Required Report - public distribution

**Date:** 9/01/2006

**GAIN Report Number:** TW6033

TW6025

**Taiwan**

**Livestock and Products**

**Annual Report**

**2006**

**Approved by:**

![](media/image1.wmf)Alan Hallman

American Institute in Taiwan

**Prepared by:**

Rosemary Kao

**Report Highlights:**

U.S. beef exports to Taiwan are estimated at 20,000 mt CWE in 2006, and
total beef imports are estimated at 98,000 CWE. Calendar year 2007 beef
imports are forecast to decrease 2% to 96,000 mt CWE. The forecast
decrease is attributed to Taiwan's weak economic performance, industry's
high stocks of boneless ribs and the substitution of chicken meat.
Exports of U.S. beef to Taiwan will be partly determined by the
disposition of the Korean market to U.S. beef. Pork imports are
estimated at 33,000 mt CWE in 2006. With a smaller domestic supply, 2007
pork imports are forecast to grow by 9% to 36,000 mt CWE.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Taipei \[TW1\]

\[TW\]

**Table of Contents**

[Executive Summary 3](#executive-summary)

[Beef 3](#beef)

[Consumption 4](#consumption)

[Trade 4](#trade)

[Policy 5](#policy)

[Swine 7](#swine)

[Production 8](#production)

[Consumption 10](#consumption-1)

[Trade 10](#trade-1)

[Policy 11](#policy-1)

[Internet Resources 12](#internet-resources)

# Executive Summary

U.S. beef exports to Taiwan are estimated at 20,000 mt CWE in 2006, and
total beef imports are estimated at 98,000 CWE. Calendar year 2007 beef
imports are forecast to decrease 2% to 96,000 mt CWE. The forecast
decrease is attributed to Taiwan's weak economic performance, industry's
high stocks of boneless ribs and the substitution of chicken meat.
Exports of U.S. beef to Taiwan will be partly determined by the
disposition of the Korean market to U.S. beef. These estimates assume
the status quo.

The U.S. continues to be the leading pork supplier to the Taiwan market.
Pork imports are estimated at 33,000 mt CWE in 2006. With a smaller
domestic supply, CY2007 pork imports are forecast to grow by 9% to
36,000 mt CWE. Taiwan is a significant pork producer, and imports of
pork are largely determined by relative prices between Taiwan and the
rest of the world.

Data included in this report is not official USDA data. Official USDA
data is available at <http://www.fas.usda.gov/psd>.

### 

# 

# Beef

  --------------- ------------ ---------- ---------- ---------- ----------- ---------- ------------
  **Country**     **Taiwan**                                                           

  **Commodity**   **Meat, Beef                                  (1000 MT               
                  and Veal**                                    CWE)(1000              
                                                                HEAD)                  

                  2005         Revised    2006       Estimate   2007        Forecast   UOM

                  USDA         Post       USDA       Post       USDA        Post       
                  Official     Estimate   Official   Estimate   Official    Estimate   
                  \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]     \[New\]    

  **Market Year                01/2005               01/2006                01/2007    MM/YYYY
  Begin**                                                                              

  Slaughter       0            0          0          0          0           0          (1000 HEAD)
  (Reference)                                                                          

  Beginning       0            0          0          0          0           0          (1000 MT
  Stocks                                                                               CWE)

  Production      5            5          5          6          0           5          (1000 MT
                                                                                       CWE)

  Intra EC        0            0          0          0          0           0          (1000 MT
  Imports                                                                              CWE)

  Total Imports   92           92         98         98         0           96         (1000 MT
                                                                                       CWE)

  TOTAL Imports   92           92         98         98         0           96         (1000 MT
                                                                                       CWE)

  TOTAL SUPPLY    97           97         103        104        0           101        (1000 MT
                                                                                       CWE)

  Intra EC        0            0          0          0          0           0          (1000 MT
  Exports                                                                              CWE)

  Total Exports   0            0          0          0          0           0          (1000 MT
                                                                                       CWE)

  TOTAL Exports   0            0          0          0          0           0          (1000 MT
                                                                                       CWE)

  Human Dom.      97           97         103        104        0           101        (1000 MT
  Consumption                                                                          CWE)

  Other Use,      0            0          0          0          0           0          (1000 MT
  Losses                                                                               CWE)

