Theoretical Analysis And Empirical Study On The Impact Of Agricultural Insurance On Agricultural Economic

Agriculture is a traditional industry of our country, and also the foundation of our national economy; it is closely related to the whole economy. China’s agriculture is facing the threat of natural disasters, marketing demand, price changes and other uncertainties. Therefore, agriculture is not only the basic industry, but also a high risky industry, which needs a certain mechanism to disperse the high risk of agriculture. Agricultural insurance offers insurance for economical losses in agriculture, forestry, animal husbandry and other industries caused by natural disasters, diseases and accidents. In our country, agricultural insurance restarted from 1982, and it has been making headway amid twists and turns. After 2007, agricultural insurance steadily developed as for the central government offering financial subsidy policy in some provinces and autonomous regions.Agricultural insurance has many functions, such as risk spreading, stabilize income, social management and so on. One of the important functions is to stabilize the income of farmers, and to promote rural economic development. Agricultural insurance has started for many years in our country, so it is necessary to examine the effect of China’s agricultural insurance on the agricultural economy. This paper makes up for the deficiencies of existing research, it elaborates the mechanism of agricultural insurance on rural economic respectively from the aspects of total amount and structure of economy. Besides, it examines the effect of the economic compensation function of agricultural insurance on the income of farmers. What’s more, empirical side, this paper uses China’s provincial panel data from 2001 to 2014 to examine the effect of the agricultural insurance on rural economy, and uses time series data of Linyi City, Shandong province, to test agricultural insurance’s effect on the rural economic structure.This paper tells that agricultural insurance will affect the rural economy through a variety of ways. On one side, agricultural insurance’s risk dispersion function promotes agricultural economic growth through the following ways. First, agricultural insurance encourage technological progress, the two is to expand the scale of agricultural production, the three is to increase loan. On the other side, agricultural insurance affects agricultural structure. Firstly, agricultural insurance can use "discriminatory" insurance policy to induce farmers to adjust the industrial structure of agriculture. Secondly, agricultural insurance’s risk dispersion function encourages farmers to actively adjust the industrial structure of agriculture. Lastly, it accelerates the process of agricultural structure’s adjustment in urbanization process. The result shows that the does has influence on the development of rural economy. On one hand, agricultural insurance promotes economic growth, and in the moderate development area of agricultural insurance, the effect of agricultural insurance on rural economic effect is the largest. On the other hand, the agricultural insurance also affects the agricultural economic structure of the agriculture, it decreases the insured crops’ proportion.This paper argues that we should vigorously develop agricultural insurance to promote rural economic development. Main measures include:we should improve agricultural insurance laws and regulations system, and each region should carry out their agricultural insurance according to the actual situation in the region. In addition, it is necessary to speed up the support of agricultural insurance development in the less developed regions, which can enable agricultural insurance to have a greater role in promoting the economic development of agriculture. And in the premise of ensuring the post disaster compensation level, we should focus on promoting the popularization of agricultural insurance, and increase insurance density. Finally, each region should adjust the types of insurance to adapt the agricultural production, which will enable the agricultural insurance plays a greater role in the adjustment of agricultural industrial structure.