Agriculture

As introduced by the Yearbook of the Republic of China:

Agriculture in Taiwan

Taiwan's agricultural sector has faced increased pressure from rapid economic development and soaring labor costs in recent years. World Trade Organization (WTO) accession in January 2002 and subsequent trade liberalization have made the situation worse, as Taiwan fulfills its WTO commitments of opening its markets and eliminating protectionist trade measures. In light of this situation, the government has implemented new policies to develop the agricultural sector into a highly competitive and modernized green industry.

In accordance with the Challenge 2008 National Development Plan, the government will take measures to upgrade agriculture.

In the Industrial Value Heightening Plan, parks are designed to promote horticultural and agricultural biotechnology. To reduce the digital divide between metropolitan and rural areas, farmers are encouraged to join the life-long learning programs of information science and distribution under the e-Taiwan Construction Plan. Similarly, the main goal of the New Home Development Plan is to retrieve the vitality of rural Taiwan. Pragmatic measures are included, such as the integration of agricultural organizations and human resource cultivation. In the face of the impacts of WTO entry, more and more farms are switching their focus from crop cultivation to agricultural tourism. The government welcomes these changes and provides assistance on farming labor transformation.

In 2002, the agricultural sector accounted for less than 2 percent of Taiwan's GDP. Agricultural production totaled US$1 billion, which is almost the same as the previous year. Of this total production value, farming accounted for 43.33 percent, livestock for 30.02 percent, fishing for 26.41 percent, and forestry for a mere 0.25 percent. The number of workers in the agricultural sector made up 7.5 percent of Taiwan's workforce in 2002.

Farmers

In 2002, about 847,000 hectares of land were farmed by 720,000 households, an average of only 1.18 per household. The average income of each farming household fell by 2.33 percent from its 2001 level to US$24,914 in 2002. Only 20.49 percent of this income came from agricultural activities; however, as nearly 80 percent of Taiwan's farming households have members working part-time on the farm or have full-time non-farming jobs.

Agricultural modernization has been inhibited by the small size of farms, and a lack of investment in the facilities and training necessary for developing larger and more profitable businesses. Farming's unattractive future prospects have pushed many young people to seek better-paying jobs in the cities. As a result, the agrarian workforce has aged rapidly, with the number of farmers aged over 65 accounting for 37.69 percent of all farm managers.

To encourage young farmers to stay in farming, the Council of Agriculture (COA) has introduced modern farm management, provided technical training, and offered guidance on the establishment of an entrepreneurial production and distribution system.

The COA also recognized the need to provide alternative forms of assistance to aging farmers and presently offers monthly stipends of US$96 to farmers over the age of 65 who have been covered by the farmers' health insurance program for more than six months. About US$700 million was allocated to subsidize elderly farmers and fishermen in 2001.

The following figure demonstrates the change of Taiwan's agricultural population from 1974 to 2002:

Farmland

In recent years, the diminishing GDP share of the agricultural sector and large increases in farm imports following Taiwan's WTO accession have underscored the need to make better use of farmland. The government has worked with farmers' organizations and other agencies to convert unprofitable farmland to other uses, consolidate plots into larger areas of land that are easier to farm, and gradually reduce excess farmland. Approximately 80,000 hectares of farmland is expected to go idle or be used for non-agricultural purposes by 2004.

The Agricultural Development Act was revised in 2003 to ease restrictions on the development of agriculture. The revised act allows more flexibility on land use, facilities, and equipment. Traditional farmers' associations were given a new role, to minimize the impacts of WTO entry. Quotas on farmland holdings were annulled to encourage capital and technology-intensive agriculture. As biotechnological development holds out the hope for agriculture, the act serves as the legal basis for the government's plans to establish agricultural technology parks.

With regard to farmland consolidation, odd plots have been integrated and then redistributed, giving each farmer a better proportioned plot of land about the same size as the one he formerly owned. Farm roads and irrigation ditches that serve these areas have also been improved, rebuilt, or repaired, thereby reducing production and marketing costs and increasing operational efficiency.

Under the General Farmland Utilization Project, county and city governments and grassroots organizations receive guidance in setting up agricultural districts to meet the needs of farmers based on environmental, economic, and technical requirements. In 2002, the COA spent approximately US$3.8 million on the project.

Water

Irrigation works are the key to agricultural production. Although Taiwan has an annual average precipitation of 2,515 mm, about 80 percent of this is concentrated from May to November. Thus, water transfer and conservation measures have to be made in advance to counter regional or seasonal water shortage or drought. In addition to strengthening irrigation management, the COA allocates water resources to facilitate agricultural production. The Ministry of Economic Affairs' data for 2001 shows that irrigation, aquaculture, and livestock activities used 13.01 billion cubic meters, or 70 percent of the total water used in Taiwan during the year. The agricultural sector is expected to require water consumption between 11.73 and 14.28 billion cubic meters by 2011.

