Taiwan's demand for soybean meal continues to be the driving force behind Taiwan's demand for soybeans. Taiwan's soybean demand is fully dependent on import supply for crushing for meal and oil and for soy food use. Soybean-based food consumption is high and mature. Soybean import estimate for MY2014/15 is 2.28 MMT, about a 2 % decrease from MY2013/14. However, import forecast for MY205/16 will resume a little higher than the level of MY2013/14 to 2.38 MMT. Though facing fierce competition from South American soybeans, U.S. share is anticipated to remain 50%.

Swine and poultry are the two most important livestock sectors in Taiwan. Swine and poultry feed combined claimed 89% of the total feed output. The local poultry sector is competitive with imports since Taiwan liberalized its market as part of its 2002 WTO accession. Trade barriers prevent significant pork imports, including U.S. product, into the island. There are no significant poultry or pork exports, at this time. Taiwan's hog sector continued recovering from 2013's PEDv outbreaks from record low of 7.99 million head on slaughtered and is anticipated to resume pre-PEDv status at 8.6 million head in MY2015/16. Domestic poultry production affected by the current HPAI outbreaks with an estimate 6% drop from the baseline year 2013 and is anticipated to recover from HPAI in MY2015/16 to a normal level at 360 million birds on slaughtered. These have translated into import demand for 1.90 MMT and 2.00 MMT of soybeans for local meal crushing in MY2014/15 and MY2015/16, respectively.

However, soybean oil demand estimate for forecast year is not expected to increase in line with foreseen growth of soybeans for meal crushing because of emerging trans fats and GE labeling requirements and local food scandals involving mis-labeled and adulterated edible oils. Consumers are distrustful of locally branded vegetable oils. The market reaction to recent edible oil scandals indicated a 39% increase in imports of all other non-soy vegetable oils combined in MY2013/14. Under immerging labeling requirements, this trend is likely to continue and soybean oil market share is not expected to rebound in a short time from current 50% share of total edible vegetable oils. Taiwan may have small surplus soybean oil for exports, though some traditional markets have hedged demand due to these food safety issues.

While certain consumer groups extol the virtues of organic product and claim high demand for non- GE soybeans, the market realities see non-GE soybeans capturing just one percent of total imports. Still, these individuals and groups have managed to encourage Taiwan authorities to implement stringent GE labeling requirements. If implemented as currently written – 3% labeling threshold extended to processed products – these new requirements would impact the vast majority of Taiwan's soybean imports and products.

Production, Supply and Demand Data Statistics:

Oilseed, Soybean

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Taiwan

USDA Official

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USDA Official

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USDA Official

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Area Planted

0

1

0

2

0

3

Area Harvested

2

1

3

2

0

3

Beginning Stocks

106

106

139

138

0

142

Production

3

2

4

4

0

6

MY Imports

2,335

2,335

2,350

2,280

0

2,380

MY Imp. from U.S.

1,303

1,303

1,350

1,140

0

1,190

MY Imp. from EU

0

0

0

0

0

0

Total Supply

2,444

2,443

2,493

2,422

0

2,528

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

1,925

1,925

1,970

1,900

0

2,000

Food Use Dom. Cons.

280

280

280

280

0

280

Feed Waste Dom. Cons.

100

100

100

100

0

100

Total Dom. Cons.

2,305

2,305

2,350

2,280

0

2,380

Ending Stocks

139

138

143

142

0

148

Total Distribution

2,444

2,443

2,493

2,422

0

2,528

1000 HA, 1000 MT

Soybeans Situation & Outlook

General

Aside from some locally produced vegetable soybeans (edamame), Taiwan is fully dependent on soybean imports for soy foods and crushing for meal and oil. In marketing year (MY) 2013/14, Taiwan imported 2.335 MMT of soybeans, a 3% or 49 TMT increase from the previous year. The United States reclaimed its position as the top soybean supplier to the island, with 56% share, or 1.302 MMT, worth USD $680 million. Brazil imports fell into the second place holding 41% market share, Argentina 1% and other 13 countries combined 2%. In 2011/12 when U.S. crops faced severe drought, local crushers deemed Brazilian beans to be a better bargain with 1% higher oil and 0.5% higher protein content on average, generating higher crushing margins. However, this situation has improved in recent years. The U.S. has recaptured lost market share as soy food manufacturers value U.S. beans due to superior protein quality.

Taiwan hog auction price slipped recently to below NT$65/kg for the first time since October 2013 when Porcine Epidemic Diarrhea virus (PEDv) outbreaks resulted in hundreds of thousands of piglets being culled. Due to PEDv outbreaks, the domestic hog production estimate for 2014 is lowered to 7.99 million head slaughtered from Taiwan's Council of Agriculture (COA) previously set a target of 8.5 million head. Hog auction prices surged to over NT$85/kg, though collusion was reported between the producers, warehouses, and processors. High pork prices encouraged hog production beyond COA estimates, which, in part, offset a demand decrease for poultry feed rations affected by current highly pathogenic avian influenza (HPAI). Hog production for CY2016 is anticipated to rebound to 8.6 million head. Taiwan's soybean import estimate, therefore, is adjusted down to 2.28 MMT in MY2014/15 but rebounding to 2.38 MMT in MY2015/16.

Taiwan's consumption of soy foods, such as tofu and soymilk, is high and relatively stable at an estimated 280 TMT. This demand is primarily satisfied by locally screened U.S. #2 grade soybeans. Of this 280TMT in food use, demand for non-GE soybeans is anticipated to increase gradually because local consumers tend to be misled by media reports and consumers' groups' statements. Still, limited supplies (and expense) of non-GE soybeans hampers any significant growth.

