Futures Daily: Natural Rubber “Insurance+ Futures” Project Benefits 14 Poverty-stricken Counties

Updated on：November 23,2017

Reported by Bao Ren

Compensation Pay-outs from the Pilot Programs Exceeding RMB7 million yuan in This Year

According to He Jun, SHFE’s Deputy General Manager, who was present on the Gold Qilin Forum 2017 yesterday, the Exchange has input 39.6 million yuan into 23 pilot projects to cover around 26,680 hectares of natural rubber cultivated area since the Natural Rubber "Insurance + Futures" Targeted Poverty Alleviation was initiated in an all-round way in March of this year. The “Insurance +Futures” Project has offered an effective approach to the mitigation of agricultural products price risks for vast rubber farmers.

Major natural rubber cultivated areas in China cluster in Yunnan and Hainan, most of which are located in frontier regions, ethnic minority areas and national-level poverty-stricken counties. As the main income source of rubber farmers, rubber plantation is the hope for local farmers to escape and remove the label of poverty. However, the price fluctuations in physical natural rubber are usually substantial. When the price drops, the farmers ‘income will be affected dramatically, even leading to their abandoning of rubber cultivation and tapping. What is the good way to help numerous and scattered poor farmers to mitigate the rubber price fluctuation risk, stabilize the household income and protect their production enthusiasm? It is a matter vital to not only the development of China’s rubber industry, but the poverty alleviation and better-off of vast rubber farmers as well.

According to He Jun, SHFE’s “Insurance + Futures” Project has combined the insurance, a familiar and easy-to-understand financial instrument for rubber farmers, with futures, a highly-specialized and efficient risk-management financial instrument, so as to provide ordinary rubber farmers with an effective approach to the mitigation of agricultural product price risks.

Remarkably, focusing on the targeted poverty alleviation, SHFE’s Natural Rubber “Insurance + Futures” Project has been running 23 pilot programs mainly in 14 poverty-stricken counties of Hainan and Yunnan, 12 of which are national-level poverty-stricken counties. Most of direct beneficiaries are archived card-bearing poor households and poverty ethnic minorities. For the purpose of better program management, SHFE has taken the initiative to communicate with local governments, Insurance Regulatory Bureaus and Securities Regulatory Bureaus, and also conducted active coordination among insurance and futures companies. In addition, the Exchange has opened dedicated trading accounts for futures company participants to ensure the smooth operation of the programs through whole-process tracing and monitoring.

Nearly half of SHFE’s “Insurance + Futures” pilot programs in this year are all completed, and the rest will be concluded by the end of this November. Actual compensation pay-outs have been made for the programs at such counties as Qiongzhong of Hainan Province, and Gengma, Yongde, Cangyuan, Ninger and Jiangcheng of Yunnan Province, totaling more than RMB 7 million yuan, which benefit more than 1,000 archived card-bearing poor households from 16 ethnic minority groups such as Li and Miao of Hainan Province, and Wa, Dai, Hani and Deang of Yunnan Province.

According to He Jun, the Exchange will intensify the efforts to support the project and further expand the scope of beneficiaries and plantation areas in the next year. The scheme of next year will give futures companies more space to bring their professional advantage into play, and also encourage insurance companies to design more flexible insurance and claim settlement plans, which allows for the maximization of the supporting capital utility, and thus the maximization of the interests of rubber farmers. In the meantime, the Exchange will also actively solicit the support from the government so as to facilitate the transition from the “Insurance +Futures” Project to the policy-guided agricultural insurance and the establishment of a long-term sustained mechanism.