Required Report - public distribution

**Date:** 2006/6/1

**GAIN Report Number:** TW6013

TW6013

**Taiwan**

**Grain and Feed**

**Annual**

**2006**

**Approved by:**

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

AgTaipei

**Prepared by:**

Chiou-Mey Perng

**Report Highlights:**

Taiwan's wheat imports are forecast to fall slightly to 1.05 million
metric tons in 2006/07. Although importers may continue experimenting
with small volumes of non-U.S. feed wheat imports, the United States is
expected to keep an 85+ percent share of the wheat market during the
forecast period. Taiwan's demand for corn imports in 2006/07 is forecast
at 4.85 million metric tons. Most of this decrease will come from
falling Taiwan broiler production resulting from the 2005 liberalization
of chicken meat imports. Rice imports are expected to remain at the
quota level of 144,720 tons, with the U.S. remaining the dominant
supplier in the public sector while Thailand supplies most of the
private sector imports.

Note: The current exchange rate is \$1 = NT\$31.99. **(Corrected
Edition)**

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Taipei \[TW1\]

\[TW\]

**Table of Contents**

[SECTION I. COMMODITY SITUATION AND OUTLOOK
3](#section-i.-commodity-situation-and-outlook)

[Summary 3](#summary-1)

[Wheat Situation & Outlook 3](#wheat-situation-outlook)

[Table 1. Wheat Production, Supply and Demand, 1,000 MT
3](#table-1.-wheat-production-supply-and-demand-1000-mt)

[Production 3](#production)

[Consumption 4](#consumption)

[Trade 4](#trade)

[Stocks 5](#stocks)

[Stocks Subcategory 5](#stocks-subcategory)

[Policy 5](#policy)

[Cross-Straits Trade 5](#cross-straits-trade)

[Taiwan Buying Practices and Investment Plans
6](#taiwan-buying-practices-and-investment-plans)

[Corn Situation & Outlook 7](#corn-situation-outlook)

[Table 2. Corn Production, Supply and Demand, 1,000 MT
7](#table-2.-corn-production-supply-and-demand-1000-mt)

[Corn Production 7](#corn-production)

[Consumption 7](#consumption-1)

[Stocks 8](#stocks-1)

[Trade 8](#trade-1)

[Distillers dried grain (DDGS) 8](#distillers-dried-grain-ddgs)

[Corn Substitutes 9](#corn-substitutes)

[Development of Industrial Uses for Corn
9](#development-of-industrial-uses-for-corn)

[Policy 9](#policy-1)

[Cross-Straits Trade 9](#cross-straits-trade-1)

[Livestock Initiatives 10](#livestock-initiatives)

[Biotechnology Update 10](#biotechnology-update)

[U.S. -- Taiwan Goodwill Missions 11](#u.s.-taiwan-goodwill-missions)

[Rice Situation & Outlook 12](#rice-situation-outlook)

[Table 3. Rice Production, Supply and Demand, 1,000 MT
12](#table-3.-rice-production-supply-and-demand-1000-mt)

[Rice Production 12](#rice-production)

[Consumption 13](#consumption-2)

[Stocks 13](#stocks-2)

[Trade Import 13](#trade-import)

[Private Trade 13](#private-trade)

[Public Trade 14](#public-trade)

[Tight Supplies of Glutinous Rice Continue
14](#tight-supplies-of-glutinous-rice-continue)

[Exports 14](#exports)

[Policy 14](#policy-2)

[Marketing 15](#marketing)

[Guaranteed Rice Purchase Prices 16](#guaranteed-rice-purchase-prices)

[SECTION II. STATISTICAL TABLES 17](#section-ii.-statistical-tables)

[Table 4. Rice Retail Prices, 2005-06
17](#table-4.-rice-retail-prices-2005-06)

[Table 5. Market Releases of Public Rice, as of April 21, 2006
18](#table-5.-market-releases-of-public-rice-as-of-april-21-2006)

[Table 6. Import Summary Table for 2005 Quota Fill
18](#table-6.-import-summary-table-for-2005-quota-fill)

[Table 7. Rice Imports for 2005 in Metric Tons by HS code
19](#table-7.-rice-imports-for-2005-in-metric-tons-by-hs-code)

[Table 8. Food Aid Statistics Table for 2005 (on a milled basis)
19](#table-8.-food-aid-statistics-table-for-2005-on-a-milled-basis)

[Table 9. Taiwan's Rice Purchase Programs
19](#table-9.-taiwans-rice-purchase-programs)

[Table 10. Tariff Rates for Grains
20](#table-10.-tariff-rates-for-grains)

[Table 11. Pork Imports vs Domestic Production and Wholesale Market
20](#table-11.-pork-imports-vs-domestic-production-and-wholesale-market)

[Table 12. Total Poultry Meat Imports vs Domestic Production
21](#table-12.-total-poultry-meat-imports-vs-domestic-production)

[Table 13. Feed Production for 2001-2006 in 1,000 mt
21](#table-13.-feed-production-for-2001-2006-in-1000-mt)

[Table 14. Non-Grain & Feed Reports Bibliography
22](#table-14.-non-grain-feed-reports-bibliography)

# SECTION I. COMMODITY SITUATION AND OUTLOOK

# Summary {#summary-1}

This is a corrected edition of TW6013. Import numbers in trade year have
been changed to the same as that of the marketing year for wheat and
corn. Stocks for corn are also adjusted down to 1.5 to 2 months of
consumption under normal trade conditions. The PSD tables for wheat and
corn are revised accordingly. Taiwan's corn import demand for 2005/06
and 2006/07 is also revised to 4.9 and 4.85 million metric tons,
respectively.

Demand for wheat and corn imports in 2005/06 is forecast at 1.10 and 4.9
million metric tons, respectively. Taiwan has been an important and
stable market for U.S. wheat and corn. Taiwan is the 8^th^ largest
market for U.S. wheat exports and the 3^rd^ largest market for U.S. corn
exports. In 2005 the US supplied 85 percent of wheat imports and 97
percent of corn imports. Since the January 2002 entry of Chinese Taipei
to the World Trade Organization, Taiwan has allowed the import of
144,720 tons of rice on a brown basis -- currently via a TRQ. U.S. rice
has been a leading supplier of Taiwan rice imports. Over the four-year
period from 2002 to 2005, The United States supplied 59 percent of
Taiwan rice imports. U.S. rice exports to Taiwan are forecast to remain
at or over 82,000 tons per year based on the current market access
regime. The rice market access tonnage is expected to remain unchanged
until the Doha Development Agenda WTO negotiations are completed.