  TOTAL Dom.      97           97         103        104        0           101        (1000 MT
  Consumption                                                                          CWE)

  Ending Stocks   0            0          0          0          0           0          (1000 MT
                                                                                       CWE)

  TOTAL           97           97         103        104        0           101        (1000 MT
  DISTRIBUTION                                                                         CWE)

  Calendar Yr.    10           10         18         20         0           19         (1000 MT
  Imp. from U.S.                                                                       CWE)

  Calendar Yr.    0            0          0          0          0           0          (1000 MT
  Exp. to U.S.                                                                         CWE)

                                                                                       
  --------------- ------------ ---------- ---------- ---------- ----------- ---------- ------------

Data included in this report is not official USDA data.

Conversion factor is 1.36 for beef and 1.0 for beef bones

## Consumption

Taiwan's beef demand is mainly met by imports. Domestic beef production,
mostly from spent dairy cattle, totaled 6,000 mt CWE in 2006. CY2006
beef consumption is estimated at 103,000 mt CWE. The figure would be
even larger if some of the consumption was not taken by greatly
increased chicken meat imports. During the past two and a half years
since Bovine Spongiform Encephalopathy (BSE) was reported in the United
States, uncertainty concerning the supply of beef has not only reshaped
the beef sourcing choices of some Taiwan buyers, but has also shifted
some beef consumption to other meats - especially chicken, which is
cheaper. Beef consumption in 2007 is forecast to decrease slightly to
101,000 mt CWE, due to reduced imports and further substitution by
chicken meat. (see Pork Consumption for details of chicken meat
substitution.)

## Trade

CY2006 U.S. beef imports are estimated at 15,000 mt, PWE (20,000 mt,
CWE) while total beef imports would be 71,000 PWE (97,000 mt CWE). The
statistics in the PS&D table are based on these estimates plus 1,000 mt
of imports of beef bones (conversion factor 1.0).

Taiwan announced its market reopening for U.S. beef on January 25, 2006.
Import conditions and certification requirements remain unchanged as
reported in TW6004. Following the market resumption announcement, Taiwan
consumers enthusiastically received the first shipments of U.S. beef to
arrive in mid February. Frozen shipments arrived in March, peaked in
April and May, stayed in plateau in June and started to decline in July.
In mid August, U.S. beef packers stopped price quotation to Taiwan
buyers, all awaiting a decision made by Korea in its beef market access.
If the Korean market continues to be closed to U.S. beef in 2006, Taiwan
will increase its purchases of U.S. beef purchase, but at a slower pace,
till year-end.

If Korean market opens in the coming weeks, U.S. beef is expected to
surge into that market, which had been closed since December 2003, and
U.S. beef will be partly priced out of the Taiwan market. Estimated U.S.
beef exports to Taiwan in the fourth quarter if Korea opens will very
likely be limited mainly to fresh and chilled products. Total CY2006
imports of U.S. beef in this scenario are estimated at 13,000 mt, PWE,
and our competitors, Australia and New Zealand, would gain market share
in the fourth quarter of 2006. Post will update its forecast whenever
the situation becomes clear.

The reopening of the Japanese market to U.S. beef, announced in July
2006, did not have a large impact on Taiwan's beef imports as the two
markets have very different import requirements (20 months vs. 30
months, etc.) Taiwan imports are, on the other hand, very dependent on
the market access of U.S. beef in Korea.

CY2007 beef imports are forecast to decrease 2% to 96,000 mt CWE. The
forecast decrease is attributed to Taiwan's weak economic performance,
industry's high stocks of boneless ribs and the substitution of chicken
meat. Fresh and chilled products and steak cuts may make some gains,
which help keep the U.S. market at 20 percent. The 2007 import forecast
in the PSD table assumes that market access in key Asian markets remains
unchanged. If these major markets all resume partial imports of U.S.
beef in 2007, the composition of beef supplying sources in the Taiwan
market as well as total imports may change. Post will amend forecasts
for 2007 whenever new information becomes available.

About half of the year-to-date imports of U.S. beef have been boneless
rib cuts due mainly to the cheaper prices. A large stockpile has
undermined purchases of other cuts, such as more expensive steak cuts.
The demand for U.S. steak cuts, which is now partly taken by
competitors, will hopefully increase in the fourth quarter of 2006 and
2007.

