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An ECFA would be bad news for farmers
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By Wu Ming-ming §d©ú±Ó
Wednesday, Jan 20, 2010, Page 8
¡¥In the five agricultural sub-sectors I investigated, at least 280,000
farmers would lose their jobs.¡¦
I have been attempting to gauge the potential impact on farmers of signing an
economic cooperation framework agreement (ECFA) with China. The results of my
study indicate that if the government lifts bans on 830 Chinese agricultural
products, about 280,000 Taiwanese farmers who grow rice, vegetables and other
crops could lose their jobs.
In my calculations, I assumed that, on the premise of a perfect competition
market, Chinese agricultural products and those from other countries were able
to replace Taiwanese items completely. For price comparison between the two
sides of the Taiwan Strait, farm prices were used for Taiwanese products; cost,
insurance and freight (CIF) prices were used for Chinese products that are
already allowed to be imported; and free on board (FOB) prices listed by the UN
Food and Agriculture Organization were used for Chinese products that are today
banned from import.
I used both the percentage of supply reduction of individual items in the total
domestic production volume and the percentage of planting area of individual
items in the total domestic planting area to estimate the percentage of the
population that would face unemployment in each agricultural sub-sector.
I used asparagus and five other vegetables to assess the impact on vegetable
growers, grapes and seven other fruits to assess the toll on orchard farmers,
peanuts to assess the grains and legumes sub-sector, and tea to assess the
¡§special crops¡¨ sub-sector.
I found that if Taiwan lifts the ban on 830 Chinese agricultural products, the
production value of 17 agricultural sub-sectors is likely to decline by NT$10.17
billion (US$319.8 million) ¡X including rice, peanuts, tea, asparagus,
cauliflowers and cabbage and other crops.
A financial loss of NT$10 billion in agriculture might seem insignificant
compared with the high-tech sector. However, in the five agricultural
sub-sectors I investigated, at least 280,000 farmers would lose their jobs. What
would they do? How do we calculate the social costs of such a significant surge
in unemployment? What measures does the government propose to respond to this?
These are questions that must be contemplated before signing an ECFA.
In my study, I only projected the effects on five sub-sectors. My results do not
include mushrooms, sugar, flowers, fisheries and forestry, for example. Thus,
the total production loss and unemployment in the agricultural sector would be
much greater than my calculations.
The purpose of my study was to put these concerns on the table and hopefully
prompt a wider debate. Hopefully, the pan-blue and pan-green camps alike care
about the health of the agricultural industry and the welfare of farmers enough
to face the potential impact of an ECFA on a relatively uncompetitive sector.
If Taiwan must sign an ECFA, it is the responsibility of the ruling and
opposition camps to propose complementary measures that would be feasible and
effective. Absent such measures, the signing of an ECFA should be decided by the
public through a referendum.
Wu Ming-ming is a policy adviser to Taiwan Thinktank.
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