Metals News
Futures + Insurance China Minmetals out of the Road of Financial Precision Poverty Alleviation and Innovation
May 10,2019
The content below was translated by Tencent automatically for reference.

SMM News: since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping as the core has stood at the strategic height of building a well-off society in an all-round way and realizing the great rejuvenation of the Chinese nation, and has put getting rid of poverty and tackling difficulties in a prominent position in governing the country. A series of new ideas and new viewpoints have been put forward, and a series of new decisions and new arrangements have been made. The report of the 19th CPC National Congress clearly pointed out that we will resolutely win the fight against poverty, ensure that by 2020, the rural poor will be lifted out of poverty under China's current standards, and that all poor counties will take off their hats, solve the overall regional poverty, and get rid of true poverty and true poverty.

On October 15, 2018, under the guidance of the China Securities Regulatory Commission and the Poverty Alleviation Office of the State Council, the 2018 China Securities Industry Poverty Alleviation Exchange Conference sponsored by the China Securities Industry Association and the China Futures Industry Association, Minmetals Futures, which belongs to the group, has won the 2018 Award for Poverty Alleviation of the Best innovative Financial products in China's Securities and Futures Industry and the 2018 Award for the Best accurate Poverty Relief Project in China's Securities and Futures Industry by virtue of the "Futures + Insurance" precision poverty alleviation project.

This model has also attracted the close attention of the national media. On October 25, 2018, CCTV's "half an hour of economy" program, with the title of "Finance" to build "Poverty Alleviation Road", reported the accurate poverty alleviation model of Minmetals futures using financial innovation.

One after another of praise. On March 31, 2019, Minmetals Futures belonging to the Group Company "Yunnan Ximeng WA Autonomous County Natural Rubber 'Futures + Insurance' accurate Poverty Alleviation Project" and "Yunnan Xichou County White Sugar Futures Price Index Insurance Project", At the press conference of "excellent cases of accurate Poverty Alleviation by Chinese Enterprises (2018)", sponsored by the Department of Social Poverty Relief and the Corporate Social responsibility Research Center of the Chinese Academy of Social Sciences, he was selected as the "case of accurate Poverty Alleviation by Chinese Enterprises (2018)".

What factors promote Minmetals futures to carry out "futures + insurance" accurate poverty alleviation model? What kind of story is there behind all this fruitful work?

A few days ago, Wang Xiaodong, secretary of the party committee and chairman of the Minmetals Jingyi Futures Company, said in an interview that the CPC Central Committee will accurately extricate itself from poverty as one of the main tasks to follow, and at the same time put forward new requirements for the capital market. It has given new expectations to the real economy of financial services, and increasing the intensity of accurate poverty alleviation has also become an important work in the financial industry, such as banking, insurance, funds, securities and futures. From the perspective of the futures market, the performance of the professional poverty alleviation work is the most eye-catching. The unique functions of price discovery and risk management, as well as the unique "futures + insurance" business model, provide professional help for the needs of various industries in the real economy. Especially in agriculture, industry, forestry and other industries.

How to view the development of futures market in recent years and its performance in poverty alleviation work?

In recent years, the development of China's futures market has been fruitful, with the acceleration of the listing of new varieties, the improvement of the degree of internationalization, the normalization of stock index futures, and the development of bulk business in various exchanges. The further expansion of futures poverty alleviation work is even more impressive. From the existing listed varieties, the number has exceeded 50, by category, covering agricultural products, industrial products, energy chemicals and financial products. At the same time, stainless steel, alumina, ferrochromium, red jujube, urea, soda ash, staple fiber, peanuts, coffee, chili peppers, pigs, Ben ethylene and other varieties are also being further promoted, including some poverty alleviation varieties.

