Taiwan’s ‘Pineapple War:’ Opportunity Amid an Industry Crisis

Taiwan’s ‘Pineapple War:’ Opportunity Amid an Industry Crisis
Photo Credit: CNA

What you need to know

China’s recent ban on pineapple imports provides an occasion for policymakers to rethink Taiwan’s dependence on the Chinese market for agricultural exports.

In late February, just as Taiwan’s pineapple season was set to begin, China’s General Administration of Customs announced that it would suspend the import of Taiwanese pineapples beginning March 1. Taiwan President Tsai Ing-wen described the move as “ambush-like.”

Given that China is the destination for over 90% of Taiwan’s total pineapple exports, addressing the issue was crucial for farmers and the government alike. Soon after China announced the ban, Minister of Foreign Affairs Joseph Wu launched a social media campaign urging consumers to buy “Freedom Pineapples” – a reference to Australia’s “Freedom Wine” movement, which began after Beijing moved to punitively raise import duties on Australian wine exports.

In addition, the Tsai administration announced that the government would spend NT$1 billion (US$35.9 million) on measures to minimize the impact on farmers and launched the “Support Agriculture, Eat Pineapples to Support Taiwan” campaign to mobilize public backing. In response, local restaurants created new pineapple dishes, consumers went on a pineapple-buying craze, and in four days Taiwanese shoppers had bought a year’s worth of pineapple exports to China.

Taipei’s economic allies also rallied in support of Taiwanese pineapples. Japan ordered a record 10,000 tons of pineapples in March and Singapore an additional 25 tons. A week after China’s announcement, Taiwan’s Council of Agriculture (COA) reached an agreement with Australia to export six tons of pineapples there in May. Taiwanese businesses operating overseas also ordered 560 tons of pineapples from the island.

The message from all of this was clear: This was not just about fruit.

Beijing claimed that the ban was a normal precaution to protect biosecurity and prevent the import of pests – a statement that was disputed by Taiwanese authorities. COA Minister Chen Chi-chung told reporters that the claims were untrue and that 99.79% of pineapples exported since 2020 had passed new, tougher inspections.

If China’s goal was to hurt Taiwan financially, more discreet options were available; a technical delay at its ports would be enough to cause spoilage and deter further exports. But claiming the presence of disease and pests has the potential to do what delays do not: affect the international image and reputation of Taiwanese pineapples.

Mark Hsieh, vice chairman of domestic food distributor Taitung Enterprise Corp. and Commissioner of Great Giant Pineapple Corp., says that China’s decision to ban the pineapple imports was aimed at seeking publicity.

“China chose pineapples for an outright ban because they are, dollar-wise, the largest agricultural export and pineapples are something of a proxy for Taiwan,” says Hsieh. He says that imposing a ban on pineapples makes for easy headlines and attracts attention, which is why China chose that route. “China wanted everyone to see it,” he says.

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Photo Credit: Taiwan Business TOPICS

By all appearances, Taiwan’s pineapple export market seems too economically insignificant to be used as a political tool. According to the COA, Taiwan produces around 420,000 tons of pineapple annually, 10% of which it exports. Moreover, agriculture accounts for less than 2% of Taiwan’s US$710 billion economy, which is dominated by the tech sector. But farmers are an important constituency in Taiwanese politics, particularly in the Democratic Progressive Party (DPP) stronghold of southern Taiwan.

Chen Kuan-ting, CEO of Taiwan NextGen Foundation, a think tank dedicated to policy research and public advocacy, says the incident is evidence of Beijing’s ability to affect Taiwanese voters, the democratic process, and industrial production by impacting the export market.

“After we successfully expanded our market in China, a lot of fruit growers were proud of this achievement and said Taiwan should not be affected by a political agenda [when dealing with China],” says Chen. “So when the DPP has a dispute with China, some farmers protest and suggest that politics are harming their exports.”

Overdependence on one market – particularly when that market is China – makes exports susceptible to political pressure, as exemplified by Australia’s export troubles last year. When Canberra barred Huawei equipment from being used in its 5G network and called for an independent probe into the origins of the Covid-19 pandemic, Beijing responded by raising tariffs on and hampering imports of several Australian goods, including barley, coal, wine, beef, and lobster.

In both the Australian and Taiwanese cases, China restricted access to its markets through regulatory means by banning goods. Such moves reveal Beijing’s preference to use economic pressure to deter countries from interfering with the pursuit of its interests. According to Chen, the implications of these incidents should not be taken lightly.

“In Australia it’s wine; in Taiwan it’s pineapples, but it could be other products and markets too,” says Chen. “What if it’s plastics or gasoline? The president can’t come out with the industry and say, ‘Let’s buy more plastics.’ The international community needs to be aware of this manipulation of trade issues. It can happen to any country that isn’t meeting China’s standards. It’s the idea of using trade as a tool to make sure small and medium-sized countries comply with China – that’s the real threat.”

Dalton Lin, executive editor at the news aggregation website Taiwan Security Research, says he was not surprised by China’s pineapple ban, particularly considering the Biden administration’s recent signals of support for Taiwan and the DPP’s less conciliatory approach to cross-Strait relations. He says the move is a signal from China that circumventing Beijing is impossible, regardless of U.S. backing, and adds that Taiwan is at a lower risk of hard-hitting economic sanctions from China than are other economies.