Crops

Both the types and quantities of crops produced in Taiwan have changed over the past two decades. Taiwan's accession to the WTO has pressured farmers to diversify crop production into horticulture, agrotourism, exotic fruits and vegetables, chemical-free organic produce, and other high-value products. The Taiwanese people have changed their dietary habits, and are now eating more wheat-based foods and dairy products while consuming less rice. Taiwan's rising standard of living has boosted demand for such products as exotic flowers and processed foods.

Despite the decrease in rice consumption, however, rice still ranked as Taiwan's most valuable crop in 2002, followed by betel nuts, pineapples, watermelons, mangoes, pears, bamboo shoots, peanuts, tea, shiitake and bananas. In terms of harvested area, rice again ranked first, followed by betel nuts, bamboo shoots, sugar cane, peanuts, mangoes, watermelons, tea, shiitake and corn.

Rice

According to the COA, there were approximately 307,000 hectares of rice fields in Taiwan in 2002, 25,000 hectares less than the previous year, producing 1.8 million tons on two crops. Rice harvest in Taiwan continued to exceed the annual demand. This surplus was largely attributed to changes in people's dietary habits, which caused per capita rice consumption to fall by 63 percent between 1974 and 2002, from 134 kilograms to 50 kilograms. As Taiwan entered the WTO in January 2002, foreign competition intensified the downward pressure on rice prices.

Since then, the COA has adjusted paddy field utilization to balance the supply of and demand for rice. As of 2003, it had diverted nearly 252,485 hectares of paddies, of which 197,707 hectares were left fallow and the remainder was planted with other crops; reduced the total area of rice cultivation from 384,300 hectares in 1997 to 307,000 hectares in 2002; and decreased rice yields by 1.66 million metric tons to 1.3 million metric tons.

From 1974 onwards, the government used to purchase rice from farmers through the Food Stabilization Fund. Due to great deficits, the fund was abolished in 2001 and the mission of food purchasement and marketing was transferred to the Agriculture Development Fund. In 2002, the government purchased some 399,000 metric tons of rice for US$2.32 million. It is also working to strengthen the international competitiveness of domestic rice, upgrade cultivation techniques, and encourage the production and marketing of quality rice.

Taiwan imported 144,000 metric tons rice under the WTO's minimum access requirements in 2002. Only 50,000 metric tons were imported by the private sector. The rice import regime was changed to a tariff rate quota in 2003. The import quantities of the public and private sectors remained as they were in 2002.

Vegetables

Most vegetables produced in Taiwan are for domestic consumption. In 2002, about 179,500 hectares of land were devoted to vegetable cultivation, mainly in Yunlin, Changhua, Tainan, and Chiayi Counties. Vegetable production was 3,462,000 metric tons, and per hectare yield was 19,300 kilograms.

In 2002, bamboo shoots, watermelons, shiitake mushrooms, leafy vegetables, cabbages, vegetable soybeans, and cantaloupes were the leading vegetables in terms of area planted. The most important vegetable crops by value were watermelons, bamboo shoots, shiitakes, cabbages, cantaloupes, garlic bulbs, scallions, radishes, Chinese cabbages, and tomatoes. Currently, more than 100 kinds of vegetables are produced in Taiwan. Radishes, Chinese cabbages, leaf mustard, and garlic thrive in northern Taiwan's cooler climate. In southern Taiwan, tomatoes, cauliflower, bamboo shoots, and beans are cultivated.

Fruits

Over 30 types of fruit are cultivated in Taiwan. Such deciduous varieties as apples, pears, and peaches thrive at high elevations, while citrus fruits, bananas, pineapples, lychees, longans, mangoes, papayas, persimmons, loquats, and guavas are grown in the lower plains and undulating slope lands. The main crops are citrus fruits, mangoes, lychees, bananas, pineapples, wax apples, and Asian pears. In 2002, 2.69 million metric tons of fruit were grown in Taiwan on a total planted area of 221,775 hectares. Persimmons and sugar apples enjoyed a respective 33 and 30 percent increase in production from the previous year.

Local growers have suffered tremendously from foreign fruit imports, which have flooded the domestic market after the reduction or elimination of tariffs on imported fruit. In response to this growing competition, Taiwan fruit growers have applied advanced horticulture technology to modernize their operations. Through the effective control of diseases, adjustments of fruit maturation, cultivation of improved fruit strains, and implementation of multiple annual harvests, fruit farming has become a profitable and growing industry. Orchards are also diversifying into the agrotourism business.

