Guidelines of the New Agricultural Policies

－ Establish a Healthy, Efficient and Sustainable Agri

culture

for All the Citizens

Council of Agriculture, Executive Yuan

July 2008

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Table of Contents

1. Review of Taiwan’s Past Agricultural Developments

Policies

2. Current Economic Environment and the Irreversible

Trends

3. Basic Guidelines for the New Agricultural Policies

4. Six Pillars for Future Agricultural Development

Policies

5. Key Programs for Short, Medium and Long Term

6. Conclusions

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Review of Taiwan’s Past Agricultural Developments Policies

• During the Japanese Occupation, the policy was “Agricultural development in Taiwan; Industry development in Japan”.

• After Taiwan was reclaimed from Japan, the policy was “Develop Industries based on Agriculture, and Assisted Agriculture Development by Industries”.

• With the contributions in food, labour, capital and markets from farming industry, the Taiwan economy took off and entered into a transition period in the 1960s.

• Agriculture accounted for more than 30% of GDP in the 1950s but fall only to 1.45% in 2007. However, the contribution was 11% if the related primary, secondary and tertiary industries are included. This shows that agriculture remains an important sector in the Taiwan’s overall economy.

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Review of Taiwan’s Agricultural Developments Policies (Con’t)

• The agriculture population was over 50% before the 1960s, but dropped to 5.4% in 2007.

• Agriculture trade deficits began in the 1970s. The deficits totaled US$7 billion in 2007.

• Income per capital in agriculture is roughly 68%-80% of the income per capital in non-agriculture sectors. The income from agricultural activities of farmers dropped from 40% in the early 1970s to 20% in 2006.

• Agriculture has shifted its role as the supplier of food in the past to the current multi-function role in food security, rural village development and ecosystem conservation.

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Statistics of Agriculture in Taiwan over Past Decade

Year 1997 2001 2002 2003 2004 2005 2006 2007

Production Value （ NT$100 million ） 3,790 3,527 3,505 3,579 3,865 3,824 3,770 3,883

Farmland Area （ 10,000 hectares ）（ Index, ％）

86.5

(125.0)

84.9

(105.4)

84.7

(100.4)

84.4

(91.1)

83.6

(81.6)

83.3

(86.4)

83.0

(85.3)

82.6

(83.6)

Working Population (1,000 People)

（ % of total working population ）

878

(9.6)

708

(7.5)

709

(7.5)

696

(7.3)

642

(6.6)

591

(5.9)

555

(5.5)

543

(5.4)

Farm Labor Productivity

（ NT$10,000 per capital ） 43.2 50.0 49.4 51.4 60.2 64.5 67.9 71.5

Farmers’ Income per Capital

（ NT$10,000 ） 20.7 22.4 21.7 22.2 23.0 23.2 24.6 NA

Average Income per Farm Household

（ % compared to non-agriculture sectors ）

90.7

(80.78)

88.1

(77.56)

86.1

(75.50)

87.4

(76.91)

89.3

(78.08)

87.3

(75.43)

94.1

(80.43)NA

Farm trade Deficits

（ US$100 million ） 59.4 38.2 39.3 45.4 53.1 57.7 61.3 70.2

Food Self-Supply Rate

(Price Index, %)79.4 81.9 81.5 78.0 75.7 74.2 74.4 NA

6+8.1 ％ Average

+1.9 ％ Average

Unit: US$ billion

Export Import Balance of trade Year Agricultural

product Annual growth rate

(%) Agricultural

product Annual growth rate

(%) Agricultural

product Annual growth rate

(%)

1996 5.49 -2.83 9.99 2.18 -4.50 9.02 1998 3.16 -42.47 7.81 -21.85 -4.65 3.27 2000 3.28 3.91 7.60 -2.60 -4.32 -7.01 2001 3.03 -7.57 6.86 -9.72 -3.83 -11.36 2002 3.15 3.93 7.11 3.54 -3.96 3.23 2003 3.24 2.97 7.83 10.19 -4.59 15.94 2004 3.55 9.58 8.86 13.19 -5.31 15.74 2005 3.58 0.79 9.36 5.56 -5.77 8.76 2006 3.30 -7.90 9.43 0.78 -6.13 3.65 2007 3.43 4.08 10.46 10.90 -7.02 17.36

Statistics of Agricultural Trade in Taiwan over the Past Decad

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Current Economic Environment and Irreversible Trends

• Doha Round Negotiations, a new round negotiation of the WTO, began in 2001. The farm products market will be even more further liberalized.

