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Guaranteed payment of agricultural insurance futures
Guaranteed payment of agricultural insurance futures refers to a cooperative mechanism reached between agricultural insurance companies and futures companies, aiming at reducing risks in agricultural product production and ensuring farmers' income. Specifically, agricultural insurance companies will sign insurance contracts with farmers to bear the losses caused by accidents or natural disasters, such as crops and livestock. Futures companies will buy relevant agricultural futures contracts in order to gain profits in the future market, and at the same time bear the risks of market fluctuation and price decline. If the future market price is lower than the guaranteed price, the futures company will pay the difference to the agricultural insurance company to achieve the purpose of guaranteed payment. This mechanism can give farmers more protection when producing agricultural products, and also provide more investment opportunities for futures companies.