....In January, the Directorate General of Budget, Accounting and Statistics (DGBAS) announced a 1.11-percent rise in the Consumer Price Index, but food prices as reflected in the Cost of Living Index (Category A) rose 1.97 percent on an annualized basis and had shown increases for three consecutive months. The Marine Products Price Index shot up to 144 in January, not only its highest level ever but a hefty 12.73 increase over last year. This shows the cost of eating one fish is, on average, 12 percent more expensive now compared with January of last year.The cross-strait seafood market displays all the issues we've been seeing with ECFA. First, the increasing involvement of big foreign financial players in Taiwan markets:
With piles of Chinese and Hong Kong consumer cash flowing into Taiwan to buy grouper, keen entrepreneurs were quick to smell an opportunity. Over the past year, Baring Private Equity Partners, Asia’s largest private investment fund controlling US$4.5 billion, has begun sinking investment dollars into the top-grade grouper produced through Taiwanese fish farming operations rather than continued investment in high-tech silicon wafer plants.An important driver of ECFA were large foreign financial houses who hoped that greater integration between Taiwan and China would drive greater profits for themselves. They heavily backed the Ma Administration in the 2008 election. Of course, we all know how the people on the bottom of the production chains are making out:
Consequently, Baring’s Asia has begun investing in Taiwanese aquaculture operations and is preparing an integrated distribution chain stretching across Hong Kong and China in a bid to reap "grouper riches." Wang reveals that Baring’s is now actively hunting for "mutually complementary" agricultural and livestock products in Taiwan and China in which to increase its investments. Dairy products, fruit and even soy sauce are all among the items under consideration. This is of course due to steadily increasing Taiwanese agricultural exports to China, not merely grouper, but also Taiwanese baked goods and leather, for all of which China is the top export destination. China is the number two export destination for other agricultural exports as well, bringing a welcome opportunity for Taiwan’s agricultural, livestock and fisheries businesses.
"Even with grouper, currently our hottest product, the pond-side price (sold to distributors at the site of production) for a jin last year was about NT$210. This year it’s about NT$250. Exporters (to China) do offer a little extra, but it’s still only about NT$270," Tsai notes. "Compare that with the current market price in Taipei, which has gone from just over NT$200 to over NT$300. But we also have to bear the risk of winter damages in addition to the 20-percent rise in feed costs since last year, so we actually don’t really earn that much," Tsai sighs. "We’re producers, not sellers. It’s the money people that come down and invest or distributors seizing the initiative in raising prices, but that money doesn’t go into our pockets."In other words, rising prices are not merely the result of rising Chinese consumer incomes, which must inevitably drive up food prices, but also a deliberate marketing strategy of middlemen who raise prices for consumers in China but suppress prices paid to suppliers in Taiwan.
The article goes out that China will continue to put inflationary pressure on Taiwan's food markets. With the 2012 elections a year away, voters will be experiencing China as the giant maw across the Strait that steals their incomes with one hand and pushes up their food prices with the other. That can't be good for the incumbent Ma Administration.
- Fascinating piece on scam colleges run by Taiwanese? Chinese? aimed at Indian students in the US. As the person who passed it along noted, it's an excellent example of globalization at work. He also thought these guys had to be Taiwanese.
- US aircraft performance is good news for Taiwan.
- The Face of Foreigners in Taiwan: a reader flipped me this pic from the immigration agency on information for
white peopleforeigners, who are clearly depicted in the upper left in all their glorious whitenessforeignness.
- Japan quake to slam suppliers to Taiwan, may cause Taiwan firms to default on loans?
- Long term effects of demographic transition in China: Brookings
- Hudson Institute next week on Taiwan's China strategy.
- Nothing to do with Taiwan: free, downloadable film noir flicks
[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.