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Taiwan Livestock and Products Annual 2006

by 5m Editor
17 September 2006, at 12:00am

By USDA, Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2006 report for Taiwan. A link to the full report is also provided. The full report includes all the tabular data which we have omitted from this article.

Report Highlights

U.S. beef exports to Taiwan are estimated at 20,000 mt CWE in 2006, and total beef imports are estimated at 98,000 CWE. Calendar year 2007 beef imports are forecast to decrease 2% to 96,000 mt CWE. The forecast decrease is attributed to Taiwan’s weak economic performance, industry’s high stocks of boneless ribs and the substitution of chicken meat. Exports of U.S. beef to Taiwan will be partly determined by the disposition of the Korean market to U.S. beef. Pork imports are estimated at 33,000 mt CWE in 2006. With a smaller domestic supply, 2007 pork imports are forecast to grow by 9% to 36,000 mt CWE.

Executive Summary

The U.S. continues to be the leading pork supplier to the Taiwan market. Pork imports are estimated at 33,000 mt CWE in 2006. With a smaller domestic supply, CY2007 pork imports are forecast to grow by 9% to 36,000 mt CWE. Taiwan is a significant pork producer, and imports of pork are largely determined by relative prices between Taiwan and the rest of the world.

Numbers of pig farms continue to decrease while small-scale growers are gradually being phased out. Taiwan is a small island densely populated with people and pigs. The very high pig waste-water treatment cost makes not only small farms uncompetitive but also a threshold too high for new comers to reach.

The break-even level for pig farming is estimated at between NT$ 4,500 and NT$ 4,800 per 100 kg. Pig prices in 2005 and 2006 have been above the level and farmers are profitable in the past several years. Even when pig prices are sometimes below that level, farmers would weather the downs using profits accumulated in the past. On the other hand, the loss of pork export market (to Japan prior to the FMD epidemic in 1997) and the hiking feed prices will discourage farmers from expanding their herd size. According to the May 2006 survey, over 90 percent of hog farmers plan to maintain the current herd size.

Consumption

The vast majority of pork meat consumed in Taiwan is produced domestically, with imports being used mainly for processing or to supplement occasional shortfalls. In 2006, surging imports of chicken meat continue to substitute pork intake, especially in the institutional and the boxed lunch areas. Taiwan has followed its WTO accession commitments to lift tariff rate quotas (TRQ) for red meat and poultry in 2005 and also increased the special safeguards (SSG) trigger volumes annually. Chicken meat imports have been 45,543 mt in 2004, 74,382 mt in 2005 and 85,215 mt for the first seven months of 2006. The chicken legs/wings volume SSG was triggered as early as March 15, 2006, promising a record high chicken imports in 2006. Pork demand is expected to be further depressed by chicken meat in 2006 and 2007.

Trade

Live pig imports, for breeding not for slaughtering, totaled 81 head during the first half of 2006, with 48 pigs being supplied by the U.S., 20 from Canada and 13 from U.K. In 2006, the U.S. continues to be the leading pork supplier in the Taiwan market. Pork imports are estimated at 33,000 mt CWE. With smaller domestic supply, CY2007 pork imports are forecast to grow by 9% to 36,000 mt CWE.

Pork imports are very price sensitive. Imports become large when Taiwan pig prices are high and U.S. pork prices are low, which is the opposite of 2006. However, U.S. pork picnics, for processing purpose, are still well accepted in Taiwan. Pork trimmings supplied by Canada are more competitive, in quality and specification, than U.S. products. However, the price gap between U.S. and Canadian products narrowed in 2006, increasing U.S. market share from 50% to 59%.

Pork bone imports for the first 7 months in 2006 totaled 218 mt, virtually all from Canada. Total CY2006 imports of pork bones, at about 1,000 mt, have been included in the PSD table for pork.
Under Taiwan’s WTO commitments, Special Safeguards (SSG) came into play following Tariff Rate Quota (TRQ) liberalization on January 1, 2005. SSG volume trigger for pork belly in 2006 is 11,762.5 mt, price trigger is NT$ 30/kg. SSG volume trigger for pork offal in 2006 is 23,637.5 mt and there is no price trigger for that item. If SSG is triggered, the tariff rate will increase by 33.3 percent, making duty for belly to grow from 12.5% to 16.67%, and that for offal to grow from 15% to 20%.

Because SSG volumes increase each year, and because Taiwan pig prices are low and U.S. pork prices are high, the SSG’s for pork belly and pork offal may not be triggered in 2006. Taiwan’s pork offal SSG only consists of 4 tariff items: pig hocks (HS 0206.30.20 and 0206.49.30), guts including intestines and stomachs (HS 0504.00.21) and prepared and processed pork offal (HS 1602.49.30). Not all pork variety meats are subject to the SSG. Imports of pork liver, tendon and other offal items are not counted against the SSG. Imports of pork offal, whether or not classified under SSG, are not taken into account in the PSD table.

In 2006, the U.S. remains the leading supplier of pork offal, mainly hocks, rectum, stomach and cheek meat. However, U.S. market share has been gradually undermined by European products, such as pork hocks from Hungary and Sweden. Denmark, which did a brisk business in Taiwan in 2005, reduced its sales sharply in 2006 reportedly due to price factors.

Policy

Taiwan applies a three-column tariff classification for imports. WTO members and those with reciprocal treaties with Taiwan are eligible for duties in Column One. Column Two applies to FTA countries and Least Developed Countries (LDCs) while Column Three applies to other countries/territories. Beginning on July 1, 2006, Guatemala joined Panama as a FTA partner with Taiwan and enjoys preferential import tariffs for many commodities. However, no pork establishment in Guatemala has been approved to supply pork to Taiwan.

Pork from Panama is now dutiable at 0%, 5.2% or 5.4% depending on various cuts, while pork from non-FTA countries, including the U.S., are faced with a tariff of 12.5%. For pork variety meats, Panamanian products are subject to a 8%, 14% or 15% duty rate, Guatemalan products face a tariff of 14% while products from non-FTA countries face a 15% duty. In order to export pork and variety meats to Taiwan, a country’s meat quarantine inspection and health certification system must be reviewed and found acceptable by the Taiwan authorities. Taiwan currently accepts the pork beef system of the United States, Canada, Australia, New Zealand and the Netherlands. Selected packing plants in Sweden, Hungary, Finland and Japan are approved to supply to Taiwan. Neither Guatemala, nor Panama, nor any of the LDCS is qualified to supply pork to Taiwan.

Further Information

To read the full report please click here (PDF format)

List of Articles in this series

To view our complete list of 2006 Livestock and Products Annual reports, please click here

September 2006