Required Report - public distribution

**Date:** 2005/9/1

**GAIN Report Number:** TW5026

TW5026

**Taiwan**

**Poultry and Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Scott Sindelar

American Institute in Taiwan

**Prepared by:**

Jeff Miller

**Report Highlights:**

Imports are rising significantly in the wake of Taiwan's elimination of
all tariff rate quota restrictions. Broiler meat imports are expected to
rise nearly 50% this year and another 20% next. The United States is
currently in a strong supply position, being one of only six countries
certified for poultry exports to Taiwan and the only one of these with
sufficient volumes and competitive pricing points. Poultry consumption
grew during 2004 and may continue to do so in the next year or two due
to production and supply issues faced by other meat proteins.
Consumption levels should stabilize in the 770\~780K mt range, or fall
back slightly, once these issues are resolved / overcome.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Taipei ATO \[TW2\]

\[TW\]

**[Executive Summary]{.smallcaps}**

Poultry meat and eggs are pillars of the traditional Chinese diet. From
*kungpao* chicken, Peking duck, and stir-fries to Cantonese-style air
dried duck, \"1,000 year-old\" eggs, and deep-fried chicken nuggets,
Taiwan today consumes approximately 762 thousand metric tons of poultry
meat (about 85% of this chicken) and 7.5 billion eggs annually. This
translates into around 32.5 kg of poultry and 380 eggs per capita. Local
producers currently supply approximately 90% of the overall poultry meat
and offal market, 90% of the broiler meat and offal market and 100% of
the egg market. The broiler meat and offal market, in particular,
present opportunities for continued significant US export growth over
the coming 2\~3 year period.

The market for broiler meat and certain relatively lucrative poultry
offal categories were subject to strict quota volume limitations until
January 1^st^, 2005, when imports were normalized, although subject to a
WTO-permitted special safeguard (SSG) levy (which adds roughly an
additional 6.5% to the Customs-cleared cost of imports). Generally high
current market prices for meat proteins, coupled with a still relatively
inefficient poultry domestic production base, saw imports into the
broiler segment rise exponentially in the months immediately following
liberalization. Continuing structural problems with domestic producers,
high domestic prices, and increasingly sophisticated marketing programs
on the part of overseas producers and associations are expected to help
boost imports of broiler meat over the 100,000 mt level within 2 years
(2007) -- at which time imports could account for roughly 15% of broiler
meat consumption.

The United States is the predominant supplier of poultry, and one of
only nine countries currently eligible to export to Taiwan based on
sanitary approvals. The United States (US) is expected to retain a
dominant position through the foreseeable future.

Taiwan's current limited beef imports (Taiwan is currently restricted by
BSE related bans to importing primarily from Australia and New Zealand)
and chronically high market prices for Taiwan's other two meat protein
staples -- pork and seafood -- has been encouraging consumers to
purchase more chicken over the past year plus and given local producers
a welcome respite from nearly 5 years of pressure to reduce production
and close less efficient producers. High prices for poultry (about 20%
above last year on a month-by-month comparison) reflect this higher
consumption of broiler meat. Domestic production of broiler meat is up
nearly 17 million head (24K mt) from last year (achieved by shifting
production over from native (*tuji*) hens).

Significantly, this windfall broiler meat consumption is currently being
shared relatively equally between local producers and importers (5:4).

Taiwan currently exports only limited quantities of poultry products,
mostly fresh/frozen meat and prepared chicken and duck eggs, to
customers in the region. Taiwan broiler producers, in particular, are
hoping to see a growing market for processed broiler breast (white) meat
in western markets, particularly the United States. The United States
Department of Agriculture (USDA)'s Food Safety Inspection Service is in
the midst of the fairly lengthy review process to establish the
equivalency of Taiwan's poultry slaughter and processing inspection
system.

