Required Report - public distribution

**Date:** 2006/8/31

**GAIN Report Number:** TW6031

TW0000

**Taiwan**

**Poultry and Products**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Keith Schneller, Director, ATO

American Institute in Taiwan

**Prepared by:**

Jeff Miller, Reports and Marketing Officer

**Report Highlights:**

The US, currently *the only significant poultry exporting country with
sanitary access to the Taiwan market*, continues to bask in the
afterglow of Taiwan's January 2005 removal of Tariff Rate Quotas (TRQs)
on broiler meat and offal imports. 2006 imports, expected to top 85K mt,
represent a 185% increase over 2004 imports in terms of volume. However,
further gains in broiler imports, which currently center on frozen leg
quarters and wings, can be expected to begin slowing well into the
single digits as easy opportunities in the "lunchbox meal" sub-segment
of foodservice become saturated. To realize further significant growth,
US poultry suppliers must address qualitative issues (e.g., defrosted
meat texture vs. fresh, moisture content) essential to winning
acceptance for US poultry in Taiwan's largest market segment (approx.
85% of total market consumption) for chicken meat -- retail sale for
sit-down restaurant and home consumption. The relatively small, but
highly viable, market for imported turkey thigh meat (widely used as a
pork substitute / protein filler in processed pork products) fell by
some 3K mt in 2005 due to lower pork prices. Without an opening of key
export markets (e.g., Japan) for Taiwan pork, cyclical pork prices can
be expected to remain low through the coming 2\~3 years, which can be
expected to suppress prospects for near term growth in Taiwan's turkey
meat imports.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Taipei ATO \[TW2\]

\[TW\]

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

Poultry meat and eggs are pillars of the traditional Chinese diet. From
*kungpao* chicken, Peking duck, and stir-fries to Cantonese-style air
dried duck, \"1,000 year-old\" eggs, and deep-fried chicken nuggets,
Taiwan today consumes approximately 760 thousand metric tons of poultry
meat (about 85% of this chicken) and 8.1 billion eggs annually. This
translates into around 33.5 kg of poultry and 360 eggs per capita, which
supported a continued, albeit mellow, increase in poultry production
over the past five years (averaging 3\~4% per year) and a highly stable
egg market. Local producers currently supply approximately 90% of the
overall poultry meat and offal market, 90% of the broiler meat and offal
market and, effectively, 100% of the egg market. The broiler meat and
offal market, in particular, present opportunities for continued
significant US export growth over the coming 2\~3 year period.

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

Given current marketing and sales conditions, an import level of 100 \~
110 thousand metric tons is viewed as a tentative peak after which
continued import growth will tend to taper off or slow significantly
without a change in competitive conditions in terms of imports vs.
domestic production.

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

Conditions that combined to give Taiwan high prices for animal proteins
other than chicken (see Taiwan's poultry annual for 2004) have relaxed
considerably, with pork prices down by some 15% over their high 2004
levels and beef imports from the United States once again open. Cheaper
(relative to previous years) pork and beef are combining to restrict
poultry consumption growth and may be expected, should poultry supply
prices rise relative to other proteins, cause poultry consumption to
decrease somewhat in terms of total quantity in the coming several
years. Such a decline should be primarily be met by further reductions
in domestic production, coupled with a plateauing of poultry import
growth.

The outlook for imports remains positive in the critical category of
broiler meat over the long term. With a cost structure that is stacked
against local birds, imported frozen chicken meat, particularly leg
quarters and drumsticks, is expected to continue earning market share
away from local producers through the foreseeable future. By next year,
imports of frozen chicken drumsticks, wings and leg quarters should be
at more than double 2003 levels (approaching 100K mt). Given continued
favorable pricing for turkey, similar opportunities exist for exports of
frozen US turkey meat once pork prices begin to rise again.

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

**[Poultry]{.smallcaps}**

**Production**

Long-term, the poultry meat production sector in Taiwan is on a gradual
downward trend and the market share of imports is rising. Chicken
production stalled during 2005 to at 695 thousand mt due to weak prices
and prospects through the near term of lower market prices and continued
pressure from imported leg quarters (the best selling cut). Domestic
production over the coming three years should see a return to
contraction, with average annual reductions in domestic production of
around 2% anticipated to give the Taiwan chicken production industry an
output of around 655 thousand mt in 2008.

During 2005, domestic production in other categories, including
non-broiler chickens (i.e., non-standardized varieties known
collectively as *tuji*), ducks, geese, and turkeys either saw mild
declines or maintained production levels similar to the previous year.
While broiler production through the long-term faces direct threat from
imports, these other categories are relatively insulated due to local
taste preferences / factors and may slightly increase or decrease from
year to year due largely to local demand factors.

Chickens (both broiler and various non-broiler (*tuji*) varieties)
dominate the poultry industry in Taiwan - accounting for 85% (2006,
est.) of all poultry raised. Ducks follow a distant second at around
10%, with geese, turkeys, and game birds accounting for the remainder.
During 2005, 348.9 million head of chicken should be channeled into meat
& offal production and an average 35.7 million head will be engaged as
layers. In a similar ratio, Taiwan will slaughter 32 million head of
duck this year while employing an average 2.7 million head in egg
production. Figures are not expected to change significantly in 2007.
Eggs of poultry other than chickens and ducks are not produced on a
commercial scale.

