Ensuring the welfare of the rural population

Welfare benefits (pension) for elderly farmers

　　To care for Taiwan’s aging farmers, in June of 1995 the government initiated a “welfare allowance” (also called “pension”) for elderly farmers. The amount of the allowance, originally NT$6,000 per month per recipient, was increased as of January 1 of 2012, to NT$7,000 per month. It is issued to all qualified farmers 65 years of age and over. In 2014 the COA dispensed NT$55.29 billion in welfare allowances to 686,000 persons.

　　To ensure that the money budgeted for the pension for elderly farmers goes only to people who were genuine farmers, on June 28 of 2013 the COA began to investigate the credentials of all persons with Farmers Health Insurance (FHI, a prerequisite to collecting the pension) who are about to turn 65 years of age. Only those genuinely qualified for the farmers’ pension will be allowed to apply; those not qualified will be asked to apply for different social benefits for which they are qualified, in order that their rights are also protected. As of the end of 2014, we had removed 3706 non-qualified persons from FHI, and assisted them to join the National Health Insurance program (which covers all citizens not covered by other programs). This allows us to use our internal budget to take care of genuine farmers, while upholding fairness and social justice.

State purchases of paddy

　　Rice is the most important crop in Taiwan. To support incomes of rice growers and stabilize prices of this critical staple, since 1974 the government has been purchasing rice at guaranteed prices. Responding to changes in recent years in rural lifestyles and circumstances, since the second crop of 2011 the government has allowed farmers to sell fresh/wet paddy to the government under this program. In 2014, fresh/wet paddy constituted 72% of the paddy sold by farmers to the state, as compared to 59% in 2011. In 2014, for the first growing season of the year, the government purchased 343,000 metric tons (MT) of dried paddy for public stocks. During the purchasing period, the market price was, on average, NT$23.7 per kilo. For the second crop, the government purchased 82,000 MT while the average japonica-paddy market price was NT$23.6 per kilo. Total state purchases for the year were 425,000 MT. Calculating based on the differences between the guaranteed purchase price and the market price, purchases for public stocks increased the incomes of rice farmers by about NT$1 billion.

Natural-disaster relief

　　In order to reduce the impact of natural disasters on agricultural production, the COA, acting on the basis of forecasts from the Central Weather Bureau, issues press releases and puts real-time information on our website to inform the rural population about pre-event preparedness and post-disaster relief. We also train individuals in the skills necessary for assessing and reporting on local disaster conditions, and have purchased digital tools (such cameras that have GPS tracking) to make on-site investigations more efficient, allowing us to deliver assistance more quickly and effectively.

　　In 2014 there were a number of occasions when inclement weather resulted in losses to agriculture. These included: (a) low temperatures in February, (b) hail and a tornado in March, (c) the “0331” destructive winds, (d) weather fronts in March and April, (e) low temperatures in April and May, (f) the “0502” destructive winds, (g) heavy rains in May, (h) the “0603” torrential rain, (i) the tornado of July 19, (j) Typhoon Matmo, (k) heavy rains in August, (l) Tropical Storm Fung-wang, (m) drought in Taoyuan County in August and September, and (n) drought in Taichung from August to October. Acting on the basis of regulations governing disaster relief to agriculture, the COA arranged cash relief payments, special-case subsidies, and low-interest loans to affected farmers. Total relief allocations in 2014 were NT$670 million, benefiting over 15,000 households, while 123 farm or fishing households were helped to get low-interest loans totaling NT$80.63 million. These practical measures substantively reduce the impact of natural events on the rural population.

Fuel subsidies

　　Under the COA’s standing policy to assist in the purchase of fuel for farm machinery, there is a subsidy of 50% for increases over the base price. In 2014, we subsidized the purchase of 63 million liters of fuel for use by farm machinery, with subsidies totaling NT$9.28 million. In addition, under the “Value- Added and Non-Value-Added Business Tax Law,” there is also an exemption from the 5% business tax. The owner of farm machinery simply needs to get a certificate from his or her local government certifying that he/she uses the farm machinery in question, and then using this certificate the farmer can purchase fuel from any local gas station and enjoy these benefits.

　　Subsidies for diesel fuel for fishing boats began on May 28 of 2008. They are calculated based on a 14% fluctuation in fuel prices. In 2014, the COA provided subsidies totaling NT$1.94 billion for a total of 595,000 cubic meters of diesel fuel. Gasoline for fishing boats was brought within the subsidy program in 2009. In 2014, the COA provided gasoline subsidies totaling NT$102 million to 5581 boats.

Fertilizer subsidies

　　Most of the raw materials for fertilizers needed in Taiwan are imported and are thus subject to factors beyond the control of local farmers and manufacturers. Since May 30 of 2008 the COA has implemented a program to manage the price of fertilizer and stabilize fertilizer supply. The nominal domestic price of fertilizer follows changes in the prices of raw materials, but the government subsidizes the differential to reduce the burden on farmers. As of the end of 2014, the cumulative cost of the subsidy program was NT$23 billion. The subsidy program currently applies to 10 major types of chemical fertilizers.