“There is a real possibility of an armed conflict as a result of hardline policies with Taiwan,” says Lin, who is also an assistant professor of Chinese foreign and security policy at Georgia Tech. “But there is no possibility that this could happen between China and Australia. China is willing to take more hardline measures against Australia to deter it and other countries from challenging Beijing’s interests. That’s why we have seen China avoid putting all its pressure on Taiwan. It gives both sides an opportunity to remain at peace.”

Toward a diversified market

Nevertheless, the pineapple ban has sparked an important debate domestically over the decoupling of Taiwan’s agricultural industry from China. Taitung Enterprise’s Hsieh notes with concern the volatility of Taiwan’s fruit exports.

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Source: Council of Agriculture

“If cross-Strait relations continue to be stalemated, agricultural exports are at high risk because China could easily hinder such sales either through regulatory bans or quarantine obstacles,” Hsieh says. “Because of its short shelf life, fresh fruit is a sitting duck when logistics cannot be assured.”

According to the COA’s public relations division, the Council is wary of possible future bans from China and is working to minimize risks.

“If China restricts imports, it may cause significant fluctuations in domestic production and sales prices and affect farmers’ incomes,” the COA said in written responses provided to Taiwan Business TOPICS. “The Council is taking relevant measures, including developing emerging markets, encouraging domestic consumption, adjusting breeding and planting areas, and providing counseling, to expand the channels of value-added products.”

Taiwan produces several varieties of pineapples for sale domestically but for its exports to China, it mainly sells Golden Diamond pineapples. The price of the Golden Diamond has risen over the years, providing lucrative opportunities for Taiwanese farmers. But to increase its exports to countries like Japan, Taiwan needs other varieties to compete.

Previous attempts to diversify the market for Taiwan’s pineapple exports have had limited success. In 2016, the state-funded fruit export company Mitagri Co., Ltd. was established to import and export agricultural products and technology, facilitate overseas investment, and diversify the agricultural market. Hsieh points out that despite this and other efforts, reliance on China for agricultural sales has increased since 2016. Meanwhile, shipments to Japan have hardly changed, although not without reason.

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Photo: Office of the President
President Tsai poses with a Taiwan-grown pineapple. China’s import ban on the fruit in March forced the government to reexamine Taiwan’s agricultural trade policies.

Tariffs alone obstruct Taiwan’s potential for competing with Southeast Asian fruit exporters. The Philippines, Southeast Asia’s largest pineapple producer, has a free trade agreement with Japan, while Taiwanese agricultural exporters pay a 15.7% tax on the goods they ship to Japan. Moreover, Filipino pineapples are year-round products, whereas Taiwan’s are exported mainly between March and August. To compete, Taiwanese farmers need to shift their focus from quantity to quality by producing more exclusive products with a longer shelf life and brand differentiation.

Apart from tariffs, Taiwan’s agricultural sector also faces issues such as expensive regulations regarding Maximum Residue Limits (MRLs), labeling, and export standards that diverge from international norms. The consequences of these policies were felt as a delivery of two tons of pineapples to Australia scheduled for March this year was suspended due to the packaging not meeting Australian standards.

In response to this issue, COA says that it is currently “strengthening pesticide residue inspection and quality control for the export supply side to ensure the safety and quality of pineapples for export.”

The COA adds that it is also supporting department stores and supermarkets in export target markets to organize Taiwan Agricultural Product Festivals and other sales-promotion activities.

“As some countries have not yet opened the importation of fresh pineapples, the Council actively assists the processing industry in the production of pineapple drinks, dried fruit, and other diversified products in order to expand pineapple exports,” says the COA.

Chyungly Lee, Research Fellow at the National Cheng Chi University’s Institute of International Relations, says Taiwanese farmers should adopt a more business-oriented mindset to avoid relying on a single export market. To trade on the global market, she says, you need to be aware of the risks.

“I hope that in the future, export farmers will understand the meaning of trade barriers – not just tariffs – and upgrade their knowledge on trade issues,” says Lee. “If we really are a player in international trade, we need to understand the rules of the game.”

Most Taiwanese farmers, however, are micro, small, or medium-sized enterprises that lack easy access to information. Darson Chiu, Research Fellow at the Taiwan Institute of Economic Research (TIER), says that the government needs to ask itself if farmers can be expected to eschew short-term profits in favor of long-term political and economic goals. He adds that the government may review what measures can be taken to protect farmers, the reasons behind increases in demand, and the stability and trustworthiness of such increases.

Taiwan Security Research’s Lin points out that the government’s response to the pineapple crisis, although effective, was ad hoc. Agricultural goods are not core to Taiwan’s economic vitality, which affords Taipei the flexibility to respond in such an impromptu manner. But considering the risk of future bans by China, Li argues that Taipei should produce clearer policies moving forward.

Additionally, if the government can assure growers that it cares about them outside election season, the political influence associated with banning agricultural products would be reduced even further, allowing pineapples to be “just” fruit. Diversifying the market by creating more high-quality products could solve the dual issue of how to decouple the market from China and at the same time protect the wellbeing of farmers.

Chen of NextGen agrees that a change in agricultural export policies is well-needed. To sustain the recent increase in exports of pineapples to Japan and other markets outside of China, Taipei needs more convincing arguments than merely defiance of Beijing’s whims.

“We need to diversify the market,” says Chen. “If we really value the idea of free trade, we shouldn’t trade on goodwill.”

This article was originally published on Taiwan Business TOPICS. The English edition of this article was written by Julia Bergstrom.

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TNL Editor: Bryan Chou (@thenewslensintl)

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