Despite relative stable year-to-year demand for poultry over the
long-term, the outlook for imports is positive in the critical category
of broiler meat. With a cost structure that is stacked against local
birds, imported frozen chicken meat, particularly leg quarters and
drumsticks, is expected to continue earning market share away from local
producers through the foreseeable future. By 2007, imports of frozen
chicken drumsticks and leg quarters are currently forecast at more than
double 2003 levels (around 100K mt). Given continued favorable pricing
for turkey, similar opportunities exist for exports of frozen US turkey
meat.

**[Poultry]{.smallcaps}**

**Production**

While long-term, the poultry meat production sector in Taiwan is on a
gradual downward trend and the market share of imports is rising,
broiler production rose nearly 9% (24,000 mt) during 2004 to 299
thousand mt. This is attributed to a continued healthy consumer economy
and continued high prices for other proteins including pork, beef and
seafood. This year's reverse in the anticipated 2\~4% annual decline,
while significant, is grounded in historically high prices for
alternative meat proteins, and thus represents a windfall not likely
sustainable once factors stabilize for other meats (e.g., additional
pork production is brought online, restrictions on US / Canadian beef
are eased).

During 2004, domestic production in other categories, including
non-broiler chickens (i.e., non-standardized varieties known
collectively as *tuji*), ducks, geese, and turkeys either saw mild
declines or maintained production levels similar to the previous year.
While broiler production through the long-term faces direct threat from
imports, these other categories are relatively insulated due to local
taste preferences / factors and may slightly increase or decrease from
year to year due largely to local demand factors.

Chickens (both broiler and various non-broiler (*tuji*) varieties)
dominate the poultry industry in Taiwan - accounting for 84% (2004) of
all poultry raised. Ducks follow a distant second at around 10%, with
geese, turkeys, and game birds accounting for the remainder. During
2005, 380 million head of chicken should be channeled into meat & offal
production and an average 34 million head will be engaged as layers. In
a similar ratio, Taiwan will slaughter 32 million head of duck this year
while employing an average 2.5 million head in egg production. Figures
are expected to change significantly in 2006. Eggs of poultry other than
chickens and ducks are not produced on a commercial scale.

Table 1: Poultry Production, Supply, and Demand

![](media/image2.wmf){width="6.479166666666667in"
height="3.904861111111111in"}

Commitments made by Taiwan during WTO accession negotiations to open its
chicken meat and poultry offal markets to international competition at
the start of 2005 imply that domestic poultry producers - for so many
decades insulated from global competition - must adapt to the new
competitive regime or concede to foreign competition a significant chunk
of current sales. This has resulted in shift in recent years, expected
to continue into the foreseeable future, of farmers shifting gradually
away from broiler production (estimated at around a 3% drop per year)
and toward increasing production of various *tuji* varieties (estimated
at around a 2% gain per year).

During 2004 and 2005, however, the unusually high prices consistently
fetched by broiler meat has led to production shifting away from *tuji*
and back to broiler chickens, reversing the abovementioned trend. The
broiler to *tuji* slaughter ratio, which averaged 55:46 over the past
two years, went to 59:41 in 2004. The ratio is not expected to shift
much further in favor of *tuji* as rises in market prices for *tuji*
should offset any benefits seen from additional shifts into broiler
production.

Attempting to help prepare the poultry industry for increasing
competition, Taiwan authorities have implemented measures to 1)
consolidate production, 2) modernize production and marketing, and 3)
create consumer loyalty to local poultry products.

[Production Consolidation]{.underline}: After offering to pay farmers to
move away from chicken rearing between 1998 and 1999, the Council of
Agriculture (COA) has since largely allowed market forces to determine
how many farms remain in operation.

[Modernization]{.underline}: Through the COA and its several key
research affiliates, Taiwan has ongoing programs targeting cooperative
extension services for poultry farmers and processors as well as
research into breed improvement and consumer product development.