In fact, on the basis of consolidating the existing achievements, the number and scale of projects have been greatly improved in the futures industry. It is understood that since 2016, the futures industry has actively promoted poverty alleviation through various professional forms, such as the "futures + insurance" model and over-the-counter options, which are strongly supported by various futures exchanges. It provided a guarantee for 35776 tons of rubber, 652844 tons of corn, 61843 tons of soybeans, 15455 tons of cotton, 4411 tons of eggs, 3000 tons of sugar cane, 39000 tons of white sugar, 372tons of apples and 200tons of soybean meal in poor areas, involving a nominal principal of 2.3990544 billion yuan. A total of 61 service schemes, such as cooperative insurance, spot price and over-the-counter options, are provided to entities or individuals in poor areas, with a nominal principal of 225.2481 million yuan, and the total benefit amount of entities and individuals in poor areas is calculated to be about 2.8686 million yuan.

What kind of model is the "futures + insurance" model?

"Futures + insurance" is an innovation of traditional agricultural insurance, which is essentially a kind of price index insurance. Traditional agricultural insurance will only compensate farmers for losses suffered as a result of natural disasters, but when the market prices of agricultural products fluctuate and farmers do not make money even if they have a bumper harvest, there is nothing they can do about it. Often can only rely on the government passive blood transfusion subsidies, even if the subsidies to compensate farmers for the loss, but also dampen the enthusiasm of farmers to produce. And "futures + insurance" fills this gap, it can avoid the risk of market price fluctuation for farmers. From the perspective of the pilot project of "futures + insurance", it is mainly the combination of price insurance products, over-the-counter futures and over-the-counter options.

First of all, futures companies and insurance companies design insurance products based on the prices announced by the commodity futures exchange, and then farmers buy insurance company-related product price insurance, and insurance companies buy put options through futures companies. Reinsurance. When the average price of the product during the insurance period is lower than the agreed price of the insurance, according to the insurance clause, the futures company pays the fund to the insurance company, and the policy-holder obtains the compensation through the insurance company. Take natural rubber "futures + insurance" as an example, according to the terms of the insurance policy, if the market price is lower than the insurance price, rubber farmers can receive compensation; if the market price is higher than the insurance price, no compensation will be provided to rubber farmers. No matter whether the price goes up or down, it can play the effect of guaranteed purchase for farmers. From the market point of view, "futures + insurance" can protect farmers' income and has a lot of market space; from the perspective of risk management, it can effectively make use of the futures market price discovery and risk hedge mechanism to improve the traditional reinsurance mechanism.

After the success of the pilot project of natural rubber "futures + insurance" in Ximeng County, the company did not stop here, but learned from the successful experience of the project and vigorously explored the new model of "order + insurance + futures" of sugarcane, from the perspective of poverty management. Compared with the previous blood transfusion poverty alleviation, "order + insurance + futures" can ensure that sugar enterprises get a stable source of sugar cane in the low price area, so that the effective supply of agricultural products will not be affected by the uncertain price factors. Ensure the stable production of sugar enterprises. Second, after sugar enterprises buy sugar cane, even if the price continues to fall, it has locked the price risk in the futures market to ensure the stable operation of sugar enterprises. Third, encourage sugar cane farmers to produce according to orders, stimulate the endogenous motivation of sugar cane farmers to "get rich by labor", and can effectively activate the hematopoietic mechanism of agriculture. Fourth, in order to keep the labor income of sugar cane farmers, during the harvest period of sugar cane, even if the price of sugar cane rises, sugar cane farmers can receive compensation, truly realize the "tripartite win-win" of farmers, enterprises and industries, and turn passive poverty alleviation into active poverty alleviation.

This model is so good, can it be pushed away generally? What are the restrictions?

"Futures + Insurance" is still in the pilot stage, and the No. 1 document of the CPC Central Committee in 2019 also pointed out that it is necessary to continue to expand the pilot of "Futures + Insurance". The China Securities Regulatory Commission also attaches great importance to the pilot project of "futures + insurance" as an important starting point for the futures industry to help lift itself out of poverty and implement the strategy of revitalizing the countryside. On the one hand, it guides futures exchanges and futures companies to step up their work. We will expand the scope of the pilot project, explore and improve the business model, and standardize the operation. Minmetals Jingyi futures will also increase the "futures + insurance" pilot project exploration work, and strive to explore a sustainable and replicable way.

