The government’s “free economic pilot zones” project will hurt local agricultural goods suppliers as food processing companies might opt for cheaper raw materials from China and other countries, a National Chung Hsing University economist said yesterday.
Agricultural products used in food processing are worth NT$174 billion (US$5.74 billion) a year in Taiwan. However, the pilot zone project will allow food processing companies to ship raw agricultural materials previously not allowed to enter Taiwan for processing in the zones, professor Chen Chi-chung (陳吉仲) told the legislature’s Economic Committee yesterday.
“If the government opens up peanut imports for making peanut butter, a sixth of local peanut farmers will lose their jobs,” Chen said.
Taiwan produces 56,845 tonnes of peanuts a year, mostly in Yunlin, Changhua and Chiayi counties, making NT$250,000 a year, and one sixth of the amount is used to make peanut butter, Chen said.
The price of local peanuts is NT$43 per kilogram, higher than NT$35.4 per kilogram for peanuts imported from China and NT$41 per kilogram for those shipped from Southeast Asia, Chen said.
The same situation is also seen for other agricultural produce.
Chen said the prices of dried red beans, pineapples, tea leaves and tomatoes are all higher than in China or the Philippines.
“Vendors and companies in Taiwan may no longer use local dried red beans to make cakes in the future, although local dry red beans taste better,” he said.
The total annual output of the nation’s agricultural sector is NT$600 billion, with 37 percent of the value coming from suppliers to food processing companies, Chen said.
Current laws allow food processing companies to sell their end products on the local market if similar imports are already on the market.
However, Chen said the government should make it clear that it would not offer income tax reductions for food processing companies to import part of their end products to the local market, as this measure would hurt the local agricultural sector.
National Development Council Minister Kuan Chung-ming (管中閔) said he would review the articles of the draft bill regarding the establishment of the pilot zones and talk with Chen about possible revisions.
Meanwhile, the council’s regulatory impact assessment report for the free economic pilot zone project was yesterday criticized by legislators as “useless,” as the council claimed the pilot zones would not damage the private sector.
Council of Agriculture Minister Chen Bao-ji (陳保基) said he did not think the whole agricultural sector would be harmed by the pilot zone project, as some local farmers can survive if they have good products.
“Some Japanese companies are willing to use tomatoes in Taiwan for making their products, despite higher costs, because of the quality of our tomatoes,” Chen said.
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