[Customer Loyalty Programs]{.underline}: Acknowledging that the broiler
segment will face the brunt of coming foreign competition, authorities
have been targeting other poultry categories (in particular, eggs and
local chicken varieties \[i.e., *tuji*\]) with technical and marketing
assistance to help these segments grow in value and realize gains in
production efficiency. One component of this assistance is the
introduction of certification marks \"T-U-G\" for local chicken
varieties and \"EGG\" for locally-raised eggs. The hope is that, over
time, consumer awareness of local products and demand for \"unique\"
Taiwan poultry varieties (while as yet ill-defined as commercial breeds,
these include varieties such as *tuji*, *wuguji*, and *fangshanji*)[^1]
will result in increased demand.

**Consumption**

The average Taiwanese consumes around 75 kg of meat annually. Drops in
consumption, due to SARS (2Q 2003) and a controlled-outbreak of avian
influenza during 1Q 2004 proved short term (see the Feb. 2004 ATO Taipei
report: [Avian Influenza - Initial Market Impact
Assessment]{.underline}), and consumption has since recovered to normal
levels. Poultry is a staple of the Chinese diet and, as consumers begin
choosing lower fat meals, chicken may, over the longer term, gain ground
against other meat proteins. Lower fat content has not yet, however,
become a significant factor in meat purchasing decisions by Taiwan
consumers.

Concerns about the potential impact of future avian influenza outbreaks
(specifically current worries about H5N1), while not yet impacting
consumption, have the potential of severely impacting both domestic
production and market demand. Taiwan's experiences with incidences of
low pathogenic avian influenza demonstrate the vulnerability of local
poultry flocks (despite Taiwan's relative isolation as an island) to
infection from both migratory birds and the (believed relatively
limited) smuggling of poultry / poultry products from China.

**Trade**

Taiwan liberalized the importation of broiler meat and a limited list of
offal products still subject to tariff rate quota (TRQ) on January
1^st^, 2005. Prior to 2005, TRQs effectively limited imports to a less
than 8% share of Taiwan's poultry market.

From 2005, Taiwan's WTO Accession Agreement permits Special Safeguard
(SSG) charges on imports of certain products that are no longer
restricted by quota volume limits when market prices or import volumes
for these products exceed certain \"trigger\" levels. In terms of
poultry products, SSG protection is to be allowed for two product
categories: \"Chicken Legs and Wings\" and \"Poultry Offals\". It is
understood that Taiwan authorities do implement the additional SSG
tariffs on products in these two categories. Please refer to the
\"Chicken, Trade Policy\" section below for additional details regarding
the SSG.

US exporters are expected to dominate the import market through the
foreseeable future. Canada and Australia are currently the only other
major producing nations that have earned sanitary clearance to export to
Taiwan (neither currently do so in significant quantity). No other
country is reported to be actively pursuing sanitary approval for
poultry products at this time. Exports from China in particular are not
expected in the foreseeable future due both to sanitary and political
issues.

Poultry offal, an important component of which became fully liberalized
upon Taiwan's WTO membership, represents a major source of new
opportunity for exporters from countries with sanitary clearance. Other
products that were open for import even prior to WTO entry (e.g., eggs,
game bird meat, goose/duck meat) are expected to see little additional
import interest due to factors including domestic oversupply, preference
for fresh (as opposed to frozen) meat, and well-established distribution
channels.

![](media/image3.wmf){width="3.4925196850393703in"
height="2.163779527559055in"}![](media/image4.wmf){width="3.2846456692913386in"
height="1.8271653543307087in"}Tables 2 & 3. Poultry Import and Export
Volumes (in 1,000 metric tons)

**Trade Policy**

As of 1 January 2005, Taiwan exercises a normalized tariff system for
poultry imports. Tariff rates are applied as follows:

