GU Hai-ying ,WANG Chang-wei

1 Antai College of Economics and Management,Shanghai Jiao Tong University,Shanghai 200030,P.R.China

2 Institute of Industry Research,Shanghai Jiao Tong University,Shanghai 200030,P.R.China

3 Institute of Finance and Economics,Shanghai University of Finance and Economics,Shanghai 200433,P.R.China

Abstract In the face of the corona virus disease 2019 (COVID-19) pandemic,it is essential to stabilize the security of urban “shopping baskets”. Through a survey and interviews with 46 agricultural cooperatives in Shanghai,this paper analyzes the impact of the pandemic on vegetable production and offers suggestions on agricultural insurance. The research results show that:(1) the pandemic has impacted almost all stages of the vegetable supply chain but has had a greater impact on the sales stage; (2) the market risks of vegetable production have increased significantly,and the gap between the field price and the market price has widened. The sales price difference between traditional channels and e-commerce is notable; (3) farmers'incomes have generally declined due to the COVID-19 pandemic,and traditional small-scale farmers have suffered more losses; and (4) agricultural insurance plays an important role in stabilizing the supply of vegetables to the city. To minimize the impact of the pandemic on vegetable production and to stabilize both urban “shopping baskets” and farmers' incomes,it is necessary to further improve agricultural insurance,especially to provide insurance against market risks.

Keywords:COVID-19,vegetable supply chain,agricultural insurance,market risks

1.lntroduction

The sudden outbreak of the corona virus disease 2019(COVID-19) is wreaking havoc on a wide array of health,economic and social factors (Ali and Alharbi 2020; Kanitkar 2020). To prevent and control the pandemic,China has adopted a phased policy of self-quarantine,which has had a serious impact on the production,distribution and sale of agricultural products (Jianget al.2020). For cities,the supply of vegetables has also been challenged (Zhou 2020). By the end of 2019,China's urbanization rate had reached 60.60%,with an urban population of 848.43 million (NBSC 2020).Products such as vegetables and fruits are daily necessities for urban residents. The vegetables supplied to cities come mainly from two areas:sub-urban rural areas and other areas outside of cities. To ensure an adequate vegetable supply in cities,China has adopted a policy in which mayors are in charge of the “shopping basket program”.During the pandemic,stabilizing vegetable production and ensuring farmers' incomes became important tasks for city governments. To minimize the impact of the pandemic on vegetable production,the State Council of China issued a policy on February 12,2020:the implementation of mayors'responsibility for the “shopping basket” to ensure the stable production and supply of agricultural products. Many cities in China have also introduced incentives to encourage farmers to produce vegetables.

Two issues need to be addressed regarding the impacts of the pandemics on agriculture:one is to ensure the production and supply of agricultural products,and the other is to stabilize farmers' incomes,which in turn affects the production of agricultural products. The impacts of the pandemics on agriculture is a risk in agricultural production and operation,and agricultural insurance is an important method for managing agricultural risks (Hazell 1992; Zhanget al.2019). Since China increased financial subsidies for agricultural insurance in 2007,agricultural insurance has developed rapidly in China,with insurance premiums rising from about 5.18 billion CNY in 2007 to 68 billion CNY in 2019. The total insured amount increased from 112.6 billion CNY in 2007 to 3.6 trillion CNY in 2019 (Zhang Q Q 2020).The number of households served by agricultural insurance increased from 49.81 million in 2007 to 180 million in 2019(Zhang 2019). China's agricultural insurance industry is now ranked second in output value in the world (Tuo 2018).To stabilize the vegetable supply,many local governments have supported the development of local vegetable insurance. For example,Shanghai launched vegetable price insurance in 2010 and vegetable weather index insurance in 2014,which effectively stimulated farmers' enthusiasm for production and stabilized the supply and price of vegetables(Liu 2016). Agricultural insurance plays an important role in helping farmers cope with the impacts of the pandemic on agriculture. Many provinces such as Zhejiang and Hainan have introduced vegetable price insurance during the period of the pandemic and subsidized the premium,which has increased the willingness of vegetable farmers to engage in production and stabilized the supply of vegetables.

