Crop Revenue Insurance And Pricing Research In China

The major risk of agricultural production is yield risk and price risk. China’s current system of agricultural insurance consists of yield insurance; therefore it can only cover the agricultural product yield loss caused by natural disasters, while it can do noting with revenue loss to farmers caused by rice fluctuation of agricultural products. Crop revenue insurance covers both yield risk and price risk, helping farmers diversify agricultural risk and stabilize agricultural income, and plays a positive role in national agricultural production safety. Crop revenue insurance has lead the trend of agricultural insurance across the world, but our country has not yet carried out any pilot projects of crop revenue insurance. Does China have the demand and the feasibility to perform the agricultural product revenue insurance? How should we carry out? In this paper, the research of China’s crop revenue insurance is based on these two questions.American is the first country to carry out the crop revenue insurance all over the world, and the revenue insurance has become the most popular agricultural insurance in American.The experience of developing crop revenue insurance can provide our country with some references. In this paper, for the development of China’s revenue insurance, the development courses of American revenue insurance, product system and operation mechanism are carefully analyzed and the successful experiences are summarized.Taking soybean production in Heilongjiang Province as an example, this paper analyzes the necessity and feasibility of developing crop revenue insurance in our country. The article calculates the yield risk and price risk of soybean production in Heilongjiang Province with the H-P filter analysis method. The results shows that the soybean farmers in Heilongjiang province are facing quite large both yield risk and price risk, and soybean planting revenue has a relatively great volatility, which also changes farmers’ choices of planting varieties. Under these circumstances, China has a large potential demand in crop revenue insurance. The degree of protection for farmers’ agricultural revenue can be improved by carrying out crop revenue insurance, and it can also realize the coordination of farmers’micro interests as well as national strategies. Furthermore, China’s policies of agriculture insurance and insurance companies already have the possibility of carrying out the feasibility of crop revenue insurance, so that revenue insurance will be the future development direction of agricultural insurance in China.Premium rating is the core issue of revenue insurance design. Based on the estimates of soybean yield risk and price risk in Heilongjiang Province, the soybean yield and price distribution were fitted. Then this paper uses the copula method to calculate the relationship between the yield and price, and the correlation coefficient is-0.46. By using Monte Carlo simulation method, the premium rating of Soybean revenue insurance has been calculated. Under the level of protection for 70%-90%, the pure premium rating is between 0.9%-4.5%, which is lower than production insurance.