Table 1: Poultry Production, Supply, and Demand

![](media/image2.wmf){width="6.54375in" height="4.739583333333333in"}

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

Prices for both broiler meat and traditional tuji varieties are off
roughly 7% from 2005 levels, with prospects for further declines
anticipated. Given current pricing trends, industry anticipates market
prices for chicken meat at roughly 15% of 2005 prices by 2Q 2007. This
would put chicken farmers once again into the situation faced prior to
2003, when farms operated at near break even or at a loss. This
situation would represent a strong opportunity for imports, given a
continuation of favorable international supply prices.

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

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

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

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

**Consumption**

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

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

**Trade**

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

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

US exporters are expected to dominate the import market through the
foreseeable future. Canada and Australia are currently the only other
major producing nations that have earned sanitary clearance to export to
Taiwan (neither currently do so in significant quantity). Exports from
China in particular are not expected in the foreseeable future due both
to sanitary and political issues.

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

![](media/image3.wmf){width="3.394488188976378in"
height="3.175196850393701in"}![](media/image4.wmf){width="3.3299212598425196in"
height="3.175196850393701in"}Tables 2 & 3. Poultry Import and Export
Volumes (in 1,000 metric tons)

**Trade Policy**

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

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

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

Taiwan imposed on 10 August 2006 a ban on poultry and poultry products
raised or processed in the state of Pennsylvania, with provisions
permitted for certain items subject to approved heat treatment. Taiwan
removed in spring 2006 the suspension (due to reports in that state of
low pathogenic avian influenza (H7N2)) on poultry and poultry products
raised or processed in the state of New York. Taiwan currently permits
poultry imports from all other US states. The impact of the bans has had
neither a significant nor apparent impact on US poultry exports to
Taiwan.

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

Countries approved as of August 2006 as HPAI-free include: Singapore,
the Philippines, Saudi Arabia, New Zealand, Australia, the United
States, Canada, the United Kingdom, Spain, Finland, Austria, the
Netherlands, Poland, the Czech Republic, Belgium, Guyana, Mexico, Costa
Rica, Panama, Uruguay, Brazil, Honduras, Argentina, Ecuador, Peru,
Chile, Botswana, and Mozambique.

Countries approved as of August 2005 as ND-free include: the United
States, Australia (with the exception of New South Wales), New Zealand,
Canada (with the exception of Saskatchewan), Costa Rica, Panama, Spain,
Hungary, and Poland as well as (added in the past year) the Netherlands,
Peru, Chile, the Czech Republic and Italy.

**[Chicken]{.smallcaps}**

**Production**

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

Taiwan produced 600 thousand mt of chicken meat in 2005, with levels
expected to decline slightly in the coming two years due to falling
prices for poultry as well as alternative animal proteins. A continued
focus on consolidation in the industry, with larger producers buying out
smaller ones will continue through the coming several years. This is due
to continued predominance of small-scale farmers who continue to produce
chickens in the same volumes despite low prices and demand.

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

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

![](media/image5.wmf){width="6.29375in" height="4.739583333333333in"}

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

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

Industry experts note that the relatively small scale and protected
nature of Taiwan's poultry rearing industry has saddled local producers
with high relative costs of production. A survey updated in 2004
estimates the average investment (including depreciation costs) required
to raise 100 head of farm gate-ready broilers at NT\$6,641. Average
market prices in 2004 supported only a slight profit of NT\$178 per 100
head (NT\$403 if farmer's own labor is deducted from costs). \[note:
NT\$32.18 = US\$1.00\]. So far in 2006, pricing pressures from imports
and declining prices in alternative animal proteins have cut into the
previously (relatively) favorable pricing situation for the local
poultry industry. Declines in farm gate prices, noted in the table
below, of 10% and more over last year's are causing financial
difficulties in the sector now and through the short term and, if the
situation continues as predicted, will lead to increased closures of
facilities and reduced production in the mid- to long-term.

Table 6. Farm Gate Prices for Broilers

![](media/image6.wmf){width="3.4375in" height="3.3229166666666665in"}

**Consumption**

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

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

An entrenched market preference for not-previously-frozen meat is the
key driver sustaining significant local broiler meat sales through
retail sales outlets and channeling imported cuts into processed and
ready-to-serve formats (lunch boxes is one of the largest end-uses for
frozen chicken thighs). While the import of chilled chicken cuts is
widely deemed uneconomical, it is interesting to note that Taiwan's
Customs Bureau recorded the island's first (at least in recent years)
purchases of chilled chicken cuts during 2004 (49 mt in 2004 \[24.5 mt
from the US and Canada, respectively\] and 576 mt during 2005 \[551 mt
from the US and 25 mt from Canada\]). Imported chilled chicken meat,
while helping distributors and retailers position imported poultry as a
gourmet / healthier alternative to domestically raised fresh poultry
meat, must be promoted and sold at a significant premium. The
development of such a market remains in its infancy.