Beef imports by country in 2005 and from January to July 2006: (in
metric tons, PWE)

+--------+-------+--------+-------+-------+--------+--------+--------+
|        | U.S.  | Aus    | New   | P     | Nic    | Pa     | Total  |
|        |       | tralia | Ze    | anama | aragua | raguay |        |
|        |       |        | aland |       |        |        | I      |
|        |       |        |       |       |        |        | mports |
+--------+-------+--------+-------+-------+--------+--------+--------+
| 2005   | 7,041 | 30,254 | 2     | 1,411 | 862    | 0      | 67,660 |
|        |       |        | 8,092 |       |        |        |        |
+--------+-------+--------+-------+-------+--------+--------+--------+
| 1-     | 1     | 16,270 | 1     | 963   | 769    | 217    | 45,961 |
| 7/2006 | 0,452 |        | 7,290 |       |        |        |        |
+--------+-------+--------+-------+-------+--------+--------+--------+

Source: Council of Agriculture compiled from Customs data

Imports of beef and products from Canada were banned entry on May 21,
2003 in response to the detection of BSE in Canada. The recent report of
the 8^th^ BSE case in Canada may delay Taiwan's beef safety risk
assessment review on Canadian beef in 2006.

Beef offal imports were liberalized on Jan. 1, 2002 upon WTO accession.
Offal imports are not taken into account in the PS&D table. The recent
market opening for U.S. beef does not include offal, and the import ban
remains in place due to BSE concerns. Trade contacts reported that
Taiwan is currently facing a supply shortage of beef variety meats.

Beef Offal Imports (mt)

+----------+--------+--------+----------+---------+---------+---------+
| S        | U.S.   | Panama | A        | New     | Ni      | Total   |
| upplying |        |        | ustralia | Zealand | caragua |         |
| Source   |        |        |          |         |         | Imports |
+----------+--------+--------+----------+---------+---------+---------+
| 2005     | 0      | 56     | 785      | 401     | 110     | 1,352   |
+----------+--------+--------+----------+---------+---------+---------+
| 1-7/2006 | 0      | 54     | 243      | 170     | 41      | 508     |
+----------+--------+--------+----------+---------+---------+---------+

Source: Council of Agriculture compiled from Customs data

## Policy

On July 1, 2006, Guatemala joined Panama as a FTA partner of Taiwan, and
enjoys preferential import tariffs for many commodities including beef
and beef variety meats. While Guatemala is not eleigible to ship beef to
Taiwan, the duty on beef from Guatemala, now at NT\$9/kg, will be
lowered following the FTA staged reduction schedule until it reaches
zero on January 1, 2015. Beef from Panama is now free of duty, while
beef from other countries is faced with a tariff of NT\$10/kg. For beef
variety meats, Panamanian products are subject to 4.3% or 5% duty rate,
Guatemala's tariff is 14% while products from other countries face a 15%
duty. Taiwan applies a three-column tariff classification for imports.
WTO members and those with reciprocal treaties with Taiwan are eligible
for duties in Column One. Column Two applies to FTA countries and Least
Developed Countries (LDCs) while Column Three applies to other
countries/territories.

In order to export beef and variety meats to Taiwan, a country's meat
quarantine inspection and health certification system must be reviewed
and found acceptable by the Taiwan authorities. Taiwan currently accepts
the beef system of Australia and New Zealand and selected packing plants
in Panama, Nicaragua, Honduras and Costa Rica (only one establishment
approved in 2006). U.S. beef is limited to establishments on the AMS BEV
list. In October 2005, Taiwan recognized Paraguay's
FMD-free-with-vaccination status and re-approved boneless beef, no
offal, from five approved facilities in Paraguay. In May 2006, the 220
mt quantity limit was doubled to 440 mt and announced during a state
visit by Taiwan leaders. The 440 mt reportedly was calculated using the
OIE-recommended FMD risk assessment models. Sweden was recently removed
from the acceptable supplier list due to BSE reports. Neither Guatemala,
Taiwan's new FTA partner, nor any of the LDCS is qualified to supply
beef to Taiwan.

