A Case Analysis Of Guoyuan Futures Corn "Price Insurance" Project

In recent years,due to the country ’s strong support for agricultural development and the improvement of agricultural production technology,China ’s corn production has grown rapidly.According to statistics,China ’s corn stocks in 2016 were more than 200 million tons,a huge amount,and China has a lot of pressure on its stocks.In order to alleviate inventory pressure and comply with supply-side reform goals,China has canceled the minimum grain protection price and the corn temporary storage policy.Without the support of the policy,there is a risk of fluctuations in corn prices,which affects the interests of farmers and also affects the "three rural" issues in China.In recent years,the awareness of price risk prevention of Chinese farmers has gradually increased,and the country urgently needs new and effective corn risk management tools to connect with temporary collection and storage policies.The agricultural products futures price insurance risk management model began to be implemented in China in 2015.In recent years,the country has attached great importance to the development of such projects.Since 2016,the central government’s No.1 document has focused on the development of this project.The agricultural products futures price insurance risk management model has developed rapidly in China.This model reflects the idea of using market mechanisms to price agricultural products and guide farmers’ production according to futures prices.It actively connects the production and management of agricultural products and highly meets the needs of agricultural product risk management.Farmers and cooperatives increasingly recognize this risk management model.And this project model is jointly participated by the insurance company and the futures company.The two financial institutions have played their respective advantages.The advantage of the insurance company lies in the wide range of customer resources.The advantage of the futures company lies in its expertise and risk management capabilities.Therefore,the two sides use their respective advantages to cooperate with each other and finally realizebenefit sharing.Agricultural products futures price insurance provides a new direction for China’s agricultural risk management,and it has also become an important measure for financial services to support the real economy.This article first analyzes the development of China’s corn futures price insurance,including the situation of China’s corn,the necessity of the development of corn futures price insurance,the advantages and significance of development,and then analyzes the corn "price insurance" project of Guoyuan Futures Co.Ltd.Firstly,the background of the case is introduced,including the reasons for the project’s development and the status of each participant.Then the project’s development process and the benefits obtained by the project participants are analyzed.Finally,the problems existing in the development of this project model are summarized through the cases in this paper,such as the slow development of options on the market,weak financial awareness of farmers,the existence of basis risk,and some problems with the two financial institutions.And then put forward some specific countermeasures to solve these problems,making this risk management model continuously improve and optimize,which is more conducive to the solution of China’s "three rural issues".