In the promotion will also be subject to some restrictions, some commodities are not futures trading varieties, such as Yunnan Yiliang specialty Gastrodia elata, some commodities need to be deeply processed to become futures trading varieties, such as Yunnan potatoes need to be processed into starch; Some commodities, such as pigs in Yunnan, are not listed on the exchange pilot list.

There are other restrictive factors in "futures + insurance", such as the imperfect price discovery mechanism, the limited capacity of agricultural futures trading market, the defects of over-the-counter options, the lack of financial support, and so on. It is necessary to make joint efforts to improve the relevant conditions.

What achievements have the company made in its poverty alleviation work in the past two years?

The poor corn farmers of Shi Quan in Shaanxi Province implemented price insurance and income insurance, explored the model of "sugar cane order + insurance + futures", and paid 7.7243 million yuan in 2018. It has aroused widespread concern in society and received the support of social funds to stabilize the income of poor households and stimulate the internal motivation of poor households to get rich through labor.

The company is standing in the strategic height of using futures derivatives to serve the country out of poverty, to engage in and explore the project pilot of "futures + insurance". Last year began to do "rubber insurance + futures" pilot project, is the first time we do, there is no experience, there is no peer experience to learn from, can only grope to do. However, we have always kept in mind two things: first, we should rely on the Government to set up insurance and set up credit cards. Second, since it is a pilot, there must be compensation, so that the establishment of credit cards get substantial benefits. Up to now, the poverty alleviation work done by the company has been carried out in accordance with the principle of going deep into every peasant household and not for any return. "deep and simple" has become the requirement of stepping up the work of accurate poverty alleviation.

In fact, as early as 2017, the company participated in two exchange projects, participated in four exchange projects in 2018, and operated one non-exchange project on the ground, a total of seven projects, all of which have now been closed. The four varieties involved are rubber, sugar cane, corn and cotton, which are distributed in Ximeng WA Autonomous County of Yunnan Province, Xichou County of Wenshan Zhuang and Miao Autonomous Prefecture of Yunnan Province, Fuyu County of Heilongjiang Province, Shiquan County of Shaanxi Province, Bachu County of Xinjiang and other state-level poor counties. The company has advanced a total of 10.436 million yuan in insurance premiums over the past two years, and has already paid 10.2977 million yuan in compensation. These seven projects benefit more than 13000 poor households, including 7373 card households, covering nearly 250000 mu of acreage.

The company has made innovations in the use of "futures + insurance" business, what are the specific?

"Futures + Insurance" has been written into the No. 1 document of the Central Committee for three consecutive years, and there will be different expressions every year. It can be seen that the "Futures + Insurance" business has been recognized by the central government and the industry.

Because the business is unique to the industry and has different competitive advantages between companies, there will also be differences in its innovative content, as far as the company is concerned, Minmetals Jingyi Futures made two useful explorations in the "futures + insurance" business in 2018: first, to explore the diversification of the "futures + insurance" model, on the basis of price insurance, The income insurance of corn and "sugar cane order + insurance + futures" were explored. The second is to explore the diversification of the sources of premium funds. In 2017, the premium funds were all supported by the Futures Exchange. In 2018, we attracted the "East and West support funds" of the Shanghai Municipal Government, the policy matching funds of the Shaanxi Provincial Agriculture Department, as well as corporate funds, totaling 1.1795 million yuan. The company just wants to explore a sustainable, replicable way to contribute to the wisdom of futures people out of poverty.

