Taiwan’s Farm Exporters Look to Unlock New Markets

Taiwanese exporters have made some headway in opening up new markets in an effort to lessen their reliance on Chinese consumers, but lack of support and onerous regulations abroad are holding them back.

With agriculture accounting for less than 2% of Taiwan’s GDP, and its supermarket shelves crammed with imported produce, it can be hard to imagine that at various points in the 20th century, Taiwan was a food exporter of global significance.

In 1939, the island – then a colony of Japan – was the world’s number-three source of bananas and canned pineapples. Around the same time, it ranked fourth for sugar and sweet potatoes, sixth for tea, and tenth for rice and peanuts. Taiwan began regular exports of canned and bottled mushrooms in 1960, and within a few years it was supplying a third of the world’s imported mushrooms. For several years until 1997, when foot-and-mouth disease decimated local swine farms, Taiwan was second only to Denmark as a pork exporter.

But since Taiwan began its transformation into a highly developed market economy in the 1950s, it has become increasingly dependent on imports of bulk commodities like wheat and soy. A typical per-year agricultural trade deficit is US$10 billion. Meanwhile, agricultural exports slid in value from 5.05% of Taiwan’s total exports in 1992 to 2.25% in 2003 and 1.38% in 2021.

For many years, China represented the biggest and most lucrative market for Taiwanese farm exports. During Ma Ying-jeou’s 2008-2016 presidency, a surge in agricultural exports to China was attributed to the Economic Cooperation Framework Agreement (ECFA) signed by Taipei and Beijing in 2010. The deal granted tariff-free access to the Chinese market to certain tea, bananas, oranges, processed foods, and live, refrigerated, and frozen fish. Between 2008 and 2016, agricultural exports to China soared from 11.3% to 19.4% of total farm exports. This figure rose to 23.2% in 2018, then dropped to 20.7% in 2020.

Following China’s ban on pineapples in 2021, Japanese buyers ordered a record 10,000 tons of the fruit in one month.

Since 2020, a series of sudden actions by Beijing have disrupted sales of Taiwanese farm products in China. Citing biosafety, Chinese authorities in March 2021 excluded the island’s pineapples, wax apples, and sugar apples. Last year, following U.S. House Speaker Nancy Pelosi’s visit to Taiwan, Beijing expanded the ban to other citrus fruits and dozens of processed foods.

In the wake of Beijing’s March 2021 announcement that it would ban Taiwanese pineapples – timed, some say, with the start of the harvest season to cause as much economic damage as possible – Taipei scored political points with its “freedom pineapples” campaign.

Engaging in solidarity economics, Taiwanese consumers bought up fruit that had been grown for the Chinese market. Support from Vietnam and Japan also significantly aided Taiwanese farmers. Late Japanese Prime Minister Shinzo Abe tweeted a picture of himself with Taiwanese pineapples after Taiwan initiated its #FreedomPineapple campaign, and Japanese buyers ordered a record 10,000 tons of the fruit in one month. Despite these efforts, 2021’s pineapple exports decreased 35% from the year before to US$36.46 million.

To reduce farmers’ and fishers’ reliance on the Chinese market, the Council of Agriculture (COA) has been trying to expand and diversify export channels, says Lin Chih-hung, deputy director-general of the COA’s Department of International Affairs. In addition to identifying potential export markets for Taiwanese produce and gaining a better understanding of consumption trends in target markets, the COA is working to enhance export industry chains while stabilizing supplies in terms of both quantity and quality.

According to Lin, notable breakthroughs have been exports of oncidium orchids and mangoes to New Zealand, candied dates to South Korea, and pineapples to Australia. The first shipment of Taiwanese guavas to the U.S. arrived in California in January 2020. Before then, Mexico was the only country permitted to export fresh guavas to the U.S.

“At present, we’re negotiating access for our pineapples and sugar apples with Vietnam, for brown-marbled grouper with Japan, and processed and heat-treated pork products with the U.S.,” says Lin.

Many of Taiwan’s farming operations are too small to reliably produce the quantities needed to win customers in other countries.

Progress in diversification

Lin says work to develop alternative markets is beginning to pay off. The proportion of farm and fisheries exports going to China fell from 19.8% in 2021 to 12.9% last year. In fact, China is no longer the number-one overseas buyer of Taiwanese produce. Exports to the U.S. edged down last year, yet it took a greater share (17.5%) of the island’s farm exports than any other market. Japan was a close second (16.3%). Compared to 2021, exports to Australia, Canada, South Korea, and Thailand were up, but ground was lost in Hong Kong, Malaysia, and Vietnam.

Japan looks to be a promising market for agriculture exports. Since 2010, Taiwan has managed to supplant the U.S. as the leading supplier of fresh lettuce to the Japanese market, including to McDonald’s branches throughout Japan. Takuya Murata, director of Nippon Ichiba Hong Kong, which exports Japanese and Taiwanese produce, says Taiwanese fruits are popular in Hong Kong due to their taste and affordable prices. Among Japanese consumers, he has noticed, Taiwan’s pineapples and mangoes are particularly popular on account of their taste.

