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Taiwan Livestock and Products Annual - September 2005

by 5m Editor
1 September 2005, at 12:00am

By USDA, Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2005 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:

Taiwan’s decision to reinstate a suspension of U.S. beef imports following the June 2005 confirmation of the second BSE case in the United States halted the swift recovery of U.S. exports. This report assumes that Taiwan's beef market remains closed, and projects that imports will fall back to fall back to 80,000 metric tons after reaching 88 tons this year. Taiwan’s swine sector is undergoing a price-led recovery and will likely show an increase in swine numbers and slaughter through 2006. Imports are price-sensitive and are expected to decline for the balance of 2005 and into 2006.

Executive Summary

Taiwan’s decision to reinstate a suspension of U.S. beef imports following the June 2005 confirmation of the second BSE case in the United States halted the swift recovery of U.S. market share during the six weeks Taiwan allowed the entry of U.S. beef. This brief window of opportunity for U.S. exporters is the primary reason that Taiwan’s 2005 beef import estimate was raised 10 percent. Under the assumption the market will remain closed, Taiwan’s beef imports are forecast to fall back to the 2004 level of 80,000 metric tons. With the release of the epidemiology report on August 30, Taiwan authorities can begin the administrative process to remo ve the current suspension and once again resume imports of U.S. beef.

Following high pig prices in 2004, Taiwan’s swine sector is undergoing a price-led recovery and, despite government intentions to stabilize or reduce the size of the swine herd, will likely show an increase in swine numbers and slaughter through 2006. Porcine Circovirus Infection is having less of an impact on swine numbers than in prior years, but lower prices in 2005 and into 2006 will likely lead to poor profitability into next year. Given the increase in domestic pork production and declining pork prices in 2005, pricesensitive imports are expected to decline for the balance of 2005 and into 2006. The lifting of the tariff-rate quota on pork belly and pork will not necessarily lead to additional imports of these items given the price situation and high current stocks, especially for offal.

Production

Fat pigs slaughter in 2005 is estimated to grow 1.5 percent to 9.53 million head. Pig farmers, who made good profits in the past two years, have tried hard to increase production. In 2005, the industry seems to make some progress in combating the disease, Porcine Circovirus Infection (PCV), which has high mortality in pigs weighing between 15 to 30 kg. A recent pig inventory survey conducted in May 2005 showed that, comparing to previous surveys done in 6 months and a year ago, every category exhibited significant increase. With larger standing pigs, total production in the later half of 2005 is estimated to grow 5 percent from the output 6 months before, making total 2005 pig production at roughly 9.53 million head. Larger breeding pig numbers have also promised a larger CY2006 pig production, which is estimated at 9.8 million head.

The same survey also indicated that 90 percent of pig farmers wanted to maintain the current herd size while 7 percent planned to increase production. Only 3 percent planned to downsize. To prevent an oversupply of pork, Council of Agriculture has been continuously urging farmers not to expand production.

Prices

Very high pig prices in 2004 encouraged farmers to expand their herd sizes. Pig prices in 2005 began to decline, following heavy media coverage in the spring of illegal slaughtering of dead/diseased pigs. Pig prices gradually recovered after May. Demand in the second half of 2005 will remain strong and peak around the Moon Festival (the full moon of the eighth lunar month, September 18, 2005), but is expected to decline afterwards. With larger pig population, CY2006 pig prices may continue to drop to the level below NT$4,800/100kg, roughly the break-even point for pig production.

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 first half year of 2005, Taiwan pig prices declined from the 2004 high levels and imports slowed accordingly. Till the end of 2005 and continuing into 2006, Taiwan pig prices are expected to decline further, with a larger domestic pig supply.

Pork imports are very price sensitive. CY2005 pork imports are expected at 28,000 mt 40,000 CWE), down 34% from the 2004 level, due to larger domestic supply and decreased demand, caused by negative reports of illegal slaughtering of sick and diseased pork. With even larger domestic supply, CY2006 pork imports are forecast to decline further to 30,000 mt CWE.

Canada replaced the U.S. as the leading pork meat supplier in 2005 because of its cheaper prices. In terms of import value, the U.S. is still narrowly ahead of Canada. U.S. Spare rib tips has become the most popular item. U.S. pork picnics, for processing purpose, is still well-accepted in Taiwan. Pork trimming supplied by Canada seems to be more competitive, in quality and specification, than U.S. products.

Pork bone imports totaled only 624 mt from January through July 2005. They were 354 mt from Canada; 186 mt from US; 77 mt from Hungary and 7 mt from Australia. 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 2005 is 10,066 mt, price trigger is NT$30/kg. Imports totaled 5,958 mt as of August 26, 2005. SSG volume trigger for pork offal in 2005 is 15,177 mt and there is no price trigger. 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%. If demand is strong and imports are profitable, importers are willing to pay the extra duty, which applies to all importers. However, pork belly imports in 2005 may not reach the 10,066 threshold and SSG may not be triggered. The offal SSG will likely be triggered in 2005 but total imports are expected at only 19,000 mt, much less than the 2004 import level of 25,359 mt. Local traders reported high stocks for imported pig offal. Imports of both pork belly and pork offal in 2005 will be smaller than the 2004 level.

In 2005, the U.S. remains the leading supplier of pork offal, mainly hocks, rectum, stomach, and cheek meat. However, its market share is gradually being undermined by European products, such as pork hocks from the Netherlands and rectum from Denmark.

Policy

Although Taiwan has been FMD-free since 2001 and was declared FMD-free with vaccination in May 2003 by the World Animal Health Organization (OIE), exports are not likely to recover to pre-FMD levels. Taiwan’s FMD vaccination rate in pig herd reached 89% in 2004. The animal health authority’s plan to do without the FMD vaccination on a couple of offshore islets beginning July 1, 2005 was postponed to August 1 and later suspended indefinitely. The initial plan to completely stop vaccination in 2006 and get OIE recognition of FMD free without vaccination in 2007 is now being re-evaluated. In the long term, the very efficient Taiwan swine industry will continue to produce pork for the local market, with imports mainly used for processing or to supplement occasional shortfalls.

In order to export meat 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 system of the United States, Canada, Australia, New Zealand, Denmark, and Sweden and selected packing plants in Japan, Hungary and Finland.

Further Information

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

Source: USDA, Foreign Agricultural Service - Annual Livestock and Products Report - September 2005