As a large city with a population of more than 20 million,adequate supplies of agricultural products are of great significance to Shanghai,especially during pandemic periods. Although the amount of locally produced agricultural products in Shanghai is limited,local production plays an important role in the emergency supply and price stability of agricultural products. For green leafy vegetables,local production accounts for more than 80% of the total demand in Shanghai (Zhou and Jia 2020). During the pandemic,the Shanghai municipal government and Shanghai Anxin Agricultural Insurance Company,only one agricultural insurance company in Shanghai,introduced a series of measures to minimize the impact of the pandemic. For example,the government provided more subsidies during the pandemic period to farmers who grew green leafy vegetables,and the insurance company increased the compensation,which weakened the impact of the pandemic on the supply of produce.

With the spread of the COVID-19 pandemic worldwide,the impact of the pandemic on agriculture has become a major issue in current agricultural development.Studies have analyzed the impact of the pandemic on agriculture from different aspects (Henry 2020;Morton 2020). Some studies analyzed the impact of the pandemic on food security (Pu and Zhong 2020; Zhang H Y 2020),some studies focused on the impacts of the pandemic on agricultural supply chains (Gray 2020),and some studies analyzed the impact of the pandemic on food safety (Unhaleet al.2020). For example,Uddinet al.(2020) analyzed the effect of COVID-19 on the food system,including food safety and food security,in low and middle income countries. Zhang Yet al.(2020) assessed the potential economic cost of the COVID-19 pandemic on China's macroeconomy and agri-food system and found that more than 46 million agri-food system workers(approximately 27% of total employment) lost their jobs due to COVID-19 in the lockdown phase. Among them,there are few studies on the impact of the pandemic on the“shopping basket” of Chinese cities and especially on the role of agricultural insurance in minimizing the impact of the pandemic on agriculture (Zhou and Jia 2020). In addition,agricultural cooperatives have developed rapidly in China in recent years (Zhang Set al.2020). Cooperatives not only improve the efficiency of agricultural production (Maet al.2018; Gong and Battese 2019) but also help to control the quality of agricultural products (Zhouet al.2016; Jiet al.2019),and have become important elements of agricultural production in China. Vegetable cooperatives have also developed rapidly. Taking Shanghai as an example,there are nearly a thousand vegetable cooperatives in Shanghai,and the planting area occupies approximately about 50%of the total vegetable area in Shanghai (Sunet al.2015).Cooperatives are the main service objects of agricultural insurance. In response to the impact of the pandemic,cooperatives have also become important subjects of policy regulation and production supply.

Through a survey and interviews with Shanghai vegetable cooperatives,this study investigates the impact of the COVID-19 pandemic on vegetable production and offers suggestions to ensure the stability of the urban “shopping basket” through agricultural insurance. This study provides two main contributions:first,the impact of the pandemic on vegetable production is investigated and analyzed,and the pandemic is found to have a greater impact on the demand side; and the second contribution is the proposal of measures to manage the impact of the pandemic on agriculture based on agricultural insurance. It should be noted that the research area of this study is Shanghai,which has certain uniqueness in vegetable production as a megalopolis. The impact of the pandemic on vegetable production and the role of agricultural insurance have some general conclusions in some aspects,but other regions or cities should combine their actual situations when referring to the research results.

The rest of the paper is organized as follows:the second section presents the analytical framework,the third section introduces the data sources and methodology,and the fourth section discusses the research results. Finally,the conclusion and policy implications are presented.

2.Analytical framework

The COVID-19 pandemic has had an extensive impact on the vegetable supply chain. Taking the supply chain of vegetables in Shanghai as an example,the process of getting vegetables from farmland to consumers goes through different stages,such as production,transportation,wholesale and retail. The impact of the pandemic on the vegetable supply chain and the function of agricultural insurance are plotted in Fig.1.

