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Reducing the Costs of Citrus Production in Taiwan
Tzu-Bin Huang
Council of Agriculture, 37 Nan-Hai Rd.,
Taipei, Taiwan, R.O.C., 1997-04-01

Abstract

Labor, fertilizer and chemical pesticides account for approximately 80% of the total direct production costs of citrus. In order to reduce production and marketing costs and raise farmers' incomes, a project called "Demonstration and Extension to Reduce Production and Marketing Costs of Citrus" has been implemented in Taiwan since 1991. Demonstration orchards have been established, with the advice of multidisciplinary extension teams. Total production costs fell by 10.4 to 16.1% in demonstration orchards, while yields increased by 18.2%. Fruit prices rose from US$0.63/kg to US$0.74/kg in the case of ponkan, and from US$0.44/kg to US$0.88/kg in the case of Liucheng. The net profit of growers, formerly a negative value, rose to US$5,940/ha in the case of Ponkan, and US$9,333 in the case of Liucheng. Orange demonstration orchards will be used as a model for extension in years to come.

Abstracts in Other Languages: 中文(1011), 日本語(962), 한국어(1186)

Introduction

The total area of Taiwan is approxi-mately 36,000 km 2, two-thirds of which is hilly uplands. The climate is characterized by high temperatures and abundant rainfall. The subtropical climate is favorable for citrus production, but it also brings a large number of pests and diseases. The frequent typhoons in summer and autumn are another problem for agricultural production.

Taiwan's agricultural policy is based upon two basic principles, i.e. equitable distribution of wealth, and optimum utilization of land. Four current goals of the policy are: first, to ensure food security through optimal land use; second, to improve rural living conditions and welfare services; third, to increase the income of farmers and narrow the income gap between farm families and those living in urban areas; and fourth, to promote nature conservation and sustainable farmland use. The project called "Demonstration and Extenstion to Reduce Production and Marketing Costs of Citrus" had the goals of increasing farmers' incomes and utilizing farmland in an appropriate way.

Citrus Production

Citrus culture in Taiwan began in the early 17th century. Many varieties, such as Ponkan, Tankan, Liucheng orange, Wentan pomelo, and Hailikan, were introduced by immigrants from mainland China. During the period of Japanese occupation, around 6,000 ha was planted in citrus, with an annual production of approximately 40,000 mt. About one-quarter of the total production was exported, most of it to mainland China, Japan and Korea. During the Second World War, exports of citrus ceased and some citrus orchards were converted to other crops. In 1945, when Taiwan again became part of China, the acreage of citrus orchards was about 4,000 ha, with an annual production of less than 20,000 mt. From 1945 to 1990, the area planted in citrus increased steadily. However, production costs were rather high, and profits of growers were low, for a number of reasons. These included rising labor costs and high land prices, market competition, pests and diseases, and the small scale of orchards. The area planted in citrus gradually decreased after 1990. At present, there are about 10,500 ha of Ponkan*, 8,000 ha of Liucheng orange*, 6,700 ha of Wentan pummelo*, and 5,900 ha of Tankan*, with a total production each year of around 472,409 mt ( Table 1(1218)).

Production Costs in 1990

Ponkan and Liucheng orange are the two most important citrus varieties in Taiwan, based on planted area. Therefore, they are chosen as the representative varieties to be discussed in this Bulletin. The project to reduce production and marketing costs of citrus began in 1991. The production costs in 1990 are listed in detail in Tables 2 and 3, to show the situation before the project began. Labor, fertilizers and chemicals were the three most expensive items, accounting for more than 80% of total direct production costs. Overall production costs for Ponkan were US$9839/ha and for Liucheng orange US$8830/ha ( Table 2(989)). Although the direct production costs of Ponkan were higher than for Liucheng orange, by about US$1000/ha, indirect production costs were a little lower ( Table 3(915)). Comparisons of total cost, gross income and net profits for Ponkan and Liucheng orange are shown in Table 4(1055). Total production costs were higher for Ponkan than Liucheng, as was gross income. However, both Ponkan and Liucheng orange gave a negative return in 1991. Apparently, citrus growers earned only the wage for their own labor.

