May 6, 2005

 

Taiwan feed millers petition to lift ban on China corn

 

 

Feed millers in Taiwan with investments in China have linked up with Taiwanese swine producers to petition the island's authorities to permanently end the import ban on China's corn.

 

In October 2002, Taiwan allowed the entry of China's corn for the first time. Since then, corn from China has been allowed entry during three periods: October to December 2002, with imports of 71,000 tonnes, November 2003 to January 2004 (67,502 tonnes) and March to May 2004 (22,946 tonnes).

 

Since May 2004, the market has been closed again. Taiwan authorities review the ban every six months, with the next review scheduled for September this year.

 

Although periodic market openings to China's 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:

    • Taiwan commercial feed millers and corn importers have resisted the introduction of China's corn because it will undermine their long-standing group buying arrangements that have allowed companies to import large cargoes on favourable terms.

    • China has not proven to be a reliable supplier to other markets because it has cancelled shipments with little advance notice.

    • China's corn is of uncertain quality, which could complicate attempts to calculate feed rations.

    • China appears to be subsidising corn exports, which is contrary to its WTO Accession Agreement commitments. The export subsidy was the major reason why China's corn was competitive in Taiwan in 2002-2004. 

If the ban were lifted, the proximity of north-east China to Taiwan could allow smaller shipments, faster delivery and lower carrying costs for Taiwan importers, compared with US corn.

 

Shipments from China 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 when US feed grain suppliers are able to use container shipments to supply Taiwan when ocean freight costs rise. The very low container backhaul rates to Taiwan from the US could make this an attractive prospect for US grain exporters.

 

According to the USDA, more than 200,000 tonnes of US corn was shipped to Taiwan via containers in 2004.