Theoretically speaking,the impact of the pandemic on the vegetable industry can be divided into two periods,the initial blockade period and the later period of the pandemic. During the period of blockade and self-isolation,the pandemic affected nearly every link of the vegetable supply chain.In terms of production and supply,most of the vegetables consumed in Shanghai need to be supplied by areas outside of Shanghai,which accounts for approximately 60%,but for green leafy vegetables,approximately 80% of the consumption is supplied locally. However,the vegetables produced locally in Shanghai are also largely dependent on migrant farm workers. Because the pandemic broke out during the Chinese New Year,some workers had returned to their hometowns. Due to the blockade policy,these workers were either restricted from returning to Shanghai or they were temporarily unwilling to return. Therefore,there was a labor shortage for vegetable production at the beginning of the pandemic in Shanghai. The logistics of vegetables have also been affected. Although the government did not restrict the transportation of agricultural products during the pandemic,the efficiency of vegetable logistics decreased due to the impact of inspections and the shortage of workers.Considering the wholesale and retail sale of vegetables,some vegetable brokers affected by the self-quarantine policy did not return to Shanghai in the early stage of the pandemic. Meanwhile,the decline at the demand for vegetables also led to a certain decline in the business of vegetable middlemen. However,for new business models,such as e-commerce,an opportunity for development emerged. On the demand side,in the first few days of the pandemic,there was a temporary increase in demand for vegetables due to public panic and the need to stock up during the Spring Festival,but then demand dropped.Although agricultural products are a necessity of daily life,demand for vegetables has been greatly impacted by the shutdown of factories,the suspension of restaurants and the closing of schools. As a result,the pandemic reduced the demand for vegetables.

Fig.1 Pandemic's impact on the vegetable supply chain and the function of agricultural insurance.

In the next period,as the pandemic gradually came under control in China,the self-isolation policy was lifted,and the production and transportation of vegetables gradually returned to normal. The pandemic had a major impact on vegetable production and distribution for approximately two months,after which the impact was relatively small. However,the overall impact of the pandemic indicates that it will take a relatively long time for the full recovery of economic and social activities,especially with the spread of the pandemic overseas,which will affect the recovery of production and consumption activities in China. A decline in social activities will lead to a drop in demand for vegetables in cities.

The impact of the COVID-19 pandemic on the vegetable industry has led to operational risks for farmers. Agriculture is recognized as a high-risk industry,with risks mainly being divided into natural disaster risks and market risks.The major sources of production risks arise from adverse weather conditions such as drought,freezing,or excessive rainfall at harvest or planting. Production risks may also result from damage due to insect pests and disease despite the control measures employed1The New England Vegetable Management Guide website lists “The Big Five Risks Faced by Farmers” (https://nevegetable.org/big-fiverisks-faced-farmers).. Market risks mainly come from price or demand fluctuations.

The pandemic is a major health event. The risks it brings to agriculture are an increase in production costs due to the lack of agricultural workers in the production stage,a loss of efficiency due to blocked transportation in the logistics stage,and a decline in sales volume and prices in the market stage (Jianget al.2020; Yeet al.2020). The increased risk will affect farmers' motivation to produce vegetables and the ultimate yield. Agricultural insurance is the main method for dispersing the risks of agricultural production and operation and stabilizing farmers' incomes.

At present,agricultural insurance mainly focuses on natural disaster risks and market risks. Price insurance for vegetables will play a role in coping with the impact of the pandemic on vegetables. With agricultural insurance,farmers receive compensation when the price of vegetables drops,thus reducing their losses,stimulating their enthusiasm for production and stabilizing the “shopping basket” in cities. However,it should be noted that agricultural insurance currently does not cover some risks to the vegetable supply chain caused by the pandemic.To minimize the impact of the COVID-19 pandemic on vegetable production and farmers' incomes,it is necessary to further improve the function of agricultural insurance.

3.Data and methods

3.1.Data

To understand the impact of the COVID-19 pandemic on agriculture,especially on vegetable production in Shanghai,we conducted a survey and interviews with 46 agricultural cooperatives in Shanghai in March 2020. The survey covers all nine districts with vegetable production:Qingpu,Jinshan,Baoshan,Jiading,Fengxian,Songjiang,Chongming,Minhang,and Pudong. Five cooperatives were surveyed in each district,with the exception of six in Pudong. The survey was conducted by questionnaire and interview.

