Tue, Nov 30, 2004 - Page 8 News List

A wasted surplus is a bitter harvest

By Lei Li-fen雷立芬

The price of oranges in Tainan county, where they are produced, is NTD $4.2 per catty, and in Taipei the selling price was nearly NT$12 to NT$15. According to the Taipei Agricultural Products Marketing Corporation Web site, the average auction price for the oranges the previous day was NT$8.4 per catty. Whether we're talking about the trading price or retail price, these figures are way over the production cost. Should fruit farmers want higher profits, they can either offload more at the price of NT$4.2 per catty, or sell less at a higher price. The best outcome would be if the entire stock were sold at a price higher than production costs.

There is little difference between the current trading price and the production cost, so it is unlikely they can sell the oranges at a higher price. The most pragmatic policy is to sell the majority of the stock at a price fractionally above the purchasing cost. But what about distribution?

Farmers shouldn't wait for the government to buy up trifling amounts. If a particular farmer has insufficient stock to fill a truck, then the Farmer's Association should hire a truck and transport everyone's produce to the major consumer areas. In addition, they ought to explore various channels of distribution, such as renting the square in front of the Taipei City Hall and putting on a special fruit sale, or holding other promotional events in conjunction with discount stores or supermarket chains.

The farmer's associations are responsible for increasing profits from produce, as well as the distribution and sale of their members' produce. If they can't hire trucks, places to market the goods or get extra help, they could put the oranges up as collateral to secure a loan from the association's credit departments or the Finance Bureau of the Council of Agriculture (COA). In any joint promotion held with wholesalers or supermarket chains they can agree to share profits after the produce is sold, to skirt the problem of businesspeople being reluctant to pay for all of the produce without the guarantee that it will be sold. Another way to attract customers would be to advertise a telephone number in the press where people can call to order fruit. It is important to grade the products in terms of quality, and not mix perfect and damaged fruit together, as consumers take quality seriously.

There needs to be restrictions on the amount of land designated to growing certain crops. Prior to Taiwan's entry into the WTO, the COA estimated that the amount of land devoted to growing oranges should be reduced to 6,000 hectares if the price was to be stabilized. Over the last two years the figure has been 9,202 and 9,401 hectares, and probably prices have fallen. We need to look closer at finding a market abroad or processing the fruit.

As for surplus stock,Southeast Asian countries may have a lower standard of living than Taiwan, but Taiwanese oranges aren't necessarily viewed more favorably there. It would seem finding a market abroad isn't going to be that easy. In general, produce with lower production costs are set aside for processing, and given the cost of producing Taiwan's oranges, it would be wasteful to make them into juice.

Farmers turn to the government for help. What can be done about the fluctuating prices of produce, aside from having the government buy up stocks at a guaranteed price, or prominent political figures promoting them? What can farmers do, besides restrict the land used, or find other ways to bring produce to market? We can't repeat this kind of bitter harvest every year.

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