Evaluation on Crop Insurance Efficiency and Risk Factors of Major Grain-Producing Area in China

YANG Ruihua, XIAN Zude, WANG Lihong

College of Management and Economics, China Agricultural University
Centre for Rural Development Policy, China Agricultural University
Daxing District Commission of Agriculture of Beijing Municipality

Abstract:
This paper uses nonparametric density function approach to calculate the loss risk of crop yield for wheat, maize, rice and cotton based on provincial yields of 13 provinces of the Major Grain-Producing Area (MGPA) in China. With the calculated results, the efficiency of policy-based crop insurance program is evaluated, and, multiple risk factors for crop insurance are stated according to the Second National Agricultural Census (2006). Our analysis indicates that the loss risk above 30% of crop yield is averagely with low probability for the period of 1985 through 2008, the current crop insurance coverage could not creates an effective inducement for farmers to buy insurance contracts. To increase the crop insurance participation, we consider that it is necessary to implement a positive and conditional forced insurance, to provide a larger proportion of premium subsidies by central government to MGPA other than the same across the country and to strengthen the basic agricultural production conditions.

Key words: Major Grain-Producing Area; Crop Insurance; Insurance Coverage Level; Risk Loss Probability; Insurance Efficiency