Taiwan’s Agricultural Incentive Policy in Response to the COVID-19 Outbreak

Taiwan’s Agricultural Incentive Policy in Response to the COVID-19 Outbreak

Published: 2020.05.29
Accepted: 2020.05.29
6
Distinguished Professor
Department of Forestry, National Chung Hsing University, Taiwan

ABSTRACT

In response to the pandemic situation of COVID-19, Taiwan’s government has formulated various relief and revitalization measures to those affected industries and businesses. For the agriculture sector, the measures include providing concessional loans and interest subsidies, strengthening overseas market expansion, strengthening domestic sales, matching e-commerce platforms, strengthening production and sales regulations, and supporting leisure agriculture. Taiwan continues to monitor its agricultural import and export market conditions, guide the industry to flexibly adjust production in a timely manner and stabilize production and sales. Through various industrial guidance measures, farmers, farmers’ groups, and agriculture enterprises can overcome the current pandemic crisis, turn the coronavirus crisis into an opportunity, reduce the risk of single markets in the past, accelerate agricultural product e-commerce development, and promote industrial structure upgrade.

TAIWAN AGRICULTURAL INDUSTRY’S POLICY IN RESPONSE TO COVID-19

Taiwan passed the “Relief and Revitalization Measures for Industries and Businesses with Operational Difficulties Arising from COVID-19” on March 12th, 2020 (The Council of Agriculture of Taiwan, 2020a). For the agriculture sector, the scope of affected industry or businesses is as follows: 1. Agriculture and food industry; 2. Fishery industry; 3. Livestock industry; 4. Leisure agriculture. Operational difficulties refer to one of the following circumstances: 1. Interrupted domestic auctions, wholesale, or operations at related trading site operations for seven consecutive days; 2. The average prices of agricultural product auctions, trading, or places of production are lower than those of the same period in the recent three years; 3. The trading volume of the agricultural product wholesale market is lower than that of the same period in the recent three years; 4. The fishing boat voyages or days are lower than those of the same period in the recent year; 5. The turnover of leisure farms in the recent month is lower than 15% of that of the same period the previous year; 6. The agricultural product export volume or value is lower than that of the same period of the previous year. Those that meet the abovementioned conditions shall be granted incentives and concessional loans, or interest subsidies. The incentive subsidies for COVID-19 are as follows.  

Agriculture and food industry

  • Production machinery, production and prevention and control materials and equipment, transportation and sales facilities and materials and equipment (including design), goods assembly and processing facilities: for personal uses, the incentive ratio, in principle, shall not exceed one third; for shared uses, the incentive ratio, in principle, shall not exceed one half.
  • Production facilities: The incentive ratio, in principle, shall not exceed one-half.
  • International quality verification fees: Amount to a maximum of NTD 150,000 per article.
  • Traceability of high-quality agricultural and food products: Incentives for freight or marketing expenditure are NTD 2 per kilogram, up to NTD 300,000 per case.
  • Procurement and processing of agricultural raw materials: Incentives for concentrated freight are NTD 2 per kilogram and NTD 3 per kilogram for processing handling fees.
  • Processed semi-finished products: NTD 0.5 per kilogram for refrigeration (freezing) fees.
  • Project display, propaganda, and market expansion activities: The incentive quota is approved in accordance with the item, time, venue, and scale.
  • Policy and business propaganda training and construction of agriculture value chain management related activities and facilities: The incentive quota is approved in accordance with the item, time, venue, and scale.
  • Regional exhibition activities in townships and towns: Incentives amount to a maximum of NTD 300,000.
  • Regional exhibition activities in direct municipalities and counties and cities: Incentives amounting to a maximum of NTD 600,000.
  • Project exhibition activities: Incentives are approved in accordance with funds required for marketing, propaganda, and related activities.
  • Incentives for group meal food ingredients: Incentives of up to 30% incentives for group meals for hospitals, national army, and schools; incentives of up to 10% for group meals for general public and private enterprises.
  • Incentives for fishery market trading: The trading volumes and prices of fishery markets or undertakers increased compared to the same period of the previous year. Incentives of up to NTD 500,000 are approved and granted according to the extent of increase.
  • Groupers and other packing materials with the traceability mark or higher: The funds shall not, in principle, exceed one half. Incentives amount to a maximum of NTD 200,000.

