People in Taiwan today do not have to go through so much trouble to satisfy their craving for a particular fruit, thanks to the recent development of controlled harvest times and the year-round availability of many fruits.
Although Taiwan is a small island poor in natural resources, it is situated between the tropical and subtropical zones and has varied landscapes ranging from coastal plains to soaring peaks. Because of these geographic gifts of nature, Taiwan is blessed with an optimum environment for almost any fruit-bearing tree, bush, or vine. A total of around 50 kinds of fruits grow on the island. During any season, at least ten kinds of fruits are available on the market. Deciduous fruits such as apple, pear, and peach grow in high elevations, while in hilly and plains areas are citrus, banana, pineapple, lychee, longan, mango, papaya, persimmon, wentan pomelo, loquat, Hengshan pear, watermelon, strawberry, and many others. Among them, citrus, banana, and pineapple are the top economic earners, with a production of over one million tons in 1988.
The output of food crops such as rice has dropped from 60 percent of total farm output in 1945 to 39 percent in 1987, while the share of horticultural products in total farm output has been growing. By 1986, the per capita consumption of fruits by ROC citizens had risen to 176 lbs. per year, four times the 1961 level, with citrus fruits making up one-flfth of the total. A dish of fruit is customarily served as dessert to offset the heavier taste of Chinese entrees.
Some well-managed orchards on the island have been successfully developed recently as tourist attractions. They are planted mainly in strawberries, citruses, grapes, star fruits, and lychees. For a fee, tourists can pick all the fruit they can eat during their outing, but they pay extra for any fruit taken off the premises. These innovative uses of nature's blessings offer a new recreational outlet for urbanites and extra income for the farmers.
During the late Ming Dynasty (1368-1644), immigrants from Fukien and Kwangtung Provinces introduced lychees, longans, and citruses to Taiwan. Bananas, pineapples, papayas, and guavas were introduced in the 17th Century, when Koxinga ruled the island (Koxinga, or Cheng Cheng-kung, 1624-1662, was the leader of the Taiwan-based anti-Manchu resistance movement after the fall of the Ming Dynasty, and he ousted the Dutch from Taiwan). Emigrants from the mainland increased in the late 18th Century, and the new residents brought pears with them.
During the Japanese occupation (1895-1945), several agricultural research stations were established to introduce and breed tropical and subtropical fruits, laying a solid foundation for Taiwan's fruit industry.
The area planted to fruits in 1909 was around 12,500 acres (mostly longans and pineapples). By 1969, the harvested area had already soared to 225,000 acres, mainly producing bananas, pineapples, and citruses. Today it has risen from 370,000 acres in 1984 to 550,000 acres, according to data from the Executive Yuan's Council of Agriculture (COA).
Wu Min-tze—problems with older fruit growers who accept incorrect information while resisting scientifically valid new ideas.
Were it not for achievements such as developing disease control and quick-maturing or slow-maturing varieties to optimize harvest times, there would be only sour grapes, small plums and peaches, and bitter seed-laden guavas available on the market. After World War II, considerable advances were made in the development of fruit varieties and cultivation techniques by an uninterrupted inflow of foreign horticultural technology.
"More than 50 percent of the mangoes currently being produced in Taiwan are Irwin mangoes introduced from the U.S. in 1954 by the Joint Commission on Rural Reconstruction (JCRR)," says Wu Min-tze, chief of COA's Horticultural Division [the JCRR is the predecessor of COA]. "The so-called Kyoho grape was introduced from Japan in the 1960s, and some Taiwan products now surpass the Japanese grape in quality," he adds.
The harvest time has also been adjusted so that fruit lovers can have grapes year-round, except possibly at times in the rainy period from March to May. Multiple annual harvests are also possible for wax apples, star fruits, and guavas. A welcome development is the Black Pearl variety of wax apples, which is rich in sugar, and another case worth mentioning is the Tainung No.4 high-grade pineapple bred by the Chiayi Agricultural Experiment Station. The Tainung No.4 is smaller than the average pineapple, and it is fiberless and especially fragrant, plus it is easy to pull apart by hand. It was the most profitable item for fruit growers in 1985, and the current volume of export is 7,000 metric tons per year. Another example of varietal improvement is the practice of grafting scions from deciduous pear trees onto the stocks of Hengshan pear trees growing in lower elevations.