The sample cooperatives involve a total of 5 000 farmers,with an area of more than 2 600 ha of farmland and annual sales revenue of agricultural products exceeding 150 million US dollars. Most sample cooperatives produce vegetables as their main products,and some also produce other agricultural products,such as rice and pigs. On average,the total sales revenue of the cooperatives is 3.9 million US dollars,while the sale revenue of the leading product accounted for 60.0% of all sales. The average farmland area of each cooperative is 66 ha,and the number of farming households is 167. As the sample included one large cooperative,the Shanghai Honggang Green Lentil Cooperative,the average and median characteristics of the sample cooperatives are somewhat different (Table 1).

In addition to the survey data,we also obtained statistical data on vegetables during the pandemic period from Qingpu Agricultural Bureau,Shanghai. Qingpu is an important vegetable production area in Shanghai,accounting for approximately a quarter of the city's vegetable output.During the pandemic,to monitor vegetable planting,the government required all cooperatives and large farms to submit data on the vegetable labor force,yield and price.We obtained the data of 29 major vegetable cooperatives in Qingpu on February 3,February 25 and March 5,which better reflect the vegetable production during the pandemic.The data involve the daily sales volume,sales channels and sales prices of more than 20 vegetable varieties. There are 330 data points for various vegetables. The cooperatives on average represent a vegetable area of 20 ha and sell 3.6 tons of vegetables per day.

3.2.Methods

To investigate the impact of the pandemic on vegetable production,we adopt two analytical methods:comparativestatistics and econometric analysis. Comparative statistics refer to a conventional statistical method that can preliminarily judge differences between samples during the comparison period. Since the production and sales of vegetables generally show periodic changes with season changes,seasonal effects can be eliminated and the impact of the pandemic on vegetable production can be better investigated only by comparing the production and sales data of vegetables in the same period of a normal year.Therefore,based on survey data and government statistics,we use comparative statistics to analyze changes in vegetable production,sales and prices during the COVID-19 outbreak to investigate the impact of the pandemic on the vegetable industry.

Table 1 Sample characteristics of cooperatives

In addition to comparative statistics,we also use econometric methods to measure the impact of relevant factors on vegetable prices to analyze the ability of producers with different characteristics to cope with COVID-19. Specifically,we build the following model:

The impact of the pandemic on vegetables is partly reflected in the price change of vegetables. In the econometric model,yirepresents the sale price of vegetables and is the explained variable. Although many factors affect changes in vegetable prices,based on the purpose of the study and limited by the data,the explanatory variables in the model include sale channels,cooperative land areas,daily sales of each vegetable variety and dates. The sale channels include field sales,wholesale,supermarket and e-commerce,with the field sales price as the benchmark. The date variables are February 3,February 25 and March 5,with February 3 as the benchmark. The variables “variety”,“volume” and “area” capture the varieties of vegetables sold by the cooperative on a certain day,the sales volume of such vegetables and the land area owned by the cooperative. In addition,the model will also control the location of the producers and the cooperative variable.εiis the random error term. The least squares method will be used to estimate the model.

4.Results and discussion

4.1.Descriptive results of the impact of pandemic on vegetable supply chain and famers' incomes

Vegetables need to go through a series of supply chain processes from farmland to market. To understand the impact of the pandemic on each stage of the vegetable supply chain,the question in the survey was “Which aspect of your production and operations has been most affected by the pandemic?”. The options are “production”,“l(fā)ogistics”,“sales” and “other”. The results show that 24.64% of cooperatives chose “production”,20.29% chose “l(fā)ogistics”,47.83% chose “sales” and 7.25% chose “other”. From this result,it can be seen that the pandemic has an impact on all stages of the vegetable supply chain,but it has had the most significant impact on the produce sales stage.

To further understand the impact of the pandemic on vegetable production,we asked the cooperatives this question:“What are the main aspects of the impact of the pandemic on production?” with the options for responses being “l(fā)ack of production inputs”,“l(fā)abor shortage”,“increase in labor costs”,and “others”. The results show that an equal number of cooperatives chose “l(fā)abor shortage” and“increase in labor costs”,which each account for 65.2% of the total sample; “l(fā)ack of production inputs” accounts for 19.6%2Since the survey question allows multiple choices,the sum of the selected results exceeds 100%.. During the early period of the pandemic,China adopted a strict quarantine policy,which created a temporary shortage of labor for vegetable production and led to an increase in labor costs. From the perspective of agricultural inputs,although the pandemic has had a small impact on production inputs in the short term,given the impact of the pandemic on the agricultural inputs industry,the stable supply of fertilizers,pesticides and other substances should also be considered.

