Pilot extension to strengthen agricultural coverage

Farmers harvest wheat in a village in Qingzhou, Shandong province. WANG JILIN / FOR CHINA DAILY

China’s finance ministry said that the scope of two types of agricultural insurance for planting rice, wheat and corn will be broadened through an extension of a pilot program.

In a statement on Tuesday, the ministry said one of the products is insurance covering all costs of agricultural production, including that of seeds, pesticides, fertilizers, land, labor and losses from natural disasters, plant diseases and pests, among others. other.

The second product is income insurance covering losses due to fluctuations in prices and production.

In 2018, China launched a three-year pilot project of the two types of agricultural insurance in 24 counties in six major agricultural provinces, including Shandong, Henan and Anhui.

The extension of the pilot project would mean that both types of insurance can protect up to 80 percent of income from planting target varieties of agricultural products, the ministry said.

This year, 500 high-yielding counties in 13 major grain-producing provinces, including Sichuan, Liaoning and Jiangxi, will launch the extended pilot project.

In 2022, the expanded pilot project will extend further to all identified counties in the major grain-producing provinces, the ministry said.

Agricultural catastrophe insurance launched in 2017 will be phased out from 2022, to be replaced by the two new types of agricultural insurance, the ministry confirmed.

Tuo Guozhu, professor at the Capital University of Economics and Business, said expanding the scope of agricultural insurance will help ensure food security, increase farmers’ income, encourage farmers to increase grain production and promote agricultural insurance products in China.

China’s fiscal policy has played an important supporting role in the development of agricultural insurance products in the country. The government provides subsidies for insurance premiums, Tuo said.

For the expanded insurance pilot, central and local governments will increase tax subsidies towards premiums. Provincial governments will pay no less than 25 percent. And 45% of the premiums will come from the central government budget for the central, western and northeastern regions of China.

The central government will pay 35 percent of insurance premiums in the eastern regions, according to the ministry.

This year, central government budget spending on agricultural insurance premium subsidies has increased significantly from 2020, a senior ministry official said.

Last year, the central government spent 28.54 billion yuan ($ 4.41 billion) on subsidies for agricultural insurance premiums, which helped mobilize 4.13 trillion yuan in security funds. for 189 million households in rural areas, according to ministry data.

Insurance companies wishing to offer the two new products should be qualified, with stable agricultural reinsurance arrangements.

Under the insurance policy, the overall expense ratio, or the ratio of net operating expenses to premiums, must not exceed 20%. This is a rule designed to limit an insurance company’s profits from agricultural insurance products, which can protect farmers’ profits.

An executive meeting of the Chinese State Council and Cabinet on June 18 decided to expand the scope of insurance. According to a statement released after the meeting, the expanded scope underscores the importance of insurance as a market-oriented method to protect farmers from risk and stabilize their incomes.

Zhang Qiao, director of the Agricultural Risk Management Research Center, which is part of the Chinese Academy of Agricultural Sciences, said the extended pilot project will promote modern agriculture as an industry in China and help its development, improve financial services in rural areas and facilitate the food safety net.

In the next step, the Ministry of Finance plans to revise agricultural insurance rules and improve relevant policies in order to better locate financial resources in areas that can support China’s rural revitalization strategy, the minister said. ministry in its press release.

The government will also increase subsidies for agricultural insurance premiums in accordance with international rules within the framework of the World Trade Organization. Facilitating the construction of information institutions in agricultural insurance services will be another key measure, the ministry said in its statement.

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