# Wheat Situation & Outlook

## Table 1. Wheat Production, Supply and Demand, 1,000 MT

+---------------+------+------+------+------+------+------+------+
| ###           |      |      |      |      |      |      |      |
| ### PSD Table |      |      |      |      |      |      |      |
+---------------+------+------+------+------+------+------+------+
| **Country**   | **   |      |      |      |      |      |      |
|               | Taiw |      |      |      |      |      |      |
|               | an** |      |      |      |      |      |      |
+---------------+------+------+------+------+------+------+------+
| **Commodity** | *    |      |      |      | (    |      |      |
|               | *Whe |      |      |      | 1000 |      |      |
|               | at** |      |      |      | HA)( |      |      |
|               |      |      |      |      | 1000 |      |      |
|               |      |      |      |      | MT)  |      |      |
+---------------+------+------+------+------+------+------+------+
|               | 2004 | Rev  | 2005 | Esti | 2006 | Fore | UOM  |
|               |      | ised |      | mate |      | cast |      |
+---------------+------+------+------+------+------+------+------+
|               | USDA | Post | USDA | Post | USDA | Post |      |
|               | Offi | Esti | Offi | Esti | Offi | Esti |      |
|               | cial | mate | cial | mate | cial | mate |      |
|               | \[O  | \[N  | \[O  | \[N  | \[O  | \[N  |      |
|               | ld\] | ew\] | ld\] | ew\] | ld\] | ew\] |      |
+---------------+------+------+------+------+------+------+------+
| **Market Year |      | 07/  |      | 07/  |      | 07/  | MM/  |
| Begin**       |      | 2004 |      | 2005 |      | 2006 | YYYY |
+---------------+------+------+------+------+------+------+------+
| Area          | 0    | 0    | 0    | 0    | 0    | 0    | (    |
| Harvested     |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | HA)  |
+---------------+------+------+------+------+------+------+------+
| Beginning     | 289  | 289  | 289  | 361  | 269  | 321  | (    |
| Stocks        |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| Production    | 0    | 0    | 0    | 0    | 0    | 0    | (    |
|               |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| TOTAL Mkt.    | 1146 | 1190 | 1100 | 1100 | 0    | 1050 | (    |
| Yr. Imports   |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| Jul-Jun       | 1146 | 1190 | 1100 | 1100 | 0    | 1050 | (    |
| Imports       |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| Jul-Jun       | 971  | 1021 | 0    | 935  | 0    | 900  | (    |
| Import U.S.   |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| TOTAL SUPPLY  | 1435 | 1479 | 1389 | 1461 | 269  | 1371 | (    |
|               |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| TOTAL Mkt.    | 26   | 0    | 20   | 0    | 0    | 0    | (    |
| Yr. Exports   |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| Jul-Jun       | 26   | 0    | 20   | 0    | 0    | 0    | (    |
| Exports       |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| Feed Dom.     | 100  | 68   | 100  | 100  | 0    | 100  | (    |
| Consumption   |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| TOTAL Dom.    | 1120 | 1118 | 1100 | 1140 | 0    | 1140 | (    |
| Consumption   |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| Ending Stocks | 289  | 361  | 269  | 321  | 0    | 231  | (    |
|               |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+
| TOTAL         | 1435 | 1479 | 1389 | 1461 | 0    | 1371 | (    |
| DISTRIBUTION  |      |      |      |      |      |      | 1000 |
|               |      |      |      |      |      |      | MT)  |
+---------------+------+------+------+------+------+------+------+

# Production

Taiwan's wheat production is negligible. All demand is met by imports.

# Consumption

Taiwan's wheat demand is approximately 1.14 million metric tons, of
which 1.02 million metric tons is for flour milling, 20 thousand metric
tons is for fermentation or brewing, and about 100 thousand metric tons
is for feed use. Taiwan's overall wheat consumption for flour milling is
basically stable, whereas wheat for feed use varies each year.
Consumption of wheat food products may increase slowly, despite already
high per-capita levels. Supporting this increase is high noodle
consumption and a dynamic wheat-based food market driven by Taiwan's
6,000 bakeries, convenience stores, and supermarkets. Intense
competition between food manufacturers and strong public interest in new
food items encourages a high number of product introductions. This
boosts demand for wheat-based food products, which is supported by
production of specialty flour. There are more than 30 different types of
specialty flour on the Taiwan market. Whole-wheat flour consumption is
increasing due to increased health consciousness in the current market
and an increase in food safety scandal cases.

# Trade

Since Taiwan does not produce wheat, all demand is met by imports.
Importers sometimes experiment with small imports of feed wheat to
offset high corn prices. The United States is expected to keep an 85+
percent share of the overall wheat market during the forecast period. In
2004/05, the U.S. had an 86 percent share, while Australia supplied 9
percent; India 4 percent and others combined 1 percent. All wheat
sourced from India was for feed. The United States had 89 percent share
of Taiwan's total milling wheat imports, while Australia supplied 11
percent.

As for milling wheat, Taiwan imports mostly U.S. #1 wheat. According to
the Taiwan Flour Millers' Association (TFMA), in 2005 approximately 53
percent of milling wheat imports were HRS or DNS, while 26 percent was
HRW, 10 percent Soft or Western White Wheat, and 0.5 percent hard white.
The remaining imports were Australian prime hard (8 percent) and
Australian Hard (3 percent). This mix varies each year mostly depending
on quality for the different classes of wheat. Despite its already high
levels, the U.S. market share for milling wheat has potential to further
increase over time because of the introduction of U.S. Hard White Wheat
into export channels in 2004. The superior milling characteristics and
price competitiveness of Hard White Wheat are expected to cut Taiwan
imports of Australian hard wheat. Although a supply constraint has
limited Taiwan imports of U.S. Hard White to only 5,000 tons in 2005 and
10,000 tons in 2006 so far, the upward trend for Hard White is expected
to continue. Taiwan wheat importers have mentioned that a stable wheat
supply with reliable gluten quality is critical for maintaining quality
control of flour milling and Chinese noodle making.

Feed wheat imports are expected to remain small in the upcoming
marketing year, with the forecast at around 100 thousand metric tons,
sourced primarily from India and some from Ukraine, Russia and the
United States. Taiwan imposes the same tariffs on milling wheat and feed
wheat, which discourages feed wheat imports. These imports by Taiwan
swine producers were primarily a result of high corn prices. Taking
Indian feed wheat as an example, in 2004/05, the average feed wheat CIF
price was \$141/mt versus \$155/mt for corn.

Flour imports will likely remain very low. In general, Taiwan imports a
very small amount of wheat flour that only accounts for about 2 percent
of the total supply. Flour imports in 2005 were 23 thousand metric tons,
an increase of 5 thousand metric tons from a year earlier. Japan
supplied 12 thousand metric tons, Australia and Vietnam supplied 6 and 4
thousand metric tons respectively. Flour exports in 2005 were 5 thousand
metric tons, primarily to Hong Kong.

# Stocks

Taiwan ending stocks for 2005/06 and 2006/07 are expected to be higher
than the recent historical average of around three months of
consumption. Stocks are above normal levels because of volatile world
wheat prices. Taiwan usually steps up purchases in response to
increasing prices and postpones them when world grain prices fall.

## Stocks Subcategory

Enter stocks subcategory text here

# Policy

## Cross-Straits Trade

The most serious potential threat to U.S. wheat exports is an opening to
PRC flour, wheat or processed products. Although liberalization
continues to be delayed by cross-straits relations, local industry
sources expect Taiwan to eventually lift import bans on PRC products.
Currently, Taiwan authorities review these restrictions every six
months. Taiwan authorities also consider liberalization petitions from
local companies or industrial groups every two months. However, the
ruling party's pro-Independence stance and resistance to integration
with the Mainland makes it unlikely that Taiwan will reward China with
wheat or wheat product market liberalization any time soon. However,
recent opposition party visits to PRC indicate a thaw in cross-straits
relations is possible. In addition, the PRC has shown an increased
willingness to resolve bilateral phytosanitary issues and to provide MFN
for Taiwan's agricultural product exports. Eventually, Taiwan may have
to reciprocate.

If PRC imports of noodles and other processed products were allowed, PRC
products could compete strongly in the Taiwan instant noodle market. To
prepare for this eventuality, Taiwan's largest two instant noodle
producers have invested heavily in Mainland China and plan to ship from
the PRC if Taiwan ends its import ban. In preparation for
liberalization, one instant noodle company already uses the same brand
names for products sold on both sides of the Taiwan Strait. Since a
potential flood of Chinese products would greatly influence the Taiwan
flour and instant noodle market and possibly increase unemployment in a
contracting wheat/noodle sector, Taiwan will be reluctant to lift the
ban.