We learned from the interviews that most of the vegetable farmers in Shanghai are not local,and some of them returned to their hometowns before the Spring Festival and were not able to return to Shanghai quickly due to the pandemic,which affected the labor supply for vegetable production. According to the statistics of the Qingpu Agricultural Bureau,88.57% of vegetable-growing households are from other areas,and 92.30% of vegetable workers are migrant farmers. During the Spring Festival,the migrant vegetable farmers who left Shanghai accounted for 32.19% of the total number of migrant farmers. By February 23,a total of 8.72% of migrant farmers had not returned to Shanghai,and by March 5,a total of 6.08% of migrant vegetable farmers had not returned (Table 2). The delay of migrant farmers' return to Shanghai definitely affected the production of vegetables.

The pandemic has had an impact on the logistics of agricultural products. Through interviews,we know that due to traffic restrictions during the pandemic,the logistics were greatly affected for vegetables and other agricultural products. For cooperatives with vehicles and distribution capacity,many agricultural products such as vegetables could not be shipped in time due to traffic restrictions. For those cooperatives without vehicles,the number of vehicles from purchasers of vegetables was greatly reduced due to the pandemic. Due to the quarantine policy,many vehicles that purchased vegetables could not enter the villages. To sell vegetables,some farmers used tricycles to transport vegetables out of the village and then loaded them into cars to transport them out. Transportation efficiency declined,and its cost rose. In addition,many vegetable middlemen and vegetable brokers were not local to Shanghai. The COVID-19 pandemic affected their return to Shanghai and therefore affected the logistics of agricultural products.

The pandemic has a major impact on the demand for agricultural products such as vegetables. To the question,“How much have your sales declined due to the outbreak?”,the results show that 15.9% of cooperatives saw their sales volume of agricultural products unaffected,4.5%saw a decrease of less than 10%,29.5% saw a decrease of 10-30%,and 50.0% saw a decrease of more than 30%.Interviews with producers confirmed the survey results.During the height of the pandemic,factories,schools and restaurants in Shanghai were temporarily closed,leading to a sharp drop in demand for vegetables. The investigation shows that after the sixth day of the first lunar month,some vegetables in Shanghai began to appear to be unsaleable.Farmers who did not have stable distribution channels,for example,those who normally rely on brokers to come to the fields to purchase agricultural products,were more severely affected by the pandemic. According to our survey,approximately 10% of the vegetables produced in February were not sold due to the pandemic in Shanghai.Affected by the pandemic,some large-scale and capable agricultural production enterprises or cooperatives began to change their sales mode,for example,by increasing the supply to communities and supermarkets and developing e-commerce,which somewhat alleviated the impact of the pandemic.

The impact of the pandemic on agricultural production,transportation and sales in Shanghai directly affects the incomes of farmers. For the question “how did your February incomes compared to normal?”,8.9% of cooperatives chose “increase or no change”,11.1% of cooperatives chose “declined by less than 10%”,20.0% of cooperatives chose “declined by 10 to 20%”,the same proportion chose “declined by 20 to 30%”,and more than 40.0% of cooperatives chose “declined by more than 30%”. Clearly,the incomes of most agricultural producers decreased during the pandemic period,accounting for 91.1% of the total sample size. From the perspective of the range of the decline,40% of producers saw their incomes decrease by more than 30%,further indicating that the pandemic has had a significant impact on the incomes of vegetable farmers.We further investigated the impact of the pandemic on farmers' incomes through interviews with producers. The profit of vegetable farmers mainly depends on their sales income from November to March of the following year because the prices of vegetables during this period are generally higher,and farmers can obtain higher returns.Vegetable prices in summer are low,and their contribution to farmers' annual profit is limited. Therefore,from this perspective,the decline in farmers' incomes during the pandemic period would have a large impact on their annual incomes. Some interviewed farmers said that the loss of the two months' incomes would cause their annual profit to drop by approximately 40%.

Although the pandemic in China has been under control,its impact on economic and social activities will be delayed and sustained. Meanwhile,the spread of the pandemic abroad will also have a certain impact on the control measures and agriculture in Shanghai. Therefore,the pandemic is predicted to continue to affect vegetable production in Shanghai for a long time. For the question“what are you most worried about in the next six months?”,the response options are “l(fā)abor shortage and cost increase”,“produce price fluctuation”,“difficulty selling produce” and“others”. According to the survey results,26.7% of the respondents chose “l(fā)abor shortage and cost increase”,53.3% chose “produce price fluctuation” and 68.9% chose“difficulty selling produce”. We find that farmers are more worried about market risks. Therefore,key issue to be considered in the later period of the pandemic is how to dissolve the market risks while ensuring the enthusiasm ofvegetable farmers in production.

Table 2 Labor supply in vegetable production on February 23,2020

4.2.Empirical results of the impact of the pandemic on vegetable prices

The impact of the pandemic on demand for vegetables is directly reflected in vegetable prices. In response to the question “What was the change in the sale price of your major products during the pandemic compared to a normal year?”,the results show that 22.7% of the cooperatives chose “increase or no impact”,20.5% chose “declined by less than 10%”,27.3% chose “declined by 10 to 20%”,20.5%chose “declined by 20 to 30%”,and 9.1% chose “declined by more than 30%”. The findings suggest that the prices of most vegetables sold by cooperatives fell during the pandemic in Shanghai.

The market price of vegetables includes the cost of logistics and other intermediate processes,and the actual sale price of vegetables received by farmers is lower due to the influence of supply chain obstruction. By comparing the prices of vegetables during the pandemic this year with the prices during the same period in the past,we can preliminarily see the impact of the pandemic on vegetable prices. Table 3 shows the prices of vegetables (including the weighted equal price of vegetables and pak-choi (Brassica chinensisvar.chinensis)) in February and March of this year compared with the same period of last year. The prices include field price and wholesale price. As shown in Table 3,on the one hand,the prices of vegetables during pandemic period this year have dropped significantly compared with those during the same period last year. On the other hand,field prices have fallen more sharply than wholesale prices.Taking the pak choi as an example,the average wholesale price of pak choi in March was 2.31 CNY kg-1,down 32.85%compared with the same period last year. However,the price of pak choi sold by farmers in their fields was only 1.25 CNY kg-1,down 50.98% compared with last year. The drop in field price is much larger than the drop in market price. Since most of the producers who sell vegetables to brokers in the fields are traditional smallholders,the results suggest that traditional smallholders were more severely affected by the outbreak.

As mentioned above,the pandemic has a considerable impact on the prices of agricultural products. In the survey,we found substantial differences in the degree of the impact of the pandemic on vegetable prices in different sales modes. To further explore the change in vegetable prices and its influencing factors during the pandemic period,we apply regression analysis using statistical data obtained from Qingpu Agricultural Bureau. The econometric models are described in the methodology section above. The results of the pooled OLS regression are shown in Table 4,where the first column only controls the vegetable varieties. As the prices of different vegetable varieties vary greatly,and the same variety may have price differences in different regions,the regression further controls the vegetable varieties and production locations,and the regression results are shown in the second column in Table 4. In addition,due to different market advantages,vegetable selling prices of different producers are also different. Therefore,individual producer variable is controlled in the regression in column (3).

It can be seen from the regression results that there are significant differences in the prices of vegetables sold in different sale channels during the pandemic. The prices of vegetables sold through the wholesale market and through e-commerce are significantly higher than the field sales price,especially for new retail e-commerce. The average price of green leafy vegetables per kilogram sold through e-commerce is 4 CNY higher than the field sales price.Through the interviews,we learned that sale channels such as Freshippo and Vegetable Steward directly reach consumers,and there are no middlemen channels,so the price is higher. However,the regression results show that the prices of vegetables sold through supermarkets are not significantly different from those for vegetables sold in the field. Generally,supermarkets have strong bargaining power,so their purchase price from farmers is low. For the variable of vegetable sales volume,the coefficient is negative and significant,indicating that the larger the vegetable sales volume is,the lower the price. This result is consistent with economic theory. Considering the date variables,the coefficients of February and March areboth negative and significant at the level of 1%,indicating that the price of vegetables continued to decline during the pandemic. Overall,the regression results show that the e-commerce sales model can effectively address the impact of the pandemic on vegetable prices. In addition,with the growth in the vegetable supply,the market risks of vegetables will increase in the next period of time.