　　In 2014 international prices for raw materials for fertilizers showed a downward trend, but still remained higher than the time period from which the base price of fertilizer sold in Taiwan was fixed. Taking into account the most effective use of overall resources, the government continued to absorb the differential, thereby keeping the purchase price stable for farmers. For all of 2014, the cumulative amount of subsidized fertilizer was 765,000 metric tons, with subsidies totaling NT$1.3 billion. After taking into account the subsidies, prices for fertilizer in Taiwan were lower than those in neighboring countries like Japan and Korea.

Educational subsidies

　　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 in Taiwan, a program was launched in September of 2003 to provide financial support for these children. In 2014 a total of NT$1.19 billion in academic subsidies was paid out, helping 153,000 young people continue their education.

Fisheries insurance and safety

　　The COA, acting on the basis of the "Regulations Governing Incentives for Insurance for Owners of Motorized Fishing Vessels," provides incentives for owners of motorized vessels of less than 100 tons to sign up for insurance. In 2014 a total of 7,634 fishing vessels (35% of all fishing vessels) received benefits under the program.

　　To provide security for the families of fishermen killed or injured at sea, the COA, acting on the basis of regulations covering insurance for fishermen during at-sea operations, makes payments for affected individuals. In 2014 the COA approved payments for 39 individuals, totaling NT$36.75 million. In addition, based on regulations governing insurance for fishing vessels, in 2014 the COA paid out compensation of NT$1.4 million for 24 vessels. Depending upon the specific situations of individual cases, the COA may also approve “consolation payments" for individuals; in 2014 payments of NT$2.32 million were paid out in cases involving 50 individuals.

　　To help maximize the safety of our nation's fishermen, the Fishery Radio Station of the Fisheries Agency of the COA provides 24-hour information on weather and sea conditions, as well as issues reports about incidents at sea involving fishing vessels. In 2014, communication was effected a total of 670,000 times, rescue operations were conducted on 562 occasions, and 2,041 individuals were rescued. In addition, on January 6 of 2014, the COA completed construction of a communications mechanism for emergencies for crew who are injured or become ill at sea. In 2014 the mechanism was implemented on 24 occasions.

Livestock insurance

　　Based on the "Agricultural Development Act" and the "Livestock Insurance Regulations," the government guides the National Farmers’ Association in offering livestock insurance. Policies are available to cover the loss of dairy cows, the loss of hogs, and the loss of hogs in transport. Livestock insurance helps spread the risk of raising livestock, discourages illegal trade in carcasses, improves the image of the industry, and raises consumer confidence in domestic pork. In 2014 a total of 8,594,039 head were insured, of which 14,103 were dairy cows and 8,579,936 were hogs. The program has won strong support from farmers, and it has effectively prevented illegal sale of carcasses (in 2014 there was not a single case of illegal sale of a livestock carcass).

　　Because insurees that raise livestock on a larger scale should have greater ability to pay for insurance and should take greater responsibility in the system, subsidies for livestock insurance, which were originally uniform regardless of scale of operations, are now differentiated, with different proportions of premiums being covered depending upon the scale of operations. The budget saved will be used to assist small-scale operations to participate in the insurance system, in order to address the problem of small-scale livestock operators failing to send carcasses of dead animals for rendering.

Market adjustment mechanisms for agro-products

　　The COA takes appropriate measures to ensure balance between supply and demand in the market for agro-products. Under this system, we can precisely track production volume by providing local governments with production targets, forecasts, and "early warnings" of imbalances. In the event of imbalances we take pre-emptive measures as well as later adjustment measures. In 2014, we adopted early warning and adjustment measures that included: (a) export promotion, marketing, and processing for garlic; (b) halting the harvesting of ume plums (Vatica mangachapoi Blanco); (c) state purchasing and resale for processing of lychee (litchi) and of pongkan tangerines; (d) tracking and marketing of domestic pork. These measures ensure stable prices for consumers and dependable incomes for farmers. Total expenditures in this area in 2014 were NT$182 million, of which NT$90 million went for farm products and NT$92 million went for livestock products.

　　The COA also stabilizes prices by setting, monitoring, and managing floor prices for agro- products. Where necessary, we assist farmers’ associations to diversify sales channels (including via the Internet) to raise demand and thus prices. In 2014 we guided farmers’ associations in: (a) making sales to the military and to correctional institutions, (b) operating a platform offering incentives for large orders for fruits and vegetables and direct shipment from place-of-production, and (c) operating their own supermarkets. We also moved 19,600 tons of domestically produced Brassica oleracea vegetables (e.g. cabbage, broccoli, kale), garlic, onions, guava, wendan pomelo, and Pacific saury, effectively stabilizing the production and marketing of these items.

