While consumer goods prices are going up in Taiwan, we have heard at the same time that the wholesale price for pigs has fallen to below NT$50 per kg, which is below the lower limit of the usual price range.
The government responded with several measures — slaughtering swine and freezing them for storage, organizing promotions, increasing the amount of pork products sold overseas, increasing the culling rate for stud sows and reducing breeding volumes — but these are apparently not having the desired result.
The government needs to investigate the root causes of the problem and come up with a more considered approach.
The nation’s system for supply and distribution of farm produce has long been criticized as haphazard and uncoordinated, leading to periodic imbalances in supply and demand.
The government has announced that an early warning mechanism for price fluctuations involving major agricultural products has been put in place. This mechanism is intended to stabilize supply, yet dramatic drops in price for produce such as pigs and garlic still occur. Clearly, the mechanism has not been implemented properly.
There are several reasons for the continued fall in pig prices. Since prices remained stable for several years, pig farmers decided to breed more pigs, thereby increasing supply.
The government did not respond in time, failing to issue price warnings, take measures to reduce supply, or secure an overseas market for the excess.
The result was that supply far outstripped demand; a situation which was exacerbated by officials revealing that some swine had been fed the leanness-enhancing feed additive ractopamine, causing a further drop in demand.
We are still waiting for an effective answer to the problem of the uncoordinated supply of agricultural and fishing products and the resultant low prices which have hit farmers so badly.
Farmers and fishermen alike have lost confidence in the government’s ability to fix the problem. We live in a market economy, and farmers are free to choose what and how much they produce, but that does not mean the government cannot employ certain policy tools to influence their behavior and so avoid this kind of thing from happening.
At the heart of the problem is the lack of a complete database of farming production figures. There is no way of determining just how much each farm is producing, no way of planning how to distribute and sell this produce or to issue price warnings, no way to stabilize farm produce prices and no way to stabilize farmers’ incomes. Japan, the US and the EU all know how important it is to establish this kind of database and strictly regulate it.
Within a regulated a database system, any farmer that wants to apply for a government subsidy has to submit accurate figures on what and how much they have planted, how much acreage they have used, where they sourced the seeds, and who they intend to sell to. All of this information can be used as a foundation for agricultural reform and also ensure that farmers’ rights are protected.
Regrettably, with the transfers of political power happening in the nation, and the many changes of ministers running the Council of Agriculture the establishment of this database has been largely ignored in favor of much more populist, voter-friendly measures such as handing out farmer subsidies with no control.