**Trade Policy**

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

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

Note that, in 2006, SSG tariffs on chicken meat was triggered in
mid-February 2006. The offal SSG was believed triggered sometime in
July.

SSG Triggers

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

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

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

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

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

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

**Imports & Exports**

Because of market preference, nearly all chicken meat import volume
(96%) is dark meat (leg quarters), frozen (HS02071411002). This
situation is expected to continue through the foreseeable future.

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

![](media/image7.wmf){width="3.294488188976378in"
height="3.175196850393701in"}![](media/image8.wmf){width="3.4062992125984253in"
height="3.175196850393701in"}

**Marketing**

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

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

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

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

**[Turkey]{.smallcaps}**

**Production**

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

![](media/image9.wmf){width="6.25in" height="4.270138888888889in"}

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

**Consumption**

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

Domestic turkeys are sold fresh or chilled, while imported turkeys /
turkey meat are sold frozen. As mentioned previously, turkey thigh meat
is accepted by manufacturers as a pork substitute / filler in processed
meat products. The trigger hog price that justifies using turkey thigh
meat as a cost-down substitute for pork is reportedly around NT\$5,000 /
100 kg live weight. Prices, which have, since late 2002, been well above
this trigger price, are gradually moving down, with July 2006 quotes
averaging NT\$5,200 / 100kg live weight -- a 4% decrease from
same-period 2005 prices and 12% off same-period 2003 prices. Falling
pork prices have negatively impacted demand for turkey as filler, and
carved slightly over 4,000 mt off Taiwan's demand for imported turkey.
Slightly increased demand for frozen whole turkeys and turkey wings
helped compensate slightly in the overall import picture. Pork prices
are expected to remain relatively stable through the end of the year,
which should help stabilize turkey thigh meat demand. Future demand
trends will continue to be highly influenced by domestic pork prices, as
"Thanksgiving birds" and other whole turkey applications using imported
turkey meat remain a small segment of the market (estimated less than
15%).

**Trade**

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

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

![](media/image10.wmf){width="3.2846456692913386in"
height="3.175196850393701in"}![](media/image11.wmf){width="3.294488188976378in"
height="3.175196850393701in"}

**Marketing**

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

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

**Duck**

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

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

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

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

**[Geese]{.smallcaps}**

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

During 2006, Taiwan is expected to produce about 25,000 mt of goose
meat. Most goose meat is sold as a ready-to-eat product in small local
restaurants. Although goose meat imports are permitted, no imports have
occurred in recent years nor are they expected in the near future.
Similarly, Taiwan is not expected to export any goose meat in 2006 or
2007.

**[Eggs]{.smallcaps}**

###### Production

Table 12. Production, Supply, and Demand Table: Chicken Eggs (in million
pcs.)

![](media/image12.wmf){width="6.336111111111111in"
height="4.3590277777777775in"}

Poultry eggs include hen and duck eggs. Egg production was 7.1 billion
pieces in 2005, with the market in a comfortable stability in terms of
supply and demand, in sharp contrast to the pre-2004 situation in which
supply far outstripped demand and retail prices were some 25% below
current levels. In-shell eggs supply three-quarters of demand. Producers
are continuing to make strides in automated production, washing, and
sorting, although a majority (64%, 2003 estimate -- not believed to have
changed significantly) of chicken eggs are sold unsorted and unpackaged.
Industry plans to construct one or more powdered egg processing plants
to help channel excess supply out of the immediate market have been
announced, although no specific funding has yet been allocated. Such
processing capability could do much to help reduce the impact of
overproduction, which promises to continue to dog this market.

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

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

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

**Price**

Chicken egg production costs are estimated at NT\$20 per kg, with the
industry considered profitable when farm gate prices are higher than
NT\$26 per kg. 2006 is anticipated to realize an average increase in
farm gate prices of around 14% over 2005 levels.

Table 13. Farm Gate Prices for Chicken Eggs

![](media/image13.wmf){width="3.5743055555555556in"
height="3.3229166666666665in"}

**Consumption**

Egg consumption is around 338 eggs per capita, reportedly the third
highest in the world -- after Japan and Hong Kong. Most chicken eggs are
destined for table use and sold through traditional or grocery stores,
prepared in restaurants, or retailed as stewed or tea-marinated eggs.
Approximately 5% of all domestic chicken eggs are processed into liquid
and powdered eggs. Currently Taiwan has no regulation requiring
pasteurization of liquid eggs and so production is scattered amongst
small-scale producers recovering the whites and yolks of broken whole
eggs. With the recovery in egg prices over the past two years, previous
government efforts to push centralized processing of shell eggs into
liquid and powdered egg products have stagnated or been shelved.
Powdered eggs are not broadly accepted in the market, with only a
limited number of hotels using them for scrambled hot serve products and
food products manufacturers using them in food production processes.
There remains little trade, either local or international in liquid or
powdered eggs as most downstream product manufacturers and consumers
request whole eggs.

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

**Marketing**

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

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