Quality Leads to Quantity:A Boom in Taiwan Rice Exports
Sam Ju / photos Jimmy Lin / tr. by Jonathan Barnard
March 2012
The World Trade Organization, various free trade agreements, and the Trans-Pacific Strategic Economic Partnership Agreement have thrown Asia’s sensitive agricultural sector off kilter. In Taiwan, the challenges have been particularly notable for growers of rice, Taiwan’s staple food and the crop most representative of the island’s agriculture. Apart from meeting domestic demand, how can Taiwan’s rice producers adapt to the challenges of the new era?
When Taiwan joined the WTO in 2002, the ROC government pledged, as a condition of its membership, that it would end its practice of purchasing rice and subsequently dumping it on the international market to earn foreign exchange. Ever since, rice has not been one of the crops that Taiwan has targeted for export.
Yet in 2008, Taiwan sold large quantities of rice as a disaster relief staple. Total rice exports exceeded 33,000 metric tons that year. The figure stirred up expectations in Taiwan about the potential for rice exports. Last year, Taiwan exported more than 1800 tons of rice. It was the second highest yearly total since Taiwan joined the WTO.
Export figures for rice are up, rice producers and brokers are signing contracts, and the government is playing a key behind-the-scenes role in promoting the production of high-quality rice in Taiwan by helping to establish special zones for rice production.
Shortly after the Chinese New Year, Taiwan Panorama traveled to Changhua’s Pitou, which is the home of Union Rice, whose Zhongxing brand accounts for 40% of domestic rice sales. Last year the company set a record among Taiwanese rice suppliers by signing contracts to supply a Japanese rice broker with 360 metric tons of rice.
We then traveled south to Chiayi’s Dalin, to visit Rice Garden Corp., which had its start with the Ruiji rice mill. Starting last year, it has been shipping 25 tons of rice to Australia every other month. The rice is sold in supermarkets in Brisbane, Sydney and other major cities there.
On the international market, rice from Taiwan is expensive—70% above rice from Thailand and as much as twice as high as rice from Vietnam. Since Taiwanese rice can’t win on price, it has to win on quality. According to the Ministry of Finance, Taiwanese rice exports to Hong Kong, Australia, and Singapore have been growing in recent years, and exports to Japan have been holding steady. These figures show that although rice from Taiwan is expensive, its reputation for high quality is well established.
Through packaging, rice takes on value as more than just a food product—there is also aesthetic and cultural meaning. The photo shows Lulu Lin, CEO of Rice Garden, and her staff.
Last year, with the nuclear disaster in Fukushima and flooding in key rice-growing areas, Japan faced a severe shortage of rice. Once Japanese rice brokers grasped the need for imports, the first place they considered was Taiwan. Makoto Hirayama, president of Kitoku Shinryo, Japan’s second-largest rice broker, personally came to Taiwan to visit all its major rice growing regions.
When he visited Union Rice at the end of November, Union’s president Joyce Chuang and director Liu Delong cooked five pots of different varieties of rice, and asked their guest to try each and determine which was best.
After a few minutes, Hirayama held a bowl up with his hand, and Chuang announced publicly that the rice variety was Tainan No. 11, which is planted in more than half of Taiwan’s rice fields. The Japanese testers gave it a score of 80 (for flavor and nutrition), which is very similar to Japanese rice. (In comparison, typical rice marketed in Taiwan scores in the 60–70 range.)
After asking careful questions about how the rice was being grown and milled, Hirayama specified that he wanted Tainan No. 11 from Pitou, and he placed an order for 108 tons. The next day the newspapers were filled with reports about the Japanese visitor describing the rice as “heavenly.”
Kitoku Shinryo followed up with another order for 252 tons, bringing the total to 360 tons for the year, the highest of any year since Taiwanese rice exports to Japan were reinstated in 2004.
Union Rice accounted for 360 of the 400 tons of Taiwan rice that were exported to Japan last year.
Chuang holds that there was nothing surprising about Taiwanese rice earning the affirmation of the Japanese: “10 years ago, the best tasting rice in the world was, in order, Japanese rice, Californian rice, Taiwanese rice and Korean rice. Now, 10 years later, Japanese rice is still number one, but certain strains of Taiwanese rice have surpassed Japanese rice in mouthfeel.”
“Taiwanese agricultural techniques have improved as a result of WTO membership,” says Chuang.
Joining the WTO was disruptive, and it forced Union Rice to think about how it could raise quality. Consequently, it imported a shipment of NT$250-per-kilogram Japanese rice, and then invited some farmers to come in and compare it to Taiwanese rice. After the taste test, the farmers fell silent—uncomfortably confronting the reality that rice produced elsewhere tasted better than Taiwanese rice.
Immediately, Liu Delong and 20 farmers established a production team, which established a collective goal: to grow Taiwanese rice that was just as good as Japanese rice.
Bringing together those 20 “seed farmers” was only the first step. Union Rice went on, under the guidance of the Agriculture and Food Agency (AFA), to establish a zone dedicated to rice production.
Beginning in 2005, the AFA established several dedicated rice production zones in various locales around Taiwan. The government assisted brokers, planters and processors to agree contracts, thus helping to lay the groundwork for a chain of production and economies of scale, by effectively combining the scattered fields of small producers. Looking to the marketplace for direction, the government also outlined standard production methods. (For instance, it offered a selection of rice varieties and fertilizers to use and designated standards for pesticides.) The upshot was that the farmers would grow exactly the kind of rice the brokers wanted.
After two years under government guidance, Union Rice decided to set out on its own. By the end of 2011, the company had garnered orders from Japan that totaled 360 tons. The government was extremely proud, and President Ma Ying-jeou went to Union’s rice mill to offer his congratulations.
