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Japan Agribusiness Report Q4 2009
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Japan |
Published |
18 September 2009 |
Number of Pages |
56 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
In 2008, Japan's food self-sufficiency on a calorie basis climbed one percentage point from 2007 to 41%, the Ministry of Agriculture, Forestry and Fisheries (MAFF) said in August. This is the second annual increase following a nadir of 39% in 2006. The rise was achieved by an increase in domestic production of commodities such as rice and sugar and a fall in imports owing to the high prices of agricultural commodities on the world market in 2007 and 2008.
In 2009, the rise is unlikely to be repeated. Japanese agriculture has been hit by a cool and wet summer, threatening large falls in crop yields. Rice production is likely to be well down on last year's harvest of 8.82mn tonnes and could well fall below the level of consumption for the first time since 2003. Wheat production is also forecast to fall, with imports expected to rise, boosted by the strong yen and lower prices on the world market. A fall in the price at which wheat is sold to millers will also prevent demand for wheat falling by a large amount in the face of the economic slowdown.
Meat imports are also set to rise in 2009. The economic slowdown is encouraging consumers to move away from expensive domestically produced meat, particularly beef, and trade down to less well regarded imported cuts. Beef imports were up 3% year-on-year (y-o-y) in the first half of 2009. US beef proved particularly popular with imports rising 24% to take the US' market share to 11%. Japanese-produced beef is often more than twice the price of imported beef and the price of local cuts has remained stubbornly high despite the poor state of the economy.
Consumption of fluid milk, for which Japan is self-sufficient, has also been hit by the slowdown. In the first half of 2009, production of milk for fluid consumption fell 3.1% y-o-y. This is line with our forecast for a full-year fall in fluid milk consumption of 3.3% y-o-y in 2009. This is an acceleration of a long-term trend for falling milk demand. A raise in the retail price of fluid milk in March only exacerbated the fall.
All the above factors will likely increase Japan's reliance on food imports in 2009, though a fall in demand for imported luxury foods could slow the rise. The Democratic Party, who seized power in the August general election, stated during the run up their ambitious goal of increasing Japan's food selfsufficiency level to 50% within 10 years and then to 60% in 20. Party strongman Katsuya Okada had also said he hopes to liberalise the sector stating in an interview with Reuters that food security and free trade are not incompatible. Any changes to Japan's tightly controlled agricultural sector would lead to strong resistance from the farming lobby and plans to liberalise trade in agricultural policies could well be quietly dropped now the Democrats are in power. Indeed, shortly after releasing its manifesto, the party inserted a line assuring farmers they would be protected from any free trade agreement with the US.
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