Saturday, March 23, 2013

Twofer from Commonwealth: rice and nukes

Went to the bike show in Taipei this friday to drop in on friends and ogle the gear. Great time. Expecting full report on the show from Taiwan in Cycles tomorrow!

Commonwealth Magazine has two excellent articles this week, one on political rice buying by China that explains why ECFA has neither benefited the south nor changed hearts and minds, the other on the fourth nuclear power plant. On rice, discussing how China early on adopted a two pronged strategy, one to win the hearts and minds via purchases, the other to strip mine Taiwan's agricultural know-how.....
This January, Wang Zhizhong twice visited Houbi District – the major rice producing area in the Jianan Plain – accompanied by Taiwan's former Minister of Justice, Liao Cheng-hao. Also in Wang's entourage were high-ranking officials from the Cuxiong Yi Autonomous Prefecture in Yunnan Province.


During each of his four visits over the past two years, Wang went directly to Taiwan's agricultural areas, meeting with representatives of production and marketing teams, farmers' cooperatives, as well as fruit and vegetable wholesalers. He also visited farming families in Jiayi, Tainan, Kaohsiung and Pingtung.

"These were special fact-finding itineraries to get the real picture of Taiwan's agricultural industry," explains ex-minister Liao, who accompanied Wang on all his visits to Taiwan.

Chinese officials not only want to understand the industry, they also want to import knowledge in the form of farming advisors and farming technology. Wang, who commands a vast interpersonal network in China, is planning to develop a plot of land of 4,300 hectares – roughly 165 times the area of Da-an Forest Park in Taipei – in Chuxiong Prefecture's Yuanmou County into a model zone for cooperation in high altitude organic agriculture between Yunnan and Taiwan. The project is explicitly defined as a cross-strait agricultural cooperation zone.
The piece also gives some numbers on the "hearts and minds" campaign...
Council of Agriculture (COA) statistics show that in June last year, after China gave the green light for rice imports, Taiwan exported a total of 773 tons of rice to China, about 25 percent of the island's total rice exports. This made China the largest buyer of Taiwanese rice alongside Hong Kong.

Taiwanese rice is not exactly an export hit. Although officials pride themselves on exports to 27 countries, total exports reached just 1,900 tons in 2011. With China added as a new buyer, rice exports soared to 3,100 tons last year. But this is still a far cry from 140,000-ton rice quota that the Taiwanese government has approved for export per year. Clearly Taiwanese rice could use more overseas buyers.
More.... the amounts....
COA statistics show that Taiwan exported rice worth US$1.32 million (about NT$39.6 million) to China last year. But local rice farmers feel that they do not reap any tangible benefits from exporting to China.
To put that tiny number in perspective, from my post on how the government is trying to encourage the hearts and minds switching to support of closer relations with China, the Council on Agriculture observes:
Of these, items on the ECFA early harvest list such as bananas, hami melons, lemons, oranges and red dragon fruits accounted for US$1.38 million,
Miscellaneous fruits are a bigger seller in China than rice politically purchased! The sum is simply too tiny to have any political effect.

The problems of China's approach are further laid out: the purchase and distribution system ensures that profits don't return to the farmers or even the local rice mills, but rather come to distant middleman, as we have already seen with other aspects of this trade:
This can be attributed to the way in which Taiwanese rice is distributed and marketed. Normally, farmers sell their entire harvest to rice mills, which process and sell it on to distributors. Rice destined for export to China is usually sold to the rice mills at the same price as rice for domestic sale; the farmers themselves do not earn a single penny more.

At the same time, the rice mills sell to Chinese distributors at the same price as domestic rice dealers. Therefore, the rice mills also do not earn more from selling to China.
How the system really works, and a hint of one of its real purposes, is laid out in these paragraphs....
"Chinese officials mostly come here to buy rice to build connections with Taiwanese county and city governments or local communities," observes Wu Yuan-chang, head of the Taiwan Province Rice and Cereals Association. He believes that Chinese rice importers only want to make their higher-ups happy and that after reaching China the Taiwanese rice will not find its way onto supermarket shelves due to a lack of distributors.