Strategy of the Project to Reduce Production and Marketing Costs

This project was planned and carried out by agricultural scientists working in cooperation with extension personnel from 1991. It aims at integrating the technology used in agriculture. Instead of a single extension specialist, farmers are being advised by seven specialists working together as a team.

The need to reduce citrus production and marketing costs has become urgent because of the relatively high costs in Taiwan, the imminent joining of GATT, and the pressure of competition from imported fruits. Reducing costs depends on bringing together specialists from many areas, analyzing and guiding each stage of production and marketing, and using the latest technology and management techniques.

The objectives of the project were to enhance the competitiveness of citrus fruits, integrate existing technology, promote rationalized operations and review the process undergone by citrus at each stage of production and marketing so as to develop a highly efficient operating model.

The practical objectives were:

To lower both production and marketing costs by 20%;

To raise the percentage of superior grade fruits from its present level of 20% to 50%;

To improve fruit quality by raising total soluble solids content of Ponkan from its 1990 level of 10.5 to 13° Brix, Liucheng orange from 12.5 to 15° Brix, Tankan from 10.5 to 14° Brix, and Wentan pummelo from 10.5 to 13° Brix.

How to Reach These Objectives

Reducing Production Costs

Improving Transport

Lowering production costs requires a lower labor input. To achieve this, road networks in citrus production areas were improved, and also roadways within the orchards themselves, to allow for mechanized operations. Roadways and mechanized transport also promoted the use of integrated control of pests and diseases, and mechanized weeding.

Mechanized Cultural Practices

A study of mechanization in citrus production was conducted by the Taiwan Agricultural Research Institute. The objective was to improve the efficiency of machinery used in citrus orchards. The results were as follows. (All of these machines are now being used in demonstration orchards).

Use of an excavator to dig planting holes was 30 times faster than using human labor, while land preparation by machine was 65 times faster. A small tractor (35 HP) with a lawn-mower attachment, used to weed the orchard, was 10 times faster than using a knapsack type of mower. The working efficiency of pest and disease control when a Solo and S.S. automatic sprayer was used was 13 times greater than the old-style high-pressure power sprayer. Drip and microjet irrigation in citrus orchards could save 25-50% of the water used by sprinklers. Fertilization by injecting nutrients deep in the soil was 30 times faster when machinery was used, compared to hand-operated equipment.

Use of Healthy Nursery Stock

Greening disease is the most important disease in citrus orchards in Taiwan. At present, there are no effective chemicals to control this disease. Other diseases and pests are common. To reduce expenditure on chemicals, the planting of pathogen-free nursery stock is encouraged, together with integrated control of diseases and pests.

Several organizations in Taiwan, including the Council of Agriculture, National Taiwan University, the Taiwan Agricultural Research Institute (TARI), and the Taiwan Provincial Fruit Marketing Cooperative, are involved in a program to propagate healthy seedlings. The aim of this program is to produce healthy plantlets and use them to replace diseased trees. Virus-free foundation stock are produced by means of heat therapy. To do this, leaves are stripped from the plant, which is then placed in a heated growth chamber. The tips of the growing shoots are free of virus, and are micrografted onto virus- free rootstock. Staff of National Taiwan University used shoot-tip grafting to obtain mother trees free of virus and the greening organism. A nursery of virus-free mother trees was established, and was able to provide healthy scions. The Fruit Marketing Cooperative was responsible for propagating healthy seedlings and supplying them to growers. Since 1986, the Cooperative has constructed 12 large greenhouses screened with netting, to protect the plants from insects. These enable the Cooperative to produce about 150,000 healthy seedlings each year.