Although the entry of PRC products would likely disrupt the Taiwan wheat
market, direct sales of Chinese wheat and wheat flour would face stiffer
competition. The dominant position of U.S. wheat in the market, its
reliable quality and supply along with the technical support offered by
U.S. Wheat Associates will make Taiwan millers and food manufacturers
reluctant to switch to alternative suppliers. Taiwan wheat millers and
importers appreciated service provided by the Grain Inspection, packers
and stockyards Administration (GIPSA) for investigating weight
discrepancies of shipments in question last year. According TFMA,
members are satisfied with all receiving wheat shipments regarding the
weight issue. Currently, receiving shipments are within a tolerance
level of 0.2 to 0.25 percent of weight difference from their loading
weight.

In the long-run, PRC wheat and products are expected to affect U.S.
wheat exports to Taiwan by cutting demand for HRW, WW and SW wheat while
possibly boosting it for DNS wheat. Since China produces middle protein
wheat and little high protein wheat, Taiwan millers anticipate stiff
competition in the low-end flour market, where flour is used for making
cookies and gluten products that account for 12 percent of the total
flour market. On the other hand, Taiwan millers hope to supply high
quality flour to the Mainland if China reciprocates a Taiwan market
opening. Outside of the milling sector, China's potential for feed grain
production has stimulated Taiwan feed miller interest in importing PRC
feed wheat, especially if corn prices remain high.

## Taiwan Buying Practices and Investment Plans

The Taiwan flour milling industry continues to import through its
long-standing collective group purchasing system under which companies
pool their funds and jointly bring in large grain shipments to cut
costs. To increase Taiwan's milling competitiveness, the industry is
considering the construction of a NT\$1.5 billion (\$45 million) flour
mill with an annual capacity of 600,000 tons of wheat at Taichung harbor
in central Taiwan.

# Corn Situation & Outlook

## Table 2. Corn Production, Supply and Demand, 1,000 MT

+----------------+-------+------+------+------+------+------+-------+
| ##             |       |      |      |      |      |      |       |
| #### PSD Table |       |      |      |      |      |      |       |
+----------------+-------+------+------+------+------+------+-------+
| **Country**    | **Tai |      |      |      |      |      |       |
|                | wan** |      |      |      |      |      |       |
+----------------+-------+------+------+------+------+------+-------+
| **Commodity**  | **C   |      |      |      | (    |      |       |
|                | orn** |      |      |      | 1000 |      |       |
|                |       |      |      |      | HA)( |      |       |
|                |       |      |      |      | 1000 |      |       |
|                |       |      |      |      | MT)  |      |       |
+----------------+-------+------+------+------+------+------+-------+
|                | 2004  | Rev  | 2005 | Esti | 2006 | Fore | UOM   |
|                |       | ised |      | mate |      | cast |       |
+----------------+-------+------+------+------+------+------+-------+
|                | USDA  | Post | USDA | Post | USDA | Post |       |
|                | Off   | Esti | Offi | Esti | Offi | Esti |       |
|                | icial | mate | cial | mate | cial | mate |       |
|                | \[    | \[N  | \[O  | \[N  | \[O  | \[N  |       |
|                | Old\] | ew\] | ld\] | ew\] | ld\] | ew\] |       |
+----------------+-------+------+------+------+------+------+-------+
| **Market Year  |       | 10/  |      | 10/  |      | 10/  | MM    |
| Begin**        |       | 2004 |      | 2005 |      | 2006 | /YYYY |
+----------------+-------+------+------+------+------+------+-------+
| Area Harvested | 10    | 9    | 10   | 9    | 0    | 9    | (1000 |
|                |       |      |      |      |      |      | HA)   |
+----------------+-------+------+------+------+------+------+-------+
| Beginning      | 1660  | 825  | 1562 | 762  | 1592 | 682  | (1000 |
| Stocks         |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| Production     | 50    | 46   | 50   | 48   | 0    | 48   | (1000 |
|                |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| TOTAL Mkt. Yr. | 4562  | 4976 | 4600 | 4900 | 0    | 4850 | (1000 |
| Imports        |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| Oct-Sep        | 4562  | 4976 | 4600 | 4900 | 0    | 4850 | (1000 |
| Imports        |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| Oct-Sep Import | 4449  | 4846 | 0    | 4655 | 0    | 4655 | (1000 |
| U.S.           |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| TOTAL SUPPLY   | 6272  | 5847 | 6212 | 5710 | 1592 | 5580 | (1000 |
|                |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| TOTAL Mkt. Yr. | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Exports        |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| Oct-Sep        | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Exports        |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| Feed Dom.      | 4500  | 4875 | 4400 | 4818 | 0    | 4738 | (1000 |
| Consumption    |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| TOTAL Dom.     | 4710  | 5085 | 4620 | 5028 | 0    | 4948 | (1000 |
| Consumption    |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| Ending Stocks  | 1562  | 762  | 1592 | 682  | 0    | 632  | (1000 |
|                |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+
| TOTAL          | 6272  | 5847 | 6212 | 5710 | 0    | 5580 | (1000 |
| DISTRIBUTION   |       |      |      |      |      |      | MT)   |
+----------------+-------+------+------+------+------+------+-------+

# Corn Production

Taiwan is not expected to produce corn for feed use in any significant
quantities. Without a significant production subsidy, domestically
produced corn is not competitive with imported products. In recent
years, domestically produced feed corn has accounted for marginal one
percent of total corn consumption. Nearly all demand for feed grain is
met by imports.

# Consumption

Except 200,000 tons of corn that is wet milled to produce corn syrup and
10,000 tons dry milled to produce corn meal/grit, corn consumption is
for feed use.

Taiwan's demand for feed corn is forecast to shrink one to two percent
from 2004/05 in line with an expected reduction in poultry production
caused by increasing meat imports. Total feed demand is forecast at 7.2
million metric tons for 2005/06 and 7.15 million metric tons for 2006/07
(See Table 12-14). Removal of poultry TRQs in 2005 sharply increased
imports of poultry meat. Industry sources expect a 15 percent reduction
in local chicken production from 2004 levels in 2006 and 2007.
Approximately 45 percent of Taiwan's feed production goes to the poultry
sector, with most of the rest going to swine production. Despite of
production shrink in poultry sector, Taiwan's swine sector remains
strong and competitive to imports.

# Stocks

Taiwan is a stable net corn import market, and ending stock levels have
remained at around two and a half months of consumption to secure
supplies and reduce costs.

# Trade

Taiwan corn imports for 2005/06 and 2006/07 are forecast at 4.9 and 4.85
million metric tons, which is a one to 2 percent decrease from the
2004/05 level. Although changes in world corn prices may stimulate more
imports of feed wheat, barley and/or sorghum, these shipments are not
expected to have a major impact on Taiwan's corn market.

[]{.mark}

The United States has enjoyed at least a 95 percent share of total
imports for number of years and is expected to remain the principle corn
supplier, although high prices may slightly erode market share by
encouraging experimentation with feed wheat or corn from new origins.
High corn prices usually spur small-volume corn imports from non-U.S.
sources, with Argentina being the largest competitor. PRC and Thai corn
are also expected to enter Taiwan in small amounts along with minor
shipments from Southeast Asia.

In 2004/05, the United States had a 97 percent share of total corn
imports, while Argentina took 2 percent, and other counties combined for
1 percent. During the forecast period, the largest potential threats to
the U.S. corn market in Taiwan are increasingly competitive south
American corn exports to Taiwan and a steeper than expected decline in
the Taiwan broiler sector. Geographical proximity, the availability of
smaller shipments and improvement in the cross-strait relationship could
create opportunities for PRC corn in the future. However, increasing
container shipments of U.S. corn is likely able to compete with PRC corn
in small shipments. According to local industry, approximately 500,000
MT, accounting for 10 percent of U.S. corn shipments, were shipped to
Taiwan in containers in CY 2005. In the short-term, tightening PRC corn
supplies and growing domestic demand have reduced the immediate threat
of large-scale corn exports to Taiwan.