Sugar Cane

Taiwan's sugar industry has lost most of its former vitality due to a stagnation in global sugar prices and the importation of sugar. The state-run Taiwan Sugar Corporation (TSC) has met these changes by expanding its product line and diversifying into biotechnology, land development, and overseas investments in order to remain competitive.

Taiwan was formerly one of the world's leading sugar exporters. In the 1950s and 1960s, it had over 100,000 hectares of sugar cane fields and produced over one million metric tons of sugar annually. By 2002, however, farm labor shortages and a steady decline in world prices had reduced Taiwan's sugar cane fields to 27,814 hectares, more than two-thirds of which were farmed by the TSC. Decreases in domestic sugar production led to a subsequent increase in sugar imports, and Taiwan imported 369,918 metric tons of sugar in 2002.

Tea

Tea was once a mainstay of Taiwan's economy. This situation has since reversed, however, and Taiwan has been a major tea importer since 1991, one year after the domestic market was opened to Southeast Asian tea imports. Since then, annual tea imports have multiplied. From 2001 to 2002, tea imports increased to 18,564 metric tons while local production increased 2.6 percent to 20,345 metric tons. Taiwan has transferred tea-processing techniques to Vietnam, Indonesia, and Thailand in order to take advantage of these nations' lower labor costs, and the tea produced in these countries is usually exported back to the Taiwan market.

Flowers

With a wide variety of fresh, beautiful flowers to choose from, Taiwan's horticulture industry has been flourishing in recent years. In 2002, its output value was US$314 million, while its export value was US$43.2 million. About 11,600 hectares of farmland were used for raising flowers in 2002. Flower farms usually devote half of their planting area to producing cut flowers, while the other half is used for orchid cultivation and nursery production. Major export markets include Japan, Hong Kong, the US, and South Korea.

Recreational Agriculture

While traditional farm operations continue to be an economic activity, recreational agriculture is a relatively recent development in Taiwan. This new form of recreation for busy people in modern society integrates agricultural production, rural life, natural ecology, and local cultural resources. More than 2,000 hectares of land have been officially converted into tourist farms, where visitors can pick fruits and vegetables. As of September 2003, the COA had approved the establishment of 114 recreational farms around Taiwan. Recreational farms are similar to tourist farms but also offer visitors areas for picnicking, bird watching, and other low-impact activities.

The COA provides assistance and counseling on recreational farm management and services. Domestic recreational farms have been encouraged to form strategic alliances and participate in international tourism exhibitions. An agrotourism website offers online information and services while Taiwan Agriculture Identity Cards have been issued to promote recreational agriculture.

As part of an effort to counter the impact of WTO accession, the Recreational Agriculture Guidance and Management Regulations were revised in January 2002 to allow recreational farms as small as 0.5 hectare to be established, land to be re-designated for the construction of board and lodging facilities, and accommodations to be set up for visitors to farm residences.

Fishing

Over the past half-century, Taiwan's fishing industry has developed from small-scale coastal fisheries to deep-sea commercial fishing. In 2002, Taiwan had 134,062 fishing households, 40 percent of which were engaged in coastal fishing, 25 percent in inland aquaculture, and 23 percent in offshore fishing. Taiwan's fishing fleet totaled 26,549 ships, of which 25,430 were powered craft, and had an annual catch of one million metric tons. Total fishery production, including aquacultural products, was 1.41 million metric tons in 2002, which represented a 7 percent increase from the previous year.

In 2002, Taiwan produced US$2.7 billion worth of fish. Of this, 49.42 percent came from deep-sea fishing, 28.35 percent from inland aquaculture, 13.38 percent from offshore fishing, 4.92 percent from coastal fishing, and 3.90 percent from marine aquaculture. Deep-sea fishery production fell 2 percent from 2001 due to disruptions in international cooperation. About 39 percent of Taiwan's total production was exported, with skipjack, squid, yellow-fin tuna, and tilapia as the leading exports.

Aquaculture

Taiwan's aquaculture has been growing steadily over the years. In 2002, aquacultural production was 346,668 tons, accounting for 25 percent of Taiwan's total seafood production. Taiwan's geography and climate are ideal for aquaculture, offering fish farmers tropical, subtropical, and temperate climates in which to raise a wide variety of fish. Even the North American rainbow trout can be cultivated in some of Taiwan's mountains. In 2002, aquaculture was conducted on 56,619 hectares of land and in nearly one million cubic meters of cage culture.

One of Taiwan's most important aquacultural products is eel, with an annual production of 34,683 metric tons, worth more than US$27 million in 2002. Other important aquacultural products in Taiwan include milkfish, tilapia, grouper, tiger prawn, giant river prawn, oyster, hard clam, and small abalone. Increased tilapia and milkfish production pushed inland aquacultural production up 11 percent, while marine aquaculture increased 7 percent in 2002.