In addition, on the basis of summarizing the pilot project of rubber and sugar cane price insurance in 2017, with the strong support of the Futures Exchange in 2018, natural rubber was promoted in Ximeng County, covering all privately planted rubber. The number of "rubber futures + insurance" is four times that of 2017. In addition to the exchange project, the non-exchange project, corn income insurance, has also been closed and paid 444600 yuan. At the same time, on the basis of price insurance, the company can successfully upgrade the 2.0 version of "Futures + Insurance".

Because of the professionalism of the company in poverty alleviation work, as well as the innovation of poverty alleviation content, it has been highly recognized by regulators and the industry.

The company does not make money in this "futures + insurance" model, so what kind of motivation supports the company to go on?

At the beginning of the project, Minmetals Jingyi Futures, as an enterprise owned by China Minmetals, actively responded to the national strategy of the CPC Central Committee and the State Council on winning the fight against poverty, and persisted in taking poverty alleviation as the top priority. When we first launched "futures + insurance" to help the poor for the first time in 2017, colleagues of the company's project team still remember when they first arrived at Lilla Village, Mengsuo Town, Ximeng County: the village was surrounded by dense rubber forests. Rubber forest pests are serious, but because the sales price is lower than the harvest cost, villagers can only let the tree die, no one to cut rubber, glue control. Because the price could not be sold, the young and middle-aged had to abandon their families to go out to work, and only the old and weak children were left in the village. Although the Ximeng county party committee and county government has thought of many ways to help the villagers, but because the information is blocked, the market is limited, the whole county guards this Jinshan silver mountain but is helpless, cannot change the product into the wealth. See this scene, the company project team heart is very heavy. At that time, we made up our mind that we must make good use of the accurate poverty alleviation policy of "futures + insurance".

When the company carried out the propaganda work of "futures + insurance" in Ximeng County, one of the things that impressed me most was that our project team contacted Luo Ling of 11 groups in Lila Village, Mengsuo Town, Ximeng League, Yunnan Province. At first, she had a lot of questions about the price insurance we talked about. I also do not believe that there will be a fall in prices and money to make what they see as a pie in the sky. Later, with the end of two consecutive years of projects, Luo Ling also slowly changed from the beginning of mistrust. Now she is an active propagandist and demonstration of our price insurance. She herself said: "in 2017, my family planted 40 mu of rubber, and the county government and futures companies helped me with the price insurance, and later paid my family a total of 7179.84 yuan. Directly hit my card, plus their own money to sell dry glue, the income will be more than 15000 yuan, which we never dreamed of. If I had not participated in this futures insurance, my family would have sold dry glue for only seven or eight thousand yuan. In that case, apart from the cost of manpower and material resources, there would be little left. This is the first time in so many years that I have been compensated for falling prices. In the future, I will have more courage to grow rubber, thanks to the good policy of the Party! " Luo Ling's happiness, let the company know that "futures + insurance" can help farmers in poor areas of China to really get out of poverty. This has strengthened the company's determination to further expand and do a good job of the "futures + insurance" project.

Thanks to the efforts of all parties, we have successfully carried out two consecutive years of natural "rubber futures + insurance" pilot projects in Ximeng County, successfully lifting rubber farmers in Ximeng County basically out of poverty. When the 2018 project was officially concluded and the staff left the Western League, the villagers asked our staff: when will you come to our village next year? Let's say: March. They took us by the hand and said, "you must come. We'll wait for you at the entrance of the village until you come."

This matter makes us all believe that Minmetals can take part in the battle against poverty, and that the problem of absolute poverty, which has not been solved by the Chinese nation for thousands of years, can be realized in the hands of our generation as scheduled. It is a blessing in life. The wheel of history is rolling forward, and one generation has a long march. Minmetals Jingyi Futures will continue to actively fulfill its social responsibility and actively participate in the cause of getting rid of poverty and tackling key problems, under the correct leadership of the CPC Central Committee. We will work with all parties to accomplish this great cause of poverty alleviation, which is of great significance to the Chinese nation and to mankind as a whole.

