By Zhu Junsheng & Tian Hui, Research Team on “Development of China’s price insurance for agricultural products”, Finance Research Institute of DRC

Research Report No 59, 2015 (Total NO 1462) 2015-12-28

Abstract: The following five approaches should be observed in the future development of China’s price insurance for agricultural products. Firstly, price insurance will be served as an important policy tool for the reform of target price of China’s agricultural products, because price insurance is not only mutually related target price subsidy system, and also has a comparative advantage. Secondly, price insurance will be served as an important measure to realize the goal of insurance serving modern agriculture, because modern agricultural development calls for transferring price risks, and meanwhile modern agricultural development provides conditions for price insurance. Thirdly, options for proper forms of price insurance products should be made according to national condition, including index insurance, income insurance, etc. Fourthly, the insurance companies should pay attention to the systematic risks of price insurance. And fifthly, price insurance and futures market should be developed in a coordinated manner. On the one hand, insurance companies should utilize price discovery function of futures market to determine security price of price insurance; on the other hand, insurance companies can make use of the risks of hedging price insurance in futures market.

Key words: price insurance, development approaches, modern agriculture, risks