## Distillers dried grain (DDGS)

Distillers dried grain (DDGS) imports continue to increase, and
substitute for soybean meal imports. In addition to the 19 thousand
metric tons of DDGS that were imported under HS2303 in 2004/05, 20
thousand metric tons may have been imported under HS2306.7000, which has
a zero percent rather than a three percent duty rate.

## Corn Substitutes

Although high corn prices may encourage some small imports of other feed
grains such as feed wheat or barley, it is unlikely that these products
will see large gains in market share. In 2004, the feed inclusion rate
for corn remained at approximately 65 percent, based on corn supply and
feed production figures. The feed inclusion rate of other feed grains
combined has been 3 to 4 percent in recent years. In 2005 Taiwan
imported 140,000 tons of barley (also 140,000 tons in 2004), 75,000 tons
of sorghum (51,000 tons in 2004), and 16,000 tons of Indian wheat
(67,000 tons in 2004). Estimated feed inclusion rate for corn for 2005
is 66 percent.

[]{.mark}

The Taiwan feed millers imported feed wheat for the first time in 2000.
Feed wheat imports are expected to decrease because of the availability
of Australian barley and rather calm world corn prices in 2006. Taiwan
has stopped the widespread use of rice for animal feed after entering
the WTO in January 2002. However, approximately 50,000 mt of old typhoon
damaged rice was used for feed in 2004 and a similar quantity is
expected in future periods.

## Development of Industrial Uses for Corn

The U.S. Grain Council (USGC) office in Taiwan has been developing the
Taiwan bioplastics market, which could eventually become a significant
outlet for U.S. corn. USGC is also exploring ways to increase the use of
biodegradable plastics to meet demand created by growing environmental
restrictions on the use of conventional petroleum products. Problems
with the functionality of the bio-plastic in some applications have led
to a delay in a ban on the use of conventional plastic for some types of
food packaging.

# Policy

## Cross-Straits Trade

In October 2002, Taiwan allowed the entry of PRC corn, giving China its
first opportunity to enter the Taiwan market. So far, Taiwan has
authorized limited imports of many Chinese food products to make up for
local shortages, although there is a trend to liberalize imports from
China. PRC corn has only been allowed entry during three periods:

-   October - December 2002, with imports of 71,000 tons

-   November 2003 - January 2004, with imports of 67,502 tons.

-   March - May 2004, with imports of 22,946 tons.

Since May 2004, the market has been closed. Taiwan authorities review
these restrictions every six months. Taiwan also reviews petitions
submitted by industry groups. Several feed millers with investments in
China have linked up with Taiwan swine producers and petition Taiwan
authorities to permanently end the import ban whenever world corn prices
rise.

[]{.mark}

Although periodic market openings to PRC corn may continue, allowing its
entry permanently is a major step that would only likely occur after
lengthy deliberations. There are several reasons for this caution: One,
Taiwan commercial feed millers/corn importers have resisted the
introduction of PRC corn because it will undermine their long-standing
group buying arrangements that have allowed companies to import large
cargoes on favorable terms. Two, the PRC has not proven to be a reliable
supplier to other markets because it has cancelled shipments with little
advance notice. Three, PRC corn is of uncertain quality, which could
complicate attempts to calculate feed rations. Four, China appears to be
subsidizing corn exports, which is contrary to its WTO Accession
Agreement commitments. The export subsidy was the major reason why PRC
corn was competitive in Taiwan in 2002-2004.

[]{.mark}

If the ban were lifted, the geographic proximity of Northeast China to
Taiwan could allow smaller shipments, faster delivery and lower carrying
costs for Taiwan importers relative to U.S. corn. PRC shipments could
also make it possible for small firms to import corn independently of
the traditional major buying groups. On the other hand, China's
advantage in making small shipments may be offset by U.S. feed grain
supplier's ability to use containerized shipments to supply Taiwan. Very
low container backhaul rates to Taiwan from the U.S. could make this an
attractive prospect for U.S. grain exporters.

## Livestock Initiatives

To adjust to post-WTO trade conditions and 2005 import liberalization,
Taiwan livestock and feed industries are working to improve the
competitiveness of Taiwan poultry and swine production. The National
Animal Industry Foundation (NAIF) was formed in January 2000 to support
the differentiation between locally produced chicken and pork products
from imported products by establishing logos related to freshness and
taste. The Taiwan Council of Agriculture (COA) is also attempting to
improve the quality of domestically produced meat and poultry products
in order to compete more effectively with imported products. COA has
also worked to reestablish Food and Mouth Disease (FMD) free status in
order to resume pork exports to Japan. FMD free status without
vaccination is scheduled for January 1, 2007. In addition, COA is
promoting a traceability system to differentiate locally produced meats
from imported products, and to market local products on the basis of
freshness, safety and quality.

## Biotechnology Update

On February 23, 2001, the Taiwan Department of Health (DOH) promulgated
regulations on bioengineered food labeling and registration. Although
these regulations only applied to soybeans and corn and products, they
will likely be expanded to other products. A bioengineered food safety
approval and labeling regulation took effect on January 1, 2003. No
bioengineered soybean or corn may be produced, processed, prepared,
packed, and imported or exported unless they are registered. All
bioengineered varieties of soybeans and corn must be registered and
approved by the Food Safety Bureau (FSB) of the Department of Health
(DOH).

Corn food products made of non-bioengineered materials can be labeled
\"Non-Genetically-Modified\" on a voluntary basis. The labeling
regulations do not apply to products that do not contain pieces of
transgene(s) or protein such as cornstarch, corn syrup and corn oil.
Taiwan uses a 5 percent tolerance level by weight to determine a
product's bioengineered status. Corn foods sold at traditional \"wet\"
markets and at restaurants do not require labeling, a practice that was
recently criticized by consumer groups.

Taiwan has approved 11 of the most widely commercialized bioengineered
corn and soybean events. It is currently drafting a basic law to cover
all products derived from biotechnology. The first draft law was
completed and was published on March 23, 2005, for comment. The draft,
along with comments, was subsequently discussed in the GM Products Task
Force, which is under the Executive Yuan ("EY" or cabinet). After the
first comment period and discussion completed, Taiwan re-drafted its
basic law proposal and held an explanation meeting to the public in
December 2005. In the explanation meeting, the public was exposed to all
possible variations of each draft article and it was impossible to
determine what will be in the final draft law. If the draft is finalized
then it will be submitted to the EY for review before going to the
Legislative Yuan (parliament) for consideration. Taiwan has no clear
timeline over how long it will take to finalize the biotech law.

In the meantime, Taiwan has been increasing its funding for biotech food
regulation. It recently allocated a two-year capacity building budget of
NT\$1.4 million or \$420,000 to facilitate conducting food safety
assessments. The project includes a review of the Guidelines for GM Food
Safety Assessment approval registration, (stacked event and
bio-engineered microorganisms will be included on the review) and
funding for a university lab for GM food safety assessment.

Taiwan implemented regulations for LMOs under the terms of its recently
amended Plant Variety and Plant Seed Act, which went into effect June 9,
2005. Its related regulations and rulings can be found at

<http://law.moj.gov.tw/eng/fnews/Fnmore.asp?lawType=c>.

The "Rules for Approving Import/Export Transgenic Plants" were announced
on July 7, 2005. Commodities for food, feed and processing use have been
excluded from the ruling and are not required to apply for additional
approval registration to the Taiwan authority at the Bureau of Animal
and Plant Health Inspection and Quarantine (BAPHIQ).

## U.S. -- Taiwan Goodwill Missions

In September 2005, Taiwan bulk commodity importers signed non-binding
Letters of Intent to import a total of at least 1.7 million metric tons
of wheat, 7.5 to 10 million tons of corn and 2.6 to 2.8 million tons of
soybeans in 2006 and 2007. Taiwan is preparing to send another "Goodwill
Delegation" in 2007.