# Swine

  -------------------- ------------ ---------- ---------- ---------- ----------- ---------- ---------
  **Country**          **Taiwan**                                                           

  **Commodity**        **Meat,                                       (1000 MT               
                       Swine**                                       CWE)(1000              
                                                                     HEAD)                  

                       2005         Revised    2006       Estimate   2007        Forecast   UOM

                       USDA         Post       USDA       Post       USDA        Post       
                       Official     Estimate   Official   Estimate   Official    Estimate   
                       \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]     \[New\]    

  **Market Year                     01/2005               01/2006                01/2007    MM/YYYY
  Begin**                                                                                   

  Slaughter            9650         9499       9800       9750       0           9550       (1000
  (Reference)                                                                               HEAD)

  Beginning Stocks     0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  Production           920          911        935        935        0           920        (1000 MT
                                                                                            CWE)

  Intra EC Imports     0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  Total Imports        39           38         38         33         0           36         (1000 MT
                                                                                            CWE)

  TOTAL Imports        39           38         38         33         0           36         (1000 MT
                                                                                            CWE)

  TOTAL SUPPLY         959          949        973        968        0           956        (1000 MT
                                                                                            CWE)

  Intra EC Exports     0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  Total Exports        0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  TOTAL Exports        0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  Human Dom.           959          949        973        967        0           956        (1000 MT
  Consumption                                                                               CWE)

  Other Use, Losses    0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  TOTAL Dom.           959          949        973        968        0           956        (1000 MT
  Consumption                                                                               CWE)

  Ending Stocks        0            0          0          0          0           0          (1000 MT
                                                                                            CWE)

  TOTAL DISTRIBUTION   959          949        973        968        0           956        (1000 MT
                                                                                            CWE)

  Calendar Yr. Imp.    16           19         12         19         0           19         (1000 MT
  from U.S.                                                                                 CWE)

  Calendar Yr. Exp. to 0            0          0          0          0           0          (1000 MT
  U.S.                                                                                      CWE)
  -------------------- ------------ ---------- ---------- ---------- ----------- ---------- ---------

Data included in this report is not official USDA data.

Conversion factor is 1.43 for pork and 1.0 for pork bones

+------------------+------------+-----+----+-----+----+-----+------+
| **Country**      | **Taiwan** |     |    |     |    |     |      |
+------------------+------------+-----+----+-----+----+-----+------+
| **Commodity**    | **Animal** |     |    |     | (  |     |      |
|                  |            |     |    |     | 10 |     |      |
|                  | **         |     |    |     | 00 |     |      |
|                  | Numbers,** |     |    |     | H  |     |      |
|                  |            |     |    |     | EA |     |      |
|                  | **Swine**  |     |    |     | D) |     |      |
+------------------+------------+-----+----+-----+----+-----+------+
|                  | 2005       | R   | 20 | Es  | 20 | Fo  | UOM  |
|                  |            | evi | 06 | tim | 07 | rec |      |
|                  |            | sed |    | ate |    | ast |      |
+------------------+------------+-----+----+-----+----+-----+------+
|                  | USDA       | P   | US | P   | US | P   |      |
|                  | Official   | ost | DA | ost | DA | ost |      |
|                  | \[Old\]    | Es  | Of | Es  | Of | Es  |      |
|                  |            | tim | fi | tim | fi | tim |      |
|                  |            | ate | ci | ate | ci | ate |      |
|                  |            | \   | al | \   | al | \   |      |
|                  |            | [Ne | \  | [Ne | \  | [Ne |      |
|                  |            | w\] | [O | w\] | [O | w\] |      |
|                  |            |     | ld |     | ld |     |      |
|                  |            |     | \] |     | \] |     |      |
+------------------+------------+-----+----+-----+----+-----+------+
| **Market Year    |            | 0   |    | 0   |    | 0   | MM/  |
| Begin**          |            | 1/2 |    | 1/2 |    | 1/2 | YYYY |
|                  |            | 005 |    | 006 |    | 007 |      |
+------------------+------------+-----+----+-----+----+-----+------+
| TOTAL Beginning  | 6819       | 6   | 72 | 7   | 71 | 7   | (    |
| Stocks           |            | 819 | 02 | 172 | 02 | 102 | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Sow Beginning    | 828        | 828 | 8  | 838 | 0  | 830 | (    |
| Stocks           |            |     | 41 |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Production (Pig  | 12000      | 11  | 1  | 12  | 0  | 12  | (    |
| Crop)            |            | 982 | 22 | 100 |    | 000 | 1000 |
|                  |            |     | 00 |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Intra EC Imports | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Total Imports    | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| TOTAL Imports    | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| TOTAL SUPPLY     | 18819      | 18  | 1  | 19  | 71 | 19  | (    |
|                  |            | 801 | 94 | 272 | 02 | 102 | 1000 |
|                  |            |     | 02 |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Intra EC Exports | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Total Exports    | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| TOTAL Exports    | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Sow Slaughter    | 0          | 0   | 0  | 0   | 0  | 0   | (    |
|                  |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| OTHER SLAUGHTER  | 9650       | 9   | 98 | 9   | 0  | 9   | (    |
|                  |            | 499 | 00 | 750 |    | 550 | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Total Slaughter  | 9650       | 9   | 98 | 9   | 0  | 9   | (    |
|                  |            | 499 | 00 | 750 |    | 550 | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Loss             | 1967       | 2   | 25 | 2   | 0  | 2   | (    |
|                  |            | 130 | 00 | 420 |    | 352 | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Ending           | 7202       | 7   | 71 | 7   | 0  | 7   | (    |
| Inventories      |            | 172 | 02 | 102 |    | 200 | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| TOTAL            | 18819      | 18  | 1  | 19  | 0  | 19  | (    |
| DISTRIBUTION     |            | 801 | 94 | 272 |    | 102 | 1000 |
|                  |            |     | 02 |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Calendar Yr.     | 0          | 0   | 0  | 0   | 0  | 0   | (    |
| Imp. from U.S.   |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+
| Calendar Yr.     | 0          | 0   | 0  | 0   | 0  | 0   | (    |
| Exp. to U.S.     |            |     |    |     |    |     | 1000 |
|                  |            |     |    |     |    |     | H    |
|                  |            |     |    |     |    |     | EAD) |
+------------------+------------+-----+----+-----+----+-----+------+

