USDA GAIN: Taiwan Oilseeds and Products Annual 2012

USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

Reports » USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed » USDA GAIN: Taiwan Oilseeds and Products Annual 2012

04 April 2012

Taiwan typically ranks among the top five export markets for US soybeans, but marketing year 2011/12 imports are expected to fall to 2.2 million metric tons due to reduced livestock production following outbreaks of avian influenza and foot and mouth disease. Higher oil and protein content is stimulating interest in South American beans. As a result, US market share could also fall in MY2011/12. With an expected recovery in the livestock sector, imports are forecast to improve to 2.4 million metric tons in MY2012/13.

Soybean Situation and Outlook

General

Taiwan is fully dependent on imports of soybeans with demand divided between food use and crushing for meal and oil. In marketing year (MY) 2010/11, Taiwan imported a total of 2.4 million metric tons (MMT) of soybeans, with 61 percent sourced from the United States (valued at $763 million.) Recent outbreaks of high pathogenic avian influenza (HPAI H5N2) and some isolated incidents of foot and mouth disease have disrupted local poultry and swine production. These incidents have also affected consumer demand, at least in the short term, following a string of highly sensationalized food safety events that have raised concerns about meat and poultry products in general. As a result, soybean imports are expected to decline to 2.2 MMT in MY2011/12. With the eventual relaxation of consumer fears and an expected recovery of the local livestock sector, soybean imports are forecast to improve to 2.4 MMT in MY2012/2013.

Demand for food-use soybeans, partly due to concerns about meat and poultry products, remains strong and is estimated at 280 thousand metric tons (TMT) in MY2010/11. This demand is primarily satisfied by locally-screened U.S. #2 grade soybeans and distributed by domestic crushers. According to the Taiwan office of the American Soybean Association-International Marketing (ASA-IM), about 20 TMT of the total food use soybeans were non-GM, including organic and food grade beans,. It is difficult to estimate the actual volume of non-GM food-grade soybeans sourced from the U.S. based on Taiwan Customs statistics. However, at least four U.S. non-GM soybean suppliers are active in the Taiwan market, so local soy food manufacturers are able to source U.S. non-GM beans, including specialty varieties that are used to make natto, a fermented soybean used in traditional cooking, or natto kainase, a health food supplement.

Market Share: U.S. is expected to remain dominant supplier

In recent years, U.S. soybeans have faced stronger competition from South American soybeans. Taiwan crushers have indicated that South American beans are not only price-competitive but even superior in terms of oil and protein content. Despite this challenge, the United States is expected to retain its leading position in the Taiwan soybean market, albeit at lower levels. Increasing attention to quality, year-round shipping availability, reliability of U.S. supplies, and the advantage of shipping from the U.S. via backhaul containers are all factors that favor imports of U.S. soybeans. Domestic food manufacturers also prefer U.S. origin screened beans for their food processing lines. In addition, local crushers value the trade servicing and marketing support provided by the U.S. cooperator, ASA-IM Taiwan.

In MY 2010/11, the United States held a 61 percent share of total imports, followed by Brazil with 38 percent; Argentina, Ukraine, Canada, China, Paraguay and other countries made up the balance. While the U.S. has ceded some market share to Brazil in recent years, U.S. soybeans are expected to regain some lost market share with lower moisture and higher oil and protein content soybeans preferred by Taiwan crushers.

Biotechnology and Labeling

According to Taiwan's Food and Drug Administration, Taiwan has granted registration approvals for seven single event biotech soybean products: 40-3-2 (RRS); A2704-12; MON89788; DP-356043-5; DP- 305423-1; A5547-127; and MON87701. Taiwan also has granted registration approval for 16 singleevent corn products, and 26 stacked corn events are registered and approved, of which 13 are two-way, 7 three-way, and 6 four-way. The registration is valid for five years for food, feed and processing (FFP) use but cannot be used for environmental release or planting.

Food products derived from biotech soybeans, such as tofu, soy milk, miso, natto and others must be labeled as containing biotech soybeans or biotech soybean ingredients. In March 2009, Taiwan's health authorities announced a new labeling requirement for foods in bulk packaging. Starting from January 1, 2010, all food products in bulk packaging for retail sale must indicate (1) product name and (2) country of origin on a card, logo (label), sign board or any other form prominently displayed in retail venues so that it can be clearly identified by consumers.

This is Taiwan’s first initiative to require labeling for food sold in bulk. The new labeling requirement may have some potential to increase Taiwan’s demand for non-GM food soybeans given the small but growing segment of Taiwan’s population that demands natural-grown or organic products as part of a larger movement promoting healthier eating/lifestyles.

Low level Stocks & Containerized Shipments

Local crushers purposely maintain low stock levels for cost management purposes. The availability of containerized shipping in recent years has provided importers with greater flexibility in shipping, which also reinforced the decision to maintain limited stocks. This shipping method peaked in 2007 when 77 percent of U.S. soybean shipments arrived by container. However, this paradigm shifted again during the recent global downturn as the volume of empty backhaul containers declined. In MY2010/11, containerized shipments accounted for only 31 percent of total imports.

