Author(s)

Fushuang Zhang, Giang Guo, Lin Xue

Corresponding Author

Fushuang Zhang

Abstract

The purpose of this study is to explore the price insurance mechanism in the agricultural trading system, especially analyzing it based on the financial derivatives perspective. The frequent price fluctuations of agricultural products bring great risks to farmers, traders and other stakeholders. This paper begins with an overview of the development of the agricultural trading system and the challenges it faces, followed by an in-depth analysis of the concept of price insurance mechanisms and their importance in market stability, with a focus on the role of financial derivatives, such as futures, options and swaps, in providing price insurance. The effectiveness and best practices of these financial instruments in practical applications are demonstrated through several real-life case studies. Finally, the paper discusses the main challenges faced in implementing price insurance mechanisms, offers relevant policy recommendations, and looks at future trends in the field of agricultural finance. The findings of this paper contribute to understanding and improving risk management in agricultural trading systems and enhancing market stability.

Keywords

agricultural trading system, price insurance mechanism, financial derivatives, risk management, futures market, agricultural finance, market volatility