Hsinchu Discussion Transcript: Farming

Participants: Kevin, Peter W, Wilson, Vina, Regina, Angela
The original discussion question is here.

The point is, it’s not so serious. If it’s the metal mine or the oil, yes, it’s limited. But the plants, we plant some seed, let’s say in Taiwan, talking about rice, normally in the south of Taiwan we can have three harvests one year, and in the north, 2 times. So it’s not that serious.


Okay, no, what you don’t know is Taiwan’s soil is incredibly rich, because, just like the US, less than 200 years ago it was all forest. Also, Taiwanese farmers use ancient Chinese farming methods, which according to the author of this book, actually conserve the nutrition of the soil really well. It’s why the Chinese have used the same land for 1000 years and it’s basically okay.
But listen, let me show you a link, this is something that happened in Uzbekistan. The Soviet gvt took a fragile ecosystem, pumped it with water from the Ural sea—permanently reducing the sea by half, by the way, and killing the fishing industries and all the towns around the edges—and got 50 years of cotton out of it. But now, the land is completely dead. It’s not even a desert. It’s completely dead. Look at this picture.
Okay, but listen, until I read this book, I totally thought exactly what you did, that it’s industry and chemicals and plastics and carbon we have to worry about. But now, I see that this is a whole new area that’s got to be considered. The world is changing so fast, you know? The Taiwanese gvt is working on a 10 year old paradigm. They’re not remotely thinking about food yet, but I really think they should be.

The reason haven’t seen that scenario in Taiwan because we let the land take a rest after one season. Even though we use the chemical fertilizer to the soil, it’s because we let it rest, so we don’t harm.

Well, actually it does, it’s that it’s not as clearly harmful, because of the resting.

You know, population is like bacteria in a Petri dish. If you feed it a limited amount of food, the population of bacteriums doesn’t grow. But if you give it a surplus, the population grows, the more surplus the more growth, but the problem is, what happens when the food runs out?

Maybe in Taiwan we don’t have a lot of farming fields.

We do have! So the gvt policy is to rest.

But we don’t have fields on the scale of the US.

But the US is largely for-profit agriculture.

But I’m saying is, we don’t have the kind of field where we plant the same kind of food for miles. So we don’t have to exploit the forest. We can keep the forest.

No I don’t agree, because in the past we had to follow Japan’s rules. If as you say, we keep the forest, and have very good farming development, and the cities, and keep it as the original situation. But these few years, people are very worried about Taiwan’s future. So now we have the politicians ask those farmers to leave things fallow, because they’re afraid that too many…so they ask them to rest. But now they have changed the laws that allow them to build houses, and they can change restrictions to build houses, so the situation, that you say we lack farmland, will come to happen, will happen, because we’ve started to build on our farmland.
Do you know these two years, the agriculture is a quite popular issues, because of the growing of the emerging market, and the great population, and imagine if china, everyone ate one more piece of bread, what a shortage of wheat would be. So the land shortage has made agriculture prices go up. And in fact Taiwan has the great advantage. We have great dirt, and good soil, we could make money from it, but instead we have been developing industry. Not agriculture.

Okay, let me give you an example from my sister in law, she’s a farmer in Miaoli. The gvt wants her to have her land fallow. The gvt doesn’t approve her to plant. The gvt want to control the quantity of food, so it won’t depress prices. But maybe this year, the world lack of food, so the gvt approve she can plant in his land every year. So it’s a policy, it’s a gvt policy. It doesn’t mention any soil exploitation, the gvt want to control the price.
But there is another problem for Taiwanese farmer. They subsidy they get is only a little money, so they need to find a way for other money. So the gvt tell my sister in law to change her farming style, so need to do something, to change from pure forming to a recreation business. So need to change their farming style. And the gvt teach them how to change their style.

But I’m thinking, just for considering the future, just feed ourselves is fine. But in the future, we’re too reliant on imported foods. We don’t have much problems because we can feed ourselves. But if you think about in America, now they already suffers from this problems, because they don’ t have enough good enough farmland for corn, and basically their main food is corn, and the corn price. Because the corn is meant for biofuel, and this cause a great influence on them. And if our food type is rice, it’s fine. But if we too rely on the wheat, maybe we will have some problems. We will have to pay more, and still more. And farmers will to change those, will maximize their profits, so they will change there, for example, if corn is more profitable, they will change over to corn, and it’s not really good for the ecosystem.

