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Japan Agribusiness Report Q1 2011
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Japan |
Published |
23 December 2010 |
Number of Pages |
62 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
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Although new Prime Minister Naoto Kan is largely seen to have passed his first test posed by the agricultural sector during the outbreak of the foot and mouth disease in April 2010, he has recently come under pressure from the strong political force of farmers. After he had expressed unprecedented support for the US-backed Trans-Pacific Trade Partnership Free Trade Agreement in early November 2010, a total of 4,000 farmers have taken to the streets to rally against any potential opening up of the much-protected agricultural sector. This reinforces our core view that the country will not implement any changes to its protectionist agricultural trade policies any time soon. That said, we do believe that this is an implicit acknowledgment from the Prime Minister no less, that significant inefficiencies are present in the agricultural sector, which is in dire need of reform. Indeed, we are not optimistic about the agricultural sector on the whole, which we believe is largely dependent on the growth rate of the country, which we expect to be subdued in the foreseeable future (projected GDP growth of 0.9% in 2011).
Key Views
- Rice production growth to 2014/15: -4.8% to 8.2mn tonnes. This will stem from fewer farmers and also lower consumption of the grain as consumers diversify into Western diets. This is also part of the general decline of the agricultural industry.
- Beef consumption growth to 2014/15: 0.66% to 1.2mn tonnes. This lacklustre beef consumption growth is due to shifting consumer preferences to poultry and pork.
- Soybean consumption growth to 2014/15: 23.0% to 5.1mn tonnes. Just under a quarter of Japanese soybean consumption is for food and almost three quarters is crushed to produce oil and soybean meal. Japanese consumers prefer non-genetically modified (GM) soybeans for food consumption and are willing to pay a significant premium for non-GM soybeans.
- 2010 Real GDP Growth: 2.9% (up from -5.2% in 2009; predicted to average 1.2% from 2010 until 2015).
- Consumer Price Inflation: -1.0% 2010 average (up from -1.4% in 2009 average). Industry Developments Agricultural scale has fallen dramatically in Japan. According to government statistics, the average size of a farm in Japan was just 1.9 hectares (ha) in 2009, as compared to 198ha in the US. Although the government has tried to reverse the industrys decline with assistance worth JPY6trn, the international competitiveness of its agricultural products still remain weak.
While consumption of meat has risen over the past few decades - per capita meat consumption jumped from 5.2kg in 1960 to 44.2kg in 2007 - it is still low by Western standards. For comparison, in Australia and the US per capita meat consumption stood at 94.0kg and 116.7kg respectively in 2007. Though we expect per capita consumption to edge up over the forecast period, we do not forecast it catching up with the levels of Western countries anytime soon.
Despite heavy government subsidies and tariffs (roughly 322%), dairy farmers have been struggling. The Japan Dairy Council estimates that outside Hokkaido about 1,240 dairy farms left the sector in 2009. The number of dairy cows in Japan has also been dropping in the past few years, falling from 1.64mn in 2006 to 1.53mn in 2008. Unless feed can be accessed at a cheaper price, many small farmers will continue to struggle."
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