Direct payment for rice expanded to 20 townships; COA promises nationwide application next year

Since last year, when the Agriculture and Food Agency piloted a parallel system of "direct payment" and "guaranteed-price purchase" for second-crop rice in six townships, giving farmers one more outlet for the rice they produce, the government this year expanded the pilot to 20 townships across Taiwan and raised the subsidy to a maximum of 15,000 yuan per hectare. This not only raised the share of farmers participating in direct payment, but also increased the earnings of the farmers' associations handling production and marketing and of the rice mills doing the processing. In response, the COA stressed that the policy helps adjust the past rice production and marketing structure, further increases farmers' income and thereby raises the proportion of farmland kept in agricultural use, so it is expected to be expanded to nationwide application next year.

Regarding the expansion of the scope of direct payment, COA Deputy Minister Chen Chi-chung said that last year's pilot was limited to six townships, and this year's first rice crop was further extended to 20 townships including Dounan in Yunlin and Dongshan in Yilan. Within the pilot areas, a total of 10,875 hectares of land and 15,081 farmers opted for direct payment, accounting for 63% of the declared rice-growing area.

Direct payment benefits not only farmers; processing and sales also gain

In addition, the Agriculture and Food Agency also said that direct payment likewise benefits the "processing and sales end." Lin Hsuan-chieh, a specialist at the Xinfeng Rice Mill, which processes rice for the Pingtung area, said that direct payment raises the willingness to grow high-quality rice, allowing the factory to supply a more stable source of goods, and this time it also got the rice produced by the factory onto the shelves of large hypermarkets.

On the sales side, Chang Yao-yu, director of the supply and marketing department of the Dounan Township Farmers' Association, which is in a pilot area, also said that this year direct payment increased the farmers' association's contract-farming area for high-quality rice by 70%, or about 179 hectares. The extra rice can not only stably supply the growing number of Japanese-style chain restaurants, but its lower price can also beat rice imported from Japan, making it a plus for the sales end.

Excess rice production; direct payment may add fuel to the fire; farmers' associations call for coarse grains to keep pace

But back to the source: Taiwan's annual rice production exceeds demand, and direct payment further raises farmers' willingness to cultivate. Does this add fuel to the problem of oversupply? Chang Yao-yu believes the current large granary plan absolutely must keep pace at the same time, so that on the one hand the traditional high-yield rice farming can be transformed, and on the other hand farmers are encouraged to grow coarse grains during rotation periods. Only then will everyone not rush headlong into growing rice, but instead strike a balance between coarse grains and high-quality rice, so that market prices will not collapse as a result.

COA promises to extend rice direct payment nationwide next year to achieve the goal of keeping farmland in agricultural use

Since direct payment has its benefits, would it be feasible to switch to full implementation and abolish the existing guaranteed-price purchase? Chen Chi-chung believes it is not feasible, because when South Korea abolished guaranteed-price purchase, rice prices fell by 40%, severely hurting the rice industry. This shows that guaranteed-price purchase has its necessity, amounting to the benchmark for rice prices. Therefore, in the future the COA will continue to promote the dual-track system of guaranteed-price purchase and direct payment, and next year will also extend direct payment nationwide, together with a review of the fallow policy, to achieve the goal of keeping farmland in agricultural use as much as possible.