adjust the current subsidy policy as soon as possible.

At present, the subsidy policy of agricultural insurance in China needs to be improved.

It is mainly shown in the following four aspects:

(1) the amount of subsidy is relatively small. Measured by the depth of agricultural insurance subsidies (that is, the proportion of various types of agricultural insurance subsidies provided by the government to agricultural GDP), the average level in 65 countries was 0.63 per cent in 2007, 4.4 per cent in the US and 1.3 per cent in Japan. In contrast, the proportion of China in 2007 is only 0.16%. Even if the total subsidy increases year by year, it only reached about 0.4% of agricultural GDP in 2012, which is significantly lower than the global average and far behind the United States and other developed countries.

(2) the type of subsidy is single. From a global point of view, government subsidies to agricultural insurance mainly include premium subsidies to farmers, operating expenses subsidies to insurance companies and excess compensation subsidies to share excess losses by means of reinsurance. According to the data of the World Bank, in 2007, global agricultural insurance subsidies accounted for an average of 68% of agricultural insurance premium income, of which premium subsidies were 44%, cost subsidies and excess compensation subsidies were 24%. The United States and India have three subsidies, Japan has premium subsidies and excess compensation subsidies, and Canada has premium subsidies and cost subsidies. In contrast, China has only premium subsidies, no cost subsidies and excess compensation subsidies.

(3) the local government undertakes a higher responsibility of subsidy. China's agricultural insurance implements the subsidy pattern of multi-level financial sharing. Take planting insurance as an example, the proportion of central financial subsidies is 35% muri 40%, local finance at all levels is 40% muri 45%, of which the provincial finance is at least 25%, the rest is mainly borne by the county finance, and the average proportion borne by farmers is 20%. Generally speaking, the subsidy responsibility of local government in agricultural insurance is heavier than that of the central government. In contrast, under the federal crop insurance plan, premium subsidies mainly come from the federal government, and state and lower governments do not need to pay for them.

(4) the supervision chain of subsidy link is incomplete. To put it simply, it is "heavy input, light output", that is, attach importance to the determination and medium-term distribution of subsidies, ignoring the late performance evaluation and overall risk control of subsidies.

The main problems caused by the imperfect subsidy policy of agricultural insurance

1. Major crops are not fully insured, especially in the areas most in need of agricultural insurance support.

According to the CIRC, in 2013, China's agricultural insurance covered 1.1 billion mu of crops, accounting for 45% of the country's sown area, and more than half were not covered by insurance. In Heilongjiang and other major grain producing areas, due to the difficulties in supporting financial funds at the county level and other factors, the coverage of agricultural insurance is even lower than the national average.

2. Because of the low level of security and few varieties, the attractiveness of agricultural insurance to farmers is declining.

At present, the average insurance amount of planting insurance in most areas is very low, and even the planting cost can not be fully covered, not to mention the role of protecting farmers' income. In addition, at present, 15 types of subsidies are mainly supported by the central finance, and there is almost no insurance coverage for the varieties with great demand from farmers, such as facility agriculture and characteristic agricultural products, due to the lack of subsidy support. These problems are obviously directly related to the small subsidy of agricultural insurance.

3. Local governments are excessively involved in the operation process of agricultural insurance, which aggravates moral hazard and insurance fraud.

In recent years, there have been frequent cases of false compensation and subsidy in the operation of agricultural insurance, many of which are "collusion" between local governments and insurance companies. Of course, this is related to the weak follow-up supervision of financial subsidies, but also related to the fact that local governments bear a high proportion in the subsidy structure so that they have a considerable incentive to implement excessive administrative intervention.

 
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