Stocks and Containerized Shipment

Local crushers have historically maintained low stock levels for cost management purposes. The availability of containerized shipping in recent years has provided importers with greater flexibility in their purchasing schedules and reinforced the decision to maintain limited stocks. In addition to U.S. soybeans, there were some soybeans sourced from other countries such as South American soybeans shipped to Taiwan via containerized shipments. Industry source indicates 50% of CY2014 soybeans were imported via containerized shipments, compared to 48% in CY2013.

Biotech Regulations

Registration Approval

As of March 22, 2015, Taiwan's Food and Drug Administration (TFDA) granted registration approvals for nineteen GE soybeans, fourteen single events and five stacked events. TFDA registration approvals are for food, feed and processing use, valid for five years but products are not eligible for environmental release in Taiwan.

Feed Control Act, Authority Oversight

According to a February 4, 2015 amendment to The Feed Control Act (FCA), COA is now the competent authority for approval registration of GE events in animal feed, with a two year grace period for implementation. This authority previously rested with Taiwan's Food and Drug Administration (TFDA) under the Ministry of Health and Welfare. TFDA will continue to have responsibility for GE events in food products for human consumption.

The FCA amendment mandates that all for feed use GE events register with COA by February, 2017. COA is expected to promulgate feed safety assessment guidelines for GE registration within six months, anticipated July 31, 2015. Thereafter, GE feed materials and feed additives will not be allowed for delivery, marketing, import and/or export, unless the product is registered and granted approval by COA. GE product developers, life science companies, shall register with both agencies (COA and TFDA) if the product is for both food and feed use.

The regulatory process may take longer for the market launch of a new GE soybean event and its stacked products because it requires two agencies' approvals.

GE and Non-GE Separate HS Codes, Traceability Requirements

Effective November 1, 2014, all soybeans and its immediate products are required to clear customs under separate HS codes according to GE or Non-GE designation. New import shipping document for Customs clearance is required to indicate whether the soybean shipment is GE or non-GE. At the same time, relevant handlers of soybean products are required to establish traceability system and keep the record for 5 years.

CCC Code

Description of Goods

1201.90.00.91-6

Other genetically modified soybeans, whether or not broken

1201.90.00.92-5

Other non-genetically modified soybeans, whether or not broken

1208.10.00.00-6

Flours and meals of soya beans

1208.10.00.10-4

Flours and meals of genetically modified soya beans

1208.10.00.20-2

Flours and meals of non-genetically modified soya beans

Revised 3% GE Labeling Threshold, Shortened Implementation Timeline

The GE labeling threshold is to be tightened to 3% from the existing 5% under Taiwan's February 5, 2014 Food Safety and Sanitation Act (FSSA). Taiwan soy food manufacturers report they can abide by a 3% labeling threshold if given enough time to adapt new labeling standards. However, all soy food sectors say that there is no way they can follow the TFDA February 26, 2015 announced proposal to move up effective date to June 1, 2015 from previously proposed January 1, 2016.

Highly Processed Products Included in GE Labeling Requirements

Currently, food products derived from GE soybeans, such as tofu, soy milk, miso, etc., with detectable content must be labeled as "genetically modified (GM)" with a 5% labeling threshold. However, on March 17, 2015, Taiwan authorities put forward a WTO notification (TBT 168 revised) extending the GE 3% labeling threshold to highly processed products where no discernable DNA residues may be detected. Local importers and food groups, AIT, and U.S. exporters and industries are very concerned with this proposal.

Non-GE Soybeans

The change to the FSSA regarding GE-labeling requirements was, in part, driven by a small, but growing, segment of the population seeking "natural" or organic and non-GE products. Thus, the biotech labeling requirements may be a marketing tool for some producers who promote non-GE soy foods. Still, out of the estimated 280 TMT of soybeans designated for food use, Taiwan imports only about 30 TMT of non-GE soybeans, an estimate 10 TMT increase from last year. There is also increasing attention on locally grown food production and discussion of developing non-GE soybeans on the island. Starting 2013, soybeans were included on the list of the government incentivized rotational crops, encouraging domestic soybean production. According to COA, target production for 2015 is 4 TMT from 3,600 hectares of land, a 50% increase over 2014.

Worth noting, one local soy sauce brand recently launched a non-GE soy sauce. However, given narrow supplies (and expense) of non-GE soybeans, limited oversight by Taiwan food safety authorities, and non-availability of DNA testing equipment or methods, the validity of these marketing statements is undetermined.

TRADE

Cross Strait Trade

Taiwan prohibits imports of commodity soybeans, soybean meal, and oil from China. Since 2008, however, Taiwan has permitted imports of specialty black skin soybeans under a separate HS1201-9000-91-6. Black skin soybeans are primarily used to make specialty soy milk or fermented soy sauce. The demand for China-origin black skin soybeans remains at around 5 TMT a year.

Although no China-origin soybean meal has been imported, Taiwan has historically lifted the import ban on China-origin soybean meal to temporarily appease the local 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 or food products from China under certain circumstances. Speculation on future openings for imports of soybeans and intermediate products from mainland China has increased since Taiwan signed the Economic Cooperative Framework Agreement with China in June 2010. President Ma urged to complete cross-strait talks on trade in goods under ECFA by the end of 2014, but the talks yet to complete. Opposition groups have critics saying that ECFA does not benefit Taiwan, quoting trade numbers that indicated Taiwan share of total mainland China's imports in CY2014 in fact dropped by 0.2% from a year earlier. However, there are conflicting reports that import restrictions may be lifted on products on which Taiwan is heavily import dependent, for example, soybeans and immediate products. Post continues to maintain a close watch on this issue.