• Integration and competition of agriculture between Taiwan and Mainland China.

• Tokyo Protocol took effect in February 2005. Taiwan will take on its responsibility in energy conservation and carbon reductions by reducing the emissions of greenhouse gases.

• High energy prices and tightened supply of commodities cause ongoing rises of food prices.

• Increasing concerns over the safety of agricultural products in both Taiwan and

overseas members.

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Basic Guidelines for the New Agricultural Policies

Establish a Healthy, Efficient and Sustainable Agriculture for All the Citizens

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Three Main Visions

1. Establishing Taiwan as a Poison-Free Agricultural Island w

ithin 50 years;

2. Increasing per agricultural household income to over NT$1

million within 4 years;

3. Building 4,000 beautiful rural communities within 10 years

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The Five Main Objectives of the People’s Agriculture

For farmers － profits, efficiency and welfare;

For consumers － freshness, quality and healthy food

For the environment － landscape, energy-saving, sustainability

For future generations － clean environment, markets and high technology

For the world － responsibility, harmony and high green energy

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Six Pillars for National Agriculture1. Establish a responsible agriculture industry to ensure sustainability;

2. Develop a competitive, market-oriented agriculture industry with the support of advanced technologies;

3. Improve farmers’ welfare and encourage retirement of old farmers;

4. Implement the third-stage farmland reform program and build new and beautiful rural communities;

5. Enhance exports of agricultural products by promoting overseas trade activities and cooperating with Mainland China’s agricultural industries.

6. Improve the agricultural administration system and farmers’ associations services

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Establish a responsible agriculture industry to ensure sustainability

• In order to curb global warming, large areas will be dedicated to tree planting. A total of 60,000 hectares on plains are planned for the planting in the next 8 years. Direct subsidies is NT$120,000 for each hectare. Absorption of 2.2 million tons of CO2 is expected each year, i.e. a reduction of 1% CO2 emission. (Taiwan is the 14th largest emitter of CO2.)

• To protect the health of consumers, efforts will be made to ensure all rice, vegetable, fish and livestock products are in compliance with CAS (Certified Agricultural Standards) in 4 years. Expansion in outputs of organic agricultural products is planned. Gradual promotion of the records system of selected products production and marketing is promoted intending to make Taiwan a poison-free Island in 50 years.

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Develop a competitive, market-oriented agriculture industry with the support of

advanced technologies• With the same dedications shown in agriculture science parks, Taiwan

is to establish itself into a world-class flower island with promoting a specialized production farming areas to upgrade the traditional flower industry technology.

• It is planned to set up specialized areas for premier rice production, “Global Centre of Sub-Tropical Fruits” and “Asia Pacific Centre for Seedling, Fishery and Livestock Breeding”.

• High value agricultural products are to be developed to sell to the international markets.

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Improve farmers’ welfare and encourage retirement of old farmers

• The guaranteed price for rice should be increased. Or, direct income subsidies should be granted to improve incomes of rice farmers.

• A retirement mechanism should be established for old farmers. The allowance for old farmers will be continued. Laws should be amended to protect the farmers’ insurance right.

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Implement the third-stage farmland reform program and build new and

beautiful rural communities

• To encourage old farmers to retire early and to implement “Small Land-owners & Big Land-renters” Program.

• To implement “Farming Village Rebirth Program” with NT$150 billion Farming Village Rebirth Fund to take care of 4,000 rural villages and 600,000 farm households.

