Comment: If the agricultural system stays unchanged and you only want to make easy money from China, you are doomed sooner or later

Text by Hao Shi Ji / Lin Hung-jen, NTU Agricultural Development Center

Editor's note: A few days ago we saw a news report with a sensational headline: "Going south with fruit is a joke. Farmers' association director-general: which bastard came up with this idea?" The gist of the whole article was that China is so friendly (lax) about importing Taiwan fruit, so why not go make that quick money instead of taking on those strict countries? Leaving aside the special political stance laid bare in that article, its content alone is full of errors. So, in the spirit of seeking truth from facts, Hao Shi Ji invited Lin Hung-jen of the NTU Agricultural Development Center to write a response addressing several of the report's mistakes, to share with everyone.

The southward policy does have points worth considering, but it is not without competitive opportunities

A certain farmers' association accused the new government of foolishly planning to sell fruit to other countries and said it should focus on developing the Chinese market. Setting politics aside, reading the content in detail, some parts seem reasonable but are not entirely correct, and more paragraphs contain many unreasonable points.

First, the director-general believes the southward policy is a dead end. I suppose this cannot be said to be entirely wrong. For example, Vietnam has already begun promoting VietGAP domestically, which can align with international certification; Thailand ranks first in the world in sales volume in the international mango market; and much of the dried mango we eat in Taiwan labeled "Made in Taiwan" may actually be imported from Thailand.

To completely occupy the market, given Southeast Asia's vast production bases and cheap labor, is indeed very difficult. So if we simply maintain the existing quality and output, promoting the southward policy really is like throwing an egg at a rock.

Moreover, Taiwan has been severely hit by typhoons in recent years. Whether the losses caused by wind disasters will create supply gaps in trade is actually a part the new government must pay close attention to when promoting related policies, and apart from the Philippines, other Southeast Asian countries are much better off than Taiwan when it comes to typhoon problems.

That said, when it comes to competition in various tropical fruits, Taiwan is not entirely without opportunities. Before the 1980s, Taiwan was the banana kingdom exporting to Japan, and later the kingdom collapsed because of two major events: one was the banana peeling case, and the other was the outbreak of yellow leaf disease. After thirty or forty years, Taiwan has gradually been able to find strains resistant to yellow leaf disease, while its biggest rival, the Philippines, has begun to see widespread outbreaks of yellow leaf disease. This may also be the moment for Taiwan to regain market share.

Targeting countries that demand quality is Taiwan's only path to opening the world's door

An elite strategy targeting countries with strict quality requirements is Taiwan's only path to opening the door to the world, and this is also where Taiwan has long held a competitive advantage over Southeast Asian countries.

Take the director-general's complaint that exporting agricultural products to Japan and South Korea requires fumigation. Since Japan and South Korea are not areas affected by the Oriental fruit fly, strict quarantine of imported fruit is of course an important step, so Taiwan's mangoes exported to Japan need fumigation treatment to kill the eggs of the Oriental fruit fly, and among all Southeast Asian mango exporting countries, the Philippines, Thailand, Vietnam and Malaysia are all Oriental fruit fly epidemic areas.

In other words, no matter how picky the Japanese are, they must eat fumigated imported mangoes, unless they eat the outrageously expensive "Egg of the Sun" from Miyazaki Prefecture, which costs an average of more than 9,000 yen each. Under this premise, whether mangoes exported to Japan need fumigation treatment does not seem to be the core of the problem. The point is how to use better post-harvest handling techniques to improve mango quality so as to maintain Taiwan mangoes' existing competitive advantage!

Interestingly, this director-general previously wrote a dedicated article for a seminar at the Tainan District Agricultural Research and Extension Station on building the industry value chain for Irwin mangoes, in which he wrote: "Let Taiwan mangoes become famous worldwide, especially loved by Japan, China and South Korea, vigorously expand export channels, let the increase in demand reduce the risk of concentrated mango production periods and imbalance between production and sales, make supply and demand regulation more balanced, stabilize mango market prices, and ensure farmers' income." This leaves the author thoroughly confused. How is it that two years ago he still said the Japanese market was very important, but now he complains that fumigation is troublesome and refuses to do it?

