International trade talks are all about giving and taking, but when the Taiwanese government mentions the cross-strait Economic Cooperation Framework Agreement (ECFA), it only talks about the good news. Not a single word has been mentioned about any possible harm that the agreement could cause to local farmers, nor has it said anything about appropriate government response measures. Agriculture officials generally lack any crisis awareness or security management and control abilities. However, it seems Taiwan’s agricultural and fishing industries are about to run into problems.
We have recently seen many media reports saying the grouper industry — which has been held up as a model example of the results brought by the ECFA — is flourishing no more. China has made major breakthroughs in terms of breeding, cultivation and production techniques, and this has led to a sharp decline — more than 20 percent — in the price of Taiwanese grouper on the Chinese market. Taiwanese fish farmers are suffering big losses on their deliveries.
The latest available data shows that between January and October, 12,596 tonnes of grouper valued at US$134 million were exported to China. That is more than 99 percent of all Taiwan’s grouper exports. The volume exported to Japan, the US, the EU and other main fish importers is tiny. Clearly this is not benefiting long term development of the industry or in staking out a position on the global market.
Government officials are, for the sake of short-term benefits and political achievements, letting this situation continue.
This does not only apply to the grouper industry. The milkfish industry — a traditional Taiwanese industry — signed a contract with China two years ago, but because the fish has many bones, an unusual flavor and the industry lacks a complete distribution system, Chinese consumers are not buying the fish.
The latest data shows that 7,324 tonnes valued at US$2.29 million were exported to China between January and October, and the current market price has dropped to NT$35 per 0.6kg. This is the lowest in three years. The ignorance of officials will, in the end, only hurt disadvantaged farmers and fishermen.
Since China’s production costs are generally lower than Taiwan’s, their products are more competitive. Although regulations on agricultural imports from China have not been relaxed, these products have long found their way into Taiwan via other Southeast Asian countries.
This nibbling away at the domestic market has already affected the livelihood of farmers. If those who do not understand the situation rush to open Taiwan to agricultural imports from China, the Taiwanese agricultural industry could collapse, therefore, caution is required.
A few days ago, Chinese officials demanded that Taiwan abide by WTO regulations. Agriculture officials later said Taiwan would allow imports of products from China that are not produced in Taiwan or products that are already imported in large volumes from elsewhere. These two statements caused panic among farmers who said such deregulation would affect their livelihood or even cause the industry to collapse.
The possible consequences of such a decision must not be ignored. The experience of grouper and milkfish farmers should be a warning to the government that it cannot allow the exportation of agricultural products to China. Doing so could create excessive dependence on the Chinese market, seriously jeopardizing national food security.
This is why the government –– based on political, economic, trade, quarantine and food security factors, the particularities of agricultural products and financial management issues, should initiate structural adjustments and upgrading of the agricultural industry before allowing wider deregulation of the domestic market.
The government must not sacrifice farmers for the sake of the bigger picture.
Lee Wu-chung is a professor of agricultural economics.
Translated by Perry Svensson