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Tough times ahead for forming

Rice is one commodity that will remain protected in Taiwan after it joins the WTO, with only 8 percent of the market open to foreign competition. PHOTO: LIN MIN-HUNG, TAIPEI TIMES

Anticipating a strong impact on the agriculture sector after Taiwan enters the WTO, the government has been busy preparing by cutting output in weak areas and developing more competitive ones.

The government's estimates of job losses in the sector after Taiwan enters the world trade body originally stood at 100,000. But now the government says the figure shouldn't climb above 40,000, as the bulk of farmers work the land part time.

Acknowledging the strengths of foreign agriculture giants such as the US and China, Lee Jen-chyun (李健全), vice chairman of the Council of Agriculture, said that over the past couple of years the government has been cutting hog production and slashing rice crops.

"Taiwan's agriculture industry isn't competitive because our land is sparse and therefore expensive, and labor costs are high," he said. "We just can't compete on price with produce from other countries."

Lee says that farmers need to develop more high-quality products that sell well in Asian markets -- such as wax apples and mangos -- and expand operations into the value-added sectors of the industry.

"Taiwan farmers have always just sold their raw produce cheaply to others, who process it and make larger profits," Lee said.

Taiwan farmers need to form strategic alliances that can pool processing, marketing and sales channels and move away from products such as rice, grains and corn that cannot compete against imports from the US, Lee said.

Lee also said that the government has encouraged rice farmers, who till around 340,000 hectares of land, to switch to other crops or let their fields lie fallow by offering cash incentives.

"If farmers let their crops lie fallow for one season, the government will give them NT$41,000," Lee said.

Under this system the total land area for rice growing has been reduced by 20,000 hectares since 1997, the council's statistics show.

As for meat imports, Lee said that the market was already 98 percent opened before Taiwan cut a bilateral deal with the US in 1997 -- known as the "down payment" -- which permitted imports of pork bellies and offal.

Since that time the additional competition and the outbreak of foot-and-mouth disease a year before, has resulted in the number of hogs falling from 7 million to 6 million, Lee said.

As part of its accession commitments, Taiwan has promised to drop simple average tariffs on 1,021 lines of agricultural imports from 20 percent to 14 percent in the first year and to 12.8 percent by 2007, according to council data.

Restrictions or bans on the import of 41 products such as peanuts, raw sugar, red beans, chicken meat and pork bellies will be either lifted fully or placed under a customs-quota system.

Rice imports, however, will remain restricted, with only 8 percent of the market being opened and a system of tariffs on foreign rice.

As for the widely reported estimates that unemployment in the sector may climb to 100,000 after entry into the WTO as farmers struggle to compete with strong foreign competition, the government now says that number will be much smaller.

According to Chen Ruey-long (陳瑞隆), vice minister of economic affairs, "86 percent of farmers are part-time, with second jobs providing the bulk of their income. Unemployment will rise only to around 30,000 to 40,000," Chen said.

To help absorb these numbers, the government has drafted plans to employ farmers in new areas of agriculture such as ecotourism and the reforestation of mountain areas and plains.

But some farmers are wary of such plans, saying many are too old to switch professions at this late stage.

"Many farmers are old and if they lose their jobs what can they do?" said Wu Yuan-chang (吳源昌), chief of the Yunlin Rice Sellers Association, which represents around 400 rice merchants in the southern county.

"The extent of how severely our industry is affected will depend on what sort of assistance we get from the government and how well it is implemented," Wu said.

Chen Po-chih (陳博志), chairman of the Council for Economic Planning and Development, said such plans, which hope to create 10,000 jobs a year, are positive but will need to be implemented properly to be effective.

"We have to wait and see if these targets can be achieved since government efficiency -- especially local government efficiency -- is still lacking," Chen said.
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