A few decades ago, a single imported red apple cost almost half of a worker's daily wage. With government assistance, retired servicemen began to experiment in the late 1950s with growing peaches, pears, and apples in the mountainous Lishan area of central Taiwan, where the air is crisp, cool, and exhilarating. That turned out to be a profitable and successful industry, and since then consumers have been able to enjoy temperate-zone fruits at reasonable prices. But as a result of excessive logging and over-cultivation, the high elevations suffered mightily from denudation and soil erosion. "Since the 1970s the government and research institutions have been working on breeding new varieties that can tolerate high temperatures and can be planted in areas less than 1,600 feet above sea level," Wu says. "Such varieties of pears and peaches can be expected soon."
Academic and research institutions play a major role in the propagation and introduction of new varieties. Among participating institutions are several universities and colleges, the Taiwan Agricultural Research Institute, and other agricultural improvement stations under the Taiwan Provincial Department of Agriculture and Forestry. Generally speaking, a good job has been done on grafting techniques and genetic engineering, manipulation of the fruiting process, fertilization, and disease control. But neither the government nor the farmers' associations are properly staffed for agricultural extension services. Besides, "there are many fruit growers over 50 who tend to accept all kinds of incorrect information, and at the same time they put up resistance to new ideas which are scientifically valid," Wu says. "They rashly take the word of pesticide and fertilizer salesmen and use excessive amounts of these chemicals. It is imperative that we strengthen manpower in this field."
Orchard management is not an easy life for growers because the trees have to be looked after carefully if they are to bear fruit regularly during their lifetime of up to 40 years or so. Besides, fruit trees do not earn any money for the initial five to seven years it takes them to mature. What is more, success as a producer does not guarantee success as a marketer. "We have land, technology, and manpower at our disposal in the fruit industry, but we don't own the market," once complained Yu Yu-hsien, chairman of COA, who made the remark when he was the commissioner of the Taiwan Provincial Department of Agriculture and Forestry. His point was that both farmers and consumers in Taiwan suffer exploitation because of the unreasonable marketing and distribution system for fruits in Taiwan.
The distance between producers and consumers is becoming longer as a result of continuous urbanization. Urbanites are more and more dependent on a myriad of services and handling stages. Before fruit can reach the consumers from the growers, it must be collected, sorted, graded, packed, processed, stored, transported, and put on the market. The greater the division of labor in society, the greater are the costs and number of stages required to move from production through marketing to final consumption. It is not news that bananas in Taipei sometimes cost six times the wholesale price in the growing areas.
A diminishing problem—fruit diseases and shipping damages are being minimized by government efforts to upgrade all aspects of production and marketing.
Individual fruit growers cannot afford to transport their own harvests to market because Taiwan's orchards have always been small scale and characterized by scattered plots with limited output. The growers must sell their harvest to wholesalers and to the so-called hang kou, the purchasing agents who supply the wholesale fruit markets. Farmers are in a poor bargaining position because they have inadequate information on the market value of their crops, whereas the purchasing agents are fully informed on this subject.
"The Agricultural Marketing Act only requires purchasing agents and wholesalers to register with the local governments. Beyond that, no other administrative supervision over them has ever been attempted," says Chen Shu-chen, marketing specialist in COA's Agricultural Marketing Division. "Purchasing agents don't compete with one another, and are in a position to manipulate the market because of their joint monopoly over purchasing," she says. A booming market does not necessarily bring profits to the farmers.
In Taiwan, about 40 percent of the consumer dollar goes to the agricultural sector, which is ten percent higher than the figure of 30 percent in the U. S. Yet investments by domestic middlemen in post-harvest processing, grading, packing, improved transportation, and other such outlays are far smaller proportionately than in advanced countries. The exploitation of the farmers by middlemen, a criticism heard at one time or another in virtually every country in the world, is also heard as a description of conditions in the ROC. "The high cost of marketing fruit results mainly from the top-heavy and complex marketing process and a scale of distribution which is too small to be efficient. The distributors include purchasing agents, wholesalers, supermarkets, retailers and street stalls," says Charles Huang, chief of COA's Agricultural Marketing Division. Someone must pay for freight charges, packing fees, allowance for damaged products, and so on. "Both the farmers and the consumers suffer even though many of the middlemen make only enough money to support their families and are not exploiting anyone," Huang says.
Since 1975, COA has initiated the "Shared Transport and Marketing" (STM) network, which consists of the farmers' associations, the Taiwan Provincial Fruit Marketing Cooperative, and other cooperative farms. "Farmers just deliver their harvests to STM's collection and distribution centers in the growing areas and leave everything else to the STM staff. The fruit is transported to the wholesale markets and sold to the highest bidder by auction," says Huang. Except for a management fee paid to the STM authorities, the farmers can keep the rest of the profits.
