The Feasibility Analysis and Scheme Design of Raw Milk Price Index Insurance in China

Journal Title: Archives of Business Research - Year 2017, Vol 5, Issue 11

Abstract

Dairy producers in China has been suffering from more and more frequently raw milk price fluctuations in recent years. Price Index insurance can be an effective tool of market risk management. We find that there are foreseeable trend, cyclical and seasonal factors in raw milk price fluctuations, and also systematicness in price risk, which make the raw milk price risk uninsurable. But by rationally designing the insurance scheme and institutional innovations, the price risks could become insurable. The choice and construction of milk price index are the core tasks of the scheme design. Income over feed cost could well reflect the actual profitability of milk production and is good to be used as milk price index. To prevent moral hazards and adverse selection, the contract should make stipulations on the coverage level from aspects of production covered and risk retention. We also carry a calculation of actuarially fair premium for the designed insurance contract using distribution approximation and Monte Carlo stimulation.

Authors and Affiliations

Liyu Feng

Keywords

Related Articles

Dividend Policy and Share Price Fluctuations of Sampled Quoted Nigerian Companies

This focus of the study was to find out the impact of dividend policy on market price of shares on sampled quoted companies in Nigeria. Secondary data were sourced from the audited annual reports of ten selected companie...

Impact Of International Public Sector Accounting Standards Adoption On Accountability In Public Sector Financial Reporting In Nigeria

This study examined the effect of adopting International Public Sector Accounting Standards (IPSAS) on accountability in public sector financial reporting in Nigeria, using the perceptions of accounting personnel (AP), a...

Export Promotion Schemes and Export Performance in the East African Community: A Comparative Analysis

This study analyzed the impact of various fiscal incentives (export promotion schemes) in the East African Community on promoting exports in the region. The schemes in place are; the manufacturing under bond scheme, expo...

Why The Big 4 Are Leaders in The Audit Market? A Literature Review

The leadership of the large audit firms has generated great interest in the accounting doctrine to explain about the concentration factors of the audit market. The objective of this paper was to make an extensive review...

The College Management Performance is Reviewed from the Perspective of Customers and Financial Perspective (A Case Study On University WR Supratman Surabaya)

One important factor that is used to assess the success of private college is performance. Private colleges continue their efforts to prepare and fine-tune their business strategies in order to survive in the world of ed...

Download PDF file
  • EP ID EP314248
  • DOI 10.14738/abr.511.3855
  • Views 53
  • Downloads 0

How To Cite

Liyu Feng (2017). The Feasibility Analysis and Scheme Design of Raw Milk Price Index Insurance in China. Archives of Business Research, 5(11), 147-158. https://europub.co.uk/articles/-A-314248