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China Should Develop Price Insurance for Agricultural Products in a Big Way (Special Issue No.56, 2015)


By Tian Hui, Research Team on “Development of China’s price insurance for agricultural products”, Finance Research Institute of DRC

Research Report No 56, 2015 (Total NO 1459) 2015-12-28

Abstract: Price insurance is a new type of insurance that compensates for economic loss caused by the lower price of agricultural product than the fixed price or price index. Compared with cost insurance holding a dominant position in current China’s agricultural insurance market, price insurance for agricultural products boasts outstanding features, mainly as follows: it is distinctive in terms of underwriting risks and business models, categorized as the higher form of agricultural insurance; it requires governmentsupport with preferential policies; and it enjoys diversified application forms and etc. Under the new normal of moderate economic growth, China should vigorously promote the development of price insurance for agricultural products. The main reasons are listed as follows: firstly, price insurance is an integral component of China’s system reform for agricultural support, protection and innovation, which is incomparably superior to other mechanisms. Secondly, price insurance is anindispensable choice for further strengthening China’s agricultural insurance market and maintaining its sustainable development under the new normal. Thirdly, price insurance is a reasonable option adaptable to the new requirements of agricultural modernization and the promotion of the development of rural inclusive finance.

Key words: price insurance, necessity, new normal