After Typhoon Megi hit Taiwan in September last year, the price of a head of cabbage surged by NT$200 to NT$300. Less than three months later, the price had plunged to NT$20 per head and NT$50 for three at the retail market. A farmer in Chiayi County even invited people to pick cabbages themselves, charging a mere NT$10 per head. Some even gave up harvesting altogether and used cabbage as fertilizer.
What the Council of Agriculture could do to remedy the situation was very limited: Apart from helping ship two containers, or 30 tonnes, of cabbages to South Korea it also shipped six containers to Malaysia.
This is a familiar scene for Taiwanese. When the Central Weather Bureau reports that a typhoon is forming over the waters off the Philippines, it has an immediate effect on Taiwan, although it is still hundreds of kilometers away and its course keeps changing. During a typhoon, fruit and vegetable prices spin out of control as people rush to stock up on agricultural products.
If a typhoon changes direction, fruit and vegetable prices return to their original levels after a typhoon warning is canceled.
However, if it hits Taiwan, problems arise. When farmers deliver the first batch of water-damaged fruit and vegetables to agricultural distribution centers, wholesale prices usually fall because the produce does not look good, but retail prices usually rise. Can the council explain this pricing mystery?
As normal output of fruit and vegetables cannot be promptly resumed, the prices of produce, such as cabbages and bananas, rise due to scarce supply. Eagerly anticipating a high profit, farmers ignore the council’s warnings and grow excessive amounts of expensive items. History then repeats itself as the prices of these items collapse a few months later.
At first blush, no one is at fault: Farmers hope to increase their profits and the council has dutifully issued its warning.
However, both are wrong. Farmers need to stop blindly growing expensive produce and authorities need to improve their overall planning. A few typhoons hit Taiwan every year, but every year, agricultural authorities sit back and watch history repeat itself as the prices of produce go up and down like a roller coaster.
Take bananas for example. Per capita income in the US is 2.5 times higher than in Taiwan, but US banana prices are a little more than NT$10 per jin (600g) at the 99 Ranch Market chain.
If faced with a price war, what should Taiwan, the “banana kingdom,” do? What went wrong with its banana exports, which are barely competitive, and how can it solve the problem? Agricultural authorities should give banana farmers a clear answer.
Government officials, lawmakers and elected local representatives frequently travel overseas on study tours. Apart from studying casinos, red light districts, drugstores and outlet malls, have they ever reviewed other nations’ fruit and vegetable policies? Do they know how other nation are able to maintain long-term stability in fruit and vegetable prices and avoid sharp short-term price fluctuations by as much as 10 times? Do they know how to prevent intermediaries from exploiting producers and how to prevent consumers from paying excessively high prices?
And a final question: Are prices really doomed to swing back and forth between prices that are so high that they hurt consumers and prices that are so low that they hurt farmers? Is it really impossible to find a solution to this quandary?
Chang Kuo-tsai was an associate professor at National Hsinchu University of Education before retiring and a former deputy secretary-general of the Taiwan Association of University Professors.
Translated by Eddy Chang
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