Wed, Jul 23, 2014 page8

• EDITORIAL: Produce price gouging must end

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  News that Typhoon Matmo would make landfall in Taiwan was followed by yet another spike in the prices of agricultural products. Consumers obviously bear the brunt of the price increases, but farmers are not benefiting from it — it is the traders and wholesalers who are profiting, and the government seems unable to do anything about this.

  It is common in Taiwan for the prices of agricultural products to spike before a typhoon hits. Yet this is an unusual phenomenon in terms of supply and demand, as prices should either go down or at least remain unchanged when supply and demand rise simultaneously. In this case, while many consumers are eager to purchase more vegetables — fearing a price hike if the storm damages crops — farmers are also racing to harvest their produce before the typhoon hits. That means that although demand for agricultural products surges, so does their supply, hence prices should drop or remain unchanged.

  Nevertheless, wholesale prices for vegetables have gone up by at least 20 to 30 percent recently. So what went wrong? The short novel The Legend of Sheng-zai and Kui-zai (笙仔與貴仔的傳奇) by Sung Tse-lai (宋澤萊) may provide an answer.

  In the novel, Sheng-zai takes high-quality melons he grew to the local wholesale market in Yunlin County early in the morning. A wholesaler comes around to his stall and offers Sheng-zai a low price for his melons, which he rejects. A second wholesaler comes around, offers an even lower price and is also turned down. A third wholesaler appears and names an even lower price, and is also sent away. When it is nearly noon, Sheng-zai and his wife are in a panic, because if they do not sell their melons, the fruit will go bad and all the money they invested in growing them will go to waste. In the end, the couple seek out the second wholesaler and sell their melons to him for much less than the average price of melons that day.

  Unfortunately, this story is not pure fiction; this phenomenon can be seen every day in farming villages and is exacerbated by the approach of a typhoon, since wholesalers know farmers are eager to sell their produce, so they can try to offer a lower-than-usual purchase price, while selling the produce at inflated prices to consumers equally eager to stock up.

  So what does the government do about this? The Council of Agriculture urges the public to buy vegetables that are less likely to be affected by stormy weather, while increasing the supply of such products, but fails to mention how it plans to deal with price inflation by wholesalers.

  Wholesalers and traders taking the lion’s share of the profits in the agricultural sector at the expense of farmers and consumers has been a serious problem for decades, even outside of typhoon season.

  For instance, in recent months, the price of garlic has hovered at about NT$50 to NT$80 per jin (斤, 600g) on the market, with wholesalers buying it from farmers for approximately NT$30 per jin. However, due to overproduction, the wholesale price has gone down to about NT$12 to NT$13 per jin, with some farmers selling their garlic for as little as NT$9.

  There are many factors leading to a supply glut, including the weather, high prices spurring more farmers to grow the best-selling products of the previous year, or a spike in imports.

  In Japan, the agricultural authorities conduct research to determine which agricultural products are the most widely grown each year, so they can launch marketing campaigns for those crops before harvest time in a bid to ensure demand will also rise when supply goes up. The Japanese government also tries to curb import surges by raising tariffs or imposing stricter inspection standards for certain products.

  Yet, in Taiwan, it seems that the government only reacts to the problem when it occurs, thereby ensuring that it continues to reoccur each year.
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