This study estimates the respective comparative advantage of the production of five crops in Taiwan and investigates how government policies have influenced their production and trade. Rice, soyabeans, and maize cannot be produced economically because their domestic resource costs are higher than their world market prices. However, the Taiwanese farmer does not necessarily conform to the criteria for domestic resource cost coefficients. With government price incentives, the private profitability of rice, maize, and soyabeans reveals only positive advantages, which gives farmers an incentive to produec those crops. On the other hand, sugarcane and bananas are subject to relatively high negative effective rates of protection.