ANALYSIS OF THE PRICING AND OPERATION MECHANISM OF COTTON"INSURANCE + FUTURES"UNDER THE RISK ZONING——A CASE STUDY OF SHANDONG PROVINCE
The introduction of the cotton"insurance + futures"model plays a crucial role in ensuring the income of cotton farmers.However,regional differences are increasing,production costs are rising and the target price is uniform and unchanged.It is precisely because of these problems that the role of this model has been weakened.The following ways were taken in order to solve these problems.Firstly,the article was based on the cotton futures price data and spot price data from 2021 to 2022 in order to improve the cotton"insurance + futures"target price and unify rates by using Monte Carlo simulation method.Secondly,the entropy value method was used to comprehensively evaluate the cotton price risk in each prefecture-level city of Shandong province.Finally,the cluster analysis method was used to divide the risk areas of cotton planting areas.The results were showed as follows.(1)The cotton price risk was mainly concentrated in the northwest areas and southwest areas of Shandong province.And among the many causes of price risk,the degree of specialization was the main cause.(2)After revising the target price and premium rate,the target price for the highest risk area and the second highest risk were significantly higher than the provincial target price average.In addition,while the guarantee level continued to improve,the growth rate of cotton"insurance + futures"insurance rate continued to decline.In other words,the growth rate of insurance premium rate decreased with the increase of guarantee level.(3)After optimizing the cotton"insurance + futures"operation mechanism,the result showed that the channels for information exchange had been broadened.This was because the spot market was integrated into the operation mechanism,and the information linkage mechanism between the futures market,the spot market and the insurance companies was built up.In summary,two suggestions were put forward to better play the role of cotton"insurance + futures"to protect farmers'income.On the one hand,insurance companies should implement more refined product design for the different risk areas.Regions with different risks should correspond to different product types.On the other hand,multiple subjects should cooperate with each other in order to reduce the pressure of premiums on local governments.The financial pressure of Shandong provincial government in the insurance premium of cotton"insurance + futures"can be reduced through the cooperation of multiple subjects to share the insurance premium.
cottoninsurance + futuresMonte Carlo simulation methodprice risk zoningoperating mechanism
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