Innovative Research On Risk Management System In The Development Of Contract Agriculture

The contract agriculture has played its unique role in solving the issues of "agriculture, countryside and farmer" in our country. However, the problem of low exercise rate appearing during its developing process has severely hindered its further development. This paper intends to establish a perfect risk management system and to set a rational price in the development of contract agriculture, which will help better perform the function of price discovery, and provide a valuable reference for its sustainable development.There is much research on contract agriculture by domestic scholars, but not much attention has been paid to the establishment of risk management system and rational pricing. Based on the characteristics of staple and non-staple agricultural products, this paper combines contract agriculture with agricultural derivatives and agricultural insurance to constitute derivative contract and insurance contract, so as to manage the natural and market risks occurred during the production process. After this system is established, many modes that are suited for it are devised. Moreover, considering the periodically fluctuating price of agricultural product, this paper derived an agricultural product option pricing model according to the Spring Oscillator Theory and Option Pricing theory of Asset with Circle Expected Rate of Return. Parameter analysis and comparison with classic model are accomplished to this new equation to analyze factors that influence option pricing. Finally some policy suggestions are given to improve the development of contract agriculture.