Taiwan’s traditional markets faced a shortage of eggs before the Spring Festival although they were well-stocked with poultry, seafood and vegetables. Egg baskets in grocery stores were empty while egg cartons in supermarkets flew off the shelves as soon as they were replenished. Breakfast cafes stopped selling egg pancakes, and small eateries no longer sold the quintessential braised soya sauce egg.
My mother said that there was still a great demand for eggs even though 600g of eggs can cost up to NT$70 (US$2.50), an increase of more than 50%, and each person was only allowed to buy 20 eggs at one time. Because nian gao (年糕, sweet rice cake) had to be pan-fried with eggs and flour, I asked my regular organic shop to reserve two cartons of eggs for me. To my surprise, relatively affordable organic eggs turned into a rare commodity; there was only a carton of eight eggs left with a price tag of NT$140.
Not meeting consumer egg-pectations
Addressing the situation, the Executive Yuan emphasised that it would stabilise the egg supply while the Council of Agriculture (COA) expressed that the egg shortage situation would improve soon. But residents in Keelung, Taoyuan and other districts painted a very different picture: they had to queue outside stores for 30 minutes to an hour and wait for the eggs to be delivered just so they could buy some. The queues were so long that onlookers even mistook them for vaccination queues!
Minister of the COA Chen Chi-chung later admitted that Taiwan was short of about one to two million eggs per day. Apart from meeting some of northern Taiwan’s needs with eggs from the south, the COA has also applied for emergency approval to import eggs from Australia and the US, which will probably arrive in mid-February. The COA expects the egg shortage to be alleviated possibly by the time of the Qingming Festival in early April.
Based on a report that the COA submitted to the Executive Yuan, since 22 December 2021, the retail price at egg production sites was frozen at NT$34.5 per 600g to stabilise commodity prices, but feed prices kept rising. With egg farmers lacking incentives to up production, not to mention avian flu outbreaks and cold weather, an egg shortage ensued.
...the government froze the retail price of eggs to stabilise commodity prices, and egg farmers became unwilling to operate at a loss, accounting for yet another reason for the current shortage of eggs.
Temperature drops and avian flu outbreaks commonly occur before the Spring Festival. An academic who has previously helped the COA conduct various investigations into egg farms pointed out that livestock farmers in Taiwan have poor production efficiency. He said Taiwan only needs to raise 32 million laying hens to meet egg production needs, but is instead raising 40 million laying hens and still facing frequent egg shortages in recent years, which he finds “amazing”. He pointed out that the lack of information about livestock diseases and inaccurate data involving laying hens must be rectified. At least three million chickens were reportedly culled last year when the avian flu swept through the region.
Egg distributors pointed out that the Covid-19 pandemic has resulted in rising raw material costs, with feed prices increasing by 40% to 50%. Yet, the government froze the retail price of eggs to stabilise commodity prices, and egg farmers became unwilling to operate at a loss, accounting for yet another reason for the current shortage of eggs.
True extent of inflation may soon become apparent
Taiwan’s Consumer Price Index (CPI) for 2021 was 1.96%, the largest increase in 13 years, but not high in comparison to the US and other countries. However, there are many factors in the CPI. The prices of essential items and price index for low-income households released by the Directorate General of Budget, Accounting and Statistics (DGBAS) under the Executive Yuan are a better reflection of the true increase in goods prices and how the people feel.
For example, the price of eggs went up by 7.7% between October and November last year, and was 11.3% higher than the same period in 2020. And between November and December last year, prices went up by 4.9%, which was 13.8% higher than the same period in 2020.
For the bottom 20% of households in terms of income, the annual CPI growth rate for 2021 went up to 2.01%, higher than the average increase in goods prices. The DGBAS noted that low-income households faced greater pressure from goods prices because they spent a larger proportion of income on food items, which saw higher price increases in the fourth quarter of 2021.
Before Chinese New Year, the authorities stabilised goods prices by looking into them and freezing hikes for petrol, electricity and liquefied petroleum gas (LPG). The Ministry of Economic Affairs later admitted that some F&B establishments had indeed raised prices due to higher prices of raw materials and ingredients, and it could only use moral suasion to get 500 industry players to make a commitment not to raise prices before Chinese New Year. However, prices would have to be adjusted upwards after Chinese New Year, as they reverted to normal market mechanisms.
The current Tsai Ing-wen administration has learned a lesson and is freezing price hikes on oil and electricity, but the huge losses due to this policy are only building up and one cannot say how long it can last.
In an effort to support the policy of freezing price hikes, companies such as public-run CPC Corporation and Taiwan Power Company have not been able to appropriately reflect increases in international energy prices — last year, CPC lost NT$43.4 billion due to a jump in natural gas prices, while the Taiwan Power Company is in debt to the tune of over NT$1.8 trillion as of the end of last year.
Former President Ma Ying-jeou nearly lost power during his term, as he tried to accommodate and allow the market to increase oil and electricity prices, leading to higher goods prices, which in turn sparked strong public unhappiness.
The current Tsai Ing-wen administration has learned a lesson and is freezing price hikes on oil and electricity, but the huge losses due to this policy are only building up and one cannot say how long it can last. Once those prices are accurately reflected, the increase will definitely have a greater impact on goods prices.
Property still seen as a safety net for now
With the US set to raise interest rates in March this year, the Central Bank of Taiwan has signalled that if inflation pressures get too great, it does not rule out also raising interest rates in the first half of this year.
Compared to the central bank possibly raising interest rates and reining in the housing market, the people are more worried about inevitable inflation; in that context, property is holding its value and continues to be viewed as a powerful weapon against inflation.
Last year, due to an oversupply of floating capital and rising construction costs and manpower costs, property prices in Taiwan’s six special municipalities — except for New Taipei City — all went up by over 10%, with prices in Tainan and Kaohsiung increasing by over 20% due to the upside of TSMC expanding its factories. Many people with cash to spare are racing to buy in despite knowing that prices are high, because they are worried that if they do not buy now they will have to pay even more later, only to diminish further the hopes of the average young person of buying a home.
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