Study On Demand And Subsidy Of Agricultural Insurance In China

China is one of the countries in the world suffering the severest agricultural natural disasters and it is very difficult for its farmers to cope with them.It is imperative that agricultural insurance which is the effective means of transferring risks should be made use of to cope with agricultural risks,stabilize agricultural production and guarantee farmers' income.Besides,agricultural insurance is one of the most important non-price policies supporting agriculture in WTO rules.Therefore,it has drawn more and more attention from academe and decision-making sectors.Four pieces of No.1 central document released consecutively from the year of 2004 to 2007,the "tenth-five year" planning and the document "State Council Guidance on Insurance Reform and Development" issued in June 2006 have all put forward requirement on the development of policy-oriented agricultural insurance.Since the first trial in 1934,China agricultural insurance has gone through a history of more than 70 years;however,its development is rather difficult all the time.Between the late 1980s and the early 1990s,agricultural insurance made great progress and reached its climax.But since then,it stagnated and began to shrink.Not until 2004 has a new round trial of agricultural insurance been carried out all through the country.However, though the decision-making sectors have attached great importance to the development of agricultural insurance,it hardly made any progress from 2004 to 2006 as a result of inadequate fiscal support.Consequently,national government finance increased financial support in 2007,arranging 1 billion yuan to promote the trial of subsidizing agricultural insurance premium in six provinces and municipalities.Agricultural insurance expanded rapidly that year with a total sum of premium reaching 5.18 billion yuan,504%higher than that in 2006.It is reported that in 2008 premium subsidy of policy-oriented agricultural insurance offered by national government finance will be more than 1 billion yuan covering the whole agricultural production process.Based on existing research and first-hand data from surveys and interviews,this dissertation focuses on exploring the demand for agricultural insurance and theories and practices of subsidization of policy-oriented agricultural insurance in China by making good use of theories and methods of microeconomics,mathematical economics and econometrics.The main content and conclusion of the research is as follows.Firstly,the dissertation analyzes factors affecting farmers' demand for agricultural insurance from the microeconomic perspective.With data obtained from surveys on 376 farm households in Hubei Province,first of all it makes a descriptive positive analysis on farmers' risk attitude and their means of spreading risks and ranking of agricultural insurance among all the varieties of rural insurance.It is found that factors like farmers' risk attitude,the traditional means of spreading risks and the minor ranking of agricultural insurance among varieties of rural insurance have negative impact on farmers' demand for agricultural insurance.Secondly,the dissertation figures out the amount of fiscal subsidization for agricultural insurance premium and farmers' corresponding payment in different schemes, together with the feasibility analysis of premium subsidization policy.According to the practice and developing trend of agricultural insurance,the mode of guaranteeing production cost selected,the author estimates the amount of fiscal subsidy and farmers' payment for insurance premium of eleven main crops that include rice,wheat,corn, soybean,cotton,peanuts,rapeseeds,jute and ambary hemp,sugar-cane,beet-roots and flue-cured tobacco,and three kinds of livestock and poultry including milk cow,pigs and poulards in different simulation scenarios.And the author makes analysis of fiscal capability to offer premium subsidy and farmers' ability to pay for premium.Among all the schemes,there are two typical ones.One is that the coverage level of the production cost of crops and livestock and poultry is 70%,fiscal subsidy is 60%and farmers' payment is 40%;the other is that the coverage level of the production cost of crops and livestock and poultry is 60%,fiscal subsidy is 40%and farmers' payment is 60%.If participating rate is 30%or 50%,then the total amount of fiscal premium subsidy is 6.286 billion yuan and 10.476 billion yuan respectively and correspondingly farmers' payment for premium is 7.573 billion yuan and4.544 billion yuan.On the above conditions and with a participating rate of agricultural insurance below 50%,the policy of subsidizing insurance premium is feasible if the subsidizing expenditure shared between central and local governments.When premium per farm household paid is about 50 yuan, more than 70%of the farmers are able to pay with a view to the average income gap and the different structure of income source.Thirdly,the dissertation establishes the subsidization system of agricultural insurance from multiple perspectives.Multiple peril crop insurance of main grain and economic crops,including rice,wheat,corn,soybean,cotton,peanuts,rapeseeds,jute and ambary hemp,sugar-cane,beet-roots and flue-cured tobacco,and death insurance of livestock and poultry,including milk cow,pigs and poulards,should be recognized as the subsidized varieties of agricultural insurance.The subsidy should be mainly offered for premium and partly for operation and management expenditures,tax preference and reinsurance. Attention should be attached to policy goals and efficiency need as subsidy for operation and management expenditures offered,the responsibility system should be established and relevant information of insurable interest should also be collected by insurance agencies and fiscal institutions at grass-roots level,in order to avoid a waste of subsidy fund.When subsidization standards determined,regional premium rates and farmers' ability to pay and the condition of local government finance of different regions should be taken into consideration,so as to figure out a reasonable planning of subsidization standards for each insurance variety and increase fiscal subsidy for agricultural insurance step by step. Subsidy fund can be raised by adjusting the structure of budgetary expenditure and that of budgetary expenditure for agriculture and cutting down expenditures of policy-oriented subsidy.In addition,it is necessary to complete supporting measures for agricultural insurance subsidization,enact relevant laws and regulations and set up national institutions supervising agricultural insurance,so that fiscal subsidizing policy will be fully implemented.Lastly,the dissertation establishes the management mode of China agricultural insurance which accords with its national basic conditions.On the basis of referring to foreign successful management experience of agricultural insurance and evaluating the advantages and disadvantages of current management modes of agricultural insurance trialed in China,the author proposes that at present the agricultural insurance mode should be the one predominated by the government with the participation of multiple main bodies. In such mode,the govemment,insurance companies and farmers can realize the goals they pursue,that is,the govemment achieves the maximization of social benefit,insurance companies realize the maximization of profit and farmers get the maximization of their income.In view of the fact that quantitative research on demand for agricultural insurance and systematic estimation of fiscal subsidy and research on the establishment of subsidization system are scarce in domestic research,this dissertation enriches the research on demand and subsidy of agricultural insurance to a certain extent,especially it is of great reference significance for establishing the subsidization policy of agricultural insurance.