Although futures companies do not make money in the new model of poverty alleviation, I think that under the joint action of the requirements of the CPC Central Committee, the social responsibility of enterprises, the support of exchanges, the participation of the government, and the insurance consciousness of farmers, This road can go a long way.

The CPC Central Committee's requirements for accurate poverty alleviation continue, how will the company carry out the relevant work next?

In 2019, under the leadership of the Minmetals Party Group and the party committee of the company, we will continue to use futures derivatives to help lift people out of poverty and contribute to the wisdom of futures people in order to achieve the national strategy of winning the battle against poverty. The specific contents include:

First, we should strive to enter the whole county promotion project designated by the Ministry of Finance to help the poor counties designated by the exchange. For example, the Apple "Futures + Insurance" project in Qinan County, Tianshui, Gansu Province, which has been designated by the Dalian Commodity Exchange to help the poor, has been supported by the premium of the Ministry of Finance. The total output of apples in the county is 50-750000 tons, a combination of futures companies.

Second, do a good job in the last period of the "one department, one village" pair support work. The designated poverty alleviation county of the Shanghai Futures Exchange is in Taihu County, Anhui Province. The company pair helps the village is Mingzhu Village, Beizhong Town, Taihu County.

Third, we will strive for full coverage of the "futures + insurance" items of the three major exchanges. Corn, soybeans, sugar, cotton, apples, rubber. We will strive to establish projects for all six varieties this year.

Fourth, the planned "futures + insurance" model diversification. This year, we will strive to make the model of "futures + insurance" more diverse, in addition to price insurance. Continue to explore in the main producing areas of income insurance, "orders + insurance + futures", "insurance + futures + basis trade", "orders + insurance + futures + banks" and so on.

Fifth, the plan "futures + insurance" diversification of funding sources. This year, we will continue to coordinate the government's financial funds, policy supporting funds, designated support funds, social funds, and so on, so as to diversify the composition of insurance premiums and explore a replicable and sustainable way.

Sixth, we will focus on promoting the work of the "futures + insurance" model in the six counties designated by the Group to help the poor. Since March, three counties, Zhenxiong, Yiliang, and Weixin, in Yunnan Province, and Huayuan County in Hunan Province, have been designated to help the poor by the Group. In the two counties along the river and Dejiang in Guizhou province, we have carried out work, including mapping statistics and full coverage of on-the-spot research, and are currently discussing with the county governments the possibility of further promoting the work.

The poverty alleviation model of "futures + insurance" is a beneficial exploration and an important battlefield for the group to give full play to its subjective initiative and carry out the main business + professional accurate poverty alleviation. With the further maturity and improvement of the model, the benefits in poor areas are getting wider and wider. Help the establishment of more and more card households. We believe that under the strong leadership of the party group of the group company, the "futures + insurance" poverty alleviation model will certainly play a greater role, and the road of financial innovation and poverty alleviation of China Minmetals will certainly become wider and wider, and the pace will become more and more solid.

From the 19th CPC National Congress solemnly declared that it would win the battle to get rid of poverty and achieve the first century-long goal of building a well-off society in an all-round way by 2020, for a total of three years, Minmetals of China, as a central enterprise, As a pilot enterprise of state-owned capital investment companies in the field of metal mining, they are fully aware of the difficulty and complexity of the task of getting rid of poverty, and deeply realize that central enterprises fully support poverty alleviation in deep poverty-stricken areas. It is a very solemn and serious political task, and it is a concrete embodiment of taking a clear-cut stand in stressing politics, keeping pace with the CPC Central Committee with Comrade Xi Jinping at the core, and General Secretary Xi Jinping. It is the inevitable requirement of fulfilling political responsibility, economic responsibility, and social responsibility, earnestly strengthening the sense of mission, sense of responsibility, and sense of urgency, taking poverty alleviation as a matter of duty and duty, focusing on tackling key problems, and going all out to overcome difficulties. To contribute to winning the battle against poverty in an all-round way.

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