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On the afternoon of September 17, the People's Insurance Company of China (PICC) and Dalian Commodity Exchange (DCE) held the signing ceremony for the “Projects of ‘Insurance + Futures + Banking’ Joint Financial Innovation in Facilitating Development of ‘San Nong (agriculture, rural areas and farmers)’” in Wuhan. At the signing ceremony, Hubei branch of PICC signed the egg futures price insurance contract with Hubei Jiahemei Food Co., Ltd. and the OTC option trading agreement based on the futures price insurance with Mailyard Futures Co., Ltd.; Hubei Province branch of Agricultural Bank of China (ABC) and Hubei Jiahemei Food Co., Ltd. signed the framework agreement on credit extension for egg farmers; DCE and Mailyard Futures signed the agreement on research projects.
After DCE pushed PICC to sign China’s first agricultural product price insurance contract in Dalian on August 14, this time the DCE again joined hands with PICC to further consolidate the foundation for the development of the agricultural product price insurance, extend the cooperative services of the two sides to Hubei, a major of laying hens farming region in China, and introduce the support from the banking sector, continuously advancing the integration of the advantages of insurance and futures and pushing forward the linkage between the futures and “San Nong”, small and micro-sized enterprises and other economic entities.
According to the price insurance policies signed by PICC and the related agricultural institutions on the scene, the PICC will, on the basis of the prices of the egg futures contracts on DCE, provide Hubei Jiahemei Food Co., Ltd. with the price insurance for 200 tons of eggs. From September 17 this year to September 14 next year, when the prices of the insured eggs are lower than certain levels, the PICC will make relevant compensations for the differences between the futures and the actual prices; in order to transfer the price risks of the insured commodities, the PICC and Mailyard Futures signed the agreement on cooperation of the two sides in risk hedging for the insured commodities, insurance of standard warehouse receipts and other aspects, and the PICC will give priority to Mailyard Futures in selecting counterparties, so as to avoid the compensation risks possibly caused by the risk fluctuations by purchasing the replicate options and other derivatives and making use of the futures market; Hubei Province branch of ABC and Hubei Jiahemei Food Co., Ltd. signed the framework agreement on credit extension in a bid to provide fund support for the insurance premiums; DCE and Mailyard Futures signed the agreement on research projects, and the two sides will explore more new models for serving the “San Nong” in the way of cooperating in research projects.
Attending the signing ceremony were representatives from Hubei Province Husbandry and Veterinary Services, Hubei Province Securities Regulatory Bureau, Hubei Province Insurance Regulatory Bureau, DCE, PICC, Mailyard Futures, and farmers.