Quarantine Requirements for Wood Packing Material in Oilseeds/Grain Containerized Shipments

All shipments without ISPM-15 compliance stamps on wood packing materials, such as bulkheads, must be fumigated at the port of entry in accordance with Taiwan import requirements for wood packing materials. Taiwan has enforced these wood packing material requirements in compliance with the IPPC’s ISPM-15 since January 1, 2009. The trade is familiar with these rules, and there were no reports of any noncompliant cases in 2011.

Trade with China under a Thawing Cross Strait Relationship

Taiwan bans imports of commodity soybeans and soybean meal and oil from China, but has permitted imports of specialty soybeans from China under a separate Code, HS1201-0000-20-1, since September 8, 2008. According to contacts in the Taiwan soy food sector, the current demand for China-origin specialty black skin soybeans is around 5-6 TMT a year. The black skin soybeans are used to make specialty soy milk or fermented soy sauce.

Although no soybean meal from China has been imported to date, Taiwan temporarily lifted the import ban on soybean meal from China from November 18, 2003 to January 31, 2004 at the request of the livestock sector. Similar and more frequent openings have occurred for imports of feed-use corn from China. This suggests that Taiwan authorities are willing to lower import restrictions on agricultural products from China under certain circumstances. Further speculation on future openings for imports of soybeans from mainland China has increased since Taiwan signed the Economic Cooperative Framework Agreement (ECFA) with China in June 2010. The Ma Administration has indicated, however, that Taiwan will not open its market to the 830 agricultural products that are currently banned from mainland China.

Oilmeal Situation and Outlook

General

Local demand for soybean meal is the main driver for Taiwan’s imports of soybeans, with locally crushed soymeal accounting for 97 percent of the domestic market in MY2010/11.
Based on local livestock production, Taiwan’s total soybean meal demand is estimated at 1.7-1.8 million metric tons annually, including conventional, de-hulled and full-fat meal. Demand for full-fat meal was an estimated 350 TMT during MY2010/11 but is expected to fall to 310 TMT in MY2011/12 due to disruptions in the local livestock sector due to outbreaks of avian influenza and other market factors. With an anticipated recovery in the livestock sector in MY2012/13, imports are forecast to expand to about 340 TMT.

Taiwan feed millers, aiming to reduce feed production costs, pay close attention to the world soybean and meal markets. They import meal only when the global soybean meal price is comparatively lower than locally crushed soybean meal. However, local crushers have on occasion paid a premium for protein in an effort to keep locally crushed meal competitive with imported meal.

In addition to the occasional import of soybean meal, locally crushed soybean meal faces some minor market challenges from imports of distiller’s dried grain soluble (DDGS) and other oilseed or protein meals, especially during periods of high world soybean prices.

Consumption & Trade

In MY2010/11, Taiwan imported a total of 56 TMT of soybean meal, of which 3 TMT was imported from the United States while the rest was sourced from India. Taiwan reduced by half the tariff on soybean meal under HS-1208 to 1.5 percent from December 1, 2010 thru May 31, 2012 to help the domestic livestock industry cope with recent increases in soybean prices.

Taiwan crushers have invested in de-hulling equipment to increase production of high protein de-hulled meal. In addition to conventional soybean meal, full fat meal and de-hulled high protein meal with crude protein (CP) of 47% or above remained popular. De-hulled high protein meal is priced with a premium of NT$0.70/kg over conventional CP 43% soy meal. Taiwan has a CP 43% national standard for soybean meal. The production of full fat soybeans is estimated at about 350,000 metric tons in MY 2010/11, falling to 310,000 metric tons for MY 2011/12, and then recovering to 340,000 metric tons in MY 2012/13. The combined feed inclusion rate of protein meals other than soybean meal (all imported) was around 13 percent in MY2010/2011.

Oil Situation and Outlook

General

Taiwan’s demand for soybean oil is primarily met by local crushing of imported soybeans with limited soybean oil trade. In MY2010/11, Taiwan imported 5 TMT of soybean oil and exported 8 TMT, mainly to Japan and the Philippines. In general, Taiwan exports approximately 10 thousand metric tons of refined edible oils to the region annually according to export statistics in recent years. Taiwan only occasionally imports small amounts of soybean oil for balancing domestic demand. Imports of soybean oil are expected to remain limited due to Taiwan’s relatively efficient local crushing sector.

Taiwan’s total vegetable oil consumption in 2011 was an estimated 573 TMT, up 20 TMT from the previous year. The increase could be the result of greater enforcement of Taiwan's quality standards for deep frying oil in line with the July 2009 announcement of the Good Hygienic Practices of Food Preparation rules for the hotel, restaurant and institutional (HRI) sector. Taiwan health authorities now regularly inspect deep frying oil quality in fast food chains and other outlets after a media scandal about some restaurants reusing their oil elevated consumer concerns. The increase in oil consumption could also be the result of the expanded use of recycled cooking oils for B100 biodiesel production to meet Taiwan’s biodiesel mandate, which was implemented in June 2010 with an estimated demand of 100 million liters of B100. Taiwan has approximately 130 million liters of local B100 biodiesel production capacity using recycled cooking oil.

USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed