Commonwealth: ECFA will destroy Taiwan's agriculture

Jialeshui's lovely carved rock seashore.

Commonwealth magazine had a great piece last month on China's inroads into Taiwan's agricultural markets. Some highlights:

"In 2002, Taiwan's deficit with China exceeded US$300 million, but the gap gradually narrowed after 2008 to US$38 million last year. In 2012, Taiwan imported agricultural products worth US$827 million from China, a 6 percent increase over the previous year, while agricultural exports to China – mainly specific farm and fishery products – totaled US$789 million, 17.7 percent more than in 2011."

Note that -- in 2002 under the Chen Administration, Taiwan was running a $300 million annual agricultural trade deficit with China, but the media was filled with yammerheads claiming that Taiwan wasn't "open" to China under Chen. However, Commonwealth points out something I posted on a couple of months ago....

A big chunk of Taiwan's agricultural exports are politically driven purchases made by Beijing to win support among the island's rural population, meaning the products do not need to stand the test of market forces. On the other hand, China has been able to deeply penetrate Taiwan's market and gradually gain market share because of its economies of scale and competitive prices.

These political purchases have one additional important effect, as I observed...

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.

In this system of trade, gains by Taiwan are gifts of Beijing, gains for China come at the cost of local farmers. Commonwealth observes:

The import tide is most obvious for tomatoes, cauliflower and peas. Over the past decade, tomato imports from China increased more than 20-fold, and imports of cauliflower and peas tripled. At the same time, Taiwan's domestic production of string beans (snap beans) and peas dropped by half.

In 2011, 5,077 tons of string beans, the equivalent of 40 percent of Taiwan's total string bean production that year, were imported from China, reflecting the substantial degree to which imported vegetables from China have begun to substitute locally grown produce.

"Taiwan's farm exports to China mostly consist of high-priced grouper and fruits, but most Chinese imports are fruit and vegetables that people eat on a daily basis. This will no doubt have an impact on Taiwanese farmers," warns Chen Chi-chung, a professor at the Department of Applied Economics of National Chung Hsing University, who hails from a farming family in Wandan, Pingdong County in southern Taiwan.

Indeed. In the markets retailers invariably claim their items were produced in Taiwan, but it is hard for me to believe that, unless I know they themselves grow their produce. Unfortunately smuggling must also be enormous, but few report on that, and certainly not our ECFA-infatuated international media. Avoiding toxic Chinese goods is a constant struggle in my weekly trips to the market, never mind restaurants, which must rely on cheap produce to keep prices down in Taiwan's small eatery sector.

According to the piece, Taiwan also imports tea equal to one-third of the island's production (total Taiwan tea imports are nearing twice local production, according to the article). Imports on this scale lead to other issues. One common problem I've heard about in many areas of Taiwan food production is adulteration by Chinese products to stretch the local products. For example, hypothetically, in an area famous for shiitake mushroom production, the big bags of shiitake mushrooms sold in shops in the area might be only 80% or 60% local, the rest being Chinese mushrooms, with no labeling, of course. This impacts both the brand image of local goods and the brand image of Taiwan itself. This has been recently exposed in the honey trade, where tainted and toxic Chinese honey is repackaged as Taiwan or Malaysian honey. In markets vendors sell preserved and dried goods such as nuts and fruits, which they bag for you on the spot. These are, the media assures from time to time, products that originate in China.

The Commonwealth article suggests clear country of origin packaging, including information on the ratio of materials by country of origin, but long experience with labeling in Taiwan (rice noodles, for example) and the regulatory regime here suggest that manufacturers will easily be able to ignore or circumvent restrictions.

The scholar interviewed in the Commonwealth article also pointed out that because Chinese products originate in disease and vermin-infested areas, quarantine and inspection systems must be enhanced and extended. Good luck with that.

In the long term, the article suggests expanding value chains for agricultural goods, specialty production under long-term contracts that guarantee prices, and educating consumers to buy Taiwanese. But none of these really address the problem that we consumers who actually live here must face every day: avoiding toxic Chinese goods in our daily fruits and vegetables.
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