China Securities Journal: First Payment of Natural Rubber "Insurance + Futures" Targeted Poverty Alleviation Exceeding RMB5 Million

Updated on: October 17, 2017

Reported by Ma Shuang

The first payment of Natural Rubber "Insurance + Futures" Targeted Poverty Alleviation Pilot Project recently completed in Lincang, Yunnan Province, which totaled RMB5.038 million and benefited 462 archived card-bearing poor households.

Shanghai Futures Exchange (SHFE) started targeted poverty alleviation work of natural rubber "Insurance + Futures" in May and approved 23 pilot projects, linking 36,000 tons of rubber in kind and covering 14 poverty-stricken districts and counties in Hainan Province and Yunnan Province, of which 12 were state-level poverty counties.

Located in the southwest of Yunnan Province, Lincang is bordered by Myanmar. It is a contiguous area with particular difficulties along the West Yunnan border. 23 ethnic minorities lives in this area and they made their living from planting rubber. The first payment of two pilot projects was respectively in Mengding Rubber Farm (in Gengma Dai and Wa Autonomous County) and Chonggang Township (in Yongde County).

The Gengma project was jointly launched by COFCO Futures and China Life Property & Casualty Insurance Co., Ltd., involving 358 archived card-bearing poor households and 1,538 ethnic minorities. The spot production of the insurance was 2,000 tons and the payment of the project was RMB4.5 million. The Yongde project was jointly launched by Shenyin & Wanguo Futures and PICC Pudong Branch in Shanghai and Yunnan Branch, involving 104 archived card-bearing poor households. The spot production of the insurance was 2,000 tons and implemented in three phases, and the total amount of the payment in September was RMB538,000.

At the claims settlement ceremony held on the October 10, He Jun, Vice President of SHFE, said that fluctuations in the price of natural rubber had an impact on the farmers' income in recent years and there have even been a phenomenon of "abandoning cutting". The "Insurance + Futures" experiment combines the easy-to-understand insurance products for ordinary peasant households with highly-specialized futures to provide rubber growers with a floor price, secure the rubber tapping benefits and prop up an "umbrella" for them, which is also an innovation for finance to serve real economy. SHFE proactively implements the targeted poverty alleviation spirit of the central government, fulfills the corporate social responsibility, and 23 projects with a capital of RMB39.6 million were all undertaken by SHFE this year.

Next year the natural rubber "Insurance + Futures" project will continue to expand and new ways will be developed, not only giving rubber growers a foundation, but also protecting their gains.

"Insurance + Futures "had been written in No.1 Document Jointly Issued by the CPC Central Committee and the State Council for two consecutive years. After two years of experiment, its significance and promotion value have been fully affirmed by the Central Government and all walks of life. The natural rubber "Insurance + Futures" pilot project for targeted poverty alleviation of SHFE recently was included in cases of Shanghai FTA financial market innovation.

Li Jianzhong, Chairman of Shenyin & Wanguo Futures Co., Ltd., believes that the innovative point of Yongde Project lies in the organic combination of the insurance of futures prices with the guarantee of gains. In the performance of price insurance, the minimum income is guaranteed even if the final market price is higher than the target price of the insurance.

Wu Haojun, General Manager of COFCO Futures, said that the company always put the protection of rubber growers' interests in the first place in promoting the Gengma Project to land, scientifically and rationally determined the target price of the insurance, reduced costs and gave real benefits to rubber growers.

Wei Bailin, General Manager of PICC P&C Agricultural Insurance Division, said that peasants in poverty-stricken areas are a vulnerable group and often suffer from various natural disasters such as drought, hail, rain, waterlog and insects. "Insurance + Futures", as a new type of business, aims to enable peasants to produce confidently while having a reasonable return. PICC P&C actively responds to the spirit of No. 1 Document Jointly Issued by the CPC Central Committee and the State Council, makes safeguarding the interests of poor farmers and promoting agricultural development as the starting point and goal, and poverty alleviation should reach those who truly need it and deliver genuine outcomes.