+--------------+-------+-------------------+--------------------------+
| Product      | T     | Product           | Tariff                   |
|              | ariff |                   |                          |
+--------------+-------+-------------------+--------------------------+
| Chicken Meat | 20%   | Goose Meat        | 25%                      |
+--------------+-------+-------------------+--------------------------+
| Turkey Meat  | 8.5   | Eggs in Shell     | 30%                      |
|              | \~10% | (prepared)        |                          |
+--------------+-------+-------------------+--------------------------+
| Duck Meat    | 35%   | Poultry Offal     | 21% fatty *livers*       |
|              |       |                   |                          |
|              |       |                   | 25% chicken *livers*,    |
|              |       |                   | *hearts*, *other*; other |
|              |       |                   | turkey *offal*           |
|              |       |                   |                          |
|              |       |                   | 30% turkey *hearts*      |
|              |       |                   |                          |
|              |       |                   | 34% chicken *necks,*     |
|              |       |                   | turkey *hearts (froz)*   |
+--------------+-------+-------------------+--------------------------+

Taiwan fulfilled its commitment to the World Trade Organization (WTO) on
poultry by eliminating its final remaining TRQs on several poultry
products on January 1^st^, 2005. Initial concerns by poultry farmers,
largely expressed through local agriculture associations, that imports
would flood the market and put domestic poultry producers out of
business have largely failed to be realized. Again, this is due
primarily to factors external to the poultry industry. In fact, imports
have increased significantly during the first half of 2005, while
farmers have continued to maintain slaughter numbers and profits. This
political and economic sweet spot has kept visible opposition to the new
TRQ-free import regime to a minimum and warded off potentially negative
political attention to poultry imports.

Taiwan suspended the importation of poultry raised or processed in the
state of New York in June 2005 due to an outbreak in that state of low
pathogenic avian influenza (H7N2). Taiwan currently permits poultry
imports from all other US states.

Taiwan requires that a country/region apply for, and be certified as,
free of *both* Highly Pathogenic Avian Influenza (HPAI) and Newcastle
Disease (ND) as part of the approval process to export poultry meat to
the island.

Countries approved as of August 2005 as HPAI-free include: Singapore,
the Philippines, Saudi Arabia, New Zealand, Australia, the United
States, Canada (including British Columbia, which had previously been
suspended), France, the United Kingdom, Denmark, Spain, Sweden, Finland,
Guyana, Mexico, Costa Rica, Panama, Uruguay, Brazil, Honduras,
Argentina, Ecuador, Botswana, Mozambique, Austria, Hungary, Germany, the
Netherlands (new as of 9/04), Poland (new as of 9/04), and Belgium (as
of 2/05).

Countries approved as of August 2005 as ND-free include: the United
States, Australia (with the exception of New South Wales), New Zealand,
Canada (with the exception of Saskatchewan), Costa Rica, Panama, Spain,
Hungary, and Poland.

**[Chicken]{.smallcaps}**

**Production**

Taiwan's chicken production falls into two categories, namely US-style
broilers and native / crossbred birds. The latter include native chicken
breeds as well as chickens resulting from crossbreeding native roosters
with broiler hens. While different names are used to identify the 3 \~ 4
major native / crossbred categories sold in market (including *tuji*,
*wuguji*, and *fangshanji*).

Taiwan produced 601 thousand mt of chicken meat in 2004, with levels
expected to hold relatively steady in 2005 and 2006 due to favorable
prices for broiler meat. A continued focus on consolidation in the
industry, with larger producers buying out smaller ones will continue
through the coming several years. This is due to continued predominance
of small-scale farmers who continue to produce chickens in the same
volumes despite low prices and demand.

Under normal pricing conditions for meat proteins (i.e., when beef, pork
and chicken are readily available at the market at reasonable prices),
we anticipate relatively steady market demand for both broiler and tuji
meat and a production ratio gradually shifting from the current 59:41
broiler meat & offal to *tuji* meat & offal ratio to a more economically
sustainable 40:60 ratio in favor of *tuji*, which will require imports
of 100,000 mt or more of broiler meat.

