Research On The Effect Of "Futures+insurance" Model On The Formation Mechanism Of Agricultural Progucts Prcies

The price of agricultural products has always been an important issue for the development of agricultural production.It is a grand plan concerning the national economy and the people's livelihood.The exploration on the formation mechanism of agricultural products has never stopped.In recent years,the price issue has become an important factor affecting national happiness index,but as a basic supply of agricultural price volatility is the most basic factor.Although since 21 th century,the state has played a positive role in regulating the prices of agricultural products,making the prices of agricultural products switch to the direction of market-oriented regulation.However,the prices of agricultural products caused by the minimum purchase price and the temporary reserve policy in successive years are seriously divorced from the actual value.Due to heavy grain shortage,state reserves and financial pressure,coupled with the influx of foreign agricultural products,the enthusiasm of domestic peasants suffered a major setback and the proceeds were hard to guarantee.In order to solve the problem of price distortions,countries towards the implementation of the target price system.It mainly divided into target price insurance and target price subsidies,which improve the price distortion in some extent.Price risk is a systemic risk,it is non-dispersible,and it does not match the“Large Number Rule”of insurance,so price insurance cannot cover it.Moreover,it is difficult to determine the target price.The singularity of the main body,the source and the way of the target price subsidy can not alleviate the national financial pressure in essence.Although the futures market of our country has been rising for a long time,it is not as mature as the futures market in developed countries in the west,but its function of price discovery and hedging play an irreplaceable role in evading the price risk of agricultural products.However the utilization of agricultural products futures market is not high due to the rules of access to futures market and the professional requirements of futures trading.From this we can see that relying solely on the insurance market or the futures market does not reflect the price signal well and carry out price risk transfer.Therefore,since 2015,people in the industry began to explore the combination of futures and insurance,the "futures insurance" model has emerged as the times require.It has been piloted for more than two years and gradually expanded its scope,which has become an important way to reform the price of agricultural products.The so-called "futures + insurance" that is futures risk management subsidiary joint insurance company,with futures prices as a basis for pricing insurance contracts designed to hedge prices of agricultural products farmers can buy futures price of insurance risk from the insurance company.If the insurance accident occurs,the insurance company may face a huge risk of compensation,for which can be purchased from the Futures Company put options.There is a risk of large losses of Futures Company put option to sell,it can buy in the futures market futures options hedging risk aversion(i.e.copy options),thus spreading the price risk layer by layer,the futures market is equivalent to the reinsurance market,and the final price risk is digested in the futures and options markets.In this paper,the author analyzes the operation mechanism of this model in detail through the first pilot case of "futures insurance",analyzes and compares the data of the pilot case,and summarizes its role in the reform of agricultural product price formation mechanism.The introduction of the "futures insurance" model enables the production subject to carry out reasonable production planning according to the futures price signal.On the one hand,it ensures the farmers' autonomy and enthusiasm in production.On the other hand,it will also boost the scale and modernization of agricultural production and stabilize the supply.The value of the industrial chain of intermediate companies participating in futures price insurance has been enhanced.The futures market and insurance market perform their duties,expanding the business scope,enhancing innovation capabilities,and contributing to the improvement of the market in the process of reforming the service pricing mechanism.Although the "futures insurance" model plays an important role in the reform of agricultural product price mechanism,compared with the mature income insurance in developed countries such as the United States and Canada,our futures market itself is not perfect.The variety is incomplete and the price discovery ability is insufficient.The variety of option in the field is almost blank.There are many shortcomings in the participant of futures company,insurance company,farmers and government.The limitations of large-scale agricultural production and difficulty in collecting data and information due to the low level of intensification,together with the lack of education and training systems,supervision systems,and risk prevention systems,have become obstacles to the overall promotion of the “futures and insurance” model.In order to make it better play an important role in the reform of agricultural product price,it is necessary to improve the futures and insurance markets,enhance the role of participating entities and agricultural production levels,optimize supervision and policies,and design products andinnovation models.It is believed that the "futures insurance" model will play its due role while summing up the previous experience,drawing lessons from foreign mature models and perfectingthe later pilot projects.