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Enhance exports of agricultural products by promoting trade activities overseas and promoting Integration and cooperating of

agricultural industries with Mainland China

• To develop international channels for agricultural products from Taiwan by establishing long-term marketing networks; to establish strategic alliances with international corporations and multinationals to expand the international markets;

• To start negotiations for the fishery industries cooperation with Mainland China; to deploy a mechanism for intellectual properties and trademarks between Taiwan and mainland China; to trade and cooperate with the agricultural industry with China to seek mutual benefits, e.g. imports of corns and animal feeds from Mainland China and exports of fruits and pork from Taiwan to Mainland China.

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Improve the agricultural administration system and farmers’

associations services• To strengthen the administrative system for the agricultural developme

nt by setting up the Ministry of Agriculture so that it can perform the function of integrating agriculture, forestry, fishery and livestock industries sectors together;

• To unite fishermen’s and farmers’ associations of all levels to construct a nationwide marketing network for agricultural products and to further develop this network into an international trade company;

• To assist Taiwan Joint Irrigation Association to fully utilize the resources to develop the industries with leisure agriculture, tourism and water usage so that it can create new financial resources for the association.

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Key Programs for Short, Medium and Long Term

Short Term—Until the End of 2008

Medium Term—Until the End of 2009

Long Term—From 2009 to 2012

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Short Term (Until the End of 2008)1.Inspections on agricultural produces will be improved to protect the health of consumers. CAS (Cer

tified Agricultural Standard), once suspended, will be resumed. By the end of 2008, it is targeted to have organized 1,100 classes for CAS production and marketing. The certificate systems for CAS organic produces, good produces and production and marketing records of produces will be implemented so as to construct a robust production and marketing system for healthy and safe agricultural products.

2. To promote and implement a smart and reasonable use of fertilizers by establishing 100 locations to demonstrate the concept. The goal is to reduce chemical fertilizers by 5% by the end of 2008.

3. To adjust the set-aside policies by stopping the support in the production of biomass crops; to encourage the growing of corns and animal feeds; to activate the use of idle lands so as to maintain the food security of Taiwan.

4. To establish a retirement system for old farmers, the Peasant Health Insurance Act should be amended so that old farmers can lend out their lands for retirement but get to retain their farmer insurance. This will protect the farmers’ insurance rights for retired old farmers (Led by the Ministry of the Interior/Assisted by The Council of Agriculture ）

5. To expand the scale of farms so as to enhance their production efficiency. “Small Land-owners & Big Land-renters” Project will run a trial program in 10 chosen locations.

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Short Term (Until the End of 2008)(Con’d)

6. To stabilize the production and marketing of the livestock products, an industry-based adjustment system will be established. Some articles of the Animal Husbandry Act will be modified in order to promote the management of the production quantity and the offering of development funds to the industry.

7. To develop multi-function fishing harbors in a systematic approach and conduct dredging engineering in 36 fishing harbors to ensure the operational safety of fishermen.

8. To draft the Regulations Governing Rebirth of Farming Villages and to conduct a trial rebirth program in 7 farming and fishery communities and develop human resources in 210 communities.

9. To implement forestation programs on the plains with an initial phase of 600 hectares; to complete the planning of one large-scale forest recreation park on the plains so as to serve as a vehicle for better education in nature and environment.

10. The Organization Guidelines of the Irrigation Association should be amended so as to fully utilize the resources of irrigation associations to develop the industries related to water resources utilization.

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Medium Term (Until the End of 2009)1. To take care of all the consumers and farmers, it is intended to promote the CAS system, organic ag

riculture, and quality produces through a variety of methods. The system to record the production and distribution of agricultural products will be established in order to build a comprehensive certification, production and distribution system for healthy and safe farm products.

2. To adjust the set-aside policies into one phase for all idle lands within a year; to expand the scope of incentives for the production of corns, pasture and forage corns.

3. To establish a retirement system for old farmers with “Small Land-owners & Big Land-renters” Project; to promote the utilization of old farmers’ experience and assist them to pass down their practics; to assist business management of “Big Land-renters”.

