Agricultural insurance boosts China’s farm output by 8.99%

The impact is especially strong in China’s eastern provinces.

Agricultural insurance has helped boost China's agricultural economy, with each one-unit increase in insurance contribution linked to an 8.99% rise in agricultural development, according to a new study by Wensheng Wang & Yehong Zhong, covering provincial data from 2004 to 2021.

Published in Humanities and Social Sciences Communications, the research used a two-way fixed effects model and found that agricultural insurance plays both a protective and promotional role. 

The impact is especially strong in China’s eastern provinces, non-major grain-producing areas, and regions with fewer natural disasters.

The study also confirmed that agricultural insurance promotes farming productivity by encouraging greater use of mechanisation and moderate-scale farming practices. 

These, in turn, drive improvements in production efficiency and output. 

The insurance contribution level was found to indirectly support agricultural development by influencing decisions around land use, input costs, and operational scale.

China’s government has supported the agricultural insurance sector since introducing premium subsidies in 2007. 

By 2022, premium income reached $17.00b (RMB121.9b), covering 167 million rural households and providing protection against risks valued at $760b (RMB5.46t).

($1.00 = RMB7.17)