Table 5. Chicken Meat Production, Supply, and Demand (in 1,000 mt)

![](media/image5.wmf){width="6.836111111111111in"
height="4.5256944444444445in"}

Government statistics report that just over 80% of broilers are
slaughtered and processed in modern, sanitary facilities. Only 6% of
*tuji* are similarly handled. The remainder are processed either in
small, low-tech processing plants or killed & dressed in the many
traditional wet markets. Government and industry-sponsored efforts to
handle *tuji* in automated processing environments have been dogged by
many problems, not least of which has been the lack of uniformity among
*tuji*, even within species.

Even more so than the poultry industry in general, chicken farmers and
processors must become efficient producers within a short span of
several years, or accept a greatly reduced market share in the face of
foreign competition. The government, directly and through industry
associations, is supporting activities to advance industry consolidation
/ cooperation, product development, technical improvement, and consumer
marketing efforts. The largest farm currently maintains a capacity of
210,000 head, with broader industry measures showing that better than
90% of broiler farms still operate on a scale of 20,000 head or less.

Industry experts note that the relatively small scale and protected
nature of Taiwan's poultry rearing industry has saddled local producers
with high relative costs of production. A survey updated in 2004
estimates the average investment (including depreciation costs) required
to raise 100 head of farm gate-ready broilers at NT\$6,641. Average
market prices in 2004 supported only a slight profit of NT\$178 per 100
head (NT\$403 if farmer's own labor is deducted from costs). \[note:
NT\$32.18 = US\$1.00\].

Table 6. Farm Gate Prices for Broilers

![](media/image6.wmf){width="3.4784722222222224in"
height="3.3229166666666665in"}

**Consumption**

The last decade has witnessed steady growth in market demand for
US-style broiler meat. In the home, breast and leg meat are heavily used
in stir-fry dishes. Nearly all fast food chain restaurants,
international and local, offer batter fried chicken breasts & drumsticks
and processed chicken burgers. Spicy chicken wings, served with
Western-style sauces, are staple menu fare at mid-range Western chain
restaurants such as TGI Fridays & Dan Ryan's and are offered by nearly
all pizza franchises as a popular side dish. Turkey wings, smoked and
spiced locally to Chinese tastes, are hot sellers at grocery stores and
hypermarkets. The flame-cooked chicken leg quarter with rice & veggies
is (along with the pork chop) one of the two most popular lunch box
entrees in Taiwan - accounting for better than 30% of all lunch box
sales (est. 37% in 2004 due to higher relative pork and cod prices).

Offal consumption is expected to be little changed over the coming
several years. Offal is consumed in greatest quantities by the street
vendor food service segment \-- which is less impacted by general
economic conditions than other segments, such as sit-down restaurants
and hotels. With domestic prices for offal significantly higher than in
other markets, attractive sales opportunities for US firms exist now
that this once-protected market is open to competition. However, there
is some question as to whether the market can absorb the full quantity
of the poultry offal TRQ, especially now that chicken liver and heart
imports are liberalized.

An entrenched market preference for not-previously-frozen meat is the
key driver sustaining significant local broiler meat sales through
retail sales outlets and channeling imported cuts into processed and
ready-to-serve formats (lunch boxes is one of the largest end-uses for
frozen chicken thighs). While the import of chilled chicken cuts is
widely deemed uneconomical, it is interesting to note that Taiwan's
Customs Bureau recorded the island's first (at least in recent years)
purchases of chilled chicken cuts during 2004 (49 mt in 2004 \[24.5 mt
from the US and Canada, respectively\] and 217 mt during the first half
of 2005 \[192 mt from the US and 25 mt from Canada\]).

**Trade Policy**

Taiwan requires that chicken meat and products enter Taiwan only from
countries certified free of Highly Pathogenic Avian Influenza (HPAI) and
Newcastle Disease (ND).

Taiwan imposes Special Safeguard (SSG) tariffs on chicken meat and offal
products brought into Taiwan, based on the price and volume \"triggers\"
noted in the following table.