4. To enhance the R&D of new varieties and the protection of new variety rights; to establish a production and certification system for quality seedling and animal breeding, i.e. “Asia Pacific Centre for Seedling, Fishery and Animal breeding”.

5. To establish dedicated regions for flower growing; to promote the high-quality and high-efficiency production system; to set up a security management system for fruits production; to select the fruits for which Taiwan has technical knowhow and variety advantages; to expand export markets; to make Taiwan “Global Centre of Sub-Tropical Fruits”

6. To establish strategic alliances with large corporations that have international marketing capacity; to build up a stable marketing channel for the exports of the Taiwan’s agricultural products.

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Medium Term (Until the End of 2009)(con’d)

7. To grasp the business opportunities with the arrival of tourists from Mainland China by establishing showcase shopping centers of the best of agricultural products of mainland Taiwan and promoting a mechanism for order taking in Taiwan and pick up the delivery in Mainland China.

8. To extend the scope of businesses for credit development of farmers’ and fishermen’s associations so as to increase their incomes; to relax the restrictions in capital utilization so as to provide financing to farmers and fishermen in production and marketing.

9. To promote Farming Village Rebirth Program by implementing it to revamp 90 farming and fishery villages/communities and develop human resources in 170 communities, in order to establish new and beautiful farming and fishery rural villages.

10. To encourage the reclaims along the coast and to revitalize the functions of fishery harbors by installing facilities required for leisure and sightseeing so as to enable these harbors to serve multiple functions.

11. To implement the policies to reduce energy consumption and carbon emissions, to expand tree planting, to reduce the number of fishing boats, to encourage a reasonable use of fertilizers, to promote the re-use of wastes.

12. To drive the projects of tree planting with 4,250 hectares of forest developing on the plains and manage 47,500 hectares of forest lands. To organize an international bidding for the plan of a large forest recreation parks on the plains choose the appropriate location and provide the resources needed.

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Long Term (2009-2012)1. To promote the CAS certificate system; to encourage the organic products production. 2. To encourage old farmers to retire early and to implement “Small Land-owners & Big Land-renter

s” Program.3. To explore the possibility of direct subsidy instead of the current purchase system with guaranteed

prices for rice.4. To promote “Agricultural & Biological Technology Development Projects”5. To improve the irrigation systems for key production areas to important horticulture plants product

ion, in order to reduce the losses due to drought and floods.6. To establish a world-class “Flower Island” and “Subtropical Fruits Center”. 7. To build up dedicated areas for larvae breeding for both edible fish and ornamental fish.8. To participate international fishery organizations in order to assume Taiwan’s responsibility as a m

ajor deep water fishery country. 9. To develop export markets for agricultural products by establishing marketing channels and brand i

mages.

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Long Term (2009-2012)(con’d)

10. To unite fishermen’s and farmers’ associations of all levels to establish a nationwide marketing network for agricultural products and to further develop this network into an international trade company;

11.To strengthen eradication measures to free Taiwan from Foot-Mouth Disease.

12.To implement a differentiation management system for credit department of farmers’ and fishermen’s associations in order to better their asset quality; to integrate channel resources of all the farmers’ and fishermen’s associations throughout Taiwan in order to expand the business base of their credit department.

13. Implement Farming Village Rebirth Program to build new and beautiful farming villages;

14. To promote reclaims along the coast in order to establish a high-quality environment for fishing.

15.To reduce the number of fishing boats and conserve the marine resources in order to maintain the ecosystem of Taiwan’s marine environment.

16.To promote energy-saving and carbon reductions so as to improve the effectiveness of production and marketing of agriculture.

17.To grow more forests so that they can absorb more carbon, preserve water resources and proect the environment.

18.To promote a holistic approach in mountain preservation and disaster prevention in order to ensure the security of the national lands.

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ConclusionsTake Root Now;

Care for the Future;

Make efforts over all the World;

Lead the Taiwan Agricultural Industry into a New Era.