The imported mango market is stable, how can we just hand it over?

In fact, over the past two years Taiwan's mango exports to Japan have remained quite stable, and besides Yujing, in important mango-producing areas such as Fangshan, Fangliao and Nanhua, Japanese quarantine officers move among them, and box after box of mangoes are loaded into containers and shipped to Japan. In the Tokyo auction market, Taiwan's mangoes are not the largest in quantity, but in average selling price they can rank in the top three, and demand exceeds supply. How could one want to hand over such a stable market? It really is a very strange thing.

This year, affected by the extreme cold spell, the flowering of many mangoes was abnormal, and the fruit farmers of Fangshan still held on, reducing the quantity for domestic sale while still meeting the needs of Japanese orders. Because they deeply understand that the market share they worked so hard to seize will be taken away by others if they slack off even for a moment, and it is very hard to win back, because others have also started to improve.

Farmers' associations must not stand still and only want to earn China's easy money

Taiwan's fruit export potential is indeed still mainly in tropical fruits, because although we have high-mountain bases that can produce temperate fruits, the production cost still exceeds that of Japan, South Korea and the United States. After deducting freight costs, at most our own people can enjoy fresh temperate fruits. Exporting these fruits would only get us soundly slapped in the face, and since temperate fruits that control their own ripeness are inherently more storable and transportable, we are even less of a match for others.

And Taiwan's tropical fruit exports have already lost the initiative in many cases: bananas were taken by the Philippines, and Vietnam has already seized the initiative in dragon fruit. Although Taiwan's strength has always been quality first and quantity second, several Southeast Asian countries are already successively introducing good agricultural practices across the board to strengthen production quality, while our farmers' associations only think of standing still and obediently earning China's easy money.

If we wait until their fruit quality surpasses Taiwan's and their prices are cheaper than Taiwan's, will China still seriously buy fruit from Taiwan? Expanding into some emerging targets, such as avocado and guava, may also be the key to opening another window.

The trade market with China is overly influenced by political forces. Although it is a market with strong potential, in terms of trade dependence, it is really not advisable to put all your eggs in one basket. The trade volume of several major global trading blocs with China accounts for only about 15%, meaning they value the global market more than the Chinese market.

The precedent of Yu He Bao is a warning: international trade requires diversified operations

Taiwan currently relies on China for more than 30% of its trade volume, and the dangerous balance continues to shift toward China, which is also a very strange thing. Among fruit farmers in the same mango-producing areas, some, wanting to expand to a larger market, voluntarily hire people to guide them in obtaining Global G.A.P. certification. For example, this year the entire Yujing mango export volume has maintained a quantity of at least 500,000 fruits. If, as the director-general says, we only think of dumping to China when there is a bumper harvest, because China buys everything, then how can we maintain a stable trading understanding?

I still remember that more than a decade ago Yu He Bao opened the first door to sales in China, and for a time it was so prized that you could not buy lychees even with money. A few years later, China came out with its own Fei Zi Xiao, and Yu He Bao, whose output was not stable enough to supply the market, could only return to Taiwan to be sold.

If the government wants to promote aggressive agriculture in the future, it must target the high-end market. The EU may be too far away, but the UAE, now a major global financial hub, and the surrounding Arab countries have strong consumer power and need fresh fruit supplies, and Taiwanese traders have already gone there to plant their flag.

In the future, Taiwan's agricultural production, facing the challenge of international competition, must unavoidably move toward strengthening quality, stabilizing output and more refined production-period regulation. We do not compete with others on brute force, but on endurance. Diversified operations are the only way to maintain the flexibility of the overall industry and survive the raging waves of international trade.

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