SSG Triggers

  ------------------------- ------------------- -------------------------
  Product Item              SSG implemented if  SSG implemented if market
                            volume exceeds:     price falls below:

  Chicken Meat: Legs and    23,953 mt           NT\$30,000 /mt
  Wings                                         

  Chicken Meat: Other Cuts  included under      NT\$42,000 / mt
                            above limit         

  Poultry Offal\*           2,295 mt            N/A
  ------------------------- ------------------- -------------------------

\* Note: SSG does not apply to imports of poultry livers or of chicken
hearts, feet, or necks.

The SSG levy increases the duty on chicken meat to 26.33% (as opposed to
the 20% \"normal\" duty). The duty for offal is similarly affected.

**Imports & Exports**

Because of market preference, nearly all chicken meat import volume
(97%) is dark meat (leg quarters), frozen (HS02071411002). This
situation is expected to continue through the foreseeable future.

Table 7 & 8. Taiwan's Chicken Meat Imports and Exports (1,000mt)

![](media/image7.wmf){width="3.20748031496063in"
height="1.8271653543307087in"}![](media/image8.wmf){width="3.427952755905512in"
height="2.163779527559055in"}

**Marketing**

As with most food products raised in Taiwan, there is an undercurrent of
concern regarding the quality of local chicken among consumers. With the
lifting of volume restrictions, US suppliers may benefit significantly
by conducting promotion work which underscores the healthful conditions
under which US chickens are reared, the emphasis on production and
processing quality control at US facilities, and trust in US brand or
country-of-origin labels.

In recent years, the COA established a quality certification logo for
*tuji* to heighten its quality image and encourage increased
consumption. The \"T-U-G\" label certifies that chicken was processed in
a facility using modern, standardized processing techniques. The myriad
obstacles to processing standardization in the *tuji* segment has held
the volume of such to between 8% and 10% of *tuji* birds processed. Most
*tuji* sold in supermarkets now bear this \"T-U-G\" logo. The largest
retail outlet for *tuji*, the traditional market, is barred from
participating in the \"T-U-G\" system as birds are slaughtered at time
of purchase.

> *A Note About Tuji*: Chinese consumers view native / crossbred
> chickens (*tuji*) as a meat product \"similar to, but distinct from\"
> broiler chickens. *Tuji* is used in many very traditional Chinese
> dishes (examples include sesame oil chicken, chicken soup \[where
> meat, skin, and bones are simmered together with traditional herbs\],
> and chicken cold plate) for which broiler meat is not an acceptable
> substitute. Similarly, tougher meat and lack of sizing standards make
> *tuji* unfit for most broiler applications.

Therefore, while production and marketing trends for *tuji* should be of
interest to US broiler exporters, particularly from the context of how
many broiler producers are heeding government calls to switch to *tuji*
production, these two segments of the chicken meat market operate with
significant independence from each other.

**[Turkey]{.smallcaps}**

![](media/image9.wmf){width="7.25in" height="4.5in"}**Production**

Table 9. Production, Supply, and Demand Table for Turkey Meat (in 1,000
mt)

Turkey production in Taiwan is largely channeled into foodservice dishes
(either advertised as turkey or covertly as chicken). A small volume
(estimated at only some 10%) is channeled into other applications such
as pork substitute in processed foods and street vendor cooked-to-order
barbequed wings / tails. Turkey production is expected to hold steady
through the coming several years.

**Consumption**

While domestic turkeys have principally been channeled into turkey fried
rice and fresh food service channels, imported turkeys and turkey meat
are principally used as (1) a substitute for pork in processed foods
(turkey thigh meat), (2) for prepared barbecued wings sold by vendors or
at grocery / hypermarket stores, and (3) as an oven-baked meal for
Thanksgiving and Christmas.