This past January, Liu Gui-miao, a former Tainan County councilor for the ruling Kuomintang and now marketing manager of the farmers' cooperative selling Chamuying Rice, sold 1,632 2-kg. bags of rice to the Foshan City government, a deal facilitated by the Tainan City Straits Economics and Trade Cultural Development. Upon import into China, the bags of rice were used as official gift packs or hand-outs to low-income families.

"They repackaged the rice into 289 gift packs and gave them to government officials. The rest was used as food aid for distribution to low-income households," association secretary general Lu Ai-hua, who formerly served as the chairman of the now abolished Yongkang City Council. In March, Lu will visit China again, hoping to land bigger orders in Luohu, the gateway between China and Hong Kong on the China side.
While much of the hype focuses on alleged benefits Taiwan receives from more closely aligning itself with China, one more important aspect of the drive, never discussed in the international media, is the way closer China links are parlayed into greater support for the KMT at the local level. Stronger links to China means, essentially, more links between Chinese money and KMT officials at the local level. People often assume the south is Green but it is more like a checkerboard -- the local level officialdom is often KMT, and more importantly, the local institutions of agriculture -- mill ownership, ag and irrigation cooperative officials, marketing firms, and so on, are more likely to be KMT. China's cooperation with such individuals helps increase the strength of their local patronage networks and improve their political prospects. Just as the Taiwanese moving their small factories to China was a way to preserve the system of family ownership and competition on price and avoid upgrading to modern management methods, so the KMT's move toward China is a way to avoid political change and preserve KMT power. China is the Vishnu of the Taiwanese sociopolitical world, ruling by preserving.

The Commonwealth piece also points out that the political rice is not distributed in China where it would cause trouble for China's powerful grain interests. Such Taiwanese rice as is sold on actual store shelves in China gets there via private marketing arrangements, and is largely a niche market, as the last page of the piece discusses. The political rice has neither stability nor order volume, two keys to maintaining and expanding markets. As Commonwealth observes...
Two years ago China began purchasing milkfish from Taiwan under contract, a move also intended to win the support of local fishermen. But in the end prices and order volume proved difficult to maintain.
The rice campaign was focused on Tainan; so was the milkfish campaign. The actual amount ordered for last year was US$4.45 million (source). Here's a piece from Dec 2012 full of promise, but I can't find anything on subsequent milkfish orders. Surely FocusTaiwan would be bragging...

The nuke piece is also quite good. It's full of interesting claims:
Dealing with nuclear waste has even become a hot-button diplomatic issue. A report published in the American journal New Scientist noted that there are 437 nuclear power reactors in 31 countries around the world, but not one repository for high-level radioactive waste.
Spend some time with it.
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.


Okami said...

I think the problem with Taiwan rice is high prices due to inefficiencies of small fields. There's not really any way for them to compete with large rice producers like Australia, Thailand, or the US. Age also plays a role with a young rice farmer generally being in his late 40's.

I'd say the Chinese will face the same problems Taiwan is facing in agriculture which is lack of cheap labor, economies of scale nor affordable mechanization. I expect any experts who go over there to make a buck to do well, but not have any long term success nor be able to build any legacy. The Chinese govt connected firms and the people who run them have very little problem with capital in the same way you would have in Taiwan.

I'd say Taiwan has a govt problem with farming and not a technical one. Taiwanese that I deal with, know their stuff inside and out and aren't held back by language. I normally have more trouble ordering food at McDonald's than I do with the ag people. The researchers and companies I deal with are bringing the products and expertise, but the market is very small and heavily fragmented due to govt intervention and distortion.

Michael Turton said...

Yes, government is a big problem. Another problem is the cultural commitment to rice as a crop. Instead of shifting to other, less water intensive crops, and branching out into lucrative specialty crops, the government and culture compel the planting of rice....

Mike Fagan said...

The nuke article is unbalanced.

For one thing, it's light on numbers such as those concerning the typical volumes of vitrified high-level wastes and the intensity of their ionizing radiation, or such as the volumes of pre-vitrified waste stored underground at Taiwan's nukes.

For another thing it neglects developments in reprocessing technology (e.g. the addition of fast neutron reactors) that will further reduce the amount of high-level wastes that have to go to geological disposal.