Executive Summary

On January 25, 2006, Taiwan announced that, effective immediately, it would resume imports of a limited category of U.S. beef products. The conditional lifting of the import suspension will lead to additional Taiwan beef imports in 2006, although the United States is not expected to immediately recapture its pre-ban market share. Taiwan’s total 2006 beef imports are now forecast at 98,000 metric tons (CWE), up from an estimated 92,000 metric tons (CWE) in 2005.

Taiwan’s pork situation in 2006 is forecast to be essentially unchanged from 2005. Taiwan’s plans to stop foot-and-mouth disease (FMD) vaccination and become recognized as FMD-free by 2007 will likely be postponed. Taiwan’s once vibrant pork export industry is unlikely to regain its status and the highly-efficient swine sector will continue to produce pork for the domestic market, supplemented by imports for processing or to cover the occasional shortfall.

Pork Production

A recent pig inventory survey showed that pig production in 2006 is likely to grow slightly from the 2005 level. Pig slaughter is estimated at 9.65 million head in CY2005 and forecasted at 9.8 million head in CY2006.

Domestic pig prices fell below NT$5,000/100 kg in later half of January 2006. The decline would be have been greater if prices were not partly offset by strong pork demand for the Chinese New Year holiday, from January 28 to February 3, 2006. The large pig herd in 2006 is expected to reduce pig prices NT$4,800/100 kg shortly after the holiday. Price are likely to decline further to NT$4,500/100 kg, a rough break-even point for Taiwan hog production, later in the year.

Trade

In 2005, Taiwan imported 160 head of live hogs, 155 head from the United States and 5 from Canada. Live hog imports in 2006 are expected at similarly low levels. CY2005 total pork meat imports were down 35% to 26,172 mt, PWE (37,426 mt CWE), with U.S. taking nearly half of the market. CY2005 pork bone imports totaled 985 mt (985 mt CWE). This makes the total CY2005 pork import level, as shown in the PS&D table, 38,000 mt CWE.

The U.S. replaced Canada as the leading pork supplier in 2005, a situation expected to continue in 2006. Taiwan’s pork imports are heavily dependent on prices. Taiwan’s pig prices are expected to be low in 2006, which may discourage imports. Total CY2006 pork imports are forecast at about the 2005 level, with the United States being the leading supplier. U.S. pork picnics, for processing purpose, will continue to be the cut with the highest market potential in Taiwan. Pork trimming supplied by Canada seems to be more competitive, in quality and specification, than U.S. products.

Pork bone imports totaled 985 mt in 2005. They were 536 mt from Canada; 301 mt from US; 117 mt from Hungary; 24 mt Sweden and 7 mt from Australia. Under Taiwan’s WTO commitments, Special Safeguards (SSG) came into play following Tariff Rate Quota (TRQ) liberalization on January 1, 2005. Taiwan’s SSG volumes for pork belly and pork offal in 2005 and 2006 are as follows: (in mt)

The CY2005 pork offal volume SSG of 15,1775 mt was triggered on October 11, 2005. The most popular pork offal items have been hocks, which took about 60% of all imports in 2005, followed by rectum. Only 4 tariff items, HS 0206.3020 (fresh/chilled hocks), 0206-4930 (frozen hocks), 0504.0021 (guts including intestines and stomachs) and 1602.4930 (processed hocks and guts) are subject to SSG. Imports of pork liver, tendon, and other pork offal items, which are not counted against the SSG, totaled about 6,000 mt in 2005. Imports of pork offal, whether or not classified under SSG, are not taken into account in the PS&D table. Taiwan’s demand for pork offal imports has been strong over the past years.

However, retailers reportedly kept a big pork offal inventory in 2005. 2006 pork offal imports are not expected to exceed the 2005 level. In 2006 the volume SSG may not be triggered. The CY2006 SSG price trigger for pork belly remains unchanged at NT$30/kg. There is no SSG price trigger for pork offal.

Policy

Taiwan recognizes the pork meat inspection and food safety system of the United States, Canada, Australia, New Zealand, Denmark and the Netherlands. Any pork or pork variety meats supplied by government-approved establishments from these countries may be allowed entry into Taiwan. On the other hand, only certain establishments in Sweden, Hungary, Finland and Japan are qualified to supply pork and variety meats to Taiwan. The same Three-Column tariff rate structure reported in the Beef Section applies to pork. Panama, as Taiwan’s sole FTA partner, enjoys preferential tariffs for pork and products. However, no establishment in Panama has been approved to supply pork and products to Taiwan.

Taiwan’s FMD vaccination rate exceeded 90% in 2005. Although Taiwan has been FMD-free since 2001 and was declared FMD-free with vaccination in May 2003 by the World Animal Health Organization (OIE), exports are not likely to recover to pre-FMD levels. The animal health authority’s plan to stop FMD vaccination on a couple of offshore islets beginning July 1, 2005 was postponed and now being rescheduled to begin in March 2006. It now seems unlikely that Taiwan will meet its initial goal to completely stop vaccination in 2006, and become recognized by the OIE as FMD free without vaccination in 2007. In the long term, the very efficient Taiwan swine industry will continue to produce pork for the local market, with imports mainly used for processing or to supplement occasional shortfalls.

Further Information

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Source: USDA, Foreign Agricultural Service - Annual Livestock and Products Report - February 2006