Building a systematic, fair mechanism for adjusting pensions for elderly farmers

Given that future price fluctuations may have an impact on the household budgets of elderly farmers, while also taking into account the government’s financial capacity and the public’s expectations of fairness and justice, on December 21 of 2011 the government announced revisions to the Provisional Regulations on Welfare Benefits for Aging Famers, with the result that as of January 1, 2012, pensions for elderly farmers have been increased to NT$7000 per person. In the future, this amount will be automatically re-evaluated and adjusted once every four years, with reference to increases in the consumer price index. The creation of this regular, systematic mechanism for adjusting the pensions for elderly farmers is intended to insulate the process from political considerations. At the same time, after consulting the rules used for excluding the wealthy from eligibility for other social welfare benefits for the elderly, the principle adopted for the farmers’ pension system will be “excluding the new without affecting the old.” These rules will come into effect starting from January 1, 2013, with a one-year transition period, and the government will do its utmost to inform and educate the public about the rules at that time.

Educational subsidies for the children of farmers and fishermen

In order to ensure that the children of farmers and fishermen do not, for economic reasons, miss out on the chance to get high-school and college educations, a program was launched in September of 2003 to provide financial support for such farmers and fishermen. In 2011 a total of NT$1.546 billion in academic subsidies was paid out, helping 216,800 children continue their education.

Helping farmers cope with losses from natural disasters or from imports

To ensure that farmers get appropriate, reasonable assistance when natural disasters strike, and in conformity with the principles of proportionality, fairness, and non-arbitrary rule-based systems, the COA amended the Regulations Governing Emergency Relief to Agriculture in the Event of Natural Disaster to increase the percentage of “special-case subsidies” that can be awarded in the form of cash assistance from 50% to 80%. At the same time, the COA amended the rules governing both (a) the items eligible for cash disaster relief and (b) the maximum cash subsidy amounts per item. The rules have been adjusted by taking into account the production costs, production times, and special features related to the cultivation and harvesting of each type of crop. There are now 14 types of crops divided into eight major disaster relief categories, and amounts have been adjusted within reason. Cash relief for various kinds of crops has been increased by NT$1000 to NT$40,000 per metric ton.

To moderate the impact of trade liberalization on the domestic agriculture sector, the COA has pursued structural adjustment across the agriculture sector (including fruit, rice, tea, hogs, poultry, cattle, and seafood). We have worked to reinvigorate and retrain the agricultural labor force, to improve immunization and quarantine work, to help in international marketing of Taiwan agro- products, and to effectively improve the structure and competitiveness of this sector. In 2011, there were no incidents of large-scale imports of agro-products from abroad leading to large declines in prices for domestic agro-products.

Adjusting market balance for agro-products

The COA convenes monthly conferences on the supply of hogs in the market, to ensure orderly distribution and marketing and to keep actual supply within a 3% margin of market-negotiated supply. Seasonal conferences for early warning on hog prices are also held. Surveys are conducted on all kinds of poultry products (chicken, duck, goose, turkey, ostrich and eggs), with over 95% of poultry producers surveyed, so that we can—through Internet technology and wireless communications—provide fast, complete, and accurate daily reports on the market situation.

We have created an Internet reporting system for seedlings for staple vegetables. When the planted area exceeds the designated warning figure, measures are taken to plow under some planted land; 519 hectares were plowed under in 2011. We also purchased garlic from farmers who had registered their acreage, acquiring 5185 metric tons, of which 4239 metric tons were sold, for export only, via public bidding. When added to the 3564 metric tons exported with COA guidance and the 1200 metric tons exported independently by farmers, total garlic exports were 9003 metric tons.

The COA provided guidance for the purchasing of inferior oranges from farmers for processing. Amounts purchased were 2442 metric tons (MT) in 2010/2011 and 4899 MT in 2011/2012. Also, 4522 MT of Mandarin oranges were bought for processing, and 778 MT of guava were acquired to be processed or turned into organic fertilizer.
We guided cooperation between farmers groups and the private sector for the latter to purchase 9679 MT of seasonal fruits (such as mangoes, wendan pomelos, bananas, passion fruit) and staple vegetables. We also closely followed the market for rice and fluctuations in rice prices, and released 33,000 MT of rice from public stocks onto the market to ensure a balance of supply and demand.

We conduct daily monitoring and analysis of data from reporting stations set up at 25 wholesale seafood markets and 15 aquaculture ponds. When concerns arise during the height of the production season that market imbalances may occur, we guide fisheries industry groups to undertake remedial measures including promotional campaigns, freezing and storage, and processing, in order to reduce market turnover and stabilize prices. When prices rise sharply in an unusual manner, we work with seafood retailers and industry groups to coordinate storage of fish or substitution of fish supplies, in order to stabilize prices.

