On September 21, 1999, Taiwan was hit by a devastating earthquake. The worst in more than 100 years, the quake killed 2,455 people and decimated the country’s central agricultural regions.
Since then Taiwan has embarked on a process of rebuilding and is seeking to attract fresh business to boost its shattered industries. Part of those efforts is being put into looking for new opportunities for export, and while Taiwan is well known for its electronic and hi-tech production, its fruit and veg remains largely unknown in the UK.
That is something the Taiwanese are looking to change.
While its fresh produce industry might not be the first thing that comes to the British mind, in the Far East the country has a strong reputation among its immediate neighbours for its high quality production, with fruit fetching premium prices in markets such as Japan, Hong Kong and Singapore.
Its sub-tropical climate provides ideal conditions for fruit production, from mangoes and papaya, to star fruit and sharonfruit.
Now the country is hoping its range of exotic produce could prove appealing to the UK - but first there are some serious hurdles to overcome.
While the quality of the fruit is held in high esteem in export markets such as Japan, where for instance Taiwanese bananas continue to attract premium prices despite the ever-increasing presence of cheaper Latin American fruit, its industry remains fragmented, labour-intensive and at the mercy of ferocious weather conditions which can decimate an entire production sector with just one hurricane.
Added to this is the fact the sector is still working hard to recover from the massive damage inflicted by the earthquake of 1999: “Our farmers were badly affected by the earthquake and some areas are still not fully recovered,” says Yutsai Huang, director general of Taiwan’s Agriculture and Food Agency, but while serious earthquakes happen once every hundred years, he says the biggest threat to the sector on an ongoing basis is from typhoons, which hit every year. “We can be hit anywhere between three to seven times a year,” he says, and a devastated sector can take a month to recover from the damage caused.
To combat this annual threat, the AFA is encouraging a re-distribution of the industry away from its present concentrations in the central regions of Taiwan, to lessen the overall damage to the industry of a typhoon strike.
A recent storm caused considerable harm to spring onion production, he says. “Prices went up by NT$500 a kilo, 10 times higher than the normal price because production of the crop is based entirely in one area. We’re trying to encourage the industry to spread the risk.”
Despite this, the industry is keen to shrug off its difficulties and make more of what it describes as its high quality fruit.
Food production is big business in Taiwan, accounting for 41 per cent of total agricultural production, around NT$147.3 billion (£2.5bn). Out of that food production, fruit makes up the bulk at 38 per cent, with vegetables representing around 24 per cent.
There are more than 20 different species of fruit produced in the country, of temperate, semi-tropical and tropical varieties, on more than 220,000 hectares of farmland. The fruit industry alone is worth NT$55bn (£951m).
The AFA was established two years ago and represents the interest of the country’s farming and agricultural industries and promotes its development.
Food safety is a big issue, and the AFA is responsible for monitoring crop quality, promoting the proper use of agricultural chemicals and carrying out pesticide residue monitoring. The country has set up its own Good Agricultural Practices system, which the AFA says has gained international recognition in its export markets.
And Taiwan’s reputation for high quality, safe products is something the Council of Agriculture is hoping will prove invaluable when it comes to development of export potential. The COA is aiming to help the industry become more competitive on the export market and it has called on experts from the Bureau of Animal and Plant Health Inspection and Quarantine, the Agricultural Chemicals and Toxic Substances Research Institute, Agricultural Research Institute and Agricultural Research and Extension Stations to form a technical and consultative task force to design a model for a high-quality production farm and publish a guidebook for farmers.
The COA is focusing on 10 primary fruit products; mango, banana, lychee, oranges and tangerines, papaya, pineapple, grapes, pomelos, starfruit and wax apple. However, the initial main focus will be on bananas, mangos and papaya.
The council says it is working hard to boost exports. Lee Ching-lung, COA minister, says: “We would like to promote the export of high-quality and high-value agriculture products to markets whose consumers have high purchasing powers and not simply to export agriculture surplus.
“We do this by supporting marketing and promotion activities done in overseas markets, working to eliminate tariff and non-tariff barriers, helping build supply chains for fruit exports, providing export information and training manpower for agriculture product exports.”
Last year, Taiwan’s fruit exports reached around $33.82m, with bananas representing 30 per cent, mangoes around 14 per cent, lychees 13 per cent and citrus 12 per cent. Japan is the main market, taking 42 per cent of fruit exports, followed by the US at 23 per cent.
Lee says the mainland Chinese market is not a major target for them, as it is too low value, although they are willing to help farmers wishing to expand their business into China. “We still think Japan, the US and Europe are more stable markets: their demand for quality is high and therefore they pay higher prices,” he adds.
Distance to market in the UK is certainly an issue, but consultant Michael Boyden, who has been tasked with investigating the opportunities for Taiwanese flowers in the UK, points to the fact that the UK is just four weeks on the water.
Airfreight, while relatively expensive, is also an option, and spare capacity in the system could also work in the exporters’ favour. “There’s spare capacity in the airlines as the more traditional export businesses, such as cheap electronics, has moved to china. Around 40 per cent of capacity has been freed up and it’s in the interests of the airlines to replace that business.”
On the other hand, he says, the competition for that spare capacity is growing, with other industries ready and willing to take up the slack.
On shipping, he says there are no such problems however, and Taiwan already exports around £2bn worth of products to the UK each year, with Evergreen being the biggest shipping line operating from the country.
When it comes to further promotion, the Taiwan External Trade Development Council has also been asked to establish an agricultural department to represent the industry at trade shows around the world.
While all of this is positive news, the biggest barrier standing in the way of Taiwanese ambitions is the structure of the industry itself.
While relatively technically advanced, the farming base remains exceptionally fragmented - lacking the scale necessary to trade effectively on the world stage.
