Japan revs up farm export drive

Posted in Japan | 17-Jan-06 | Author: Hisane Masaki| Source: Asia Times

Prime Minister Junichiro Koizumi visits food and health fair in Tokyo.

TOKYO - After years of international pressure over farm trade liberalization, Japan now believes the best defense is a good offense and is avidly promoting agricultural exports as a way to turn the tables. While still a major food importer, the country has set a new, ambitious goal to double exports of agricultural and marine products amid growing concerns about food security.

To that end, Japan is boosting government funding to help domestic growers and businesses with market cultivation and export promotion programs. The country is also beefing up efforts to eliminate the increasingly rampant proliferation of pirated produce varieties grown more cheaply abroad, especially in neighboring countries, from prized seeds developed and cultured by Japanese farmers. Unless such cases of agricultural piracy are nipped in the bud, not only could the growth in a promising source of income for Japanese farmers be stunted, but the government-led export drive could stall.

Japan is on the offensive in negotiations to liberalize trade in non-farm products such as automobiles and electronics, but is on the defensive when it comes to agriculture. The year 2006 will be a crucial one for the global trading system; the World Trade Organization's ministerial meeting in Hong Kong last month made only modest progress. Trade ministers from 149 countries failed to strike a deal on a framework for further liberalizing trade in goods and services. Instead, they pledged to work out such a deal by the end of April, in hopes of meeting an end-2006 target deadline.

The biggest sticking point in the Doha Round of WTO negotiations is agriculture. WTO members remain sharply split over how much barriers to the freer cross-border movement of farm produce, such as national subsidies for domestic farmers, export subsidies and high import tariffs, should be eliminated, especially in richer industrialized members. This question has also pitted industrialized WTO members, including the US, the European Union and Japan, against one another.

As the Doha Round ticks toward the deadline, Japan is expected to come under stronger pressure to liberalize its heavily protected agricultural markets. It is vehemently resisting a proposal supported by many WTO members to set a ceiling of 75-100% on the import tariffs for farm products. Tokyo wants to keep those tariffs, especially for politically sensitive rice, as high as possible to shield weak and uncompetitive domestic farmers from a flood of cheaper imports. Japan is also seeking a greater percentage of farm products exempted from sharp tariff reductions than many countries demand. The US insists wants to limit that percentage to only 1%, while the Group of 10 (G-10) farm-exporting countries, including Japan, South Korea and Switzerland, are demanding exemptions of 10-15%.

While digging in its heels to protect some farm products, Japan has begun to try a new tactic to breathe life into its ailing agricultural sector: plying foreign consumers with its own foods. "Japan should export safe and tasty food rather than just importing. Let's change our defensive attitude in farming to a more positive one and spread the Japanese diet to the world," Prime Minister Junichiro Koizumi said in Tokyo on Saturday at a government-sponsored annual food fair. He said high-quality Japanese exports of beef, apples, strawberries and rice are popular with "foodies" around the world.

Cashing in on Japanese cuisine
A major reason for hope in the farm-export drive is the popularity of Japanese cuisine, which is widely perceived as healthy as well as exotic. To some extent, this popularity was driven by the expansion of Japanese businesses abroad, which multiplied the number of Japanese restaurants overseas. For many years, these establishments were largely the preserve of local Japanese expatriates. However, many such restaurants have had to reach beyond their traditional clientele in recent years as Japanese companies slimmed down their overseas operations after the bursting of the "bubble economy"; when they did so, it further boosted the popularity of Japanese food.

Ironically, though, Japanese consumers now eat less rice and other domestically grown farm produce. Their diet has shifted from traditional vegetable-based Japanese cuisine, or washoku, to bread, pasta and other Western dishes. Alarmed by recent studies finding that the Westernized diet, junk food and a lack of exercise have produced many obese children, the government has launched projects aimed at raising public awareness of healthy diet, including the food fair attended by Koizumi.

Japan, the world's largest net food importer, has set a new, ambitious goal of doubling exports of agricultural and marine products over a five-year period by 2009. In 2004, the latest year for which precise figures are available, Japan exported agricultural and marine products worth about 300 billion yen (US$2.6 billion), only about 3% of the nation's total output of such products. This amount was dwarfed by Japan's annual imports of agricultural and marine products, worth about 7 trillion yen. The Japanese government aims to double exports to 600 billion yen in 2009. Among the most promising products are apples, pears, salmon and scallops.

To meet the goal of doubling exports, the Koizumi government earmarked 1.253 billion yen for its fiscal 2006 budget plan to help whet agricultural exports. This amount was nearly double the 656 million yen in the current, fiscal 2005 budget. The government will use the increased budget to, for example, conduct market research and launch publicity and sales promotion campaigns.

Regional groups of producers have been popping up around the country to promote exports of agricultural and marine products in recent years. In Kumamoto prefecture, on the westernmost main Japanese island of Kyushu, for example, about 30 local producers of vegetables, fruits and processed foods formed the Kumamoto Study Group to Promote Exports of Farm, Forest and Fishery Products in May 2004.

Japanese food exports, especially marine products and fruit, are on the rise. Marine products accounted for just over 40% of the nation's total exports of agricultural and marine products in 2004. The export growth in marine products has been led by salmon, which skyrocketed nearly 13-fold from 2000 to 2004, totaling 8.9 billion yen. Scallops soared 84% during the same four-year period, to 6.2 billion yen. Among other fruits, apples surged 482% from 2000 to 2.9 billion yen in 2004. During the same four-year period, pears rose 77% to 700 million yen, oranges increased 105% to 500 million yen, and Japanese green tea climbed 146% to 1.7 billion yen.