"The auction has been computerized beginning with this year, and the market prices are sent back to the farmers' associations by fax machine by 12:00 noon every day," Huang says. It used to take a week to 10 days to work out the total payment for the fruit, but now it takes only three days. Another distribution outlet is the "Direct Transport and Marketing" (DTM) method. Under this procedure, farmers' associations sell a small part of their fruit directly to supermarkets, thus saving more on expenses. In addition to dealing with privately operated supermarkets, the Taipei Agricultural Products Marketing Corporation, an STM member, operates six supermarkets in the Taipei area. "But supermarkets now make up less than five percent of the whole market, and it's unlikely that they will expand in the near future. As a result, the DTM only has a very small market share," Huang says.
"Since manpower within each farmers' association is inadequate for the task, the COA has grouped the association members into production and marketing teams," says Chen Shu-chen. Each team consists of up to 20 farmers growing the same fruit. The team chief acts as the contact man between the farmers and the farmers' associations in transport and marketing operations. "Fruits produced by team members are packaged and labeled the same way so that they can check on one another for quality," Chen says.
STM requires well-graded and carefully packaged products. Fruit packing used to be criticized for being dishonest and poorly designed for transport. Farmers put the quality products in the upper layers of the containers, and then hid the poor ones under them to deceive the buyers. They crated fruits in unwieldy wooden boxes and bamboo baskets weighing 110 to 132 pounds each when filled. The size of the containers also caused high levels of damage to the fruit.
"In 1975, COA began promoting the use of standardized cartons and graded packing by offering a subsidy to participating individuals and farm cooperatives," Chen says. For example, on one occasion the government offered to pay half of the carton cost to encourage seedless watermelon growers to try out the standard packing container. "The experiment was worth its expense because the farmers soon discovered that standard packing was economical and convenient, and within a year they were all willing to adopt it." Graded packing makes auctioning the fruit possible. Buyers no longer have to look inside the fruit containers before bidding. Thanks to such packing and grading methods, Sanwan brand pears have earned high marks for quality and consistency, so high in fact that the name is being copied by others.
During the early years, 23 farmers' organizations took part in the STM network, supplying around 8,000 tons of fruit to the Taipei area, including tangerines, grapes, Western melons, seedless watermelons, lychees, pears, strawberries, loquats, and others. The annual volume of these fruits supplied by STM in the Taipei area grew to almost 65,000 tons by 1989, and the STM membership rose to about 200 or so. STM and its auction system have been adopted only in the Taipei area, and it supplies about 30 percent of the Taipei market, mainly through the Taipei Agricultural Products Marketing Corporation. STM also distributes small amounts of fruits to other markets, including Kaohsiung. STM supplies to Taipei and elsewhere total slightly over ten percent of the market for fruits in all of Taiwan (data for 1988).
Since 1986 when the ROC's business tax was modified, both the sellers and buyers in the wholesale markets have been required to pay business tax. "Because transactions have been computerized, suppliers and buyers in STM markets cannot find any way to evade the business tax. Many of them turned to doing business outside the market so that their transactions would not be recorded and could thus escape the tax man," Chen says. In markets outside of Taipei, wholesale market managers do not record transactions as required because the purchasing agents and other dealers handle matters in their own ways. These outside operations have no auction system either. More than 50 percent of the business is done through purchasing agents without using the public wholesale market system.
To spray or not to spray, that is the question—the excessive use of pesticides in Taiwan's orchards is now causing increased public concern.
The farmers' level of awareness and sophistication with respect to improvement of the marketing system have not been raised to any marked degree. "Purchasing agents sometimes offer higher prices to the farmers as a way of hitting at STM. Unfortunately, many farmers covet small gains and go for instant advantage without considering that the enticing business arrangements probably will be canceled without warning whenever the market price dips. The farmers do business with purchasing agents when the market booms, and they turn to STM when the market is down," Chen says. "These practices and others of their kind have impeded STM's growth."
Taiwan's STM is often compared to its counterpart in Japan, which supplies around 80 percent of the Japanese fruit market. "It took the Japanese several decades to establish this system. There are wholesale markets in each Japanese city with a population of over 300,000 persons. Guided by Tokyo prices, these markets strongly influence fruit prices throughout Japan," says a marketing specialist of the Taiwan Fruit Marketing Cooperative (TFMC), a leading farmers' organization.
