A Study On The Financial Support For Agricul Tural Insurance In Shandong

As an effective means of agriculture risk management, agricultural insurance is applied widely with the government support, especially the subsidy by finance. It was in 2004 that the local government of China applied financial subsidies to the agricultural insurance. Obviously, there is much demand for Shandong on agricultural insurance, as a major agricultural province. The government of Shandong province has tried to use the agricultural insurance with financial subsidies since 2004. This paper aims at establishing the policy system of the agricultural insurance with financial subsidies for Shandong.This paper analyses the necessity and feasibility of the agricultural insurance subsidized by the finance, and refers to the domestic and foreign experience. Basing on the premise that amount insured equals the direct cost of crops, the author gives a suggestion to establish the policy system of the agricultural insurance subsidized by the finance, and analyses it. The premises are the innovation of this paper.This paper is divided into seven parts:Part 1: basing on the agricultural insurance practice more than 20 years in China and Shandong, and the Quasi-public goods characteristics of the agricultural insurance , this paper explains the reasons why choose this topic, the significance of the agricultural insurance subsidized by the finance to Shandong, the main research methods and innovation of this paper.Part 2: with the foreign agricultural insurance literature and views introduced, there is a gradually in-depth study on the agricultural insurance in China. This part introduces the research and views of the experts and scholars at home and abroad in two aspects. One is whether the government should provide the finance subsidies for the agricultural insurance; the other is how to do it.Part 3: first, with some micro-economic theory, this part analyses the Quasi-public goods characteristics of the agricultural insurance, and gives a profound analysis on the agricultural insurance market failure, and the necessity and feasibility of the agricultural insurance subsidized by the finance, then using the theory of welfare economics and the game theory, analyses the feasibility of subsidizing the agricultural insurance, and introduces the positive significance in the promotion of social welfare, improving the efficiency of the use of funds, mobilizing social capital and other aspects.Part 4: introducing the experience that the government provides the agricultural insurance with the finance subsidies in Spain, Japan, and so on, and comparing with the main policies in Jiangsu, Jilin and Inner Mongolia, then providing experience for Shandong.Part 5: analyzing the 2006 and 2007 pilot policies of the agricultural insurance subsidized by the finance in Shandong, and suggesting to improving the pilot subsidy policies of Shandong.Part 6: on the basis of the previous parts, giving a suggestion to establish the policy system of the agricultural insurance subsidized by the finance, and analyzing it. The subsidy policy system includes the targets and means, the subject matter of insurance, the standards, the sources of funds, and so on. This part empirically analyses the number of the funds and the influence over the ability of farms to pay and the local fiscal expenditure.Part 7: combining the preceding analysis, reaching the conclusions, and giving the direction of further study. The conclusions include: it is necessary to provide the financial subsidy for the agricultural insurance in Shandong; the government can subsidies the agricultural insurance with the protection of direct cost; the different standards of subsidies should be made on the base of the different ability of the farmers to pay; the subsidy funds and the catastrophic risk reserve should be planned as a whole in Shandong. This part also sets out the direction for further study which includes the problems of regional disaster classification in Shandong, the establishment of catastrophe risk-sharing mechanisms, the mechanism which induced the commercial insurance companies to participate in the agricultural insurance.