Abstract

In China, the construction of multi-layered agricultural insurance product system is such a proposition that has both the theoretical significance and the important practical value. Theoretically, as an overall concept, the propositions of the agricultural insurance's attribute, function, system design and evolution have been studied sufficiently, and some consensuses have been reached accordingly. But the agricultural insurance was not a homogeneous entity, it is a multi-layered system consisting of insurance products with diverse functionalities. Such system shall have inner structure that interact, coordinate and complement each other. However, rarely has any research been done to form the theoretical basis for such system. In practice, considering the fact that China has committed to modernize agriculture, ensure food security and improve social administration through insurance, the traditional agricultural insurance typified by simple, similar products are outdated and could not support such ambitious cause. Even though there are some attempts by pilot regions to introduce new insurance products, such attempts are highly fragmented and the new products often fail to grow compatible with the existing products. All of these have made a multi-layered insurance products system with careful planning, organized structure and clear measurement indispensable.

This thesis is organized as follows：

Chapter 1, Introduction, It firstly proposes the main problem this paper need to address and introduces the background where such problem was formed on. The research significance is highlighted by reviewing the literature from China and abroad. Furthermore, the framework on how we approach such problem is introduced and the methodology is explained. Finally, it points out the novelty and limits of this paper.

Chapter 1, the theoretical analysis on the multi-layered agricultural insurance product system. This chapter aims to theoretically explore the key concepts involved in the research. Because the agricultural insurance is both the starting and finishing point for this paper, the theories on it will last throughout the whole process of this research. The theoretical basis of agricultural insurance mainly involve the theory of externality and the theory of public goods. We tried to distinguish these two in the context of insurance. The analysis on the externality theory mainly determined the three criteria for externality, summarized as 1）the influence it may bring to another subject of welfare,2）accompanied effect and 3）lack of payment. The analysis on the theory of public goods changed the“either-or”classification, but adopted the two-dimensional classification taking the competitiveness and exclusiveness as the criteria, resulting in the spatial range of quasi-public goods. Information asymmetry theory was later introduced to identify such instance in agricultural insurance product management proactice. We highlight the reason why it needs to be paid special at tention to prevent the risk of information asymmetry in agricultural insurance. We later expound on the theory of agricultural risk management. The characteristics of agricultural risk and the risk management methods suitable for different kinds of risks are analysed. We reached the conclusion that the agricultural insurance can be used mainly for coping with the risks with medium frequency and loss in middle level. The last concept for the researched problem in this paper is the multi-layered system. We explained the reason for constructing multi-layered system through the theories of risk preference and prospect theory.

Chapter 2, International experience in agricultural insurance product system and its application in China. Through analyzing the construction process of the agricultural insurance product system in different countries, we find the evolution process from single form to diversified and multiplelayered system. Such evolution process in embodied in the change in five aspects including insurance responsibility, guarantee level, insurance unit etc. The agricultural insurance in the U. S. is considered to be the most comprehensive, with the most clear property of multiply layers. The agricultural insurance in India is similar with that in China, with no layer in its simple agricultural insurance system; but it is gradually being optimized through the unified planning by the central institution. Chinese agricultural insurance products are becoming increasingly rich. However, it lacks unified planning and the property of multiple layers. Furthermore, in this chapter we analyzes the necessity for constructing Chinese multi-layered agricultural insurance product system, and demonstrates its feasibility through the aspects of fiscal strength, the management experiences of insurance companies and the recognition degree of peasants.

Chapter 3, The framework design of Chinese multi-layered agricultural insurance product system. To reach the goal of meeting the risk management demand from multiple participants of agricultural insurance, the effective transfer and dispersion for agricultural management risk, we constructs such a multi-layered agricultural insurance product system. Such system will not lower the farmers' utility, and will not undermine the profitibility of insurance companies. This system has three layers: the first layer consists of the traditional agricultural insurance products（insurance based on cost）; the second level consists of those insurance products for agricultural output, farmers' income and some new types of products to cover the market risks; the third level takes American insurance project of“shallow loss”as the blueprint, consisting of insurance products such as weather index insurance. In order to ensure the complementarity of the products in different levels, we have also designed a combination model for products in different levels, so as to fulfill the demand on the guarantee for diversification.