Data included in this report is not official USDA data.

## Production

Hogs are Taiwan's most valuable farm crop. In 2005, hog production,
valued at NT\$ 58.8 billion (US\$ 1.8 billion), accounted for 15.38% of
Taiwan's total farm production. A recent pig inventory survey taken in
May 2006 showed declines in all categories of breeding stocks,
indicating a smaller pig supply in the early half of 2007. CY2007 pig
supply (fat pigs slaughter) is forecast at 9.55 million head, down two
percent from the 9.75 million estimate for 2006.

**Taiwan Hog Population Data**

  --------------------- ---------------- ---------------- ----------------
                        May 2005         Nov. 2005        May 2006

  No. of farms          13,463           12,930           12,905

  Pigs on farm          7,167,559        7,202,435        7,119,025

  Boars                 35,771           35,368           34,450

  Sows/gilts            845,945          841,322          822,686

  Sows                  755,894          749,761          730,695

  Gilts                 90,051           91,561           91,991

  Fattening Pigs        6,285,843        6,325,745        6,261,889

  Piglets               1,081,772        1,043,401        1,092,600

  Under 30 kg           1,835,464        1,804,502        1,822,763

  30-60 kg              1,704,710        1,745,124        1,707,433

  Above 60 kg           1,663,897        1,732,718        1,639,093
  --------------------- ---------------- ---------------- ----------------

*Source: Council of Agriculture*

Numbers of pig farms continue to decrease while small-scale growers are
gradually being phased out. Taiwan is a small island densely populated
with people and pigs. The very high pig waste-water treatment cost makes
not only small farms uncompetitive but also a threshold too high for new
comers to reach.

The break-even level for pig farming is estimated at between NT\$ 4,500
and NT\$ 4,800 per 100 kg. Pig prices in 2005 and 2006 have been above
the level and farmers are profitable in the past several years. Even
when pig prices are sometimes below that level, farmers would weather
the downs using profits accumulated in the past. On the other hand, the
loss of pork export market (to Japan prior to the FMD epidemic in 1997)
and the hiking feed prices will discourage farmers from expanding their
herd size. According to the May 2006 survey, over 90 percent of hog
farmers plan to maintain the current herd size.