One problem has been that the nurseries became overheated during the summer. A wind tunnel cooling system is now being tested, to remedy this. This close cooperation between several different institutions made it possible to establish a successful propagation and distribution system for disease free planting stock. In carrying out this program four recommendations were followed.

  • Most of the new, healthy citrus groves were established in isolated areas or on virgin land.
  • Citrus orchards with aged, unproductive or heavily infested trees were uprooted.
  • One area for new orchards was paddy fields with a low water table, which farmers wished to convert to citrus.
  • In lightly infested areas, farmers were able to replace infected trees by healthy seedlings.

Ecological Control of Greening Disease

Research has been carried out in recent years on the incidence and spread of greening disease in relation to fluctuations in the population of the vector psyllid ( Diaphorina citri). The results clearly indicated that the number of adult psyllids in Taiwan increases from mid-March (mid-spring), reaching its highest density in late April and early May (early summer). This high population density lasts for two to three months. Generally, psyllids which have survived Taiwan's cold winter begin to increase in orchards as the new flushes appear. This accounts for the higher transmission rate during March, April and May. The control of psyllids by intensive insecticide spraying during the period of new growth will effectively prevent the spread of the disease. However, it is also important that different citrus varieties should be planted in different areas, so that new sprouts flush at rather different times. In summary, the intensive spraying with pesticides from February to May, and early eradication of greening-infected trees, will minimize infestation with likubin.

Improved Soil Management

Soil and leaf analysis is used to encourage efficient fertilizer use and reduce fertilizer costs. Soil and leaf samples are taken by individual citrus growers, and collected by the leaders of demonstration teams. The samples are then sent to the local District Agricultural Improvement Station for analysis. The analysis service is completely free. On the basis of the results, together with observation of the vigor of the trees and any deficiency symptoms they might show, soil and fertilizer experts from the technology extension team will suggest to farmers how to improve their soil and fertilizer management.

Germplasm Collection and Breeding Program

New varieties are one of the most important ways of improving production. Breeding and selection programs are being carried out by agricultural research centers in Taiwan, in order to diversify the cultivars grown, improve fruit quality and increase productivity. Some good cultivars were lost during and after the Second World War, so a germplasm collection project was begun to try and replace these. Most of the collections were at first infected by virus. However, heat therapy and shoot tip grafting were used to decontaminate the germplasm, which was reestablished in screenhouses and protected from insect attack. Seeds are kept, but most collections are plants kept in screenhouses. Some duplicates are grown in the open field for evaluation. The Taiwan Agricultural Research Institute maintains 16 species with more than 90 cultivars, while a district agricultural station maintains a collection of 18 species with more than 100 cultivars. Besides germplasm collection, breeding and selection of new cultivars is also carried out. Several new cultivars with excellent eating quality, good appearance and high yields will be released in the near future.

Establishment of an Efficient Extension System

Farmers' Associations and District Agricultural Improvement Stations do most of the agricultural extension in Taiwan. As well as extension services, the Farmers' Associations also help in marketing, banking, credit and insurance. They assist the government in carrying out all types of rural development projects. The Fruit Marketing Cooperative specializes in fruit crops. It supplies agricultural inputs, and helps farmers to market their produce.

For the citrus project, three technology extension teams were organized. Members of the team include a soil and fertilizer specialist, a marketing economist, and specialists in horticulture, orchard farm planning, farm machinery, the economics of farm management, and plant protection. The teams hold training courses and field trips, as well as making farm visits. By combining their expertise, the team is able to offer a more complete solution to farmers' problems than could be given by a single extension expert. For example, in planing the layout of a citrus orchard, the team can advise from the viewpoint of mechanization, soil conservation, the best varieties for marketing etc.

Mass Production of Citrus

About 38,000 ha in Taiwan are planted in citrus, with 20 - 25,000 citrus farmers. There are still too many people engaged in citrus production, and the average size of orchards is only 1.5 - 2 ha. This is too small for efficient production. The government has recently been trying to help farmers enlarge their orchards by encouraging the joint management of orchards, so that production can be carried out on an economic scale. Low-interest loans offered by the government are of great help to growers. These are administered through Farmers' Associations and agricultural banks, and help young farmers buy land to enlarge their orchards, and purchase machinery.