Table 3 Comparison of vegetable prices during the pandemic this year and the same period last year

Table 4 Impact of different channels on vegetable prices during the pandemic period

The above regression results show that under the control of related factors,the price of vegetables decreased significantly during the pandemic period,and e-commerce was less affected by the pandemic and even showed development,indicating that the impact of the pandemic on vegetable production can be mitigated through the development of e-commerce.

4.3.Practices and problems of agricultural insurance in response to the pandemic

Agricultural insurance is an important way to diversify agricultural planting and management risks. In recent years,to guarantee the supply of agricultural products and the incomes of farmers,Shanghai has issued many policies to support the development of agricultural insurance (Liu 2016). Agricultural insurance has also played an active role in responding to the impact of the pandemic on agriculture(Mu 2020). In this section,we will discuss the measures taken by agricultural insurance in Shanghai and farmers'expectations under the impact of the pandemic.

In response to the impact of the pandemic on the supply of vegetables and other agricultural products,Shanghai has taken many measures to make agricultural insurance play a greater role. First,insurance coverage for vegetable farmland was increased. All green leafy vegetables grown during the pandemic were covered by price insurance. The original policy for Shanghai vegetable price insurance limited the covered area of vegetables,and so not all vegetables grown can be covered by insurance. During the pandemic,to encourage farmers to produce more vegetables and stabilize their incomes,the government allowed all vegetables to be covered by policy-oriented agricultural insurance for those farmers willing to participate in price insurance.

Second,insurance compensation for farmers' losses was increased. In response to the increase in labor cost in vegetable production,the Anxin Agricultural Insurance Company arranged a compensation reserve of 50 million CNY to double the compensation for any vegetable operation losses that triggered claims. In March,the first compensation was paid to farmers,and the simple indemnity ratio reached 132%,which effectively stabilized the incomes of vegetable farmers and increased the motivation of vegetable farmers to plant vegetables.

Third,agricultural insurance coverage for agricultural products was increased. Some varieties of vegetables and fruits in Shanghai were not covered by price insurance and have suffered severe losses due to the pandemic. For example,after the Spring Festival,strawberries were difficult to sell and the price was low due to the drop in demand. In addition to the lack of agricultural workers,a large number of strawberries rotted in the fields,and farmers suffered serious losses. Anxin Agricultural Insurance Company developed strawberry price insurance in cooperation with local governments. If the market price of strawberries is lower than the average market price for the same period in the previous three years,the insurance company will compensate the farmers for their losses. Farmers only need to pay 20% of the premium,while government subsidies account for 80%. Agricultural insurance reduced farmers'losses due to the pandemic by insuring more kinds of vegetables and fruits.

Finally,vegetable production bases outside Shanghai were insured. As an agricultural enterprise in Shanghai,Bright Food (group) Co.has 150 plantation bases outside Shanghai. The cooperation between Anxin Agricultural Insurance Company and Bright Food (group) Co.to provide insurance to its plantation bases outside Shanghai helped maintain the supply of vegetables to Shanghai during the pandemic.

There are still some problems with agricultural insurance in responding to the impact of the pandemic on vegetable supply. First,insurance coverage needs to be expanded.Current agricultural insurance does not cover risk in the agricultural product circulation stage. Our survey shows that most producers expect insurance companies to provide insurance against risks in distribution and sales. Some vegetable varieties are not covered by insurance. In the case of green leafy vegetables,agricultural insurance covers only pak choi and Chinese cabbage throughout the year. In addition,agricultural insurance companies mainly provide agricultural insurance to cooperatives and large farms,and many small farmers have less opportunity to participate in agricultural insurance. Second,the sum insured needs to be raised. At present,the sum insured of most agricultural insurance types in Shanghai only covers the materialized costs of production,and the standard is low. Due to the impact of the pandemic,the field sales price of agricultural products has dropped significantly to only half of the market sales price. Price insurance,which uses market price changes as a criterion for determining whether to compensate,can only partially reflect farmers'losses. Finally,agricultural insurance claims need to be processed more quickly. There is still room for improvement in the business process,claim speed and service efficiency of Shanghai agricultural insurance. Our survey shows that more than 60% of farmers wanted the speed of insurance payments to be increased.