According to the AFA, from 2005 to 2011, the number of farmers in Taiwan participating in the special rice production zones increased from some 2000 to 5000, and the total area under cultivation in those areas increased from 5000 to 14,000 hectares. Meanwhile, the value of production from a hectare in the areas was NT$26,000 higher than from a hectare outside.
Last year Union Rice, makers of the Zhong-xing brand, exported 360 tons of rice to Japan, the biggest order from that country ever. The photo shows the packaging zone in the Union Rice factory.
Now contractual relationships have been established, and the entire process has become standardized, with rice brokers guiding rice farmers and the farmers overseeing job contractors.
Wu Guoming, 43, participated in the “small landlord/large tenant” plan. “Times change, but farming remains lots of work,” says Wu. His routine work is to patrol the fields to see if there is a need for irrigation anywhere, to transplant rice seedlings, to apply fertilizer, and to spray pesticides. When it’s time to harvest, he calls the contractors.
“One raking machine costs NT$2–4 million, and a harvester costs NT$3 million. If you bought one and tried to operate it yourself, the return on investment would be too low.” In comparison, by contracting out the tilling and harvesting, Wu spends NT$10,000 per tenth of a hectare but is able to reap NT$20,000 in profits.
Xie Chang, 73, explains that he has been planting rice for Union Rice for more than a decade. He only plants seven-tenths of a hectare, and jokes, “Farming is simple; all you’ve got to do is spread fertilizer and irrigate!”
“These days there’s true division of labor,” notes Wu. “Fertilizing experts fertilize, and other professionals operate the harvesters.”
As for the amount of fertilizer and pesticides to apply, that is left up the experience and expertise of the individual farmer.
Xie and Wu are full-time farmers, but in the special rice production zones there are numerous part-time farmers who brim with passion for agriculture.
At his day job, Liu Wen-ming, 55, works as chief of job training and counseling at the National Minsyong Vocational School of Agriculture and Technology. Meanwhile, 48-year-old Weng Zhensheng is a division chief at Nanya Plastics. But at nights and on weekends, they both work as contract farmers for Rice Garden, a rice broker in Chiayi.
“At six in the morning, I take a walk around the field before I go to work,” says Weng. “If the fields lack water, then I’ll be sure to irrigate after I come back from work and have dinner. I’m often groping around in the dark until the wee hours of the morning.” Weng also operates a 1.8-hectare organic farm, both out of personal interest and from a desire to enroll in a master’s program in agriculture at National Chiayi University.
“The technical level of Taiwanese agriculture is excellent; you can harvest 1000 kilos per tenth of a hectare. That’s much higher than in Thailand, but the amount of land available per capita to plant rice in Taiwan is simply too small,” says Liu Wen-ming. “When farmers have only one to two hectares to plant, they won’t even be able to earn NT$20,000 per month.”
Weng Zhensheng believes that competitiveness will only come by expanding the amount of land being cultivated. “Only when you plant more than 10 hectares can you call yourself a professional famer.”
With regard to the competitiveness of Taiwan’s rice, Weng says, “The special rice production zones have very strict regulations in order to ensure quality. But the costs of production in Taiwan are high, so producing for export isn’t easy.”
Under the current realities of the international market, the relative expensiveness of Taiwanese rice will be hard to change, but the key question is: Can you make it expensive with meaning and with value, expensive but still sought after? Can Taiwan rice become a prestige brand?
Special rice production zones are highly market oriented. Whatever varieties of rice dealers want, those are the strains that the farmers plant.
“The question I’ve been considering is: how do you exploit the value of Taiwanese rice? The answer is: ‘packaging’!” says Lulu Lin, the CEO of Rice Garden.
Rice Garden has also developed its own special rice production zone, the only one in Chiayi. It has signed contracts with 60 local farmers to grow Taigeng No. 9 rice on 160 hectares. The farmers only have to worry about production and leave the marketing to Rice Garden.
Lin insists that rice must taste good before you can start talking about marketing strategies. The product must be up to snuff. As for the “packaging,” she says that it involves “telling a story” or “creating some atmosphere.”
She personally oversaw the design of the physical packaging. The vacuum-sealed Taigeng No. 9 rice package is made in the shape of Taiwan, and it shows the Tropic of Cancer going through Chiayi. Thus it tells a story about the place of production.
As part of that story, she put cartoon figures of farmers on the package, so as to convey a story about the rice’s producers.
In her hands, Taiwan rice is a food, a commercial product, a gift idea, and also a work of art. For instance, she once photographed a high-heeled shoe completely covered with stuck-on rice, which she then put into a photo album about Taiwanese rice. The idea was to help sate the visual appetites of the book’s readers. She was also the first rice producer ever to take out an advertisement in Brand magazine.
Rice Garden entered the Australian market last year, and now ships a container with 25 tons of small bags of rice there every other month. Those bags then go directly onto store shelves. Although sales are steady, Lin notes: Taiwanese rice is indeed expensive, so it’s difficult to sell on the international market.
According to the Ministry of Finance, Australia imported 336 tons of rice from Taiwan last year. Only Hong Kong, at 532 tons, imported more. Malaysia came in third with 253 tons. The total of 1885 tons of exported rice brought in nearly NT$100 million in foreign exchange.
Where there are Chinese, there is rice. But markets for rice are not limited to places where Chinese live. Taiwan’s rice brokers are true globetrotters, with one unwavering goal: to share with the world’s consumers an understanding of just how good Taiwanese rice is!
Rice is a staple food, but it can also be a gift item. At right Joyce Chuang, president of Union Rice, holds an elegant rice gift-box.
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