Problem Of Disaster Compensation In Animal Husbandry

Chinese animal husbandry has got a rapid development after canceling the Unified Purchase and Sale System on animal products and implementing market economy in 1984. Generally, farmers confront relatively high market risk and natural disaster risk. Market risk often affects farmers' decision, and natural disaster risk is the main factor for farmers to enlarge the breeding scale. Recently, the frequent breakout of animal epidemic diseases has resulted in serious economic loss and a threat to public safety. Commonly, the economic value of animal products is rather high. If disaster occurs, individuals can't bear the loss at all. Unfortunately, the main manner of disaster loss compensation in governmental relief in China, which aims to safeguard the victims' basic life after disaster, and don't accord with the requirement of modem agricultural risk management. The serious loss and current laggard disaster compensation form a speculate contravention. Consequently, the reform of disaster compensation mechanism is very urgent. From 2004, Chinese government began to carry out agricultural insurance pilot and provided subsidy for livestock insurance in 2008. This external environment will be good for the reform.This paper aims to get some helpful suggestions for the reform of disaster compensation mechanism for Chinese animal husbandry. It begins with the economic loss of animal husbandry, and examines the role of current disaster compensation. The third chapter focuses on farmer's decision between agricultural insurance and governmental relief. A substitution rate between insurance and relief and optimal subsidized rate for insurance are got. The empirical analysis on the insurance demand is arranged in the chapter 4, and some interesting conclusions are given. In the last chapter, the author puts forward three models of disaster compensation mechanism reform, and gives some specific policy suggestions.The main conclusions of this paper are as follows: (Ⅰ) Current disaster compensation mechanism is incommensurate to the requirement of agricultural risk management. Governmental compensation is the main manner, and livestock insurance does not realize the responsibility it should charge. The unreasonable compensation mechanism can't elude the farmer's risk brought by the animal disaster. Reviewing the history of livestock insurance in China, I consider the forepart livestock insurance institutional change is induced institutional change, and changed to compulsory institutional change. It will maintain this variance model in the future; (Ⅱ) Both governmental relief and livestock insurance have advantages and disadvantages, but livestock insurance is more incommensurate to the modern agricultural risk management and coincide with international trend. Under the condition of agricultural industrialization, traditional risk management tools fail. Therefore, livestock insurance is a rational choice for fanners. But, the traditional livestock insurance is financial failure. Government has to provide financial subsidy for the implementation; (Ⅲ) In competitive model, the premium farmers are willing to pay equals the premium which in determined by the zero profit of insurance company. Using the real premium, we can get the optimal subsidized rate, which depends on disaster probability, average output of elements. For individuals, the relationship between governmental compensation and livestock insurance is substitution, and the substitution rate depends on coverage level and also the average output of elements; (Ⅳ) Farmers' willingness to pay (WTP) for livestock insurance is relatively high, accounting for 70% of premium. The empirical result of Tobit model demonstrates that, it is negative relation between WTP and age, education, scale, risk level, and positive relation between WTP and percent of income from animal husbandry, and farmer's net income; (Ⅴ) It is necessary to establish a scientific disaster compensation mechanism for Chinese animal husbandry under the requirement of the whole agricultural risk management system, and be carried out step by step.(Ⅵ) Three models of disaster compensation can be adopted. The first one is mainly-dominant governmental compensation, second one is mainly dominant livestock insurance, and the third one is complete livestock insurance. Every model has advantages and disadvantages, and has its suitable regions and farmers. In chapter 6, the suggestions are given, including law-making, reforming the current veterinarian system, implementing multiple models of disaster compensation mechanism pilot and adopting a manner of premium-discount to realize different premium rate. I hope these suggestions will be beneficial for the establishment and consummation of disaster compensation mechanism on animal husbandry.