The expectation of vegetable producers on agricultural insurance under the impact of the pandemic was also revealed in the survey. The survey shows that most agricultural producers confirm the positive role of insurance but also have considerable expectations for it. To understand these expectations,we introduce the following questions:“In response to the impact of the pandemic,what are your expectations for agricultural insurance?”,and the response options are “increase the speed of compensation”,“increase the sum insured”,“increase the insured area”,“include more kinds of agricultural products in policy-oriented agricultural insurance”,“provide insurance for the risk of labor shortages or cost increases” and “provide insurance for the risk of circulation and sales of agricultural products”. The survey results show that more than 60% of cooperatives chose“increase the speed of compensation”,“increase the sum insured”,and “provide insurance for the risk of circulation and sales of agricultural products”. Among them,“provide insurance for the risk of circulation and sales of agricultural products” had the highest proportion,reaching 76.1%,followed by “increase the sum insured”,with a proportion of 69.6%.

The above question is a multiple choice question,and the responses show that cooperatives have many expectations for agricultural insurance. Extending the above question,we further asked “what is your strongest expectation”. The survey results show that most of the sample chose “provide insurance for the risk of circulation and sales of agricultural products”,accounting for 51.1% of the total sample (Fig.2).This shows the role of agricultural insurance in minimizing the market risks of vegetables is an important issue to cooperatives that agricultural insurance needs to focus on.

Fig.2 The service most expected by producers from agricultural insurance.

In addition to investigating producers' expectations through closed selection questions,we also obtained producers' advice on agricultural insurance through open questions. To the question “what are your suggestions for the services of agricultural insurance?”,the producers proposed:“increase insurance coverage for more vegetable varieties”,“shorten the verification and claim process”,etc.

This study also has some limitations. For example,due to the impact of the pandemic on the survey activities,the sample size is limited,which restricts the further quantitative analysis. There are some differences in vegetable production modes and agricultural insurance products in different regions,so the study reflects more of the situation in Shanghai,which may affect the universality of the research results. In the future,we will conduct surveys on different types of agricultural producers in different regions of China,further analyze the long-term impact of the pandemic on the supply of vegetables and other agricultural products in the context of the global agricultural supply chain,and analyze the role of agricultural insurance in coping with major unconventional events such as the pandemic.

5.Conclusion and implications

This study investigates the impact of the COVID-19 pandemic on vegetable production in Shanghai,and analyzes the practices and problems of agricultural insurance in response to the pandemic. Results indicate that the pandemic has impacted almost all stages of the vegetable supply chain especially the sales stage,leading to a decline in vegetable prices and serious losses for farmers.The e-commerce business model was relatively less affected by the pandemic and that the price of vegetables sold through e-commerce was substantially higher than the price of vegetables sold through traditional sale channels.Agricultural insurance played an important role in stabilizing the supply of vegetables to Shanghai during the pandemic.But many vegetable varieties are not included in the price insurance catalogue,and the compensation provided by agricultural insurance for the loss caused by the pandemic is limited. Based on the results,agricultural insurance should be further improved to cope with the impact of the pandemic on vegetable production and farmers' incomes.For example,the coverage of policy-oriented agricultural insurance for more vegetable varieties should be increased and the amount of agricultural insurance should be further increased to compensate for farmers' losses. In addition,it is necessary to encourage and help vegetable producers to develop e-commerce to improve the ability to minimize the impacts of the pandemic and the risks of external environmental changes.

Acknowledgements

This study was supported by the Humanity and Social Science Youth Fund of the Ministry of Education of China(18YJC790157) and the National Social Science Fund of China (16ZDA019).