Cotton "Insurance + Futures" Project To Protect Cotton Farmers' Income, 45 Cotton Farmers In Xinjiang Received Nearly One Million Yuan.

Recently, Xinjiang Awati county and Sha Ya county cotton "order + insurance + futures" pilot project held a settlement ceremony in Shanghai, 45 cotton farmers have been awarded 991 thousand and 600 yuan.

It is understood that the project by Guotai Junan Futures and Guotai Junan Risk Management Co., Ltd. joint PICC Shanghai branch, Awati branch, Sha Ya Branch Company to carry out, for Awati county and Sha Ya county about 18 thousand acres of cotton fields to provide cotton price insurance, underwriting cotton 2000 tons, for the above two counties 45 cotton farmers to provide protection.

The project is linked to the 1905 contract price of the cotton futures contract of Zheng Shang, with an insurance term of 3 months and a target price of 15830 yuan / ton.

In order to better fit the production and operation characteristics of the uniform shipment during the cotton harvest, the core of the insurance product consists of the Asian spread option and the two yuan put option, so as to enhance the effect of the price insurance and effectively protect the interests of the farmers.

When the insurance expires, the average arithmetic value of cotton futures price in the insurance period is lower than the target price, and the insurance company will pay the amount, the amount of which is 991 thousand and 600 yuan.

In recent years, domestic cotton prices have gone up and down, and the decline in the second half of 2018 has been as high as 25%. Cotton growers' planting income is facing great uncertainty.

As an important cotton producing area in Xinjiang, the local cotton growers and the risk resisting ability of cotton enterprises are facing severe tests. Stabilizing the income of cotton farmers has also become one of the major issues faced by the local government.

The "insurance + futures" mode provides an additional insurance for cotton farmers' income on the basis of target prices, effectively protecting cotton farmers from losses caused by falling cotton prices.

At the settlement ceremony, the representative of the cotton grower said that the "order + insurance + futures" project guaranteed the farmers' income in the case of a fall in cotton prices, and also solved the sale problem of cotton, so that farmers could get tangible benefits.

Wang Shengrong, assistant general manager of Xinjiang Lihua cotton industry, said, "order + insurance + futures" mode is a new exploration of enterprise risk management.

In addition, the rational use of OTC options is of great significance to the long-term and stable operation of enterprises. In the future, companies will participate more in the business of "insurance + futures" and so on.

Xia Long, head of the OTC derivatives Department of Guotai Junan risk management company, said that the company will continue to support the "insurance + futures" project, which will bring more benefits to more farmers and industrial customers.