context: This expansion of ‘insurance + futures’ pilots follows two years of successful operation by ZCE. New pilot efforts have been carefully focused in regions critical to poverty alleviation and rural revitalisation goals. The move will facilitate expansion of agricultural insurance programs in crops like sugar and cotton—allowing a WTO-compliant ‘green box’ income or price insurance subsidy to replace direct subsidies.

Zhengzhou Commodity Exchange (ZCE) approved 40 new insurance+futures pilots in 2018—29 of these, over 72 percent, are located in counties that have been flagged by national poverty alleviation or rural development goals says Futures Daily.

Compared with previous pilot projects, the piece notes newly approved pilots have

  • diversified products including sugar, cotton, and apple
  • broadened geographic coverage to Xinjiang, Yunnan, Gansu, Shaaxi, Shanxi, Hebei, Shandong, Anhui and Guangxi
  • introduced improved pilot models ‘contract+insurance+future’ and ‘insurance+future+loans’ modes
  • more emphasis on product differentiation and ag operators desires
  • broadened funding sources including local governments, ag operators, futures and insurance companies

A new batch of insurance+futures contracts are expected to be released in coming days.