BEIJING -- Premiums from agricultural insurance in China recorded a 16.05 percent year-on-year rise to 846 million yuan (US$108 million) last year.

This second highest growth came after China's agricultural insurers reported a rise of 84.26 percent in premium from 396 million yuan in 2004 to 729 million yuan in 2005, ending a decade-long decline.

Last year was also the second straight year that the agricultural insurance business stayed in the black after losing money for 18 years.

The China Insurance Regulatory Commission is yet to release the 2006 profit figures. Last year China's agricultural insurance expenditure totaled 584 million yuan, up 4.6 percent from 2005.

Guo Zuojian, director of the Property Insurance Department of the China Insurance Regulatory Commission, attributed the growing enthusiasm of Chinese farmers for insurance to fiscal allowances by local governments.

The Shanghai municipal government, for instance, paid 33 percent of the crop insurance premiums for farmers, while Meishan city government, in the southwestern Sichuan province, offered a 66 percent subsidy on premiums for dairy herd insurance.

Farmers in Suzhou only need to pay 38 percent of the premium for rice insurance, while those in northwestern Xinjiang were spared 12 percent of the premium for cotton insurance.

The insurance mechanism initiated in 2004 began trial operation in Shanghai, Jilin and Heilongjiang and later extended to Jiangsu, Liaoning, Xinjiang, Ningxia, Inner Mongolia, and Sichuan.

These regions contributed nearly 78 percent of last year's total premium income, about 657 million yuan.

Three niche agricultural insurance firms -- Anxin, Anhua and Yangguang -- established in 2004 together with the two comprehensive insurers, Property and Casualty Insurance and China United Property Insurance, raked in total premiums of 842 million yuan, about 99 percent.

Guo said the China Insurance Regulatory Commission had set agricultural insurance as one of the four priority fields for development, together with pension, health and liability insurance

Likening agricultural insurance to a "rock" of the rural economy, Guo said it could stabilize the rural economy and help farmers through natural disasters.

From January to August last year, natural disasters and insect pests cost the agriculture sector almost 100 billion yuan (US$12.5 billion) in losses, an average 100 yuan per farmer. The per capita cash income of farmers reached 2,762 yuan in the first nine months last year.