Fishery industry

  • Breeding fishermen: Incentives of up to NTD 15 per kilogram for fish breeding.
  • Processing plants, fishermen (fishery industry) groups, or agricultural enterprises: Incentives of up to NTD 15 per kilogram for fish breeding.
  • Local governments and aquatic product related associations: Administrative fees related to incentive case acceptance and inspection.
  • Whole-pool disinfection: Incentives of NTD 60,000 for concrete ponds; incentives of NTD 100,000 for clay ponds.
  • Sparse breeding: Breeding according to the optimum breeding density, with incentives of NTD 30,000 per hectare.
  • Postponement of breeding in a suitable place: Avoid concentrated breeding time, with incentives of NTD 30,000 per hectare.
  • Local governments and fishermen (fishery industry) groups: Administrative fees related to incentive case acceptance and inspection.

Livestock industry

The average auction livestock product prices plunged in the recent month to nearly below 90% of the average prices of the same period in the recent three years. The revitalization measures are provided as follows:

  • Meat pig slaughter, freezing and storage: Incentives of NTD 1,000 per head (slaughter, cutting, and freezing and storage).
  • Elimination of breeding sows: Incentives of NTD 1,000 per head.
  • Conduction of domestic livestock product promotions: Due to policy-based requirements, domestic livestock promotions are urgently conducted, food safety or new technology promotion, as well as business propaganda work, are strengthened. The incentive quota is approved in accordance with the characteristic, time, venue, and scale.
  • Innovative, strategic, or policy-based demonstration plans: Incentives are approved in accordance with the fund needs.

Recreational farms

  • Field improvement: Incentives shall be granted for leisure farm environment and facility improvement, up to NTD 500,000 per farm.
  • Employee salaries: Incentives shall be granted to leisure farms that recruit manpower to conduct field improvement and service innovation and upgrade, up to NTD 15,000 per person per month and for a maximum of six months; the incentive quota shall be in accordance with the leisure farm area, up to 10 persons for less than one hectare, up to 20 persons for less than five hectares, and up to 30 persons for over five hectares.

In addition, the Council of Agriculture, Executive Yuan, provides relief measures targeting fishing operators subject to operational difficulties arising from COVID-19 pandemic. The contents include providing relief loans and granting loan interest subsidies to industries subject to severe impacts for one year at most, as follows (The Council of Agriculture of Taiwan, 2020a):

  1. Relief loans: 18 items of relief loans with the project agriculture loan quota of NTD 6.8 billion; also providing differential interest subsidies to support agriculture and fishing operators’ related fund needs.
  2. Interest subsidy measures: For the agriculture and food industry, livestock industry, fishery industry, and leisure agriculture (in compliance with provisions in Attachment 1 of this guideline), free of interest or partially free of interest is granted for one year at most.

 (1) New loan cases: Loan application cases after January 15th, 2020 are all known as new loan cases. Free of interest or partially free of interest in the first year taking effect on the day of loan approval.

 (2) Existing loan cases: For cases with an outstanding balance as of January 15th, 2020, free of interest or partially free of interest shall apply from March 1st, 2020 to February 28th, 2021.

 (3) Subsidized new loan cases are not subject to the upper limit of the total loan balance of every project agriculture loan borrower.

 (4) A borrower that meets the interest subsidy criteria shall be exempted from payable interest after the borrower’s eligibility is confirmed by the loan agency. If the borrower has already rendered interest payment, the loan agency shall make a remittance to the borrower’s deposit account after the Agricultural Bank of Taiwan reimburses the interest subsidy.