Better terms for farmers for rice purchased for public stocks

Rice is the most important crop in Taiwan: nearly 260,000 hectares of land are planted with it, and more than 230,000 households grow rice. To better reflect the realities of current operating conditions and in consideration of increased costs of production, starting with the first growing season of 2011 the price for public purchases of rice was increased by NT$3 per kilogram, a move which will shore up rice farmers’ real profits. In addition, starting with the second growing season of 2011, the COA began promoting a wet-paddy purchasing policy, and began to subsidize farmers NT$2 per kilo on the basis of dry paddy for the costs of drying, packaging, and storing rice that is to be delivered for public purchase, thereby reducing the burden on farmers of delivering rice to the government.

Because there was a bumper harvest of rice in 2011, in combination with the above-mentioned changes in the government’s rice-purchasing policy, farmers became much more willing to sell to the state. A total of 386,000 metric tons of rice was purchased for public stocks in 2011, effectively reducing the amount on the market and thereby stabilizing prices. It is estimated that farmers earned profits of about NT$40-50,000 more per hectare in 2011 than in 2010, indicating that the COA is living up to its policy of protecting farmers’ welfare.

Subsidizing fertilizer price differentials

Most of the raw materials for fertilizers needed in Taiwan are imported. To ensure a normal supply of fertilizers, since May of 2008 the COA has been adjusting the domestic price of fertilizers, and the government has been subsidizing 85% of price increases, with farmers absorbing the remaining 15%, thereby reducing the burden to farmers of purchasing fertilizers. In 2011 subsidies were continued for 11 types of chemical fertilizers. The total cost of the subsidy program from May 2008 through the end of 2011 was NT$15 billion.

In 2011 international prices for raw materials for fertilizers continued to climb. Most of the increases in the domestic price of fertilizers were absorbed by government subsidies, covering 88% of price increases, thereby keeping the purchase price of fertilizers stable for farmers. After taking into account the subsidies, prices for fertilizers in Taiwan were lower in 2011 than in neighboring Japan and mainland China. Taking carbamide (urea) for example, farmers in Taiwan paid only 40% of what farmers in Japan paid, and the price in Taiwan was also lower than in mainland China.

Fishing boat insurance and compensation for damage

In order to further encourage fishing boat owners to actively participate in insurance, on December 30, 2011 the COA revised the regulations that govern incentives for owners of motorized fishing vessels to participate in insurance. For owners who own boats of less than 20 tons, 20-50 tons, and 50-100 tons, and who thereby would apply for insurance subsidies of NT$4000, $6000, or $8000 (respectively), it is now possible for them to apply during the insurance period.

In response to the restructuring of local government and the creation of three new special municipalities (bringing the total to five in Taiwan), on April 27, 2011 we officially amended the regulations governing relief for fishermen or boats who suffer accidents, to the following effect: Where a fishing boat is registered under the fishing industry of a special municipality, if there are losses as a result of fire or of irresistible forces during at-sea operation, besides similar financial assistance that can be applied for under other laws or regulations, the affected persons can also apply under these regulations. Compensation will be paid for either complete or partial loss, based on the tonnage of the vessel. This will protect fishing boat owners against being unable to operate as a result of accidents or damage.

Livestock insurance

Livestock insurance is the only policy-based insurance among all forms of agricultural insurance in Taiwan. It was launched on a trial basis in 1954, the national legal framework was completed in 1960, and the policy formally went into effect at the local level in 1963. Under the Agricultural Development Act and the Livestock Insurance Regulations, the insurance system is run by local-level farmers associations, with the government playing a guidance role. Livestock insurance helps spread the risk of raising livestock, discourages illegal trade in carcasses, lowers operating costs, improves the image of the industry, and raises consumer confidence in domestic pork.

Livestock insurance includes death insurance for dairy cows, death insurance for hogs, and transport insurance for hogs. Of these, death insurance for hogs has been extended to every city and county in Taiwan (including all five municipalities). In 2011, a total of 9,678,464 head were insured. Of these, 9,655,167 were hogs, with the remainder being dairy cows. In the entire year there was only a single case of illegal sale of a livestock carcass, showing that the program has not only won strong support from farmers, but has effectively prevented the illegal sale of carcasses.

Building a modernized market information broadcast system

In 2011 the COA drew up plans to build an automatic notification-broadcast system utilizing information and communications technology, and has begun training specialists in agricultural market information, to remedy shortcomings in existing systems for disseminating agricultural information. Tasks include:

◆Building a platform for automatic transmission of agricultural information via fax, text messaging, and e-mail, which will issue up-to-the-minute information.

◆Construction of electronic “bulletin boards” for agricultural information, so that farmers or fishermen can go to any farmers’ or fishermen’s association office and see the market information and agriculture- related programming on the screens.

◆Selection and training of “agricultural market information specialists” from among the staff of production and marketing groups or farmers’ associations, who will assist in transmitting information, and will help to explain it, to farmers who are elderly or who are unable to use information technology to get the information they need.