That is something the industry is working hard at, says AFA fruit specialist, Pi-Hai Huang, but he says the challenges are considerable: “The costs of production are high and the scale of the industry remains small. We also have issues with supply and demand often being out of balance, it can often be either too high, or just not enough produce.”
However, at times of over supply, the government has a policy of intervention, he adds.
When it comes to scale and size, the problem is historical. Farming operations are primarily family owned and the average farm size is around one hectare. Farmers are also reluctant to sell their land to others, which is impeding the development of larger scale farms.
Despite this, there are signs of some change, with some families leasing land to fellow farmers, allowing businesses to increase their scale. Price of land is also extremely expensive, which is holding business back, with average price for one hectare around NT$15m (£265m).
The work of the government, through organisations like the COA is also urging farmers to work together and form co-operatives to enable them to increase the scale of their operations.
Pi-Hai Huang says the AFA is also encouraging farmers to diversify their production into wider ranges of crops, partly to tackle the problem of oversupply in certain products.
And the industry remains optimistic, with many pointing towards the ability of the sector to adapt to meet new challenges. In the meantime, Taiwan is keen to push on with its quality message, as AFA chairman Huang says: “We cannot compete on the commodity market, we have to compete on quality.”
So while it maybe early days, with Taiwan facing increasing pressure, both on the recovery front and increasing isolation by the mainland power of China, the country is keen and willing to expand its horizons. And while it may face many hurdles, there is a degree of optimism throughout the country that these are far from insurmountable, as Kuo Yao-Chi, minister of state and chair of the post-disaster recovery committee, says: “Our industry has changed very quickly in the past, I think it can easily meet the challenges for the future.”
ONLY THE BEST FOR CHEN
The citrus packhouse of the Mei-Hsan Farmers’ Association handles around 20,000 tonnes of citrus a year, but only the best looking fruit is selected for export, says chairman Zong-Tsung Chen, pictured.
Quite often the citrus fruit retains its green colour, but Chen points out that this does not mean the fruit is not ripe. “If the trees flower earlier, then the fruit is greener, while later flowering fruit is an orange colour.”
Around 30 per cent of the association’s fruit is selected for export, he says, and the domestic market remains the main focus of his organisation, which is made up of around 110 farmers.
This season has been a struggle however. “We’ve had too many typhoons this year so the crop has not been as big as it could have been this year. Fortunately the fruit quality has remained high.”
The Mei-Hsan packhouse is one of 20 such facilities, spread through the four counties of Taiwan, although Chen points to the fact that his operation is centrally located in a major production area, making it convenient for farmers.
The citrus season in Taiwan runs from September through to December, and out of the season, Chen switches to packing lychees, guava, wax apples, pineapples and papaya.
He says he is interested in the UK market as an export destination: “The more routes to market we have, the better it is for our farmers.”
YEN TSAO PICKS ITS PEARL TO HEAD GUAVA EXPORTS
Guava is a significant crop in Taiwan and the Yen Tsao Farmers’ Association and its packhouse in the south of the island, near Kaoshiung, handles the fruit almost year round.
At the moment the facility is packing the pearl variety of guava and throughout the entire production year handles more than 15,000 tonnes of fruit. Each fruit itself weighs around a kilo, says Tsing Ho, specialist with the association.
The main production seasons are from March to May, July to August, and December to January.
Guava is a labour intensive crop in Taiwan, he adds: “Each fruit is wrapped in a plastic bag on the tree soon after it forms to protect it from insects.” Farmers still have to carry out spraying however, to protect the leaves on the tree, he adds.
Around 800 farmers supply into the Yen Tsao packhouse, but the area itself has more than 35,000 people who produce fruit, albeit on very small scales, often in their backgardens. Overall, there is around 15,000 hectares of guava production in the area.
Despite this, the packhouse adheres to standards on production, such as GAP, and also handles certified organic produce. It is also in the process of working with the Agriculture and Food Agency to set up a traceability system which will use barcodes to enable the association to trace fruit all the way back to the original farmer.
“We mainly supply the domestic market,” says Ho, “but we also export some fruit to China, Hong Kong, Singapore and Japan.” Although he adds the Japanese market is extremely demanding on production standards.
The fruit is sold on the domestic market with some of the leaves still attached. “That allows the consumers to look at the leaves and see how fresh the fruit is,” says Ho. The fruits’ skin also has to be rough, he adds. “If the skin is too smooth it means the guava has not had enough sunshine - the rougher it is, the better the fruit.”
FORMOSA GIVES THE TIGHT TREATMENT
Formosa is a leading supplier of fruit to the export markets, particularly bananas to Japan, but also mangoes and papaya.
To meet the exacting demands of the Japanese market, the business has independent inspection officers at its packhouse facility in Kaoshiung at all times.
The packhouse specialises in mango and papaya and has heat treatment equipment. Arthur Lai, general manager, says: “The fruit has to be heat treated at 46.5°C for 30 minutes to kill off any potential pests. It is then left to cool down for four to five hours before it goes on to be packed.”
After heat treatment the fruit is given a further check by inspectors from the Bureau of Animal and Plant Health Inspection and Quarantine before being approved for export.
When it comes to banana export to Japan, the industry has suffered from increased competition from South America, but Formosa is fighting to maintain its share. Lai points to the fact that fruit takes three weeks on the water from South America to the Japanese market, while Taiwanese fruit can be there in just a few days. He says they also have an edge over their Latin competitors. “South American fruit is cheaper, but Taiwan’s bananas are superb quality and are still considered the best in Japan
As well as export, the company also has an import operation and has even recently trialled some imports of apples from France, Lai says.
No comments yet