Taiwan Turns to Agriculture to Loosen China’s Embrace
Taiwan is becoming an unlikely agricultural powerhouse, with agricultural technology sector companies cashing in on improved access to the massive markets of India and Southeast Asia thanks to a government policy designed to help the island’s economy inch away from an increasingly hostile China.
Taiwan is primarily known for its technology manufacturing prowess, with tens of thousands of concerns in China led by Foxconn, the world’s largest provider of electronics manufacturing services and the fourth largest information technology by revenue. But fully a quarter of Taiwan’s lands are planted with agricultural products and the island exports an estimated US$5 billion of products to Canada, Japan, the Middle East, Singapore and the United States
The island’s farmers have been growing food for at least 2,000 years. In the 1960s, in an effort to gain international support to keep its UN seat, which it ultimately lost to Beijing, the government launched “Operation Vanguard” providing agricultural assistance to developing countries. Today, in what is being called the New Southbound Policy (NSP), it has adopted the sharing of advanced agricultural technology as one of its flagship programs.
Among other things it entails reduced tariff and non-tariff barriers, training courses, establishment of grain production bases and irrigation facilities as well as a special preferential interest rate of 2.02 percent for Taiwanese agribusinesses that reach out to the target countries.
Implemented in 2016, the program has tangible gains to show, with Taiwan’s India and ASEAN-bound exports of agricultural machinery such as tractors, agricultural product dryers and animal feed-blending machinery increasing by 16.8 percent in 2018 compared with 2016.
In volume terms, exports of agricultural fertilizers, agricultural products, aquatic seedlings, seed seedlings and feed to India and ASEAN increased by 39.8 percent, 62.1 percent, 37.5 percent, 23 percent and 22.3 percent respectively in the same period, making the total reach US$100 million in 2018, according to Taiwan’s Council of Agriculture (COA).
In sharp contrast with Taiwan, agricultural productivity in the likes of India, Vietnam, Indonesia and the Philippines is notoriously low, with workers cowering within mechanized harvesters to manually help collect grain still a common sight.
“Our agricultural technology has early gained an edge over India and Southeast Asia, which is partly owing to our having modified Japanese machinery designs in order to make them robust and affordable enough for the requirements of Taiwanese farmers,” said Hung Chung-hsiu, Director General of the Department of International Affairs at the Council of Agriculture, in an interview with Asia Sentinel.
“And today, the farmers in the NSP countries increasingly appreciate that we offer Japanese quality standards at competitive prices,” he added.
Historically, the NSP’s agricultural component has been built on experience gained back in the 1950s and 1960s, when teams of agricultural technicians were dispatched to developing countries, especially in Africa, to teach farmers techniques for increasing yields of crops.
Launched in 1961, Taiwan’s “Operation Vanguard” emphasized small and medium-scale rice and vegetable cultivation.
Close to its peak in 1968, Operation Vanguard was fielding 1,239 Taiwanese agricultural experts in 27 countries, according to US professor Deborah Brautigam in her book The Dragon’s Gift.
There currently are around 100 Taiwanese agricultural experts engaged in NSP field work in projects such as the Karawang Agricultural Comprehensive Demonstration Farm in Indonesia’s West Java province.
The demo farm concept entails transfer of Taiwanese knowhow in water irrigation, rice cultivation, horticulture and duck farming.
The Taiwanese introduced Taiwan's agricultural and water irrigation technologies, agricultural materials, seedlings and agricultural machinery, as well as management modes such as farmers' associations, production and sales classes.
“In those countries, agriculture plays a pivotal role in the economy, in India, for example, employing a whopping 58 percent of the national workforce,” said Hung.
“But the production of staple food like rice with 2.4 tonnes per hectare accounts for only half of Taiwan's national rice yield, making India a potential market for Taiwanese agricultural tech companies to explore,” he added.
Among the Taiwanese agricultural tech companies seeing exports to NSP countries increase is Taichung-based TBA Corporation, a trading company focusing on fruit grading machines, rice nursing machines and anti-insect nets for plantations.
TBA exhibited at the Taiwan Expo 2019 in New Delhi’s Pragati Maidan International Exhibition Center in mid-May, perceiving increased interest by Indian buyers.
“Taiwan used to be an agricultural economy that moved on to the high-tech industries, and the workforce in the countryside had to be freed up with the help of sophisticated agricultural technology to facilitate that shift,” said Annie Hsu, TBA’s general manager. “We are now seeing exactly the same trend in India and South-east Asia, and our expertise is helping them in going up the value-added ladder more quickly.”
Besides providing business opportunities to the private sector, the NSP’s agricultural component also to some extent helps Taiwan overcome its diplomatic isolation.
The Karawang demo farm, for example, was facilitated by Taiwan and Indonesia signing an action plan in June 2018 and is being jointly developed by the Indonesian Ministry of Agriculture, the Karawang County Government and relevant departments of the government.
Amounting to another such de facto government-to-government exchange between Taiwan and NSP countries under China’s radar, Taiwan requires the governments of NSP countries that receive its agricultural technology to sign certificates of transfer and licensing of plant variety rights.
Many Taiwanese agricultural experts have in recent years moved to China after retirement, carrying valuable knowhow there to the detriment of the international competitiveness of Taiwan’s own farmers.
Nonetheless, economists do not expect the NSP to significantly affect Taiwan’s overall economy.
“While direct Taiwanese government intervention will secure more business-to-business exchanges with NSP countries, growth in trade and investment will ultimately be constrained by Taiwan's lack of free trade and investment agreements with the target countries, amid a proliferation of pacts among competitor countries,” said John Marrett, Asia Analyst at the Economist Intelligence Unit.