Improvement of Fruit Quality and Yield

To boost the percentage of high-grade fruit with a higher sugar content, cultural practices and orchard management were improved. Varietal improvement programs were also conducted. Suitable varieties were selected, and planted in the most appropriate areas. Postharvest handling techniques and facilities were improved.

Reducing Marketing Costs

Marketing improvements were aimed at raising pricing efficiency, promoting fair trade, stabilizing prices, boosting business efficiency and cutting down on marketing costs. To achieve these aims and coordinate supply and demand, many important programs were undertaken.

Improving the Marketing System

Some of the fruit wholesale markets needed to be improved. This was achieved by the following steps.

  • Fruit markets were guided as to whether they should sell by auction or by contract, and helped farmer's organizations to organize collective marketing by members.
  • Markets were introduced to scientific management methods, including standardized operations.
  • A database for fruit wholesale markets was established, to give those involved in marketing both static and dynamic market information.
  • Transactions in fruit markets were computerized.
  • Market and transportation facilities were improved, giving greater operating efficiency. A reasonable pricing system was promoted, and organization was improved to reduce labor input and human error in market operations.

Grading and Packaging of Fruit

Under this project, farmers' groups were encouraged to improve standards of packaging and handling, and reduce the amount of substandard produce being sent to market. Small-scale packaging was improved and standardized, so that growers could sell direct to retailers or consumers. Tangerines were selected to be the first citrus fruit sold by collective marketing. If this is successful, other citrus varieties will be sold following the same model.

Cooperative Marketing and Direct Marketing

Marketing experts of the extension teams have helped farmers' groups increase the amount of cooperative marketing. They encouraged closer contact between farmers and those responsible for marketing, and helped improve grading and packaging facilities. In terms of direct marketing, farmers' groups were encouraged to market fruit directly to retailers, supermarkets, schools, restaurants and the military. This shortens the marketing process, reduces the number of middlemen, and thus increases farmers' incomes. Cooperatives were also encouraged to develop unified marketing software, and reduce the time before making payment to citrus growers.

Modernizing Retail Marketing

Several programs were carried out to overcome the marketing bottlenecks that exist between various stages of wholesale and retail sales. These apply to other agricultural products as well as citrus. Farmers' associations at a county or township level are encouraged to establish their own supermarkets. These supermarkets are encouraged to adopt government price stabilization measures after typhoons and other destructive weather, so that there is an adequate supply of citrus and other fruit at reasonable prices.

Upgrading of Wholesale Markets

Wholesale markets are responsible for much of the collection and distribution of citrus fruit. Inadequate markets must be expanded, and aging equipment must be replaced. The construction of refrigerated storage units, parking areas, and facilities for auction sales and waste disposal, is being carried out. Cargo elevators and conveyor belts have been purchased.

Strengthening Market Information

More than 550 reporting stations have been set up in Taiwan to report on prices and demand for citrus and other types of agricultural products. They are linked by an electronic communication network. All these stations have instant access to wholesale market conditions for citrus and other agricultural products in 770 local markets around Taiwan. Users of this communication system have 24-hour access to market information, which is also transmitted by radio, newspapers, billboards and other media.

Success of the Citrus Project

The goals of this project are to reduce the cost of labor, fertilizers, and chemical pesticides, while raising the percentage of high-grade fruit and increasing farmers' profits. Tasks completed in the first year (1991) of the project included:

  • The designation of demonstration orchards and local guidance groups;
  • The formation of technology extension teams;
  • Survey of demonstration orchards;
  • Quality of evaluation of citrus fruit in major citrus production areas;
  • The production of videotapes giving a general introduction to the project.