Livestock

Starting from backyard farms in poor villages during the 1950s, the livestock industry in Taiwan has grown into a US$3 billion business, accounting for 30 percent of Taiwan's total agricultural production value in 2002. The industry covered 11,430 hectares of land that year, with hog and chicken farms each accounting for over 30 percent. Hog production ranked first in terms of value, followed by chickens, chicken eggs, and milk.

Hog prices increased 10 percent from 2001, and hog production was down 3 percent. Cattle and honey production also registered respective increases of 5 percent and 17 percent. Goat and turkey production fell 6 percent and 15 percent, in 2002, while eggs, duck, and goose production were all down between 3 and 5 percent.

The Animal Industry Act, which went into effect in June 1998, makes the COA responsible for meat inspection. The COA's Bureau of Animal and Plant Health Inspection and Quarantine (BAPHIQ) has 327 well-trained veterinary meat inspectors conducting meat and poultry inspections at 77 registered slaughterhouses around Taiwan. The BAPHIQ also takes action against illegal livestock slaughtering to safeguard meat quality and sanitation. The bureau has four branches near the airports and harbors in Keelung, Hsinchu, Taichung, and Kaohsiung, and each branch has three or four inspection stations.

WTO Impact

Following Taiwan's accession to the WTO, the simple average nominal duty rate for the agricultural sector was reduced from 20.02 percent to 15.21 percent. By the time the scheduled tariff concessions covering 1,021 agricultural items are completely phased in, the average rate will have fallen to 12.9 percent. Import restrictions were fully removed for more than ten product categories, and replaced by tariff rate quotas for another 22 products, such as pork bellies, chicken meat, animal offal, and some fishery products. Under the new tariff rate quota, the tariff on a product remains low up to a stipulated quota level, above which the tariff rate escalates markedly. Market liberalization of Taiwan's agricultural sector through tariff reductions and the elimination of non-tariff measures is expected to increase new business opportunities by US$1.7 billion.

One year after Taiwan's entry into the WTO, the impact on agriculture of opening its markets has gradually become apparent. For example, prices have dropped in the rice, fruits, and chicken markets due to substitution by imports. The impact has not been as great as anticipated, however. The total production value of Taiwan's farming, animal husbandry, and fishery sectors decreased 0.63 percent in 2002, with crop production falling by 5.54 percent, livestock production increasing by 3.95 percent, and fishery production increasing by 2.70 percent. Due to economic recession, employers were back to the agricultural sector. By comparison with 2001, there were 3,000, or 0.42 percent more, people employed in farming, animal husbandry, and fishing in 2002. In addition to the challenge of tariff reduction, Taiwan's agricultural production encountered competition, such as in the establishment of import distribution channels, and imports from China. Further requirements to open Taiwan's markets and reduce agricultural subsidies are expected in 2005. These will pose greater challenges to Taiwan's agricultural sector.

The government has taken steps to ensure market stability. Short-term price stabilization measures have been implemented for 18 kinds of sensitive farm and livestock products and important coastal fishery and aquacultural products that will be affected by WTO accession. These measures include marketing promotion, low-interest loans, and assistance in finding alternative livelihoods for those wishing to leave these industries.

Should the opening of Taiwan's agricultural markets or tariff reductions after WTO accession result in an enormous increase in imports that jeopardize the domestic farming sector, Taiwan can take safeguard measures under WTO rules such as strengthening import quota controls and implementing tariff rate quotas for 22 kinds of agricultural products. Special safeguard measures can also be adopted for 14 kinds of sensitive agricultural products, such as peanuts and oriental pears. As of mid-2002, the government had allocated an Agricultural Products Import Damage Relief Fund of US$860 million as part of a relief effort for agricultural products hurt or expected to be hurt by imports. Budgets will be allocated to this fund annually according to estimated needs.

To counter the increased danger of epidemic diseases and pests entering Taiwan with imported goods, Taiwan has strengthened quarantine inspection measures on both agricultural imports and domestic animal and plant products. Taiwan has also conducted research and development on quarantine inspection techniques, strengthened export quarantine inspection facilities to help expand foreign sales of agricultural products, and stepped up technical and information exchanges. After the introduction of vaccination, in May 2003 Taiwan was declared as an area free of the foot-and-mouth disease by the Office International des Epizooties.

Efforts are made to bring about a knowledge-based restructuring of Taiwan's agricultural sector. Agricultural e-commerce is being promoted, high-tech and recreational agriculture developed, and the use of agricultural resources adjusted.