Taiwan May Initiate Pork Import Program Following Pork Price Spike

Taiwan may implement a special pork import program following a sharp rise in domestic pork prices. The domestic pork price spike has made headline news in Taiwan over the last three weeks, and the Taiwan Government is investigating whether a disease outbreak, market speculation, or both lies behind it. After a steady run-up to the Jan. 31 lunar New Year, the average live market hog price leaped by nearly 20 percent in February, reaching a historical high of NT 83.17/kg ($125.86/cwt) on March 3. Following an announcement by Taiwan’s Council of Agriculture (COA) that it may halve the pork import duty to facilitate imports and undertake other measures to control prices, live hog values weakened by 2.7 percent and closed just above NT 81/KG on March 13.

According to Taiwan government sources, 220,000 piglets (which would equate to about 3 percent of annual hog slaughter) died of porcine epidemic diarrhea virus (PEDV) during the October to February winter growing season, but industry sources tell USMEF the extent of PEDV remains murky and that other forces may have contributed to the rapid price increase. Earlier this week, Taiwan authorities reported that they had completed an investigation of key pork market operators, including processors and cold storage operators and found that five of the largest ten companies were under suspicion of “irregular transactions” involving pork sales. The investigation was prompted in part by analysts’ claims that the recent price hike came too early too fast, and that any PEDV supply hole was likely to appear later in the spring and early summer.

USMEF notes that earlier reports that Taiwan had decreased its pork import duty from 12.5 percent to 6.25 percent were premature, and that the duty reduction is just one of several options still being considered. COA also announced that it had asked the Taiwan Sugar Corporation, a state-run enterprise that also raises and processes hogs, to release meat from 3,000 hogs onto the market this month to augment commercial supplies. The National Animal Industry Foundation (NAIF) will soon facilitate a special pork import program of up to 3,000 tons per month as another market control measure, according to recent press reports. USMEF is seeking additional information on the import mechanism.

Total annual pork imports, including variety meat and a very small volume of processed products, have averaged approximately 54,000 mt over the last decade, with a record import volume of 78,000 mt in 2009. Last year, Taiwan imported 49,880 mt of pork, with Canada capturing a 48 percent market share and the U.S. a 30 percent share. According to COA statistics, Taiwan’s pork self-sufficiency rate increased from 90.7 percent in 2004 to 93.9 percent in 2012. Taiwan’s pork production remained basically steady in 2013. In the meantime, Taiwan’s per capita pork consumption has fallen slowly but steadily over the decade from 40 kg in 2004 to 37 kg in 2012 according to COA statistics. Variety meat and pork bellies are still subject to special safeguards under which duties rise by a third when shipments in a given year reach 23,372 tons and 9,987 tons respectively.

As Taiwan explores sources of imported pork, price will be important, and high current U.S. prices could be a deterrent. According to USMEF-Taiwan Director Davis Wu, “Imported pork is utilized by the processing industry, and pricing is the critical determinant in purchasing decisions. Taiwan has several overseas supply choices.” NAIF stated Wednesday that Taiwan’s ban on ractopamine residues in imported pork will remain in place for purchases made under the special import program currently being considered.

Taiwan established an import MRL for ractopamine in imported beef on Sept. 11, 2012, following the adoption by the CODEX of safe MRLs on July 6. USMEF believes the lack of a ractopamine MRL for pork will be an issue in upcoming Trade and Investment Framework Agreement (TIFA) talks between the U.S. and Taiwanese governments scheduled to begin the first week of April. USMEF held meetings with American Institute of Taiwan (AIT) officials earlier this week and were told that the TIFA talks provide a forum for bilateral discussions on Taiwan’s possible eventual entry into the Trans Pacific Partnership (TPP). Taiwan President Ma Ying-Jeou told the American Chamber of Commerce in Taipei on March 11 that Taiwan’s “next major goal” is to join TPP. Taiwan is also seeking entry into the Asia-wide Regional Comprehensive Economic Partnership (RCEP).