Effects Of Agricultural Insurance On Part-time Farming Decision Making

Part-time farming, in which farmers prefer to do non-agricultural jobs in order toincrease the earnings, is an important economic phenomenon in rural areas China.Thus, many scholars provided the proposal of "part-time farming" to develop ourcountry’s agriculture. In the recent decades, aiming to solve the Three Agricultureproblem, the government has taken a series of policies, especially the Green Boxpolicy, to change the institutional environment of part-time farming, and then play anessential role on part-time farming indirectly.Based on the literature review, the study constructs the model on howagricultural insurance have influence on part-time farming behaviors, explaining theinternal interaction mechanism. This model illustrates that in order to actualize theirmaximum utility, farmers had to break down the equilibrium of resource allocationafter bringing in the agricultural insurance by increasing the labor resources onagriculture. In other words, agricultural insurance has effects on part-farmingbehaviors by changing their resources allocation on agriculture and non-agriculturaljobs respectively.On this basis, the study takes tobacco insurance for example, stimulating theprocess on how agricultural insurance affects part-timing decisions. First of all, byanalyzing the62tobacco households and other relevant data, we found that it is veryurgent for tobacco farmers to obtain the tobacco insurance. But there exist manyproblems for the development of tobacco insurance, such as the lack of effectivedemand, the prisoner’s dilemma between tobacco farmers and insurance companies, andthe neglect of long-term strategy of insurance companies. Then according to the abovedata, MOTAD was used to stimulate the internal interaction among risk level, incomelevel, and resources allocation when part-time decision is balanced under the conditionof non-agricultural insurance or different insurances. The conclusions are as follows.Under the risky conditions, farmers are more likely to invest their resources onnon-agricultural jobs rather than on agricultural production.For individuals, agricultural insurance promotes more labor resources allocated on agricultural production, and then forms the large agricultural household. From themacro perspective, agricultural insurance will be beneficial to the modernization andscale of agriculture, and also enhance the rural-household differentiation, dividingthem into totally new farmer communities.Different kinds of insurance have different influence on part-time farmingbehaviors. Generally, the lower the rates and the safer the agricultural insurance, themore effects it will have on farmers’resources allocation.As the crops planting and cultivation custom, risk origin, risk managementexperience, cost, yield, price and so on, are diverse in different areas, the responses tothe design of agricultural insurance are different.Finally, this study put forward some suggestions related to the development ofagricultural insurance and the optimization of the farmers’ resources allocation fromfour perspectives. For the governmental departments, they should promote thedevelopment of agricultural insurance, accelerate the circulation of land, and establishthe open databases by cooperating with research institutions and insurance companies.For the insurance companies, diverse and proper agricultural insurances should beimplemented aiming to improve the rate of joining the insurance and keep the marketshare of agricultural insurance. For the tobacco companies, they should continue toplay a lead role in planting tobacco. For the farmers, they ought to join theagricultural cooperation community, improve the ability to manage risks, and furtherpromote the process of agricultural modernization.