Taiwan Pig Auction Prices (NT\$/100 kg)

+-------+-------+-------+------+------+------+------+------+------+
| C     | C     | Jan.  | Feb. | Mar. | Apr. | May  | Jun. | Jul. |
| Y2004 | Y2005 |       |      | 2006 | 2006 |      |      |      |
|       |       | 2006  | 2006 |      |      | 2006 | 2006 | 2006 |
+-------+-------+-------+------+------+------+------+------+------+
| 5,912 | 5,912 | 5,212 | 4    | 4    | 4    | 4    | 5    | 5    |
|       |       |       | ,833 | ,717 | ,658 | ,937 | ,136 | ,203 |
+-------+-------+-------+------+------+------+------+------+------+

*Source: National Animal Industry Foundation*

Exchange rate: approximately NT\$33.49=US\$1 in 2004, NT\$32.13=US\$1 in
2005 and roughly NT\$32.24=US\$1 in the first half of 2006.

2005 Pig Production Cost Analysis (NT\$ per head of 118 kg)

  ----------- ----------- ----------- ----------- ----------- -------------
  Feeders     Feed        Other Costs Total Cost  Gross       Loss/Profit
                                                  Income      

  1,194       3,308       821         5,323       6,189       866
  ----------- ----------- ----------- ----------- ----------- -------------

*Source: Council of Agriculture*

Exchange rate: NT\$32.13=US\$1 in 2005

The above cost, NT\$ 5,323/118 kg, is equivalent to NT\$ 4,511/100 kg
(US\$ 140.4/100 kg and \$ 0.64/lb).

## Consumption

The vast majority of pork meat consumed in Taiwan is produced
domestically, with imports being used mainly for processing or to
supplement occasional shortfalls. In 2006, surging imports of chicken
meat continue to substitute pork intake, especially in the institutional
and the boxed lunch areas. Taiwan has followed its WTO accession
commitments to lift tariff rate quotas (TRQ) for red meat and poultry in
2005 and also increased the special safeguards (SSG) trigger volumes
annually. Chicken meat imports have been 45,543 mt in 2004, 74,382 mt in
2005 and 85,215 mt for the first seven months of 2006. The chicken
legs/wings volume SSG was triggered as early as March 15, 2006,
promising a record high chicken imports in 2006. Pork demand is expected
to be further depressed by chicken meat in 2006 and 2007.

## Trade

Live pig imports, for breeding not for slaughtering, totaled 81 head
during the first half of 2006, with 48 pigs being supplied by the U.S.,
20 from Canada and 13 from U.K.

In 2006, the U.S. continues to be the leading pork supplier in the
Taiwan market. Pork imports are estimated at 33,000 mt CWE. With smaller
domestic supply, CY2007 pork imports are forecast to grow by 9% to
36,000 mt CWE.

Taiwan Pork Meat Imports by Country (mt, PWE)

+-------+-----+------+-------+-------+------+------+---------+------+
|       | U   | Ca   | Aust  | De    | Sw   | Hun  | Neth    | T    |
|       | .S. | nada | ralia | nmark | eden | gary | erlands | otal |
|       |     |      |       |       |      |      |         |      |
|       |     |      |       |       |      |      |         | Imp  |
|       |     |      |       |       |      |      |         | orts |
+-------+-----+------+-------+-------+------+------+---------+------+
| 2005  | 12, | 11   | 144   | 1,265 | 87   | 423  | 217     | 26   |
|       | 979 | ,057 |       |       |      |      |         | ,172 |
+-------+-----+------+-------+-------+------+------+---------+------+
| 1-7   | 7,  | 4    | 90    | 155   | 137  | 121  | 51      | 12   |
| /2006 | 584 | ,794 |       |       |      |      |         | ,933 |
+-------+-----+------+-------+-------+------+------+---------+------+

Source: Council of Agriculture compiled from Customs data

Pork imports are very price sensitive. Imports become large when Taiwan
pig prices are high and U.S. pork prices are low, which is the opposite
of 2006. However, U.S. pork picnics, for processing purpose, are still
well accepted in Taiwan. Pork trimmings supplied by Canada are more
competitive, in quality and specification, than U.S. products. However,
the price gap between U.S. and Canadian products narrowed in 2006,
increasing U.S. market share from 50% to 59%.

Pork bone imports for the first 7 months in 2006 totaled 218 mt,
virtually all from Canada. Total CY2006 imports of pork bones, at about
1,000 mt, have been included in the PSD table for pork.

Under Taiwan's WTO commitments, Special Safeguards (SSG) came into play
following Tariff Rate Quota (TRQ) liberalization on January 1, 2005. SSG
volume trigger for pork belly in 2006 is 11,762.5 mt, price trigger is
NT\$ 30/kg. SSG volume trigger for pork offal in 2006 is 23,637.5 mt and
there is no price trigger for that item. If SSG is triggered, the tariff
rate will increase by 33.3 percent, making duty for belly to grow from
12.5% to 16.67%, and that for offal to grow from 15% to 20%.