By the end of the third year, twelve production and marketing demonstration teams had been designated, and were being used as an extension model for other citrus growers. The number of extension teams had been expanded, and were providing citrus growers with services such as training courses, field guidance on cultural practices, and diagnosis of pests, diseases and nutrient difficiencies. Farmers' associations had been given training in quality evaluation, and guidance on how to build up brand recognition. Seven videotapes had been produced on how to lower production costs. They covered orchard planning, use of machinery, soil and fertilizer management, pest and disease control, cooperative and direct marketing, farm operations and extension, and orchard management. A handbook had also been published on how to reduce production and marketing costs. Information on orchard planning, cultural practices, postharvest handling and marketing was included in this handbook.

By the end of the fifth year, there were 16 demonstration orchards with a total area of just over 361 ha. The number of growers' groups had been expanded to 44, producing citrus on more than 1,000 ha of orchards. Quality evaluation was beginning to have an impact on citrus quality, and standards for superior grade fruit were higher. For high-quality Ponkan, Liucheng orange, Tankan and Wentan pummelo, the Brix of total soluble solids in superior grade fruit had risen to the desired levels of 13°, 15°, 14° and 13°, respectively. Four thousand copies of the citrus production handbook had been distributed free of charge to growers. Education extension services for growers had been further improved.

Direct production costs, indirect costs, and the net profits from citrus production in 1994, are shown in Table 5(1154) Table 6(1165) Table 7(1197). Direct production costs of Ponkan fell from US$9838/ha in 1990 to US$8216/ha in 1994 ( Table 8(954)), while costs for Liucheng orange fell from US$8830 to US$7887/ha. ( Table 9(950)). The net profit of growers increased significantly, from losses of US$519/ha to net profits of US$5420/ha in the case of Ponkan, and from a loss of US$2729/ha to a net profit of US$8515/ha for Liucheng orange ( Table 10(1080)). Of the different items in production costs, the fertilizer cost showed the most significant reduction. It seems that the analysis of soil and leaves, accompanied by the guidance for improved management, did indeed reduce the cost of fertilizer. In terms of pesticide costs, these showed a sharp fall of US$472/ha for Ponkan, but a slight increase of US$3/ha) for Liucheng orange (Table 8 and Table 9). This was probably because Ponkan is more tolerant to pests and diseases, and does not need as many chemical applications as Liucheng. Labor costs did not show much change, perhaps partly because wages have continued to rise during recent years. Another possibility is that more intensive orchard management is required in order to boost yield and produce better-quality fruit.

Fruit quality of all four citrus varieties improved during the period convered by the project ( Table 11(960)). There was an exception in 1994, a year in which Taiwan was hit by six typhoons in summer and autumn. Many citrus trees were damaged by the typhoons, and fruit quality was relatively low. Improvements in quality were matched by increases in prices paid for citrus. The price of Ponkan fruit rose to US$0.7/kg in 1994, compared to US$0.6/kg in 1990, while the price of Liucheng orange rose from US$0.4 to 0.8/kg. Overall, growers realized a marked increase in their net profits.

Conclusion

The work of reducing citrus production and marketing costs is continuing, through the programs described in this Bulletin. There is now a new emphasis on management, and growers are being introduced to the same kind of management techniques successfully used by commercial businesses. The program has already yielded significant results. As work progresses, we can expect improvements to occur at a faster rate, and for the fruit quality and competitiveness of Taiwan's citrus industry to be further enhanced.

