Exploring the role of price insurance in alleviating relative poverty among rubber growers in China

Abstract

Income derived from rubber cultivation constitutes a crucial source of price for rubber growers in tropical China. However, the persistently low market prices for rubber since 2014 have rendered the livelihoods of these growers precarious, significantly increasing their risk of relative poverty. Price insurance, serving as a financial instrument to underwrite the incomes of rubber growers, plays a vital role in stabilising their earnings and alleviating relative poverty. This paper utilises micro-survey data from 441 rubber growers in Hainan Province, a primary rubber-producing region in China, collected in December 2021, to examine the mechanisms and heterogeneous effects of price insurance purchases on the relative poverty of these growers. The findings indicate that the purchase of price insurance by rubber growers can substantially reduce their relative poverty levels. Furthermore, according to a counterfactual analysis, the relative poverty of rubber growers who purchased price insurance would have increased by 18.5% had they not purchased price insurance, and the relative poverty of those who do not purchase price insurance would have decreased by 25.3% had they purchased price insurance. The alleviation of relative poverty through price insurance occurs via mechanisms such as enhancing capital input enthusiasm and labour input enthusiasm among rubber growers. Additionally, the impact of price insurance on poverty alleviation is notably more pronounced among “rubber plantation income-based growers” and “new generation rubber growers”. The findings of this study offer significant practical implications for policymakers seeking to implement price insurance-based poverty reduction initiatives in Hainan and other natural rubber-producing regions across China.

Clinical trial number

Not applicable.