CY2005 SSG trigger volume and imports, CY2006 SSG trigger volume for
pork belly and pork offal, are as follows: (mt)

+-------------+-------------+-------------+-------------+------------+
|             | 2005 SSG    | 2005        | 2006 SSG    | 1-7/2006   |
|             |             | Imports     | Volume      | Imports    |
|             | Volume      |             | Trigger     |            |
|             | Trigger     |             |             |            |
+-------------+-------------+-------------+-------------+------------+
| Pork Belly  | 10,066      | 9,237       | 11,762.5    | 4,772      |
+-------------+-------------+-------------+-------------+------------+
| Pork Offal  | 15,177      | 19,246      | 23,637.5    | 12,901     |
+-------------+-------------+-------------+-------------+------------+

*Source: Directorate General of Customs, Ministry of Finance*

Because SSG volumes increase each year, and because Taiwan pig prices
are low and U.S. pork prices are high, the SSG's for pork belly and pork
offal may not be triggered in 2006.

Taiwan's pork offal SSG only consists of 4 tariff items: pig hocks (HS
0206.30.20 and 0206.49.30), guts including intestines and stomachs (HS
0504.00.21) and prepared and processed pork offal (HS 1602.49.30). Not
all pork variety meats are subject to the SSG. Imports of pork liver,
tendon and other offal items are not counted against the SSG. Imports of
pork offal, whether or not classified under SSG, are not taken into
account in the PSD table.

In 2006, the U.S. remains the leading supplier of pork offal, mainly
hocks, rectum, stomach and cheek meat. However, U.S. market share has
been gradually undermined by European products, such as pork hocks from
Hungary and Sweden. Denmark, which did a brisk business in Taiwan in
2005, reduced its sales sharply in 2006 reportedly due to price factors.

# 

#  

## Policy

# 

Taiwan applies a three-column tariff classification for imports. WTO
members and those with reciprocal treaties with Taiwan are eligible for
duties in Column One. Column Two applies to FTA countries and Least
Developed Countries (LDCs) while Column Three applies to other
countries/territories. Beginning on July 1, 2006, Guatemala joined
Panama as a FTA partner with Taiwan and enjoys preferential import
tariffs for many commodities. However, no pork establishment in
Guatemala has been approved to supply pork to Taiwan. Pork from Panama
is now dutiable at 0%, 5.2% or 5.4% depending on various cuts, while
pork from non-FTA countries, including the U.S., are faced with a tariff
of 12.5%. For pork variety meats, Panamanian products are subject to a
8%, 14% or 15% duty rate, Guatemalan products face a tariff of 14% while
products from non-FTA countries face a 15% duty.

In order to export pork and variety meats to Taiwan, a country's meat
quarantine inspection and health certification system must be reviewed
and found acceptable by the Taiwan authorities. Taiwan currently accepts
the pork beef system of the United States, Canada, Australia, New
Zealand and the Netherlands. Selected packing plants in Sweden, Hungary,
Finland and Japan are approved to supply to Taiwan. Neither Guatemala,
nor Panama, nor any of the LDCS is qualified to supply pork to Taiwan.

#  

# 

# Internet Resources 

Most Taiwan (.tw) domain websites are only in Chinese, but the amount of
English content is increasing.

[http://www.coa.gov.tw/english/index.htm]{.underline} for agricultural
statistics and general agricultural information (in English).

[http://www.baphiq.gov.tw]{.underline} for Taiwan quarantine
requirements (English version available).

[http://www.trade.gov.tw/english.index.htm]{.underline} for trade
statistics, trade rules, TRQ bidding rules and general trade information
(English version available).

[http://www.wto.org]{.underline} The WTO's website for information about
Taiwan's WTO accession.

[http://www.customs.gov.tw]{.underline} for current tariff schedule
(English version available) .

[http://www.mof.gov.tw](http://www.mof.gov.tw/) for WTO & FTA staged
tariff reductions

[http://210.69.119.40/seadb]{.underline} for Special Safeguards
application (Chinese only).

[http://www.naif.org.tw]{.underline} for pig auction prices and pork
retail prices (Chinese only).