Fresh guavas and lychees could also become popular, says Murata, but import regulations make it difficult to profitably export them to Japan. Because of the risk of bringing in pests, certain fruits are admitted only if fumigated; this adds to importers’ costs while damaging the taste, he explains. Some growers in Taitung get around Tokyo’s ban on fresh sugar apple imports by chilling them to minus 50 degrees Celsius and selling them as frozen treats, Taiwan News reported on September 27, 2021 – but that only works with a few types of fruit.

Tea leaves dry under the sun more than 1,000 meters above sea level in Chiayi County.

Kaohsiung-based She Sun Dae Trading Co. has also looked to Japan to increase its exports of Taiwanese produce. The company has developed a strong relationship with Ministop, Japan’s number-four convenience store chain in terms of sales revenue. Among the products supplied to Ministop are fresh and baked sweet potatoes, frozen pineapples, fresh mangoes, and fresh bananas. She Sun Dae Trading also ships Taiwanese cauliflower, cabbage, and lettuce to Japan while importing Japanese apples, pears, persimmons, and strawberries.

“Taiwan’s agricultural export strategy has two directions,” says Ignacio Chang, a consultant at Taiwan Sweet Potato International Food Co. and She Sun Dae Trading, its parent company. “The first is to sell large quantities at low prices, like the pineapples we used to sell to China. The other is to sell high-priced, small quantity, but delicate agricultural products. We’ve chosen the second approach, as the Japanese market has extremely strict requirements on the quality of agricultural products, including appearance, size, aroma, sweetness, newness, certificate of origin, production plan, environmental protection labels, and so on. For each of these, there are established specifications.”

Each year, specialists sent by Japanese buyers audit both the trading company and the farms to ensure that all requirements are fully met. Finding Taiwanese farmers willing and able to grow the right type of crops is challenging, Chang says. Few “have the energy to cope with such requirements. Our company has tried to contract with many different farmers, but in the end, only about one in 10 can meet the standard.”

“Based on my experience – and this is only my opinion – COA assistance for exporting agricultural products is very limited,” Chang says. The COA subsidizes exhibition fees, helps with publicity in Taiwan’s media, and assists with brand design. But it does little to help would-be exporters negotiate cumbersome procedures such as pesticide inspections and license acquisitions, he says. Chang expresses disappointment that “because it’s impossible to check the regulations of target countries through official channels here in Taiwan, we have to pay for private inquiries.”

Chang’s complaint is corroborated by Nancy Lang, founder of Three Leafs Tea, which she launched in 2016. About half of Lang’s business consists of dispatching tea direct to consumers in various countries. For small orders, she can use regular postal services or package delivery services, and the paperwork is minimal. Exporting larger quantities of tea is far more complex, however.

Lang says that despite being an export-oriented economy, Taiwan’s government hasn’t done well in terms of assisting small farmers or brands in exporting their products. Experienced tea merchants and producers have proven more helpful than the authorities, she adds.

“Most of the government programs I’ve come across are aimed at helping local farmers promote their teas within Taiwan,” says Lang, an American. “And as a foreign-owned company, Three Leafs Tea probably doesn’t qualify for certain schemes or subsidies.”

Taiwanese mangoes, like these growing in Pingtung County’s Xinpi Township, have been exported to Japan, China, and other markets.

The number-one overseas market for Three Leafs Tea is the U.S., which Lang says is a relatively easy market to enter. Hong Kong is the number two destination, while France and Germany are also important markets. Japan-bound shipments require a great number of certifications, and much paperwork on the Taiwanese side, adding expenses to exporters.

“Most international trade seems to be conducted via just a few channels,” says Lang. “For individuals who want to get into the business, this makes it very hard. It also makes exports very vulnerable for all agricultural products. When relations with China take a dive, farmers suffer, and the government picks up the tab.” If the government in cooperation with farmers’ associations could diversify Taiwan’s sales channels and export destinations, “the situation wouldn’t be so fragile,” she adds.

The COA’s Lin cites government investments in cold chain logistics and quality assurance systems that will make it easier for local farmers to meet U.S., EU, and Japanese standards and the upgrading of quarantine treatment facilities and low-temperature storage equipment as actions that should lead to an expansion of agricultural exports.

Meanwhile, Chang calls for a thorough overhaul of the agricultural sector. In addition to export issues, climate change is having a serious impact on agriculture. But in Chang’s opinion, “the government’s coping strategies for extreme weather have almost no effect. Losses caused by abnormal weather are only subsidized. When the weather is favorable and there’s excess production, it’s impossible to adjust market demand or assist in long-term preservation of produce.”

Chang suggests elderly farmers receive more guidance on subletting or transferring their land and planning their retirement to make way for young agriculturalists who are more comfortable with modern technology. But Chang notes that initial investment costs are enormous, and the government’s loan system is neither complete nor entirely sound, so few young farmers dare to try. “At the same time, government agencies have obviously failed to keep up with the progress of global scientific and technological agriculture,” he says.

“The export dilemma isn’t difficult to solve,” Chang notes. “Many agricultural marketing companies are capable of negotiating international business, but only if there’s a stable and high-quality supply of goods will exports be sustainable.” He urges greater transparency as to the availability of land and personnel and stricter enforcement of rules governing the use of pesticides and fertilizers, so private-sector matchmaking can allow farmers who are “truly capable of producing high-quality agricultural products to connect with the international community.”