# Rice Situation & Outlook

## Table 3. Rice Production, Supply and Demand, 1,000 MT

+----------------+------+------+------+------+------+------+--------+
| PSD Table      |      |      |      |      |      |      |        |
+----------------+------+------+------+------+------+------+--------+
| #              | Ta   |      |      |      |      |      |        |
| ####### Countr | iwan |      |      |      |      |      |        |
| y {#country-1} |      |      |      |      |      |      |        |
+----------------+------+------+------+------+------+------+--------+
| ###            | R    |      |      |      | (    |      |        |
| #### Commodity | ice, |      |      |      | 1000 |      |        |
|                | Mi   |      |      |      | HA)( |      |        |
|                | lled |      |      |      | 1000 |      |        |
|                |      |      |      |      | MT)  |      |        |
+----------------+------+------+------+------+------+------+--------+
|                | 2004 | Rev  | 2005 | Esti | 2006 | Fore | UOM    |
|                |      | ised |      | mate |      | cast |        |
+----------------+------+------+------+------+------+------+--------+
| USDA Official  |      | Post | USDA | Post | USDA | Post |        |
| \[Old\]        |      | Est  | Offi | Est  | Offi | Est  |        |
|                |      | imat | cial | imat | cial | imat |        |
|                |      | e\[N | \[O  | e\[N | \[O  | e\[N |        |
|                |      | ew\] | ld\] | ew\] | ld\] | ew\] |        |
+----------------+------+------+------+------+------+------+--------+
| **Market Year  |      | 01/  |      | 01/  |      | 01/  | M      |
| Begin**        |      | 2004 |      | 2005 |      | 2006 | M/YYYY |
+----------------+------+------+------+------+------+------+--------+
| Area Harvested | 237  | 237  | 258  | 269  | 0    | 258  | (1000  |
|                |      |      |      |      |      |      | HA)    |
+----------------+------+------+------+------+------+------+--------+
| Beginning      | 304  | 451  | 249  | 437  | 174  | 382  | (1000  |
| Stocks         |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Milled         | 1011 | 1011 | 1025 | 1033 | 0    | 1044 | (1000  |
| Production     |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Rough          | 1434 | 1434 | 1454 | 1467 | 0    | 1481 | (1000  |
| Production     |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| MILLING RATE   | 7049 | 7049 | 7049 | 7041 | 0    | 7049 | (1000  |
| (.9999)        |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL Imports  | 158  | 156  | 125  | 63   | 0    | 189  | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Jan-Dec        | 125  | 156  | 125  | 63   | 0    | 189  | (1000  |
| Imports        |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Jan-Dec Import | 40   | 83   | 0    | 21   | 0    | 127  | (1000  |
| U.S.           |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL SUPPLY   | 1473 | 1618 | 1399 | 1533 | 174  | 1615 | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL Exports  | 99   | 56   | 100  | 26   | 0    | 100  | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Jan-Dec        | 100  | 56   | 100  | 26   | 0    | 100  | (1000  |
| Exports        |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL Dom.     | 1125 | 1125 | 1125 | 1125 | 0    | 1125 | (1000  |
| Consumption    |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| Ending Stocks  | 249  | 437  | 174  | 382  | 0    | 390  | (1000  |
|                |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+
| TOTAL          | 1473 | 1618 | 1399 | 1533 | 0    | 1615 | (1000  |
| DISTRIBUTION   |      |      |      |      |      |      | MT)    |
+----------------+------+------+------+------+------+------+--------+

# Rice Production

Targeted rice production remains just slightly above 1 million tons from
a targeted production area of 258,000 hectares. The targets are designed
to accommodate 144,720 mt (brown rice basis) of imported rice. This
quantity of rice has been imported annually since Chinese Taipei joined
the World Trade Organization in 2002. In 2002, rice imports did not
significantly impact the local rice market because imports began late in
the year. However, anticipation of rice imports pushed local rice retail
market prices to a decade low of NT\$29/kg in 2003. To put a floor under
prices, COA increased its purchases of rice, referred to as "surplus
purchases" or "import relief purchases" previously, to balance the
market. In February 2004, rice retail market prices rose to NT\$34/kg
and have remained at this level. This price is higher than the average
rice retail price at NT\$32/kg in 2001, the year before Taiwan opened to
rice imports. (See Table 4 for details)

Higher prices have enabled Taiwan to release publicly imported rice to
the market quickly in 2004-2005. As of April 21, 2006, Taiwan has
released all rice imported by the public sector from 2002-2004 and part
of 2005 imports to the local market. The most recent release was
announced March 14, 2006; see Table 5 below for further details.

[]{.mark}

Starting in the Spring of 2005, the success of Thai fragrant rice
imports spurred commercialization of a new local fragrant rice variety
in northern Taiwan. So far, the new Taiwan fragrant rice has been well
received by local consumers. In addition, a new glutinous rice variety
and a high-end Japanese variety were commercialized in 2004 and 2005. To
differentiate local rice from imported varieties, Taiwan sells local
rice with variety, specialty and geographical (county) labeling.

# Consumption

Estimated total domestic rice consumption for 2004 and 2005 has been
reduced to 1.1 million tons, based on newly released per capita
consumption of 48.70 kg in 2004. Domestic consumption is forecast to
remain at that level in 2006. Market promotions are unlikely to increase
total demand, but could shift rice significantly between varieties and
origins.

# Stocks

Estimated Taiwan ending rice stocks are fell in 2005 because of a delay
in public rice imports. However, stocks in 2006 are expected to increase
due to 2005 public import shifted to 2006 and the likelihood of smaller
food aid exports than the target level of 100,000 tons.

# Trade Import

In 2003, Taiwan switched its import regime to a Tariff Rate Quota (TRQ)
system from the Minimum Market Access (MMA) system used in 2002, its
first year in the WTO. The total quota amount remains at 144,720 mt on a
brown rice basis (equivalent to 126,000 tons on a milled rice basis). Of
this total, 65 percent is reserved for government purchases and 35
percent for the private trade. All grain dealers who have registered
with COA and have a grain dealer license may bid for rice import quotas.
The out-of-quota tariff rate is NT\$45/kg for rice and NT\$49/kg for
processed rice products, with conversion factor of 1.15 to convert from
milled or processed products to brown rice.

Taiwan's change to a TRQ system was submitted to the WTO in October
2002. In December 2002, it passed enabling legislation without prior
consultation with WTO members, triggering a formal objection from the
U.S., Australia, and Thailand in Geneva. The objections were based on
Taiwan's lack of consultation, the removal of previous negotiated WTO
head note language and associated concessions, and the extremely high
out of quota duty. Taiwan and its trading partners continue to make
progress in resolving the issue.

Although Taiwan has switched to a TRQ regime, it has fulfilled its
obligation to import the full quota amount of rice, with virtually 100
percent fill rates for quotas both in public and private trade. See
Table 6 below for quota fill data.

## Private Trade

Thailand had an 83 percent share of the 2005 rice private trade,
followed by the United States with 14 percent, Japan 1 percent, and
Egypt and Australia each had less than 1 percent.

Under the TRQ, importers bid for quota rights that are sold to the
highest bidders first. Using the so-called "System Three" quota bidding
system, Taiwan has already successfully allocated all 50,652 mt (brown
basis) of 2006 quota rights to local importers as of April 28, with the
bid prices ranging from NT\$12.090/kg to NT\$16.500/kg (brown basis).
The specific quota allocation results for the private trade are reported
in GAIN TW6007. Prices in 2006 were about the level of 2005. The cost
for quota rights reflects conditions in the local rice markets -- higher
local prices make import rights more valuable.

[]{.mark}

The private quota for 2005 was 100 percent filled. Taiwan did not even
have to use its quota reallocation mechanism in 2005, which
redistributes unused import rights. Only a few quota holders, who failed
to import rice before September 15, had to request extension of their
quota rights to the end of year.

