Taiwan rice farmers set for export boom

For Asia Times Online www.atimes.com
The door to both the mainland Chinese and Japanese market have been cracked open recently for Taiwan’s rice farmers. In Japan, fears over radiation contamination are making the infamously picky Japanese consumers desire foreign grain, while across the Taiwan Strait in mainland China, Taiwanese rice is starting to conquer the supermarket shelves for political reasons.

For the first time since 2002, when Taiwan joined the World Trade Organization (WTO) and thereby effectively sacrificed the domestic agricultural industry for the well-being of the high-tech ones, the island’s rice producers seem to be on the right side of history.

As last year’s Fukushima Dai-ichi nuclear disaster occurred in one of Japan’s major rice-growing areas, Japanese housewives unsurprisingly begin feeling a lot safer serving up overseas-grown grain to their families. Tokyo has always been notoriously protectionist when it comes to agricultural imports, but the changing preferences of the local consumers put pressure on the Japanese government to soften its attitudes somewhat.
Although of the 9 million tonnes of rice sold in Japan in 2011 only 440 tonnes were imported from Taiwan for the grand some of US$298,000, the figure accounted for a record high, and according to the Taiwanese Council of Agriculture, in the first seven months of this year alone, Japanese grain traders have already procured 1,500 to 2,000 tonnes of rice from central and southern Taiwan.

There is an answer as to why the Japanese favor Taiwanese rice over Chinese and Thai grain strains.

“The quality of Taiwanese high-value organic rice meets Japanese standards; also the QQ-effect [pleasantly exciting chewing sensation related to texture] is much more to the Japanese public’s liking,” Hu Sheng-Cheng, an economist at Academia Sinica, Taiwan’s most renowned research institution, told Asia Times Online.

If Tokyo would open the market wider for rice imports, there would thus be tremendous opportunities for Taiwanese farmers, according to Hu: “The contaminated area surrounding Fukushima is huge, and so will be the demand for high-quality organic Taiwanese rice.”

While doubts remain on whether significant shipments of Taiwanese rice will eventually make it past the Japanese farming lobby, which has strong political clout, things are set to go smoothly in mainland China.

Only US$77,000 worth of Taiwanese rice was sold there in 2011, but that has appeared most definitely to change since mid-June, when the mainland’s Taiwan Affairs Office Director Wang Yi, announced that China will allow imports of Taiwanese rice. This was one of numerous gestures aimed at making Taiwanese better appreciate the mainland.

Chinese officials then got busy sorting out related quarantine procedures and settled for an import duty of 1%. China’s China National Cereals, Oils and Foodstuffs Corporation (COFCO) and Xiamen Seashine Food Development Co Ltd, both state-owned, subsequently placed their orders, and only a month later, in two historic shipments across the Taiwan Strait, 178 tonnes of “Taiken 9 rice” from Taiwan’s Changhua county were delivered to the mainland market. Another 80 tonnes are due later this month or in early September.

Taiken 9 has since been spotted in 2kg packages in mainland supermarkets. Asia Times Online has been told that the price tag doesn’t stand out in comparison with its domestic competitors, and according to Du Yu of Taiwan’s Chen-Li task force for Agricultural Reform, the mainland consumer response has been “not bad” so far.

Du Yu noted that Taiwanese farmers associations are remarkably upbeat over the opportunity to make it into a gigantic Chinese market, but he also saw some dangers.

“An over-reliance on mainland China [will] decrease incentives for Taiwanese farmers to upgrade technology and marketing methods,” Du Yu said. “In the longer term and in a global context, this cannot be good.”

He explained that challenges to Taiwan’s farming sector are posed by the very high average age of farmers (at 61 about twice as high as that of people working in other professions), the small scale of Taiwanese farms (average farm size is 1.1 hectares, with less than 10% of all farms being larger than 10 hectares), and the less-than-ideal soil conditions, among other factors. Efforts to overcome those may now be put on the back burner due to easy mainland business.

Also, according to Du Yu, Chinese procurement delegations roaming the island have initially been targeting surplus produce after gluts. Those were “ordinary grade” products, as opposed to the “boutique” ones, which production the Taiwanese government has been promoting.

If China now were to buy regularly instead of only after gluts, the common produce would have to be improved, which inevitably takes time and investment, Du Yu said.

“If such an effort is spent [in order to satisfy the particularities of the Chinese demand], Taiwan’s policymakers must take into account that sudden changes in Chinese procurement patterns would bring about drastic effects on the island’s agricultural sector.”

Economist Hu also warned that if Beijing raised the import quota for Taiwanese rice significantly, it is foreseeable that the boom will be short-lived.

“Past experience augurs that as soon as the Taiwanese high-value organic rice becomes marketable in mainland China, thetaishang [mainland-based Taiwanese business people] will copy the grain strain and sell the rice for a lower price. Thus, for Taiwan’s farmers, there might be gain in the short term, but in the longer one, the profit increase will be meaningless.”

Jens Kastner is a Taipei-based journalist.

(Copyright 2012 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


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