I have been attempting to gauge the potential impact on farmers of signing an economic cooperation framework agreement (ECFA) with China. The results of my study indicate that if the government lifts bans on 830 Chinese agricultural products, about 280,000 Taiwanese farmers who grow rice, vegetables and other crops could lose their jobs.
In my calculations, I assumed that, on the premise of a perfect competition market, Chinese agricultural products and those from other countries were able to replace Taiwanese items completely. For price comparison between the two sides of the Taiwan Strait, farm prices were used for Taiwanese products; cost, insurance and freight (CIF) prices were used for Chinese products that are already allowed to be imported; and free on board (FOB) prices listed by the UN Food and Agriculture Organization were used for Chinese products that are today banned from import.
I used both the percentage of supply reduction of individual items in the total domestic production volume and the percentage of planting area of individual items in the total domestic planting area to estimate the percentage of the population that would face unemployment in each agricultural sub-sector.
I used asparagus and five other vegetables to assess the impact on vegetable growers, grapes and seven other fruits to assess the toll on orchard farmers, peanuts to assess the grains and legumes sub-sector, and tea to assess the “special crops” sub-sector.
I found that if Taiwan lifts the ban on 830 Chinese agricultural products, the production value of 17 agricultural sub-sectors is likely to decline by NT$10.17 billion (US$319.8 million) — including rice, peanuts, tea, asparagus, cauliflowers and cabbage and other crops.
A financial loss of NT$10 billion in agriculture might seem insignificant compared with the high-tech sector. However, in the five agricultural sub-sectors I investigated, at least 280,000 farmers would lose their jobs. What would they do? How do we calculate the social costs of such a significant surge in unemployment? What measures does the government propose to respond to this? These are questions that must be contemplated before signing an ECFA.
In my study, I only projected the effects on five sub-sectors. My results do not include mushrooms, sugar, flowers, fisheries and forestry, for example. Thus, the total production loss and unemployment in the agricultural sector would be much greater than my calculations.
The purpose of my study was to put these concerns on the table and hopefully prompt a wider debate. Hopefully, the pan-blue and pan-green camps alike care about the health of the agricultural industry and the welfare of farmers enough to face the potential impact of an ECFA on a relatively uncompetitive sector.
If Taiwan must sign an ECFA, it is the responsibility of the ruling and opposition camps to propose complementary measures that would be feasible and effective. Absent such measures, the signing of an ECFA should be decided by the public through a referendum.
Wu Ming-ming is a policy adviser to Taiwan Thinktank.
TRANSLATED BY EDDY CHANG