Overproduction of farm-raised grouper this year highlights the need for a public institution to monitor international export markets in China and beyond, Feng Chia University professor of agricultural economics Yang Min-hsien (楊明憲) said.
While the government is looking to the Middle East to diversify the export market for farm-raised grouper, it also needs to establish a system to warn of potential unfavorable market fluctuations, Yang said.
Grouper farmers are the nation’s most at-risk agricultural producers because of sluggish demand and tanking prices in the Chinese market that have spilled over to the domestic market, triggering overcapacity, sources said.
The Fisheries Agency said that although cold weather is expected to reduce grouper yields to less than the 26,000 tonnes produced per year, there would still be a surplus of between 3,000 and 5,000 tonnes.
Taiwan exported 9,840 tonnes of grouper from January to August, of which 7,905 tonnes — or about 80 percent — were exported to the Chinese market, the Fisheries Agency said, adding that Taiwanese grouper farmers have “put too much in one basket.”
There are a number of initiatives under way to sell grouper or reduce the effects of the glut, including a subsidy of NT$16 per jin (600g) of fish to either farmers or exporters on the county and city level, with the choice to be determined by local governments, it said.
The Council of Agriculture is helping local governments and the industry explore markets in the Middle East, such as the Kaohsiung Marine Bureau’s efforts to get halal certification, and the Taiwan Frozen Seafood Industries Association’s participation in a African-Middle East regional trade expo next month, the agency said.
The government is to consider all options to ameliorate the glut, including exporting grouper at cost, the Fisheries Agency said.
The government’s aim is to gain footholds in the Middle Eastern, US, Japanese and Singaporean markets, and grouper producers have been encouraged to diversify their products to include whole-frozen, filleted and flash-frozen grouper, the agency said.
While the agency’s policy to double grouper production between 2009 and last year was partly to blame for the industry’s doldrums, Chinese grouper producers also increased productivity by a factor of several times in recent years, which eroded the market share of Taiwanese exports, it said.
The industry is in a “post-boom consolidation,” and the agency aims to guide it to “long-term sustainability through balancing production volumes and pricing,” it said.
Some business owners might need to rear other fish, such as golden threadfin bream and blue threadfin, the agency said.
Several producers have already made the transition, it said.
However, “the government needs to mitigate risks by creating a system to track changes in international demand, such as monitoring overseas sales, changes in customs policy and local production figures,” Yang said.
The government and the private sector rely on statistics that are generated after the fact, but real-time information and market forecasts are needed, Yang said.
Instead of a focus on China, the system should gauge domestic production volume and the international market, Yang said.
Declines in export volumes and overproduction are linked, Yang said.
As the nation’s type and volume of agricultural products are more or less constant, declining exports are a major cause of overproduction, he said.
With the appropriate storage, processing and marketing capabilities, the government could deal with short-term overcapacity by moving excess from one regional market to another, Yang said.
However, effective governmental intervention in periods of long-term decline in global demand would involve public-assisted restructuring and diversifying of the industry, efforts that cannot be successful without accurate forewarning, Yang said.
Yang added that it is important for business owners to keep the Council of Agriculture informed about the Chinese market, because the council has no access to information, except what industry volunteers pass on, while it is “unreasonable” to blame the government for policy failures if the industry witholds vital information.
Exports to China could be termed “policy-motivated procurements,” and they do not necessarily reflect stable and reliable market demands for the goods, Yang said.
Taiwanese agricultural exports to China did not show signs of overall decline in the first half of this year, while export volumes for certain products increased in the same period, which could suggest that Chinese have a genuine desire to import those products, he said.
The government still needs to monitor those trends to fine-tune exports, he added.
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