Huang points out that the COA's priority and greatest challenge is to improve the wholesale markets and the STM system. But there are only two administrators in Huang's division who are assigned full time to fruit marketing. "The government is studying the question of whether to set up a bureau of agricultural product marketing when the Ministry of Agriculture is established in the near future. Such a bureau can cover the business of fruit transport and marketing, processing, trade, and market expansion," Huang says.
Processed products like juice and canned fruits provide another outlet for the island's abundant fruits. Canned pineapples, for example, are one of Taiwan's major exports. But many of the famous fruit juice brands on the market are criticized because they are adulterated. Surprisingly, people in Taiwan may actually prefer the adulterated mixture, which tastes flat and watery to Americans who are used to the strong citrusy kick of U.S. juices. Some farmers' associations have tried to market quality 100 percent juice, but their efforts have met with only limited success. Their product is less competitive than the poor but famous juices because there are not enough marketing outlets to distribute the product to a wide spectrum of consumers and gradually educate their palate to what juice is really all about.
"Unlike consumers in the West, people in Taiwan do not look upon juice as part of their daily diet, and a discriminating demand for quality fruit juice simply does not exist," says COA's Charles Huang. To remedy the situation, "COA started this year to help farmers produce 100 percent pure juice of mangoes, tomatoes, star fruits, and citruses, under the brand name of The Country Road," Huang says, "and we hope to produce 200,000 cartons of canned juice in the first year." Neither COA nor the farmers' associations can afford to spend much on advertising.
As far as can be determined, there are no plans to develop a frozen fruit juice industry to serve the domestic market. There is a frozen concentrate production capacity, but it serves the export market, except for some concentrate supplied to domestic juice companies, which use the concentrate to prepare the adulterated juice described above. Evidently the exploitation of this market potential must await the evolution of popular demand for fruit juices, or at least the advent of someone with the vision and the capital resources to develop the market and wait patiently for the long-term payoff. COA's Food Technology and Processing Division notes that an earlier attempt to market frozen concentrates failed because consumers turned away from this form of food for the convenience of ready-to-drink mixtures.
The ROC government and the farmers' associations have taken other steps to promote the sale of fruits. For instance, COA has sponsored fruit competitions to upgrade quality and increase marketability. During festival seasons, farmers' organizations help the farmers to retail fruits in major commercial buildings for two or three hours a day. For example, TFMC has retailed fruit in the Taiwan Power Company Building once or twice a week, a very welcome move to the busy nine-to-five workers.
In addition to the domestic market, fruit exports have been an important outlet for the island's abundant supply of fruits, especially bananas, citruses, and pineapples. Fruit exports can be traced back to the years before World War II. In 1938, over 70 percent of locally harvested bananas was exported, mostly to Japan. But since the late 1960s, the planted area of both bananas and pineapples was reduced because of a number of factors, including rising production costs, keen competition from the Philippines and Latin America, and the appreciation of the NT dollar.
Outstanding in its field—the Tainung No.4 pineapple is known as the "perfumed pineapple."
TFMC has more than 218 collection and distribution centers and does a good job of STM operations for both domestic and foreign markets. Since 1974, it has been authorized as the island's exclusive banana export agent and is the sole supplier of Taiwan's citruses and mangoes abroad. Around 95 percent of banana exports go to Japan, with small amounts going to Korea and Hong Kong. The volume of orange exports has dropped since 1978 due to competition from the U. S. and mainland China. Citruses such as ponkans and tankans enjoy a stable foreign sale. Other fruits including citruses are mainly exported to Hong Kong, Singapore, and Malaysia, but "the competition from mainland China is becoming sharper, and we are working on opening up markets in the Philippines and Indonesia," says Z. F. Wu, TFMC's deputy general manager.
Farmers sometimes focus too much on supplying the domestic market when the price is attractive, and they fail to pay enough attention to the Japanese market, which can absorb vast quantities from February to June, according to Wu. "We have adopted production plans which will help us to avoid banana overproduction," he says. "We consult with our Japanese buyers about the quantity they will buy within the coming three to five years. Local production is then planned according to the agreement reached." The government uses the mechanism of TFMC to subsidize fruit growers when the price drops. TFMC disposes of unmarketable fruit when necessary by grinding it into animal feed. The government offers a citrus subsidy of US$0.035 per pound this year whenever the export price drops under US$0.276 per pound. "The harvest time sometimes comes too late for the Japan market because of weather conditions, including typhoons, so we also export our bananas to Korea," Wu adds.