References

  • Chen, C.H. and R.C. Lie. 1989. The production of healthy citrus nursery plants. Proceedings, Symposium on Research and Experiment for Citrus in Taiwan, pp. 128-135.
  • Council of Agriculture. 1992-1996. Council of Agriculture General Report.
  • Ding, Y.L. 1994. Evaluation Report on the Accomplishment of the Project "Reduction of Production Costs of Agricultural Products". Taiwan Provincial Department of Agriculture and Forestry. (Unpublished mimeograph).
  • Hsu, H.T. and M.H. Leu. 1995. Diversification of citrus cultivars. Proceedings, Symposium on Research and Development for Citrus in Taiwan, pp. 33-41.
  • Huang, C.H. and C.F. Liaw. 1995. A proposed strategy for control of citrus likubin from an ecological viewpoint in Taiwan Proceedings, Symposium on Research and Development for Citrus in Taiwan, pp. 177-185.
  • Huang, M.H., G.S. Chen, and D.R. Leu. 1995. The extension and outlook on the project of reducing costs of citrus production and marketing. Proceedings, Symposium on Research and Development for Citrus in Taiwan, pp. 7-14.
  • Huang, T.B. 1994. The retrospect and prospect of fruit industry in Taiwan. Proceedings, International Symposium on Horticulture in Northeast Asia: Past, Present, and Future, pp. 180-193.
  • Kang, Y.D. 1991. The past and perspective of fruit industry in Taiwan. Proceedings, Symposium on Fruit Production, Research and Development in Taiwan, pp. 1-10.
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Unit: US$/ha


Discussion

Greening disease is a major threat to production in Asia. Participants asked about the success of the program to control greening in Taiwan by chemical control of the vector. Dr. Huang replied that chemical control of the vector is the only control method available at the present time. Some field tests had been carried out on treating infected trees by injecting tetracycline, but these had not been very successful.

Several Korean participants expressed concern that Korean trees might be infected with greening via the Ponkan oranges imported from Taiwan. However, it was pointed out that greening disease in Asia is vectored by the citrus psyllid, Diaphorina citri. If this psyllid exists in a particular area and the disease is introduced, then the disease is likely to spread. If there are no Diaphorina citri present, greening disease will not spread even if infected plant materials are present. The psyllid thrives in warm, moist conditions. Temperatures are so low in Japan and Korea that there is no greening problem.

As far as quarantine is concerned, it is necessary to check only that no Diaphorina citri are present. However, the psyllid is not found on fruit, only on green shoots.

Index of Images

Table 1 Citrus Production in Taiwan, 1995

Table 1 Citrus Production in Taiwan, 1995

*Ponkan:Alargetangerinewithalooseskin,nearlyseedless,greenish-yellowwhenripe. Tankan:Ahybridoftangerineandorange,smallerthanPonkanandharvestedaroundFebruary. Liuchengorange:Sweetjuicydessertorange,difficulttopeel,usuallycutintoslicesforeating. Wentan:Waistedpummelo,paleyellowish-greenwhenripe.(Ed.).

Table 2 Direct Production Costs of Citrus in 1990

Table 2 Direct Production Costs of Citrus in 1990

Table 3 Indirect Production Costs of Citrus in 1990

Table 3 Indirect Production Costs of Citrus in 1990

Table 4 Income and Net Profits for Two Varieties of Citrus in 1990

Table 4 Income and Net Profits for Two Varieties of Citrus in 1990Table 5 Direct Production Cost of Citrus in 1994

Table 5 Direct Production Cost of Citrus in 1994

Table 6 Indirect Production Cost of Citrus in 1994

Table 6 Indirect Production Cost of Citrus in 1994

Table 7 Net Profits from Citrus Farming in 1994

Table 7 Net Profits from Citrus Farming in 1994

Table 8 Comparision of Direct Production Cost of Ponkan in 1990 &Amp; 1994

Table 8 Comparision of Direct Production Cost of Ponkan in 1990 &Amp; 1994

Table 9 Comparision of Direct Production Cost of Liucheng in 1990 and 1994  

Table 9 Comparision of Direct Production Cost of Liucheng in 1990 and 1994

Table 10 Comparision of Income and Net Profit in 1990 and 1994  

Table 10 Comparision of Income and Net Profit in 1990 and 1994

Table 11 Total Soluble Solids Content of Citrus Fruit

Table 11 Total Soluble Solids Content of Citrus Fruit

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