## Public Trade

The United States continues to dominate the public rice trade, with a
75, 75, 83 and 80 percent shares in 2002-2005 public imports,
respectively. In 2005, Thailand captured a 17 percent share and
Australia 3 percent, while Egypt didn't participate in the rice tenders.

[]{.mark}

The 2006 public tender schedule has yet to be published. In 2005, Taiwan
delayed its completion of public rice tenders because offered bidding
price exceeded the set ceiling price. There is 73,701 tons (on a brown
rice basis) of public tendered rice from 2005 that will enter Taiwan in
2006.

## Tight Supplies of Glutinous Rice Continue

Taiwan produces approximately 65,000 mt of glutinous rice a year, with
domestic supply and demand generally balanced in most years. In 2004,
glutinous rice prices increased sharply because of the timing of the
Chinese New Year and the Dragon Boat Festival, which both came before
the Taiwan spring rice harvest. This generally only happens every four
years when planting season starts late because of the leap year. Taiwan
imported 22,000 tons of glutinous rice in 2004 and 24,000 tons in 2005.
The Dragon Boat Festival is around the corner, and falls on May 31 this
year. As of late April, glutinous rice market is quiet and prices remain
at NT\$43/kg for short grain and NT\$42/kg for long grain milled
glutinous, approximately one NT dollar less compared to a year earlier.
This desire to stabilize prices is the primary reason why Taiwan has
continued to tender for glutinous rice in 2004 and 2005. (See Table 7
for Taiwan Customs statistics on HS codes)

## Exports

Taiwan stopped selling surplus rice onto the world market at discounted
prices after WTO entry.

In 2005, commercial exports amounted to 345 mt, of which 271 mt or 78
percent was destined for Japan. Taiwan's rice industry was very proud of
entering the Japan market since its exports meet Japan's sanitary
standards, one of the most stringent in the world. Taiwan authorities
and growers have used this Japan trade to promote domestically grown
rice to local consumers. The rice to the Japan market was produced in
east Taiwan and was purchased and milled by the local township farmers'
association who recently complaint to Taiwan government for not making
profits from exports to Japan. However, farmers are proud of being able
to ship rice to Japan and have urged the association to continue selling
rice to Japan. The rice has benefited the township by attracting
tourists. The attraction is recognition of the township as a "clean"
farmland.

Taiwan also sent 25,504 tons of rice (milled basis) as food aid to needy
countries in 2005 to control stocks. (See Table 8 for details.)

# Policy

Imported rice continues to be inspected on a lot-by-lot basis for
pesticide residues, heavy metal and aflatoxin by the Bureau of
Standards, Metrology and Inspection (BSMI). This raises some national
treatment concerns, as domestically produced rice does not appear to be
subject to such inspection. In March 2004, this issue was mitigated
slightly when the Agriculture and Food Agency (AFA) under the Council of
Agriculture moved to monitor pesticide residues in domestically produced
agricultural products, including rice.

# Marketing

The introduction of imported rice has resulted in the diversification of
the Taiwan rice market into different origins and varieties. Taiwan
customers now have the choice of many different types of rice, including
Calrose, Koshihikari, Jasmine or Tamanishiki. With the exception of
specialty rices, Taiwan customers prefer local freshly produced and
milled rice. Calrose doesn't fall in the specialty rice category and
goes to institutional use, which accounts for 65 to 70 percent of total
rice distribution. Institutional use is also stimulated by the lack of a
price premium for Calrose on the Taiwan market. However, many Taiwan
millers prefer marketing a 20/80 Calrose/Taiwan rice mix to increase
profits. However, specialty rice such as Jasmine Thai rice or Missouri
rice, Koshihikari, organic brown, rice with germ, and certified Taiwan
good quality rice are priced higher than general rice varieties. The USA
Rice Federation has launched consumer promotion activities in 2004 to
promote 100 percent U.S. rice packs to increase consumer awareness of
U.S. high quality rice. The 100 percent U.S. rice packs have yet to
become popular, and are available only during the promotion period.

[]{.mark}

The diversification of rice products and the presence of new premium
varieties has made local consumers increasingly concerned about false
labeling of commercially packed rice. To help ensure that people get
what they pay for, COA is conducting research on how to better monitor
rice freshness, varieties, and origins to ensure more truth in labeling.
Current rice labeling guidelines require that commercially packed rice
list rice origin, local production county for Taiwan rice, or both for
mixed origins. There is an ongoing project to build a \"rice DNA
fingerprint data bank\" to cover rice varieties from Taiwan, the United
States, Australia, Thailand, and Mainland China. DNA fingerprints will
help prevent false labeling on rice packages and illegally transshipped
rice. In March, a congressman criticized Taiwan authorities for allowing
mixed origin rice packs to be promoted as domestic rice with county
geographical indication, which has misled consumers. As a consequence,
Council of Agriculture (COA) announced in April, all mixed origin rice
pack should have mix ratio and origins on the front of the package,
effective July 1, 2006.

Taiwan rice millers are using different market strategies to respond to
the post-WTO market. Large millers are both importing and investing in
new milling/packing facilities to improve quality in order to capture a
larger market share. One top local miller has taken out newspaper ads
for imported U.S., Japanese, Australian, and Thai rice sold under his
brand, while some millers claim that they will stick with locally grown
rice and segregate it from imports though advertising. COA is training
its staff to inspect packaged rice in retail outlets to improve
domestically grown rice quality in order to be able to compete more
effectively with imported rice.

[]{.mark}

Taiwan rice producers have also attempted to gain from other changes in
consumption. With the rise of fusion food, Taiwan rice producers have
aimed to compete with imported rice from various suppliers though menu
promotions using local equivalents of Risotto, Southeast Asia chicken
rice and Xing-Jiang rice. These promotional activities of locally
produced rice are becoming market challenges to the U.S. Rice Export
Federation's menu promotions.

Since Taiwan's rice production cost is much higher than imported rice,
Taiwan agricultural authorities have been working with local rice
millers/farmers to improve quality under a voluntary Taiwan Good Rice
Program. In September 2004, the first ever rice contest was held to
highlight Taiwan's best rices. The champion rice was sold thru auctions
to encourage rice farmers to focus on high quality rice. The champion
rice was sold at as high as NT\$20,000/kg. Despite these efforts, the
local HRI sector remains skeptical, especially because of the high
prices for local rices.

## Guaranteed Rice Purchase Prices

Two voluntary programs existed under which farmers can sell rice to
Taiwan central authorities for pre-established prices: the guaranteed
purchase program and guidance purchase program. Sales under these
programs are limited to certain quantities per hectare. If a farmer were
to sell the maximum per-hectare quantities allowable under these two
programs, program sales would roughly equal half of production.

These two basic purchase programs have not changed fundamentally since
1993. However, in October 2003, Council of Agriculture (COA) allocated a
NT\$2 billion (approximately \$600 million) from the Import Relief
Measure funds to purchase additional paddy rice to stabilize the local
rice market. The eligible amount of surplus purchase is set at 3,000
kg/ha for the spring crop and 2,360 kg/ha for the second crop. These
were calculated on the five-year, 1998-2002, average production level
minus the existing two basic purchases. The surplus purchases were
triggered by declining paddy rice prices that slipped by 18 percent
below the five-year average level of NT\$15.6/kg. These lower prices
were a result of Taiwan's larger than expected rice harvest and
implementation of Taiwan's WTO commitment to import 144,720 tons of
rice. The surplus purchases pushed up the paddy rice price to
NT\$16.2/kg on December 12, 2003, and the current paddy prices are
NT\$19.03/kg and NT\$18.33/kg for Japonica and Indica rice,
respectively.