So it's interesting, paragraph 32, they say it’s not necessary to say that every national agriculture is completely self contained, this would be a great pity. So Taiwan has enough food, we don’t need to import too much food, just some flour.

It’s interesting to think about Africa. They lack food so they want to increase their population.

Huh?

They want more labor to plant plants.

Wow. But if they would stop fighting, they would have the population.

So, about question number one, its strange to link, to say the population is proportional to the agriculture. So I don’t think it’s a real situation. I think the population, there are many factors that affect the population growth.

Yeah, medicine is one.

Even Africa, their economic situation is very bad, and agriculture unit output is not so….but their population is very huge.

Like in china.

So I don’t think the agricultural development is the major factor for the double triple of population in Europe in the 18th century. In my understand, the European empire, the Spanish and the British robbed the agricultural treasure from south east Asia and mainland china, is the reason for the economic growth.

How?

Their economic position improved.

So allow them to do what?

Allow them to have more babies, more land, and improve their living environment. So this can explain the high growth rate of their population.

Okay, back to the agriculture in Taiwan, after Wilson was say that it’s not a big problem. I’m not so optimistic about the agriculture here. I don’t think the soil is fertilized enough. For example, a few months ago, the worldwide fertilizer price rise very sharp, so many farmers couldn’t get enough, so without enough fertilizer, they can’t plant enough, and can’t get good harvest, so it means our soil also lack, like the Europe and America, it’s worse than before. But where we are strong is our agriculture scientist, our capability.

Yeah, don’t have lost talent.

Yes, is very advanced. And 20 or 30 years ago, they can dispatch the teams to help the African countries, or the middle east countries. So I think the soil crisis I think is global issue. And why our gvt decide to fallow many lands, partially is because just like Vina says, part of eating habit is changed to western, like McDonald, so we don’t need too many the rice to supply our internal demand.

But we can export it!

Rice, some surplus rice.

Just like Thailand.

What countries are importing our rice?

Lots of countries import Thai rice.

Number one in the world.

So I say, who buys Taiwan rice?

We haven’t developed the market.

China will need it.

I don’t think so

Yes! They will.

I’m supporting Peter. In the past, we have a lot of talented experts, like our previous president, Lee Tunghue. In that generation, some talented people liked to go into agriculture so we have many professionals who could make a good agriculture policy. But now we’re better at technology, so in education system, I don’t think many young talented people will go into agriculture, because it’s without money, without future. So in future, we’ll lack this professional area,. Everyone wants to go to TSMC.

No, that’s ten years ago.

Okay, IC design.

Sure, and it’s hard for farmers to make money. And it mentioned that their business model is not right. And I’ll say that the price of food is always low. It’s a worldwide problem. Because people need it every day. so if the price increases, it causes a lot of pressure to the country’s economy. And maybe, I’ll say it’s a problem, but it’s not a solvable problem. It’s very complicated.

But the profit, the farmers, they don’t get a considerable profit. Most of the profit is taken by the middle man, who takes advantage of the farmer, and of the consumer. So we actually pay a lot for food, but the farmer makes no money.

So if you can pay less money to buy the stuff, would you pay more for it? For me, I would choose to pay less money. It’s very straightforward.

But it’s talking about the true cost of making that thing. What if you say that this should cost 5, but you’re selling it for 2, I won’t buy it, because it’s too cheap.

Like in mainland china, all the fake foods.

Like okay, if a shop is going out of business, you can buy for cheap.

Or what about the reuses. Like someone steal the clothes put out for recycling, and wash it and sell for a cheap price, but it’s really not new.

So less than the true cost!

So that’s one problem of the social system, not the trading system.

But on the scale of mainland china? All the fake goods do affect!

But it’s also ethics!

But think about in Hsinchu, why do we have the low price policy, we try to do the lower cost. So what is the true cost?

So for low cost notebook, what do they do, to lower the margin, they can’t cut out materials so they cut out labor. So what do they do, they go to china.

But if you don’t have any margin, then you reduce the material cost!

But in Europe, some, they are against those company they build the factories in mainland china that use the very cheap laborers, because it’s children and overworked people. They say that even though we can get the cheaper price, we are against it. For example Nike, they didn’t know their manufacturer employed children, overworked with no rest. Or maybe you can get the cheaper price, they’ll say background, exporting costs, but it’s bullshit. So I’m against for buying.