Anti-piracy measures for long-range fishing operations

　　In recent years, piracy has been a major problem in the waters around Somalia, threatening the safety of all ships and crews operating in those waters. On August 21 of 2013, the COA, responding to requests from the fishing industry, announced amendments to the “Fisheries Act” that permit fishing vessels to hire private armed security personnel, in order to protect crews and allow operations to continue unhindered. On January 20 of 2014, the COA completed the legal framework for this policy by announcing relevant bylaws required by the amendments (including regulations governing methods for hiring private armed security personnel, as well as regulations defining high-risk areas for piracy or armed criminal activity). With the legal framework in place, fishing ships operating in high-risk areas could begin to legally employ private armed security personnel for self-defense, and in 2014, 80 fishing vessels did so.

Rural functional organizations

Farmers' and fishermen's associations

　　In 2014 the COA made two important changes in the regulations governing farmers' and fishermen's associations. First, on January 1 of 2015 these associations became subject to the Labor Standards Act. As a consequence of this the COA had to amend a number of regulations. On November 28 of 2014 we announced amendments to: (a) the regulations governing personnel management at farmers' associations, and (b) the regulations governing financial management at farmers' associations. On December 27 of 2014 we announced amendments to the same sets of regulations as they apply to fishermen's associations. These changes ensure that staff at these associations will enjoy the protections of the "Labor Standards Act" and the "Labor Pension Act," creating a fairer framework for labor-management relations.

　　Second, to conform to measures adopted by the Ministry of the Interior to make household certificate transcripts paper-free, on June 3 of 2014 the COA announced corresponding amendments to the regulations governing the review and verification of qualifications for members of local-level farmers' associations.

　　In order to assist farmers' and fishermen's associations to develop profitable enterprises, the COA once again selected the "Top 100 Products of Farmers' and Fishermen's Associations," for which we printed high- quality catalogues, and sent these catalogues to large corporations as reference in large- scale purchases of holiday gifts. We also held a major exhibition of these “Top 100 Products" from December 25 to 28 of 2014.

Irrigation associations

　　The COA oversaw the holding of the 4th direct elections for directors and commissioners of Taiwan's 15 irrigation associations. We also amended a number of regulations governing these associations, including: (a) those governing management of finances, (b) those governing methords for collecting membership fees, (c) those governing personnel management, and (d) those governing organizational structure for use by the Liugong and Qixing irrigation associations of Taipei City. To ensure that irrigation associations do not become a financial burden on farmers, the COA provides subsidies to pay membership dues. In 2014 these subsidies totaled NT$2.23 billion.

Rural financial institutions

Diversifying financial services

　　To enhance the quality and competitiveness of services provided by the credit departments of farmers' and fishermen's associations (F/FAs), the COA assigned the Agriculture Bank of Taiwan (ABT) to reorganize the services of F/FA credit departments. In June of 2010, F/FAs signed comprehensive contracts to construct a complete integrated vertical system for payment services, allowing F/FAs to accept and process 273 different types of payments, including insurance premiums for national pensions; payment of water, electricity, cable TV, and telecommunications bills; payment of the fuel-usage fees for motor vehicles; and credit card payments. By the end of 2014, 1,170 credit departments at 306 F/FAs had processed a total of 45.46 million such transactions, totaling nearly NT$173.8 billion.

Improving management of F/FA credit departments

　　The COA has for many years been working to steadily improve operations at the credit departments of farmers' and fishermen's associations (F/FAs) Total deposits at these credit departments in 2014 were NT$1.71 trillion, while outstanding loans were NT$954.4 billion. Before-tax net profit was NT$5.6 billion. The non-performing loan ratio was 0.7%, the lowest point over the last three decades. The non- performing loan rate was less than 1% at 228 of the 306 credit departments at F/FAs, and 60 boasted a rate of 0%, showing that loan quality, already at a high level before 2014, continued to improve.

　　In December of 2014 significant changes were made to laws and regulations related to rural finance. Besides (i) creating a mechanism for cross-deposits and capital flows within the agricultural financial system, as well as (ii) upgrading the efficiency of the use of capital in credit departments of F/FAs, the regulatory changes relaxed a number of restrictions in order to upgrade the competitiveness of the business operations at these credit departments. In addition, to assist these credit departments to cope with potential future losses that may result from changes in economic conditions, stipulations were added to require that the rate of non-performing loans be lowered in order to maximize the capability to absorb risk. Our goals are to expand the business operations of F/FA credit departments—especially to encourage them to steer more capital into the agricultural sector and assist with both agricultural policy and the development of rural economic activity—while carefully managing and minimizing risk.

　　All in all, there has been a marked improvement in the operations at F/FA credit departments. The COA will persist in keeping close track of operational conditions at all such institutions, help out when problems are discovered, and strengthen monitoring. We will equally emphasize oversight and guidance as we continue to advise credit departments on how to improve operations.

Policy-oriented special agricultural loans

　　The COA has long had a policy of processing loans that are designed to promote specific policies (as opposed to loans made on purely financial grounds). In 2014 we provided NT$20.3 billion in policy loans to 43,000 farmers and fishermen to help them meet their needs for operating capital. At the end of the year, outstanding loans of this type totaled roughly NT$87.8 billion, benefiting 220,000 farmers and fishermen. We also assisted about 30,000 farmers and fishermen to use the agricultural credit guarantee mechanism so that they could raise NT$15.7 billion in capital.