Domestic turkeys are sold fresh or chilled, while imported turkeys /
turkey meat are sold frozen. As mentioned previously, turkey thigh meat
is accepted by manufacturers as a pork substitute / filler in processed
meat products. The trigger hog price that justifies using turkey thigh
meat as a cost-down substitute for pork is reportedly around NT\$5,000 /
100 kg live weight. Recent pork prices have been high, with June 2005
quotes averaging NT\$5,400 / 100kg live weight. This, combined with
reasonable FOB prices for turkey, has rallied demand for turkey as a
meat-filler in Taiwan's food processing industry. Imports of frozen
turkey meat are expected to rise another 12% next year and, with steady
producer prices, should remain at these historically high levels.

**Trade**

> As with chicken meat, turkey imports into Taiwan must arrive from
> countries certified by Taiwan authorities as free of both ND and HPAI.
> The United States is expected to be the only registered exporter of
> turkeys to Taiwan through the foreseeable future.

Tables 10 & 11. Imports & Exports of Turkey Meat (1,000 metric tons)

![](media/image10.wmf){width="3.3161417322834645in"
height="1.8271653543307087in"}![](media/image11.wmf){width="3.3181102362204724in"
height="1.8271653543307087in"}

**Marketing**

Efforts to increase turkey meat sales at the retail level continue to be
dogged by consumer lack of understanding of meat characteristics /
qualities and poor product availability in retail outlets (grocery
stores, hypermarkets, traditional markets). Turkey meat in sausages is
typically used \"covertly\", with either no mention at all on the
packaging (aside from the small-print ingredient label) or simply a
statement that the sausages are lower in fat.

Turkey lacks a foundation in the Chinese universe of ingredients and
thus does not find a ready home in dishes such as stir-fries and soups.
The Chinese chef, whether in the home or in a restaurant, is typically
not innovative and would be unwilling on his/her own to substitute
turkey meat in, for example, a stir-fry that calls for chicken.
Appropriate consumer education and promotion should help pique interest
and salve concerns regarding substituting turkey for other poultry meats
in popular dishes. The market for turkey in Western dishes represents a
small niche market comprised primarily of 4- and 5-star hotels and a few
restaurants in Taipei, Taichung, and Kaohsiung.

**Duck**

Three-thousand years of duck rearing history in China bequeath to
Taiwanese a well-founded fondness for duck meat and eggs. The
distinctive dishes in which duck products are served give duck meat and
eggs a market categorization distinct from other poultry meats and
products.

Production and consumption of duck is expected to remain stable during
2004 and 2005 (at around 64,000 mt), due to the lack of growth in the
food service industry. In terms of domestic production, ducks raised in
Taiwan for meat production are principally of the variety *tufanya*
(80%), with the remainder divided roughly evenly between *fanya* and
*beijingya* (Peking duck) breeds. Layers are almost exclusively of the
*chensecai* variety.

In recent history, the duck farming and processing industry in Taiwan
was heavily export-oriented, with exports of meat, eggs, and feathers
targeting consumers in Japan and Southeast Asia. The entry of China as a
low cost duck meat / products exporter has pared export markets for
Taiwan ducks significantly. The entry of both China and Taiwan into the
WTO is expected to cut further into the margins of local producers
margins and, eventually, entice international sales into this market.
Industry experts anticipate that high-quality US producers will pose the
most effective challenge to domestic ducks. China and Thailand offer
strong price competition - although current sanitary restrictions rule
out importation from either.

The current tariff for duck meat (whole) is 35%. No duck meat is
expected to be imported into Taiwan during 2005 or 2006 due to flavor
expectations of consumers (Taiwan-raised, freshly-slaughtered),
conservative supplier - buyer relationships, and little market growth in
this category.

**[Geese]{.smallcaps}**

As late as the 1980s, geese were generally raised as a sideline to a
main farm business, such as fish or vegetable farming. As such, the
industry remains in the early stages of development as a
production-scale industry. Taiwan breeds are largely descended from
varieties including White Roman & Embden (imported initially from
Denmark during the 1970s and 80s) and Tulouse, African, and White
Chinese (imported during the 1980s from the US).

