History is full of examples of major events decisively influenced by seemingly random or incidental happenings at a crucial moment. We have an example of this in the sale of milkfish. This farmed fish is considered a cheap and nutritious food source by many Taiwanese, but it has become caught up in cross-strait politics and could even influence the direction that Taiwan takes in the future. As such, its place in history books is assured.
The milkfish has been an important commodity in Taiwan for more than 300 years now, especially in the south. An overwhelming percentage of the yield — about 75 percent — is sold domestically. However, for years, suppliers have been hampered by a poor distribution network and rely on middlemen to sell their products. This eats into farmers’ profits.
The government has yet to come up with a solution, leaving the suppliers to fend for themselves. This was why milkfish farmers in Greater Tainan’s Syuejia District (學甲) were so enthusiastic about being able to sign purchase agreements with companies in China as part of the “early harvest” list in the Economic Cooperation Framework Agreement (ECFA).
Milkfish has many spines running through the flesh, which makes it difficult to sell in the West, where consumers are not used to having so many bones in their fish. This is a serious obstacle to expanding its overseas market. As such, the government needs to find a solution to improve domestic distribution and farmers have to become more engaged in the process of bringing the fish to market.
Some form of balance should be introduced to facilitate farmers’ access to market information in order to level the playing field during price negotiations and ensure producers obtain reasonable returns. After all, one of the most important parts of the government’s job is to make sure people live a decent life and can get on with their business.
China has recently been going out of its way to show goodwill to Taiwanese farmers. It initially relied on the “emergency purchase” model, buying Taiwanese produce wholesale when a supply glut sends prices plummeting. It did this recently with bananas and oranges.
The problem with this model is it removes the element of competition, and there are too many middlemen involved. It is therefore the distributors who end up making most of the profits, and not the producers. Moreover, because everything is done at the last minute, sometimes there isn’t even time to grade the produce for quality before it is sent off to be sold in China. This is detrimental to the reputation of Taiwanese farmers among consumers in China and damages the image of their brand. In short, this model has many flaws and does not benefit farmers.
A new model was therefore adopted, in which Taiwanese farmers’ associations and organizations sign regular supply contracts for their goods. This was the model used for milkfisk. Adopting this model means profit goes directly to the farmers and fishermen, making it a popular option.
However, it is not without risks — the main one being that the selling price of milkfish could easily fluctuate depending on the market in China. Poor sales have a knock-on effect all the way down the line. Farmers receive fewer orders, tensions arise over rules, prices, quality (such as the earthy smell of milkfish) and shipping delays — all of which lead to commercial disputes that can easily damage the mutual trust between Taiwan and China that has taken so long to establish. For this reason, China as a market for these goods is still in a trial period, and the government should pay attention to what this all means in practical terms for policy.
Taiwan’s domestic market for agriculture and aquaculture products is small, making it vulnerable to a supply glut or a shortage. If farmers could rely on substantial orders from China, on a regular basis, it would have a positive effect on farmers’ ability to adjust domestic production and stabilize prices. The Taiwanese government should not resist such a model, but it should ensure that there is a management mechanism in place.
As tensions between China and Taiwan have abated, trade between the two countries has increased. Unfortunately, there is now a trade deficit in agricultural products. Last year, Taiwan imported US$662 million in agricultural products from China and exported US$521 million, resulting in a deficit of US$141 million. China is thus doing better out of this trade than Taiwan.
Of course we need to work harder to cultivate the Chinese market for our goods, but we also need to think about diversifying into other markets to spread the risk. Taiwan’s deficit in global agricultural trade has expanded from more than US$7 billion in 2007 to about US$8.8 billion now.
Chinese officials have been pulling out all the stops to try to accommodate the Taiwanese, but their enthusiasm has not been reciprocated by their Taiwanese counterparts, who have been passive and unresponsive. The proper way to approach this, in order to address the issues surrounding cross-strait competition in agriculture and farming production in Taiwan, is to have a plan in place to increase farmers’ incomes and allow farmers to go about their business without any unnecessary pressure. After a string of failed agricultural policies that have enraged farmers, the government agencies concerned need to step up their game.
Du Yu is a member of the Chen-Li task force for Agricultural Reform.
Translated by Paul Cooper
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