Cabbage prices soar, prompting farmers to rush into planting, with a full-scale collapse feared in December

This year the price of cabbage (gaoli cabbage) has stayed stubbornly high, with a single head costing over a hundred yuan. At the same time, the Council of Agriculture issued a warning yesterday that the October planting area for cabbage already exceeds the reasonable scale by 24%. With the December harvest period approaching, there is no guarantee that the miserable scenario of "three heads of cabbage for one tea egg" will not appear once again.

High prices, rushed planting, oversupply, price slump, abandoned planting, prices rise again, farmers keep planting...... The same drama plays out almost every year. Besides farmers being "strongly addicted to gambling," the Council of Agriculture does not care whether farmers have registered their planting area, and the "everyone gets a prize" plow-up subsidy has emboldened speculative farmers all the more.

Although the last time a plow-up subsidy was activated was already 2011, next year happens to be an election year, and many people in the industry have predicted that if prices collapse this year, legislators and the government may once again spend taxpayers' money to subsidize farmers in plowing under their cabbage, all for the sake of votes.

Cabbage may collapse; industry worries subsidy plow-up will wreck the market

According to statistics from the Taipei wholesale market, the current average price of cabbage (gailan) is about 20 yuan per kilogram, compared with 60 yuan after Typhoon Soudelor and Typhoon Dujuan, a difference of nearly three times. "Right now the volume is still on the low side; it will be around December 10 that the first wave of cabbage comes out in large quantities." said Cai Yixiu, a cabbage farmer in Zhutang, Changhua. This year there have been many typhoons and vegetable prices are good, so farmers rushed to plant. The seedlings planted in October after the wind disaster will be harvested in December, "and by then prices will only be lower."

Cabbage takes about 70 days from planting to harvest. The Council of Agriculture calculates by market demand that the cabbage planting area across Taiwan for each ten-day period (a month has three ten-day periods) should be about 180 hectares, but in October this year the early, middle, and late ten-day periods were 239, 213, and 223 hectares respectively, exceeding the reasonable planting area by nearly 24%.

The above data comes from the Council of Agriculture's "Major Vegetable Planting Registration and Seedling Supply Warning Mechanism." This system was established in 2010. Through data from domestic seedling nurseries and farmers' voluntary reporting, it tracks the cultivation area of cabbage and napa cabbage (heading cabbage). Taking cabbage as an example, once all three ten-day periods exceed 180 hectares, a warning is issued, calling on farmers to stop planting.

But the warning system cannot force farmers not to plant. For farmers "strongly addicted to gambling," the warning system's most important function may be determining the disbursement of plow-up incentive payments. The Council of Agriculture links the plow-up mechanism with the warning system: farmers who come to register their planting area can receive a subsidy of 70,000 yuan per hectare if overproduction that year triggers a plow-up.

However, this system has a fatal flaw: even those who do not come to register can still receive a 40,000 yuan plow-up subsidy. The Council of Agriculture's explanation is that if there were no subsidy, the surplus vegetables would flow onto the market and drag down overall prices. But in the eyes of farmers and industry operators, this explanation is a failing excuse.

"Plant first and talk later; if I win the bet I profit, if I lose the bet the government pays." An operator familiar with the cabbage ecosystem said bluntly that neighboring Japan adopts planned production, with the agricultural cooperative purchasing cabbage uniformly and allocating planting area to each farmer, refusing to buy any excess. In Taiwan, however, many farmers see good prices and rush to plant in a swarm, paying no attention to the warning mechanism at all, and the farmers' associations have not shouldered a role similar to Japan's agricultural cooperatives. "And next year is an election year, so farmers are betting that the government will definitely subsidize."

However, Lin Lifang, deputy director-general of the Agriculture and Food Agency, said the Council of Agriculture has not subsidized plow-ups for 3 years, and this time it will also start by guiding processing and cold storage. Will it simply cancel the plow-up subsidy? Or change it so that only farmers who have registered their planting can receive it? She said the whole situation must be reviewed first, discussions held with farmers' associations and industry groups, and nothing decided until this year's production season is over.

Can market mechanism regulation solve the problem?

However, many farmers still hold a pessimistic attitude toward the government, hoping the Council of Agriculture will interfere as little as possible, "the market will regulate itself through its own mechanism."

The market mechanism they speak of is in fact simply letting prices move with demand. A wholesaler revealed that in conventional agriculture, a professional cabbage farmer plants hundreds of hectares at a time; when prices are good, a single season can bring in tens of millions. But once amateur farmers follow suit, prices fall due to oversupply. At this point the big farmers not only do not pull back, they instead plant along with them: "Having taken in tens of millions last season, taking out two million to lose is nothing, but it can make prices collapse; the copycat farmers get scared and won't dare plant the following year." When prices rebound, professional cabbage farmers then have room to survive.

"Do you want to say doing this is terrible? But growing cabbage inherently requires professionalism; amateur farmers only plant following high prices, and a collapse is just the market mechanism."

A truly professional cabbage farmer's skills include not only cultivation ability but also market judgment. Take Cai Yixiu as an example: the production-and-marketing group he participates in has a total cabbage area of about 30 hectares; observing auction market prices is basic skill, and before planting each year he also looks at what amateur farmers near the village are planting. If even amateur farmers are planting cabbage, it means this year's vegetable prices are good and many people are planting.

Since many people are planting, one must stagger the harvest period and judge climate change. For example, if the current daily temperature is 32 degrees and next month it may drop to 24 degrees, cabbage grows at different speeds; planting 20 days apart may result in a harvest difference of 40 days. "I plant at times when no one else is planting." He also calculates precisely around hot-pot seasons such as the winter solstice, New Year, and year-end feasts to judge planting timing. As long as he has 70 percent confidence he will plant, and even if he misjudges he will not lose too much.

Market planning is the fundamental way

The cost of conventionally cultivated cabbage is about 6~8 yuan per kilogram. The industry describes growing cabbage as gambling: if you lose the bet, one jia of land may lose over 100,000; if you win the bet, taking in hundreds of thousands is no problem.

"The best cost-to-return ratio can reach 1:10. If you are a bit more professional and don't rush to plant, when you lose it is probably only 1:0.5, investing 20,000 and having 10,000 left." Cai Yixiu said the price of cabbage appears to rise and fall dramatically, but if you take a ten-year interval, on average you will not lose everything.

The most important thing is to assess the market and not chase prices. He believes that to become thoroughly familiar with a crop takes at least 3 years of continuous, stable planting. When others have no vegetables you have vegetables, and of good quality, so sales channels will trust you more and returns are less likely to fluctuate with prices. If the previous year you grew Taiwanese lettuce or scallions, then seeing good prices came running to grow cabbage, and after the collapse gave up and switched to something else, you will always have followed into the losing moment. "Loving every one you see, in the end you will only end up empty on both ends."

Weng Zhenxin, head of the Crop Production Section of the Agriculture and Food Agency, instead encourages farmers to switch crops. He revealed that at the end of December a broccoli cutting machine will be introduced; professional cabbage farmers can shift part of their area to another crop, and after cutting and processing it can be frozen and released in summer. "Switching one jia of land to another crop means 60 tonnes less cabbage." He also asked seedling operators to cooperate by staggering seedling delivery dates, planting at least a week later, to regulate the production period.

A farmer surnamed Liao in Yunlin believes that some farmers only know how to grow cabbage their whole lives. If the government wants to guide them into alternative crops, it must first provide information on each crop, such as cultivation area and cultivation methods in various places, so farmers can make judgments.