The rice bowl war
In the year since Taiwan has been open to imports, foreign rice, in fact, hasn't made major inroads into the domestic market, both because both import costs are high and because locals are generally not accustomed to the taste of foreign rice.
In order to protect local rice farmers, in Taiwan's first year in the WTO, the government bought up 65% of the nation's import quota of foreign rice. But in the second year, under pressure from other WTO members to open up the market farther, Taiwan agreed that imports of rice could exceed the 140,000 metric ton limit but that there would be a tariff of NT$45 per kilogram on the excess, thus protecting the market from a flood of low-cost foreign rice. And the consensus is that these high tariffs will continue to be imposed for some time.
"Imported rice has had almost no impact on us," says Yeh Su-hui, the general manager of Chyuan Shun Foods, which mostly produces high quality Shanshui rice. "We've spared no effort in maintaining quality, and our production has continued to rise steadily." Yeh estimates that production this year has already reached NT$1 billion, which represents NT$200 million more than last year. Last year, Chyuan Shun also imported rice from the United States and Thailand, but Yeh says that consumers didn't take to it. After harvesting, packaging and shipping, by the time foreign rice to reaches Taiwan it's already at least six months old. Although the rice may not look much different, it's noticeably harder after cooking. When you eat Taiwanese rice, you can taste the "freshness."
Chou Chun-hu, manager of special sales for Chunghsing Rice, explains that annual demand for rice in Taiwan stands at 1.5 million metric tons. Since 1.52 million tons are produced domestically, this means that domestic supply and demand are nearly balanced. Currently, because the government is imposing high tariffs on foreign rice, he estimates that over the next five years foreign rice will enjoy no price advantage, but beyond that it's hard to say.
"In the rice market, flavor and texture are key," says Chou. Jasmin rice from Thailand is much like Taiwan's long grain rice varieties, but it can only be stored for two months in a hot climate, so it doesn't pose much of a competitive threat. Mass plantings give American rice a cost advantage. As for Japanese Koshihikari rice, 4000 1-kilo bags were selling a month at the beginning of the year, rising to 6000 bags a month at the end of the year. In Taiwan, it represents a top-quality product for a select group.
"Most people will opt first for domestic rice," Chou says. "Domestic rice won't totally lose out, but in the future it will definitely have to go the road of higher quality." Chou argues that Taiwanese farmers need to maintain a crisis mentality and realize that they will only be able to defeat these foreign challengers by raising quality.
Because imports of rice have caused supply to exceed demand, Taiwan's rice industry is being forced to change. Apart from imposing rules about crop rotation and leaving acreage fallow to reduce production, and also stepping in to buy rice when supply is high and to sell when supply is low, the government is calling for farmers to plant high-quality rice that looks and tastes good.