nese agricultural authorities are racing to skill up officials and insurance firms to extend subsidized insurance coverage to the country’s highly fragmented aquaculture sector. With a landmark Agricultural Insurance Act in force since March, Beijing is keen to increase take-up of subsidized insurance policies, a move that could lift output.As part of the awareness campaign targeted by government at producers, the Nongmin Ribao (Farmer’s Daily), published by the Ministry of Agriculture, recently published the story of farmer Yang Wanyou in the province of Anhui — a freshwater aquaculture belt — who insured 1.2 hectares of fish ponds with coverage worth RMB 40,000 (USD 6,510, EUR 5,020). Yang paid only RMB 320 (USD 52, EUR 40) of his RMB 1,600 (USD 260, EUR 201) annual policy fee, with the rest paid by government subsidies.
Seen as a mouthpiece for government agricultural policy and priorities, Nongmin Ribao detailed how the Anhui provincial ministries of agriculture and finance had co-launched supportive policies to extend insurance to aquaculture practitioners like Yang. Insurers have been turned off by the high-risk, and high-payout nature of aquaculture according to Anhui official (and member of Anhui Political Consultative Conference, a Communist Party policy drafting body) He Zongwen who recalled how in 2010 “huge flood damage” had damaged the local fish and crab farming sectors.
National government departments as well as local governments (including provincial authorities in Anhui and Hunan, another fresh-water aquaculture hub) have been offering training to officials and insurance firms, familiarizing them with the workings of the Agricultural Insurance Act which took effect from 1 March. The 5-chapter Act had been passed by the state council in October 2012 and is meant to serve as a framework or “general guideline” for extending insurance coverage to the country’s agriculture and aquaculture-fishery sectors.
The country’s key financial newspapers meanwhile have been commenting on the new insurance act, with the influential salmon-colored Economic Daily declaring the “act provides good macro framework … the key however is how micro details are rolled out regionally… It’s coming into force meant that agriculture insurance is now a national policy with a basis of legitimacy, rather than a series of pilot experiments lacking official status …”
The aforementioned pilots started in 2004 with four chosen insurance companies in Jilin, Heilongjiang, Shanghai and Chengdu. Since then China has also shown its willingness to use large sums of public money to subsidize the extension of agri insurance. The agricultural ministry in 2007 for the first time paid subsidies for agricultural insurance policies, paying out RMB 1 billion (USD 162.8 million, EUR 125.5 million). The 2013 budget for agricultural insurance was RMB 5.66 billion (USD 921.2 million, EUR 710.6 million), up 41.9 percent year on year.
China has approved 25 insurance companies to sell agri insurance products. The state-controlled People’s Insurance Company Group of China (PICC) in 2012 held 50 to 60 percent of the agricultural insurance market, while China United Property Insurance Company Ltd (CUPI) accounts for about 25 percent. Key players in aquaculture insurance include Anhua Agriculture Insurance’s and Shanghai-based Anxin insurance. PICC customers include Shanghai-based offshore catch specialist Kaichuang Marine which recently reported the cost of a large offshore trawler that caught fire will be covered in full by PICC.
The aquaculture side of the market, however, remains small. This may be down to the fragmented nature of the aquaculture sector compared to the grain segment, where large state entities prove more reliable customers for insurance policies sold by (state-run) firms like PICC. However China’s regional press has reported instances of abuses which suggest aquaculture insurance will take some time to develop. SeafoodSource has come across news snippets detailing fish breeders who concealed their fish in neighbors’ ponds in order to claim insurance.
It’s clear that China’s fish farmers will take some education and persuasion: Hainan provincial authorities cooperated with PICC in designing an insurance product for the local aquaculture sector but take-up wasn’t sufficient and the plans were scrapped. Aquaculture policies make up less than 10 percent of RMB 3 billion (USD 488.3 million, EUR 376.6 million) of premiums written by PICC. Another key aquaculture province, Guangdong last autumn stated a pilot program to cover fishermen and boats with a 35 percent of the cost of the premium, supported by provincial, city and county-level fiscals. However, less than 2.5 percent of fishermen are so far covered, according to local media reports.
Aside from awareness, a key part of the jigsaw being put in place by central authorities is a network of mutual insuring organizations which will be the key intermediary between millions of producers and commercial insurance companies. Communist Party delegate to China’s annual rubber stamp parliament Li Keping proposed at the March session that the China Fishery Mutual Insurance Association (CFMI) should be chosen as the national mutual body. The CFMI was set in 1994, based in Beijing under the management of the agricultural ministry. Yet it’s not clear how the CFMI will interact with regional mutual insurers. The Fujian Provincial Fishery Mutual Insurance Association along with Fuding City authorities and Haichuan Food Co. last year signed the province's first single policy, covering 1,108 acres of seaweed farming. The agreement covers damages caused by typhoons, torrential rains, flash floods, high temperature and diseases. Fujian provincial authorities have pledged to extend the pilot to the rest of the province.
That would chime with long-term central government priorities to get the aquaculture sector covered. A state council (China’s cabinet) meeting on April 3 earmarked nine agricultural areas as priorities for reform, one of them agricultural insurance. According to the Nongmin Ribao China’s central government will ensure that local and Beijing officials play a key “third party” role in the new agri insurance scene. “Governments should help farmers with most of the premiums, organize and guide farmers to buy insurance and help with applications for compensation.”