Fruit growers have been suffering from the consequences of overproduction in recent years, and the flood of imported fruits has made the situation even worse. "Fruit trees are perennial plants. Most of the trees planted around 1984 have now matured and have started to bear fruit in commercial volume and quality," says COA's WU Min-tze. According to the Taiwan Provincial Department of Agriculture and Forestry, there were around 740,000 agricultural households as of June 1989. "More and more of them have stopped growing field crops such as rice and sugarcane. Instead, they now plant horticultural crops, especially fruit, for more value-added and greater potential for export. As a consequence, about thirty kinds of commercial fruit are overproduced," Wu says.
Early this year, more than 200 pineapple growers petitioned COA to control imports of canned pineapples, which has threatened the local pineapple industry, an irony for Taiwan—the kingdom of pineapples. The volume of imported fruits is increasing rapidly as a result of ROC's large trade surplus, the appreciating NT dollar, and local people's curiosity. While the farmers are forced to dump their mangoes into rivers, imported fruits from the U.S. (61 percent), Canada, Thailand, the Philippines, Korea, South Africa, New Zealand, Australia, and Chile are flooding the market.
According to COA's Agricultural Trade Division, the volume of fresh fruit imports ran up to 148,000 tons in 1987. This occurred just when there happened to be a bumper harvest on the island, with output reaching 50,000 tons above the previous year's level. The local production of apples was 16,300 tons in 1987, while apple imports amounted to 88,000 tons, mainly from the U.S. Not surprisingly, fruit growers mounted a public demonstration against imported fruits. To ease the situation, imports from areas other than the U.S. were suspended in 1987, and the concerned authorities have established an early warning system to maintain a close watch on the volume of fruit imports.
As a result of the government measures, retail fruit prices were driven up, but wholesale prices in the growing area remained unreasonably low. Apparently neither the farmers nor the consumers benefited much from the government measures. The extent of the problems caused by imported fruits can be gauged from the fact that 22 legislators have made around 40 interpellations in the nation's Legislative Yuan since 1987 concerning imported fruits.
Many nutritionists agree that local fruits are by no means inferior to imported fruits nutritionally or otherwise. According to an opinion poll conducted in December 1987, 45 percent of the interviewees occasionally buy imported fruits for their different or improved taste, for offerings to the gods, as gifts for family or friends, or for their better quality. The import value of fresh and processed fruits in 1989 amounted to US$221 million, with an annual growth rate of almost 25 percent. Apples, grapes, and grapefruits from the U.S. formed the bulk of these imports. The current annual per capita consumption of imported apples in the ROC has reached about ten pounds. The current volume of fruit exports surpasses imports, but it is expected that the competition between domestic and imported fruits will grow keener.
The government's policy is to try to treat all fruit exporting countries equally and without discrimination. The import of many items such as nuts, honeydew melons, and raisins has already been resumed. Imports remain suspended for 14 other fruits such as bananas, pineapples, mangoes, grapes, and grapefruits because of their heavy impact on the domestic market. "By this coming October, people can expect imports of apples to resume their pre-1987 levels," says Wang Ming-lai, chief of COA's Export/Import Division. Hundreds of thousands of tons of American fruits have been imported, but almost no Taiwan fruits are exported to the U.S. "The U.S. has stricter import regulations than the ROC, although Taiwan fruits can already meet American quarantine standards, technically speaking. During the latest Sino-American trade talks, the ROC requested that this situation be corrected, but there have been no results as yet," Wang complains.
Besides planning production to cope with overproduction problems, Wu Min-tze notes that the government must guide quality improvements in agriculture in general and in the fruit industry in particular. COA has focused on helping full-time fruit growers to produce quality fruits, with appropriate attention to the inner texture of the fruit when grading and packing their products. "I believe a higher price for quality fruit is acceptable to the consumers and is an inducement to the farmers to continue improving their fruits," he says. Fruits of poor quality will soon be driven out of the market, and overproduction will be eased.
Keener competition from abroad, increasing production costs, and consumer demands for higher quality and a wider variety of fruits offered on the market have made people question the wisdom of developing the fruit industry in Taiwan. Local experts on production and marketing are convinced that there are still rosy prospects for superior quality and variety in fruit production, thanks to the revolution of consumer preferences and growing consumer purchasing power. Nevertheless, much remains to be done in improving quality, the marketing system, farmers' organizations, and agricultural education and extension work.