The global spread of COVID-19 in 2020 and economic stagnation have sabotaged Taiwan’s domestic agriculture, including vegetables, fruits, livestock, flowers and plants, and even leisure agriculture, and have indirectly impacted Taiwan’s agriculture production and sales. If farmers affected by the pandemic situation intend to get a loan, whether a new loan or an existing loan, Taiwan’s latest agricultural policy provides farmers with availability of loans for one year free of interest. In addition, farmers who intend to get finance will be granted a low-interest loan at 1.29%. For the vegetable part, provided that market prices remain unaffected, measures such as providing the national army and elementary schools in remote towns extra food and delivering food to the food bank are implemented, supplying at least 80 tons weekly. In response to the shortage of fertilizers reported in some areas, according to the Council of Agriculture, Executive Yuan, (COA), Taiwan Fertilizer Co., Ltd. (TFC) supplied an additional 30,000 tons of fertilizers in the first half of this year compared to the previous year, and supply is not at all a cause for concern. The COA has also communicated with the TFC regarding the future adoption of the pre-order system. That is, farmers’ fertilizer usage for two weeks will be guaranteed by registering at the National Farmers’ Association, R.O.C. (NFA) for the COA to carry out uniform distribution.

China is the major target of Taiwan’s pineapple exports. However, due to the raging COVID-19, freight prices in China have soared, while the purchase quantity has decreased, hitting the pineapple export economy hard. According to the customs import and export statistics of the Customs Administration, Ministry of Finance in 2020, the export volume and export trade value have significantly declined, but the undesirable sales have resulted in partial hoarding, which affected the domestic prices. The effects of the current pandemic situation are not to be underestimated. The COA formulated various coping measures in February 2020, such as overseas marketing expansion, Internet distribution, provision of relief loans, etc. Nevertheless, it is necessary to ponder on whether or not the freight subsidy targets can actually alleviate pineapple trade barriers. The COA released the new agriculture guidance plan on February 6th, 2020 (The Council of Agriculture of Taiwan, 2020a), including such contents as agriculture relief loans, overseas marketing expansion, e-commerce channels and home delivery, stable agricultural product prices, etc., hoping to make related preparations to reduce impacts. The Taiwan government has recently commenced export country conversion related guidance to farmers and exporters, with the United States and Japan as the current targets. Home delivery orders have also shown an upward trend in March 2020, as the general public’s willingness to go out has diminished due to the pandemic situation, resorting to purchases through electronic platforms. In view of the overall situation, domestic and foreign sales have slowly moved along the existing track, making adjustments and responding accordingly.

CONCLUSION

The COA has provided additional export freight subsidy for four products (pineapples, sugar apples, grouper, whitebait) subject to the greatest impact of COVID-19, hoping to provide traders with extra funds to enhance competitiveness or open new markets. However, because fresh pineapples cannot be kept long and that the sales is a problem now, the Taiwan government should focus on how to successfully alleviate export pressure by refining processed foods. Therefore, Taiwan’s subsidies can focus more on pineapple processors, and Taiwan can frequently request similar processors to purchase pineapples to relieve the plight of exporting fresh pineapples. In fact, Taiwan’s farmer groups should view the impacts this time positively and amend their business model, such as entertaining the possibility of online sales; agricultural affair units should propose relief plans and provide psychological support for individual farmers, which along with the revitalization voucher about to be released, will encourage consumers to buy more agricultural products.

REFERENCES

Customs Administration, Ministry of Finance, Taiwan, 2020. https://eweb.customs.gov.tw/

The Council of Agriculture of Taiwan, 2019a. https://www.coa.gov.tw/COVID_19/index.php?theme=ws&id=2510247

The Council of Agriculture of Taiwan, 2019b. https://www.coa.gov.tw/COVID_19/index.php?theme=publication

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