By region, food exports to the rest of East Asia have shown particularly robust increases in recent years. As the Japanese population began to decline in 2005, two years earlier than widely expected, Japanese farmers and food businesses are increasingly looking to overseas markets, especially in East Asia, where the middle-class population that can afford Japanese agricultural products is becoming more numerous. In 2004, more than three-quarters of Japanese agricultural and marine products shipped abroad went to East Asia. China and Hong Kong imported a combined 37% of the overall Japanese exports of such products; South Korea 16%; and Taiwan 13%. China's share has shown a particularly remarkable surge in recent years, rising from a minuscule 2% in 1989 to 17% in 2004, while Hong Kong's has remained flat during the same period, at 20%.

Officials at the Ministry of Agriculture, Forestry and Fisheries say it hopes to expand overseas markets for Japanese agricultural and marine products by taking advantage of the current global boom in Japanese foods and making them, including agricultural and marine products, as a whole recognized as "a Japanese brand rooted in Japanese technology and culture".

Farm piracy: A 'growing' problem
Rampant piracy of Japanese products, including animation, movies, music compact discs, and electronic devices, has long been a major concern for Japanese businesses and government policymakers. But agricultural products are not usually thought of as targets for intellectual-property thieves. Sadly, however, the illicit cultivation and sale of Japanese produce varieties has become a serious problem.

As part of efforts to maintain the competitiveness of Japanese producers of some prized agricultural products, the Japanese government is preparing to launch countermeasures against illegally grown Japanese farm produce in Asian neighbors, beginning on April 1. The government will help Asian neighbors establish systems for protecting new varieties of Japanese farm produce through seminars, regular meetings and the dispatch of Japanese experts.

A Japanese registration scheme, under the Seeds and Seedlings Law, protects the rights of individuals and organizations that have cultivated a new type of farm produce by prohibiting the sale or import of the new strain from another country without the registrant's permission. But at present there is no way of cracking down on sales of pirated Japanese agricultural and marine products on overseas markets. Unlike industrial products, agricultural ones are not yet fully protected under international intellectual property treaties, and this has opened the way for large-scale purloining of valuable varieties. For example, the bulk of South Korean strawberries are said to be Japanese varieties.

Pirated Japanese farm products began to hit the domestic market in large quantities several years ago. Among them are Yukitebo, a new variety of kidney beans developed in Tokachi on the northernmost main Japanese island of Hokkaido; and Tochiotome, a strawberry variety developed in Tochigi prefecture, just north of Tokyo. Yukitebo and Tochiotome were grown in China and South Korea without permission, and reimported into the Japanese markets.

According to a survey conducted in 2002 by the Society for Techno-innovation of Agriculture, Forestry and Fisheries, 30% of farmers and farming firms who had registered a new seed variety said they had fallen victim to piracy. Alarmed by the growing amount of pirated farm produce sold on the domestic market, the government revised the Seeds and Seedlings law in 2003 to toughen the penalties for seed piracy, as well as making it possible to stop pirated products from entering the country at customs. Furthermore, in view of the increasingly rampant piracy of Japanese agricultural products abroad, the government's Intellectual Property Strategy Headquarters also decided last June to reconsider the measures needed to stop pirated farm products.

Still, the cat-and-mouse game is continuing between Japanese law-enforcement authorities and traders in pirated Japanese farm produce. The basic problem is that protected seeds are both easy to get (most fruits and vegetables contain fertile seeds) and easy to steal (preventing individuals from putting seeds in a suitcase and taking them abroad is almost impossible).

Last month the prefectural government of Yamagata, in northeastern Japan, filed a complaint against Japanese and Australian employees of an Australian company for violation of the Seeds and Seedlings Law. The local government alleged that a technique to grow Benishuho, a cherry variety, was illegally transferred to the Australian company.

DNA analysis has been effective in uncovering cases of piracy. Last March, the prosecutor's office of Kumamoto prefecture discovered through DNA analysis that the pirated version of Hinomidori, a type of igusa rush used for making tatami mats that was developed by the prefectural government, was being imported from China. The prosecutors office indicted the Japanese importer on charges of violating the Customs Law. But the office was not able to determine how the technique was leaked abroad.

The Hinomidori case took place nearly four years after Tokyo and Beijing locked horns over the igusa-rush trade. Japan imposed "safeguard" import restrictions for the first time in early 2001, albeit on a temporary basis, on three Chinese agricultural products - stone leeks, shiitake mushrooms and igusa rushes. This invited an angry retaliation from China, which slapped punitive 100% import duties on three Japanese industrial products - automobiles, air conditioners and mobile phones. Japan lifted the import restrictions after the two countries agreed on an "orderly trade" in the three farm products in question.

The tit-for-tat trade war between Tokyo and Beijing was resolved at the end of 2001, shortly before China was admitted to the WTO. The Sino-Japanese trade war was widely seen as a victory for China and a defeat for Japan, where concerns grew, especially among non-farm industries, about losing business opportunities in the rapidly growing and lucrative Chinese market of about 1.3 billion people if the trade war dragged on. Growing Chinese farm piracy not only has raised fresh concerns in Japan about intellectual-property protection, but is also - literally and figuratively - sowing the seeds of further trade conflict between the two Asian giants.

Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economics. Masaki's e-mail address is yiu45535@nifty.com.

Hisane Masaki is WSN Editor Japan.