The Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC) is the first free-trade agreement (FTA) that Taiwan has signed with a country with which we do not maintain diplomatic relations.
While this agreement will almost certainly have a stimulating effect on the depressed domestic economy, the joint efforts of the public will be the factor that decides whether it will meet the expected targets.
New Zealand is a great agricultural nation that possesses advanced agricultural production technology: Its quality control and cold process technologies are the best in the world.
The country’s agricultural production value exceeds US$25 billion and it exports the bulk of its farming products, which include meats, dairy products, fruit and wool to a total value of US$31.5 billion. This makes up as much as 71 percent of New Zealand’s total exports, which are well received around the world.
In recent years, the country has been even more active in its efforts to develop Asian markets, such as China, Japan and South Korea.
In contrast, Taiwanese farmers are small farmers, with limited tolerance and ability to adapt, making the prospect of such strong competition out of the ANZTEC agreement daunting.
Official data shows that New Zealand’s agricultural exports to Taiwan reached a total value of US$607 million last year.
The bulk of these exports, 105,253 metric tonnes, consisted of livestock products at a value of US$434 million, 55,981 tonnes of agricultural products at a value of US$111 million, 7,936 tonnes of aquatic products worth US$13 million and 155,635 tonnes of forestry products at a value of US$49 million.
On the other hand, Taiwanese agricultural exports to New Zealand only amounted to US$2.53 million. These exports included 1,063 tonnes of agricultural products worth US$2.25 million, 85 tonnes of aquatic products worth US$270,000, 12 tonnes of forestry products at a value of US$10,000 and no livestock products.
The domestic consumer market for agricultural products is limited, but when the import tax exemption for New Zealand agricultural products takes effect, its beef, mutton, deer antler, kiwifruit, apples, wine and dairy products will increase sharply.
With price drops, these products are likely to take an increasingly large share of the market.
Although there is complementarity with local agricultural products due to seasonal differences, there will be increased competition for apples and livestock products.
The reason for this is that domestic consumers focus on price, quality and brand name when making their purchasing decisions.
Since domestic agricultural production costs are high and there is a lack of economies of scale, a drop in the price of New Zealand kiwifruit, beef, mutton and dairy products while maintaining quality means that these products are likely to replace other local Taiwanese fruits and livestock products.
This is likely to create an even more difficult situation for the local industry.
To strengthen support for local products among consumers, the government should be quick to introduce a complete set of guidance measures to promote variety improvements, production technology advancements, added-value increases, food safety certification and marketing, which would all help farmers.