Taiwan plans to keep the surplus purchase mechanism in place along with
the two basic purchase programs established long before Taiwan's
accession to the World Trade Organization. Farmers have been pressing to
increase the import relief purchase price to NT\$23/kg to their reflect
production costs, but the request was refused because it would have
likely pushed Taiwan's AMS above WTO limits. Higher payments would have
also created an incentive to increase production further, creating more
downward pressure on the rice market while pushing up stocks levels and
complicating plans to dispose of domestically produced rice.

# SECTION II. STATISTICAL TABLES

## Table 4. Rice Retail Prices, 2005-06

  ------------------ ----------------- ----------------------- -----------
  Prices Table                                                 

  Country            Taiwan                                    

  Commodity          Rice, Milled                              

  Prices in          NT Dollar         per uom                 100 Kg

                                                               

  Year               2005              2006                    \% Change

  Jan                3474              3498                    1%

  Feb                3477              3503                    1%

  Mar                3486              3488                    0%

  Apr                3489              3440                    -1%

  May                3449                                      -100%

  Jun                3346                                      -100%

  Jul                3313                                      -100%

  Aug                3228                                      -100%

  Sep                3353                                      -100%

  Oct                3463                                      -100%

  Nov                3489                                      -100%

  Dec                3511                                      -100%

                                                               

  Exchange Rate      NT\$31.99         Local Currency/US \$    

  Date of Quote      04/24/2006        MM/DD/YYYY              
  ------------------ ----------------- ----------------------- -----------

## Table 5. Market Releases of Public Rice, as of April 21, 2006

+-------------+------------+-----------+--------------+----------------+
| types of    | origins    | released  | released     | \*Wholesale    |
| grains/crop |            | quantity  | price        | market price   |
| year        |            | in mt     |              | in April 2006  |
+=============+============+===========+==============+================+
| Medium      | U.S.A.     | 200       | NT\$25.06/kg | NT\$24.79/kg   |
| brown/ 2005 |            |           |              |                |
+-------------+------------+-----------+--------------+----------------+
| Medium      | U.S.A.     | 789       | NT\$22.58/kg | NT\$24.79/kg   |
| brown/2004  |            |           |              |                |
+-------------+------------+-----------+--------------+----------------+
| Short       | U.S.A.     | 60        | NT\$36.01/kg | NT\$36.47/kg   |
| Glutinous   |            |           |              |                |
| milled/2004 |            |           |              |                |
+-------------+------------+-----------+--------------+----------------+
| Short       | Australia  | 100       | NT\$25.06/kg | NT\$24.79/kg   |
| brown/2005  |            |           | (cold        |                |
|             |            |           | storage)     |                |
+-------------+------------+-----------+--------------+----------------+
| Long milled | Thailand   | 108       | NT\$27.00/kg | NT\$34.32/kg   |
| glu         |            |           |              |                |
| tinous/2003 |            |           |              |                |
+-------------+------------+-----------+--------------+----------------+
| Long brown  | Thailand   | 100       | NT\$25.25/kg | NT\$24.79/kg   |
| fr          |            |           |              |                |
| agrant/2005 |            |           |              |                |
+-------------+------------+-----------+--------------+----------------+
| \*The       |            |           |              |                |
| quoted      |            |           |              |                |
| wholesale   |            |           |              |                |
| prices are  |            |           |              |                |
| Japonica    |            |           |              |                |
| brown rice, |            |           |              |                |
| milled long |            |           |              |                |
| and short   |            |           |              |                |
| grain       |            |           |              |                |
| glutinous   |            |           |              |                |
| rice,       |            |           |              |                |
| re          |            |           |              |                |
| spectively, |            |           |              |                |
| which are   |            |           |              |                |
| official    |            |           |              |                |
| prices      |            |           |              |                |
| published   |            |           |              |                |
| by COA and  |            |           |              |                |
| are a       |            |           |              |                |
| general     |            |           |              |                |
| average     |            |           |              |                |
| price, with |            |           |              |                |
| no          |            |           |              |                |
| indication  |            |           |              |                |
| of crop     |            |           |              |                |
| year or     |            |           |              |                |
| grade. The  |            |           |              |                |
| COA set     |            |           |              |                |
| market      |            |           |              |                |
| released    |            |           |              |                |
| prices do   |            |           |              |                |
| reflect     |            |           |              |                |
| crop years  |            |           |              |                |
| and storage |            |           |              |                |
| conditions  |            |           |              |                |
| etc market  |            |           |              |                |
| value       |            |           |              |                |
| factors.    |            |           |              |                |
|             |            |           |              |                |
| Source:     |            |           |              |                |
| Council of  |            |           |              |                |
| A           |            |           |              |                |
| griculture. |            |           |              |                |
+-------------+------------+-----------+--------------+----------------+

## 

## Table 6. Import Summary Table for 2005 Quota Fill

  ------------- --------- --------- --------- -------- ---------- --------- ---------- --------
  Origin        2005                                   2004                            

                Public    Private   Total     Import   Public     Private   Total      Import
                Trade     Trade     Imports   Share    Trade (mt) Trade     Imports    Share
                (mt)      (mt)      (mt)                          (mt)      (mt)       

  The United    75,248    7,181     82,429    57.0%    77,826.5   6,605     84,431.5   58.3%
  States                                                                               

  Thailand      16,420    42,001    58,421    40.4%    6,241.5    24,431    30,672.5   21.2%

  Australia     2,400     256       2,656     1.8%     10,000     222       10,222     7.1%

  Egypt         0         380       380       0.3%     0          19,081    19,081     13.2%

  Japan         0         528       528       0.4%     0          256       256        0.2%

  Other         0         259       18        0.2%     0          39        39         \--
  Countries                                                                            

  Grand Total   94,068    50,605    144,673   100%     94,068     50,634    144,702    100%

  Quota Fill    99.996%                                99.999%                         
  Rate                                                                                 

  *Source:                                                                             
  Council of                                                                           
  Agriculture                                                                          
  (COA)*                                                                               
  ------------- --------- --------- --------- -------- ---------- --------- ---------- --------

## Table 7. Rice Imports for 2005 in Metric Tons by HS code 

  ------------------------- ---------------- ----------------- --------------- -------------- ---------- -------------
  Origin                    HS100620         HS100620          HS100630-0010   HS10063-0090   HS100640   Total/Share
                            (brown-public)   (milled-public)   (glutinous)     (milled-       (broken)   
                                                                               private)                  

  U.S.A.                    17,467           15196             1,666           5,832          0          21,028/33%

  Australia                 19               16                0               204            0          220/0.3%

  Egypt                     0                0                 0               330            0          330/0.5%

  Thailand                  1                1                 21,024          40,155         1,214      41,370/65%

  Japan                     14               12                0               352            0          364/0.6%

  India                     1                1                 0               9              200        210/0.3%

  Vietnam                   0                0                 1,056           1,056          0          

  Italy                     0                0                 0               3              0          3

  Total                     17,502           15,226            23,746          47,941         1,414      63,381

  Source: Taiwan Customs                                                                                 
  Statistics, websites at                                                                                
  http://www.trade.gov.tw                                                                                
  ------------------------- ---------------- ----------------- --------------- -------------- ---------- -------------

## Table 8. Food Aid Statistics Table for 2005 (on a milled basis)

  ------------------------------------ ----------------------------------
  Destination                          Tonnage

  Indonesia                            23,004

  Laos                                 1,500

  Sri Lanka                            1,000

  Total                                25,504

  Source: Council of Agriculture (COA) 
  ------------------------------------ ----------------------------------