During 2005, Taiwan is expected to produce about 26,000 mt of goose
meat. Most goose meat is sold as a ready-to-eat product in small local
restaurants. Although goose meat imports are permitted, no imports have
occurred in recent years nor are they expected in the near future.
Similarly, Taiwan is not expected to export any goose meat in 2005 or
2006.

**[Eggs]{.smallcaps}**

###### Production

![](media/image12.wmf){width="6.916666666666667in"
height="4.344444444444444in"}Table 12. Production, Supply, and Demand
Table: Chicken Eggs (in million pcs.)

Poultry eggs include hen and duck eggs. Egg production was 7.4 billion
pieces in 2004 and the market found a certain level of stability, which
is holding prices at levels about 20% above than the lows of recent
years. In-shell eggs supply three-quarters of demand. Producers are
continuing to make strides in automated production, washing, and
sorting, although a majority (64%, 2003 estimate) of chicken eggs
continue to be sold unsorted and unpackaged. Industry plans to construct
one or more powdered egg processing plants to help channel excess supply
out of the immediate market have been announced, although no specific
funding has yet been allocated. Such processing capability could do much
to help reduce the impact of overproduction, which promises to continue
to dog this market.

Nearly the entirety of duck egg production is consumed as salty and
alkalized (1,000 year-old) eggs. As both are traditional foods, demand
from year to year is largely stable - at around 540 million pieces.

Dioxin contamination of duck eggs in a limited area of southern Taiwan
in the spring of 2005 (news broke during May / June) caused a
short-lived consumer avoidance of 1,000 year-old and salty eggs (the
main end uses of duck eggs in Taiwan). Overall the impact was minimal.
(for additional information, please refer to the report *Dioxin
Identified in Duck Eggs* at:
<http://www.fas.usda.gov/gainfiles/200507/146130384.pdf>).

Duck layers number approximately 2.7 million, while hen layers number
around 35 million.

**Price**

Chicken egg production costs are estimated at NT\$20 per kg, with the
industry considered profitable when farm gate prices are higher than
NT\$26 per kg. 2004 is anticipated to realize an average increase in
farm gate prices of around 8%.

Table 13. Farm Gate Prices for Chicken Eggs

![](media/image13.wmf){width="3.5840277777777776in"
height="3.3194444444444446in"}

**Consumption**

Egg consumption is around 338 eggs per capita, reportedly the third
highest in the world -- after Japan and Hong Kong. Most chicken eggs are
destined for table use and sold through traditional or grocery stores,
prepared in restaurants, or retailed as stewed or tea-marinated eggs.
Approximately 5% of all domestic chicken eggs are processed into liquid
and powdered eggs. Currently Taiwan has no regulation requiring
pasteurization of liquid eggs and so production is scattered amongst
small-scale producers recovering the whites and yolks of broken whole
eggs. Statistics record an uptick in powdered egg production due to
government and industry-inspired efforts to provide price supports for
fresh eggs. There remains little trade, either local or international in
liquid or powdered eggs as most downstream product manufacturers and
consumers request whole eggs.

Egg Products: Nearly all duck eggs are consumed as salty and 1,000
year-old eggs. The small volume of out-of-shell chicken egg products
consumed include liquid eggs and powdered eggs.

**Marketing**

Four of every 5 eggs retailed to consumers are sold by farms to
traditional markets and retail outlets in 12 kg trays. Consumers
purchase by weight or by number based on individual retailer practice.
Traditional market vendors typically sell by weight, while local
convenience store chains and some local grocers sell by number. The
remaining retail eggs are packaged in 10-piece cartons and distributed
principally through supermarket and hypermarket chains.

[^1]:
    > For purposes of this report and unless otherwise noted, all local
    > varieties are categorized under the generic name \"*tuji*\".