Two Paths Toward Raising Quality: Fertilizer Use in Rice and Sugarcane Cultivation in Colonial Taiwan (1895–1945)

This chapter explores how farmers could purchase both “superior” and “optimal” fertilizer, focusing on rice and sugarcane cultivation in Taiwan under Japanese colonial rule. The Government of Taiwan strongly promoted fertilizer-intensive agriculture and transactions of fertilizer rapidly expanded. However, because fertilizer is a product with a high degree of information asymmetry, farmers had to bear the costs for judging the qualityQuality of fertilizers and keeping up with the advancement of fertilizers. In order to deal with these problems, farmers chose institutional solutions by trading with agricultural associationsAgricultural association in rice cultivation and sugar companiesSugar companies in sugarcane cultivation. However, as fertilizer transactions increased, the means of solving information asymmetry followed different paths for the two crops. In the case of rice cultivation, because the characteristics of the fertilizer did not change, maintaining institutional solutions became irrational, resulting in the rise of market-based solutionsRegulation vs market-based solutions . In sugarcane cultivation, because the fertilizer advanced rapidly, keeping institutional solutions remained rational. Given the differences in production parameters, both rice farmers and sugarcane farmers made rational choices resulting in a choice of institutional solutions in the sugarcane case, and market-based solutions in the rice case.