This hiring children, this is a problem for the reputation of the company, for the image. So if Nike reduced cost by hiring children, so we can be against their product, we don’t use less money to buy their products. So maybe it’s like in example question. But I challenge the words, ‘true cost’ who can tell me what is the true cost?

Everything you buy you have a price in your mind.

It’s market price, but two high, or too low, everyone uses their sense, it’s market sense. You just know!

I don’t agree.

Give me an example, I’ll show you.

So you’re saying this cup should be 5 dollars.

But I agree that the true cost depends on people.

I'll give you an example of cars. Say a Lexus or BMW. Same car, same design, but Lexus is cheaper, because of customers loyalty.

But the price is rising now, because people will like it, so the price is rising.

But so it’s over the true cost, it’s the brand loyalty.

Sure, brand loyalty is why luxury goods still profitable.

Okay, but if someone wants to sell you a new BMW, one million [=NT, about 30,000USD], everyone else pays 2 million, then you know something’s wrong

Stolen car!

Sure, but why is IBM so much more expensive computer?

That’s what they price it.

So if you can buy it cheap, something is wrong.

But Lenovo laptop is the same, but it’s cheaper.

So I don’t buy IBM, I buy Lenovo!

Sure, but you see my point.

Okay, but if the price is so much lower, then you know it’s fake goods, or sacrifice some benefit to the supplier. And it’s not good for the consumer to pursue this behavior. For example my husband’s company, the purchasing manager, tried to cut costs of suppliers, to a very low price, and one year the supplier’s bankrupt, so they still have to find other, which cost them in a different way. So the best way is everyone can make money. Not big money, but you have to keep the supplier alive. You still have to thinking about others. So the lower price, I think that maybe really means that only you are benefit. It’s a short term benefit, but not more.

The key point is ethics. I know it’s judgmental but you know what’s right or wrong. You use your feelings. You buy the more expensive thing, but you get something in return. You buy low quality, you lose.

How about your opinion, Regina?

Okay, I think in example B, sometimes it’s not depends on our intention, sometimes it depends on market price. For example, in Africa, they plant coffee beans, because our developed country need it. The develop countries don’t really need it. And the price, maybe it’s under the cost, because our wealth is stronger, so we can control them. Maybe we would like to pay more, but the market is like this, so we don’t have the power to control this.

I remember I read one article that we talk about children in Africa, they have to collect those beans, and a lot of boxes, and not more than one dollar, and the price at Starbucks is 3 or 4 dollars, and it’s really the margins of it is only made by—

The middle man, like Kevin was saying.

—Right. They can manipulate the price.

Yeah, and if we can use the internet, we can organized this for itself.

Yeah, but talking about Starbucks, the environmentalists said that Starbucks was manipulating the markets, and they fought back, saying that they showed what price they sold what country’s coffee, and they’re saying they hope—

Yeah, using another way to explain.

Sure, but who is lying. It’s not Starbucks. It’s not the environmentalists are not lying. The information is distorted. The point is the complete money is not involved here.

Most of the money goes to third-party organizations.

So they are talking different target, but it’s the same issue.

Because the consumer wants cheaper, so the company wants to cut costs, so the suppliers can’t earn money.

And I think the key issue is the example b. Want to highlight for the true cost. It try, okay, to point out the most of the manufacturing costs is underestimate, then it’s true. Normally, we over consume the resources on the earth, and also, some resource is export form other countries, by some, you know, inhuman way. So I think its purpose is to remind us, that when you pay one dollar to buy some product, so what’s the real, invisible, some heightened cost behind the cost showing the finance report.
Okay, another issue I want to, I think the price, the transaction price in the market is determined by buyer and seller. I think its very simple, but we can say, I don’t think it’s guilty or illegal for business man or company owner to try decide this production site to supply cheaper to the market, it’s not about guilt or illegality. If the market is free enough, so the consumer has the right to decide to purchase a product at the lowest cost, under the condition the quality is equal. So that’s why china has become the world’s factory. Of course, a lot of people refuse to buy products made in china—

[laughter]

—but for rational consumer, there’s no reason not to buy, because it’s cheaper. So…I don’t think the transfer wealth, from one countries to another underdeveloped country is wrong, because we all know the businessman’s money, always he will invest in an area, in most efficient way.

Oh?

So what we have to do is try to improve our distribution.

You mean channel.