## Table 9. Taiwan's Rice Purchase Programs

+------------+------------------+------------------+------------------+
|            | **Guaranteed     | **Guidance       | **Surplus        |
|            | Purchase**       | Purchase**       | Purchase**       |
|            |                  |                  |                  |
|            | **(paddy         | **(paddy         | **(paddy         |
|            | basis)**         | basis)**         | basis)**         |
+------------+------------------+------------------+------------------+
| Variety    | Price NT\$/kg    | Price NT\$/kg    | Price NT\$/kg    |
+------------+------------------+------------------+------------------+
| Japonica   | 21               | 18               | 16.6             |
| rice       |                  |                  |                  |
+------------+------------------+------------------+------------------+
| Indica     | 20               | 17               | 15.6             |
| rice       |                  |                  |                  |
+------------+------------------+------------------+------------------+
|            | Quantity kg/ha   | Quantity kg/ha   | Quantity kg/ha   |
+------------+------------------+------------------+------------------+
| Spring     | 1,920            | 1,200            | 3,000            |
| Crop       |                  |                  |                  |
+------------+------------------+------------------+------------------+
| Fall Crop  | 1,440            | 800              | 2,360            |
+------------+------------------+------------------+------------------+

Source: Taiwan Council of Agriculture

## Table 10. Tariff Rates for Grains

+---------------------+---------------------+--------------------------+
| HS Code             | Grains              | Current Tariff (%)       |
+=====================+=====================+==========================+
| 1001.10 & 1001.90   | Wheat               | 6.5                      |
+---------------------+---------------------+--------------------------+
| 1101.00             | Wheat Flour         | 17.5                     |
+---------------------+---------------------+--------------------------+
| 1005.10             | Corn                | 0                        |
+---------------------+---------------------+--------------------------+
| 1007.00             | Sorghum             | 0                        |
+---------------------+---------------------+--------------------------+
| 1003.00             | Barley              | 0                        |
+---------------------+---------------------+--------------------------+
| 1006                | Rice                | NT\$49 per kg\*\*        |
+---------------------+---------------------+--------------------------+
|                     | Source: Taiwan      |                          |
|                     | Customs Tariff      |                          |
|                     | Schedule            |                          |
|                     |                     |                          |
|                     | \*\*Out of Quota    |                          |
|                     | rate for            |                          |
|                     | unprocessed rice.   |                          |
|                     | Private Sector rice |                          |
|                     | imports will enter  |                          |
|                     | through the System  |                          |
|                     | 3 auction quota     |                          |
|                     | allocation system   |                          |
|                     | with a price        |                          |
|                     | ceiling at          |                          |
|                     | NT\$23.26 per kg    |                          |
+---------------------+---------------------+--------------------------+

## 

## Table 11. Pork Imports vs Domestic Production and Wholesale Market 

+--------+-----------+-------------+---------------------+------------+
| Year   | **Pork    |             | **Domestic Pork     | **Auction  |
|        | Imports   |             | Production in 1,000 | Price in   |
|        | in 1,000  |             | head**              | NT\$/10    |
|        | mt**      |             |                     | 0kg-head** |
+--------+-----------+-------------+---------------------+------------+
|        | **Meat**  | **Offal**   |                     |            |
+--------+-----------+-------------+---------------------+------------+
| 2001   | 16        | 5           | 10,420              | 3,976      |
+--------+-----------+-------------+---------------------+------------+
| 2002   | 19        | 10          | 10,060              | 4,336      |
+--------+-----------+-------------+---------------------+------------+
| 2003   | 33        | 23          | 9,460               | 5,298      |
+--------+-----------+-------------+---------------------+------------+
| 2004   | 40        | 38          | 9,410               | 5,912      |
+--------+-----------+-------------+---------------------+------------+
| 2005   | 25        | 20          | 9,500               | 5,327      |
| (      |           |             |                     |            |
| esti.) |           |             |                     |            |
+--------+-----------+-------------+---------------------+------------+
| 2006   | 35        | 26          | 9,450               | 5,300      |
|        |           |             |                     |            |
| (      |           |             |                     |            |
| fore.) |           |             |                     |            |
+--------+-----------+-------------+---------------------+------------+
| 2007   | 35        | 26          | 9,400               | 5,300      |
|        |           |             |                     |            |
| (      |           |             |                     |            |
| fore.) |           |             |                     |            |
+--------+-----------+-------------+---------------------+------------+
| *S     |           |             |                     |            |
| ource: |           |             |                     |            |
| C      |           |             |                     |            |
| ouncil |           |             |                     |            |
| of     |           |             |                     |            |
| Agric  |           |             |                     |            |
| ulture |           |             |                     |            |
| (COA)  |           |             |                     |            |
| and    |           |             |                     |            |
| Na     |           |             |                     |            |
| tional |           |             |                     |            |
| Animal |           |             |                     |            |
| In     |           |             |                     |            |
| dustry |           |             |                     |            |
| Foun   |           |             |                     |            |
| dation |           |             |                     |            |
| (N     |           |             |                     |            |
| AIF).* |           |             |                     |            |
+--------+-----------+-------------+---------------------+------------+

## Table 12. Total Poultry Meat Imports vs Domestic Production 

+----------+----------------+--------------------+--------------------+
| Year     | **Chicken Meat | **Domestic Poultry | **Farm Price in    |
|          | Imports in     | Production in      | NT\$/kg**          |
|          | 1,000 mt**     | 1,000,000 birds**  |                    |
+----------+----------------+--------------------+--------------------+
| 2001     | 19             | 415                | 30.96              |
+----------+----------------+--------------------+--------------------+
| 2002     | 28             | 415                | 33.70              |
+----------+----------------+--------------------+--------------------+
| 2003     | 37             | 409                | 33.37              |
+----------+----------------+--------------------+--------------------+
| 2004     | 46             | 417                | 33.73              |
+----------+----------------+--------------------+--------------------+
| 2005     | 80             | 394                | 33.95              |
| (esti)   |                |                    |                    |
+----------+----------------+--------------------+--------------------+
| 2006     | 80             | 354                | 33.00              |
|          |                |                    |                    |
| (fore.)  |                |                    |                    |
+----------+----------------+--------------------+--------------------+
| 2007     | 80             | 354                | 33.00              |
|          |                |                    |                    |
| (fore.)  |                |                    |                    |
+----------+----------------+--------------------+--------------------+
| *Source: |                |                    |                    |
| Council  |                |                    |                    |
| of       |                |                    |                    |
| Agr      |                |                    |                    |
| iculture |                |                    |                    |
| (COA)    |                |                    |                    |
| and      |                |                    |                    |
| National |                |                    |                    |
| Animal   |                |                    |                    |
| Industry |                |                    |                    |
| Fo       |                |                    |                    |
| undation |                |                    |                    |
| (NAIF).* |                |                    |                    |
+----------+----------------+--------------------+--------------------+

## 

## Table 13. Feed Production for 2001-2006 in 1,000 mt

  ------------------------------------------------------------------------
  Feed           2002     2003     2004      2005      2006      20076
  Production                                 (esti.)   (FORE.)   (fore.)
  -------------- -------- -------- --------- --------- --------- ---------
  Total Compound 7,563    7,544    7,406     7,300     7,200     7,150
  Feed Produced                                                  

  by commercial  4,921    5,083    5,004     4,930     4,865     4,840
  producers                                                      

  by integrated  2,642    2,461    2,403     2,370     2,335     2,310
  producers                                                      
  ------------------------------------------------------------------------

## Table 14. Non-Grain & Feed Reports Bibliography

  --------- ------------ -------------------------------------------------
  Report \# Date         Title

  TW4043    10/13/2004   Bioplastics

  TW5026    08/31/2005   Poultry Annual

  TW6007    02/27/2006   Private and Public Tender Update

  TW6001    12/29/2005   Oilseeds and Products Annual

  TW6004    01/27/2006   Livestock Semi-Annual

  TW6005    02/14/2006   Completion of Private and Public Tender

  TW6007    02/27/2006   Private and Public Tender Update
  --------- ------------ -------------------------------------------------