Chapter 4, The influence of the first layer product on farmers' behavior and agricultural production. In this chapter, we establish a theo retical model for how the agricultural insurance would influence the farmers'production behavior. The result shows that the influence of agricultural insurance on the farmers' production behavior may be reflected through the changes in the cultivated area and agricultural investment. Then, it utilizes the practical data for regression analysis, and such as the plant area, and verifies the model result. For data selection, we selects the micro data based on household surveys, concerning the major grain producing areas in China, with a thousand questionnaires in total. For the model setting, we takes the agricultural income and the proportion of agricultural income to the total income as the dependent variables, representing respectively the absolute gains and relative gains of agricultural production. We control for variables on population, agricultural economic variable and risk cognition variable as the controlling variables, to investigate whether the existence of agricultural insurance has the effect on the dependent variables of the model. Because there are two dependent variables, the regression analysis used in this paper takes the form of nested model. Results show that, the agricultural insurance products at first layer play the supporting and stabilizing role on agricultural income, but they do not significantly improve the relative gains of agriculture. The effect on agriculture income gain was achieved mainly through the expansion of cultivated area, while agricultural insurance do not cause a not significant rise in agriculture investment. In addition, to account for regional difference, we performs the fuzzy clustering analysis on the samples of each province, makes the group regression on overall samples divided into two groups. Our results show that, the agricultural insurance has significant stabilizing effect in provinces where the agricultural income accounting for higher ratio in its total income. However, the agricultural insurance fails to improve the productivity of the farmers.

Chapter 5, Investigation into the development of second layer insurance through case studies. In this chapter, we expounds the reason why it is hard to develop the insurance on agricultural output and farmers'income at present. We expand the range of the second layer products to the series of insurance on prices. The“insurance+future”model was analyzed on its background, basic principles and compensation mechanism. A case study is performed on such model based on the practice adopted in Dalian. Later on, through analyzing the advantages and defects of the“insurance+future goods”, it clarifies that the second layer is only transition process Finally, it points out the connection method between the“insurance+future goods”model and the income insurance system, also points out the development path for the products in second layer

Chapter 6, Empirical study on the farmers'demand on the third layer products. In this chapter, we introduces the compensation mechanism and simulated effect of American“shallow loss”project in details. We points out the rationality for China utilizing the weather index insurance to cope with the“shallow loss”, and also points out that the effective demand on the additional guarantee shall be the key factor that influence the actual effect of the produces in such level. The empirical analysis utilizes the Logistic model to carry out the regression analysis on the effective demand of the agricultural producers in different scale based on micro survey data. Results show that, the key factor influencing the effective demand of small peasants shall be their risk consciousness and their subjective evaluation on the importance of agricultural insurance; for large scale production, the cultivated area shall also be the important influencing factor on their effective demand.

Chapter 7, Conclusions. We summarize our results and outline the future research in this field accordingly.

The contribution and novelty of this thesis include the following aspects：

First, the research perspective is innovative. Currently existing researches in China mainly took the agriculture insurance as a institution, with the focus on investigating the information asymmetry during institutional evolution, or risk of natural disasters.. Some studies have focused on the policy design and pricing of some products. No systematical research is available to my best knowledge. This thesis systematically researched the characteristics of the various agricultural insurance products, and constructed a research framework on the multi-layered agricultural in surance system.

Second, this thesis constructed the agricultural insurance product system in three levels, based on status quo of Chinese agricultural industry. This system draws experiences from the most recent findings of American agricultural insurance product system, and integrated them with the experiences in China and some other developing countries. Therefore, we provide valuable insights to how to solve the problems in China's agricultural insurance system. The multi-layered system also comprehensively considers the demand from participants of agricultural production on risk management, and has the potential to improve the efficiency of agricultural insurance. Last, by combining the empirical analysis and case studies, the thesis finds the development path for each level of multi-layered agricultural insurance product system. This departs from existing studies that gives policy made based on qualitative research and empirical studies on limited amount of insurance products.

Key words: Agricultural Insurance; Multi-layered; Supply-side Structural Reform; Product Structure