Yes, because most of industry in Taiwan, the smile curve, we discussed a few weeks ago. The margin of the manufacturing is very very low. So most of Taiwanese companies try to invest more in the marketing, and in the development. So these two sides are the most value added in the supply chain of any products.

But I can understand what Peter said, and I also agree, but, also this article, like Kevin said, the ethics of transferring wealth. We talk about b, but we didn’t talk about a, which is more about American style.
Sorry—

No, go ahead, I bash the US all the time, it doesn’t offend me when others do it!

I think that when people talk about climate change, about bigger issues, but in America, there is the most irresponsibility, the most throwing away of resources—

100 percent agree!

—and they can just buy others’, like mainland china, Africa. But if you agree, that I can pay for it, and also make those countries rich. But the truth is that most of the irresponsible behaviour, the result is suffered by the whole people, because of the climate change, the revolutions, even in mainland china, and the revolution and the waste is caused by ourselves. Sure I can pay for it, I can get the cheaper price, I can pay for others’ resources. But it’s not a good way of thinking. For example in Japan and Europe, they’re really devoted to lower, minimize the waste of resource. Just like the Kyoto protocol only two people didn’t sign, just America and Australia. But now only America. So maybe after Bush—

Depends if McCain or not.

But the point is what this article is talking about, it’s not just about marketing and brands.

You mention about responsibility to society.

Yes, because this article is talking about this.

It’s very ideal, and practically, we can talk about as peter said, value added, why low product are for gaining more money, so you add value. So the lowest cost is manufacturing, because it’s just to compose some component. But for the branding, they can put more value, but that’s depend on you need or you trust. If you can rely on the brand, you don’t care about paying more, because they add on the brand. So it depends on, so I’m saying, how do you really figure out the true costs? If you rely on your logic, you might be paying more.
So I’m saying this article is too idealistic. The practical economy is not evil, they can get the balance. Challenging the trading system as an evil thing against the agriculture system.. I’m saying he’s a scientist, he’s not an engineer.

So from paragraph 28: “Modern opinion is now set against all forms of exploitation. The limitation of money dividends, the disciplining of capital investments have begun. Undertaken originally only from the point of view of economic order, then continued for political and national motives, these measures bear in themselves further possibilities; it would be easy to give them wide moral significance.

[Quite possibly this was true in 1930, I highly doubt it’s true now. –Angela]”
You wrote that note, Angela, what are you saying by that?

He was writing this at the end of World War II. He was saying that modern people understand how wrong capitalism could go, because of the war? And so people would thinking differently. But he’s wrong, obviously. I’m saying, if we were truly against exploitation, it wouldn’t exist now, because we would have got rid of it already. If we truly were against it.

So it’s saying capitalism = democracy? That if our economic system is capitalism, then our society would be democratic?

Wait, you’re not saying capitalism is democracy, are you?

[Laughter]

So if capitalism does not equal democracy, then what does, socialism? Communism?

Wow, I’m not sure whether you question is in the right vein.

If our society is free or democratic, you have a right to play your business on your own, but you need to obey the law. And we also discus some, we have disciplines, because we have social responsibility, so we have to constrain our freedom to run our business. So I just say, does it violate the democratic spirit?

Wow, what do you think?

Well I don’t know what democracy is…

Democracy means free, or free democracy.

I think democracy is free plus responsibilty, so I don’t think that it violates….

But Wilson, you’re mixing up the systems. Anarchy is emphasis the full freedom for emphasizing everyone’s right. But democracy, the basic rule, is the minority has to follow the majority.

Wow.

I so agree.

Exactly right.

But the majority have to respect the minority.

Yes.

Yes.

But the minority has to follow the majority.

Sure, after the decision has already been taken…

The majority has to respect the minority’s right or benefit, so that’s the base of what democratic society exists on. If the basis of the rule is broken, the democratic society cannot sustain.

For example if the, for nuclear waste. All Taiwan’s people decide to put the waste in Lanyu [=Orchid Island, about a two hour plane flight away, inhabited by an aboriginal tribe], of course the majority would!

Majority violence!

But you still have to respect the minority voice.

Even the decision is to locate the waste in Lanyu, also all the protection or compensation should be taken by the government, for the nearby people.

But it’s interesting that if we decided to put the waste in their neighborhood, and we give them money, would they really want it?

Sure, they want it, but they want more money.

So the key point is the price.

So you need to give me enough money!

So it means democracy can be solved my money.

As long as you’re rich it’s okay!