Fertile area

Taiwanese farmers set to profit from deal

Fertile area

Destined for a Beijing teapot?

Bankers and factory owners aren’t the only ones who stand to gain from the new trade agreement with China – there’s something in it for Taiwan’s farmers too.

Just how much so is hotly contested, in a debate that has as much to do with politics as it does trade. The island’s rural south has long been a stronghold of the pro-independence Democratic Progressive Party. Beijing is hoping to change that by persuading farmers that their economic future is tied to Chinese dinner tables.

Opposition politicians are claiming the opposite, and have predicted the pact will lead to a surge in imports and unemployment. It’s possible, but if it does happen, it won’t be by design. China’s leaders want the new trading ties to win over the Taiwanese, not alienate them. “That’s why the Kuomintang [the ruling Nationalist Party, or KMT] has decided, with Beijing’s tacit consent, to restrict as many goods as possible in which mainland producers have the competitive advantage,” wrote the China Daily this week.

In fact, the Economic Cooperation Framework Agreement (ECFA) signed on Tuesday offers particularly good terms for agriculture. Beijing has agreed to cut tariffs on 18 products (like bananas and lemons) without requiring a single agricultural concession from Taipei. Minus their tariffs, Taiwan’s fruits and vegetables will sell for 10-20% less in mainland China.

Taiwan’s beleaguered farmers need all the help they can get. They have been fighting a losing battle against over-production at home and low-priced imports from neighbours since the island’s WTO accession in 2001.

Chinese officials began cutting tariffs on Taiwanese produce in 2005, and started purchasing the island’s surplus fruit harvest the following year. This year, the Chinese government plans to buy more than 3,000 tonnes of its fruit, despite the island’s significantly higher prices.

Officials also inaugurated an industrial park in 2006, to help Taiwanese farmers to sell produce and agricultural technology in China. It is located just across the Strait in Fujian, a province where many Taiwanese have family ties (see page 7).

Taiwan’s ‘economic miracle’ came on the back of land reforms in the 1950s that boosted production and created a broader base of wealth. The experience turned farmers, and their associations, into one of the most formidable political forces on the island.

President Ma Ying-jeou won election in 2008 in part by arguing that his opponents, the DPP, had failed the farming community. He contends that closer ties with China will open up a vast new market for Taiwanese produce.

Developments since Ma took office have proven positive, especially in logistics. The increase in direct shipping and flight links across the Straits has strengthened the refrigerated supply chain for Taiwan’s perishable produce, for instance.

But many farmers are still far from convinced, fearing a “hollowing out” of local employment as production moves offshore.

“My original idea was to sell the sweetest Taiwanese fruit to China,” Taiwanese exporter Huang Yizhong told Xinhua, “now I would like to plant Taiwan fruits in China.” Liu Wenming, a Taiwanese businessman invested in Chinese agriculture told the Hong Kong Commercial Daily that many of the island’s farmers were more afraid of losing their domestic market than conquering China’s.

The problem? Taiwanese farmers struggle to compete with China’s low labour costs, and the sector already runs an agricultural trade deficit with China – importing $718 million versus $436 million of exports.

But the bill’s supporters argue that this deficit can be reversed, although Taiwanese produce will need to compete on quality instead of price. That looks like good advice, especially in light of China’s well-publicised food safety issues.

The alternatives look less encouraging. “If you grow the same product as China, of course you won’t be competitive”, farmer Huang Chengqing told the Commercial Daily.

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