TAIWAN - A coherent package: agrarian reform, agricultural policy and economic development

Up until Japan’s takeover of the island in 1895, Taiwan, like the rest of traditional Chinese society, had a social hierarchy based on land wealth, in which masses of peasant families worked the land according to traditional tenure systems.

During its phase of accelerated industrialisation, Japan, with its crowded, overpopulated and mainly uncultivable islands, sought to transform Taiwan into a supplier of basic agricultural products. First of all, the Japanese colonial authorities succeeded in augmenting rice, sugar and sweet potato production by both increasing farmland surface area and intensifying the labour of the 73% of the total population working in agriculture. Starting in the early 1920s, they launched a scheme for the modernisation of farming techniques and simultaneously introduced selected sowing, chemical fertilisers and irrigation, which resulted in a rapid and significant intensification of production (increased output and multiple harvests). To do this, they provide for an organised and professional farming sector, including farmers’ unions, supply and credit co-operatives and technical training networks. By 1930, there was on average one technical trainer for every 32 farms, which represents the highest rate in the world at the time. Nevertheless, Taiwan remained a colonised and underdeveloped country. The traditional social hierarchy had been conserved and land ownership was held by a small elite. The peasants hardly benefited from this progress as they were heavily exploited. A net surplus, estimated at one-fifth of the value of farm production, was extorted from small farmers through income taxes, rents paid to landowners and unfair trade with Japan (Thorbecke: 137).

After the war and the Chinese Communist Party’s victory on the continent, a decisive split took place. Survivors of the nationalist army and the continental bourgeoisie, assembled as the Guomindang, fled to the island, established their power and undertook the development of its economy with significant help from the United States. Right away, the new arrivals and their powerful friend set out to liberate the peasantry and get rid of the class of local landed gentry with whom they had no political connection.

This was done is three phases:

• 1. forced reduction of land rent to 37.5% of the crop yield (instead of the previous 50%)

• 2. selling of small land shares seized from the Japanese;

• 3. finally, a proper agrarian reform in 1953 (Land-to-the-Tiller Program) with a 2.9 hectare limitation on the property surface area, expropriation of big landowners and the redistribution of surplus farmland to small farmers.

These various measures considerably reduced the number of share-croppers, as small farmers cultivating their own land became the majority. A quarter of the farmland surface area was distributed to small farmers, thus giving the country a more egalitarian farm structure. The former landowners received small monetary compensations as well as stocks in industrial companies set up by the government at the same time, thus transforming these people into capitalists.

Agricultural development was revived along the same technical lines as what the Japanese had promoted, which sought to make use of the abundant rural workforce: high-yield seeds, fertilisation and irrigation. The use of draft animals increased from 1946 to 1958 while the amount of manpower invested in farming increased until 1968. Mechanisation, which could have substituted human labour, was not encouraged until the seventies, once industrial development was able to absorb the labour transfer. Furthermore, mechanisation was only done through forms that were compatible with peasant production methods (such as tillers and lawn tractors).

This agricultural policy was directly organised and financed by the American government through a surprising institutional arrangement. The Chinese American Joint Commission on Rural Reconstruction (JCRR) was founded in 1948 to manage American aid towards agriculture, which figured at 51% of the total development aid. For 20 years, the JCRR was a kind of super-ministry of Agriculture, totally independent from the local government who did not have access to the funds managed by the JCRR. Its policy entailed cooperating with Taiwanese professional farming organisations in order to formulate then apply development projects. In a way, the United States furnished the Taiwanese State with a supplementary State apparatus, until it acquired the level of development, efficiency and integrity inherent to a modern, industrial and middle-class state.

This policy had illustrious success: between 1946 and 1976, agricultural production quintupled and continues to diversify: animal products, fruits and vegetables, which were not very prominent early on, reached, particularly in the last years, an above-average growth rate. At the same time, the agricultural sector was able to supply the rest of the economy with a capital sum representing between 22% of the agricultural production value at the early stages, and 15% at the end, whether through taxes or, as happened at the later stages, the diversified placement of farmers’ savings. For this reason, it is safe to say that agricultural surplus played a crucial role in the constitution of industrial capital (Thorbecke: 203).

In the mid-eighties, agricultural expansion slowed down and new problems arose: drop in farmers’ incomes, rice overproduction, etc. Servolin remarks that Taiwanese agriculture began to experience problems in matters of production and market regulation, or in price and income monitoring—the same problems that characterise the farming sectors of all developed countries! He emphasises that Taiwan’s economic development, a success on its own terms and under special circumstances (such as the political subordination of the Taiwanese state to the USA, and the billion and a half dollars that Taiwan received from the United States between 1951 and 1965), had reproduced the features of Western agricultural policies. For example, the peasant liberation, the planned intensified production by means of institutionalised collaboration between the State and professional organisations, small farmers’ participation in savings, and generalised market and price regulation (in particular, for rice and fertilisers).

Comments

The experience of Taiwan, beyond its specificity, clearly illustrates a certain number of necessary conditions to be met in order to attain sustainable economic development backed by family farming. For an agrarian reform to enable farmers to profit from new possibilities due to intensified production, it must be accompanied by a coherent agricultural policy, as much at the technical level (modernisation of techniques and organisation) as at the level of political economy (market regulation). This would be impossible without solid farmers’ organisations, which hence need to be developed. Furthermore, this would be impossible today when economies open completely to the global market economy.

This article is part of Land Policies and Agrarian Reforms. Proposal Paper. 2007

Paper Editor: Merlet, Michel. Edited summary of Claude Servolin’s paper, completed by elements taken from the Thorbecke work after discussion with C. Servolin. 2001.

Translation: Mary Rodeghier. 2007.