Japan's farm export drive bearing fruit

Posted in Japan | 02-Jul-07 | Author: Hisane Masaki| Source: Asia Times

TOKYO - Riding high on the current global boom in Japanese foods, the world's largest net food importer has seen its recently revved-up agricultural export drive bearing fruit, with overseas shipments rising at an increasingly accelerated pace.

The Japanese campaign to ply foreign consumers with its own foods has received a fresh boost with the long-awaited resumption this month of rice exports to China, the world's most populous country and biggest food consumer, after a hiatus of four years.

After years of international pressure over its heavily protected farm industry, Japan now believes the best defense is a good offense. As a way to turn the tables, Japan is vigorously promoting agricultural exports. Japan believes increased overseas sales will help shore up the uncompetitive domestic industry.

Prime Minister Shinzo Abe himself has touted Japanese food products as "delicious and safe". The Abe government, inaugurated last September, has set an ambitious goal of nearly tripling Japanese exports of agricultural and marine products to 1 trillion yen (about US$8.1 billion) by 2013. To reach the 2013 goal, Japan is boosting government funding to help domestic growers and businesses with market-cultivation and export-promotion programs.

The most promising overseas markets are neighboring countries in East Asia, where income levels are rising rapidly amid robust economic growth, making Japanese agricultural products more affordable for local consumers. With Japan's population rapidly aging - and expected to keep shrinking over the long term - Japanese farmers and food businesses are increasingly looking to overseas markets, especially in East Asia.

Meanwhile, Japan has beefed up efforts in recent years 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 the world's largest net food-importing country, buying from abroad 60% of food consumed domestically on a calorie basis. Japan has defended its farm protectionism, citing the need for food security. However, its self-proclaimed new "aggressive" agricultural policy, focusing on boosting exports, could sow the seeds of stronger discontent among major farm-exporting countries, if it is not accompanied by greater access to the Japanese market for foreign exporters. In fact, Japan slaps a whopping import tariff of 778% on rice, its most politically sensitive item but at the same time one of main items the nation is now eager to export.

Japanese free-trade proponents agree that the nation should promote the liberalization of its farm sector while ensuring the sector's competitiveness through such steps as expanding the scale of operation by farmers and letting joint-stock companies enter the agricultural business to raise productivity and create more high-value-added products. Belatedly, the Japanese government has actually begun to take such measures recently to increase the farm industry's competitiveness. But many critics say that so far, these measures have been far from sufficient.

Export drive in high gear
Japanese cuisine is becoming increasingly popular globally. It is widely perceived as healthy, safe, upmarket and of high quality. The number of Japanese restaurants has sharply increased in the past decade, with between 20,000 and 25,000 Japanese restaurants now said to be operating around the world.

To cash in on the global boom in Japanese foods, the government of Junichiro Koizumi, Abe's predecessor, set a goal of doubling exports of agricultural and marine products to 600 billion yen over a five-year period by 2009 from about 300 billion yen in 2004. Abe also unveiled in his first parliamentary policy speech last September an even more ambitious goal of increasing such exports to 1 trillion yen by 2013.

To meet the goal of doubling exports, the Koizumi government earmarked 1.25 billion yen for its fiscal 2006 budget to help boost agricultural exports. This amount was nearly double the 656 million yen in the previous, fiscal 2005 budget. The Abe government has set aside an even larger amount of 2.3 billion yen for fiscal 2007 to fuel the farm-export drive.

Japan's farm exports have been growing at an accelerated pace in recent years. According to the Agriculture, Forestry and Fisheries Ministry, Japan exported about 374 billion yen worth of agricultural, forestry and marine products in 2006, up 13% from 2005. This rate of increase was nearly double the average annual growth of 7.1% registered between 2000 and 2005. Still, the 2006 export figure is dwarfed by the country's hefty imports of agricultural, forestry and marine products, which totaled about 7.4 trillion yen.

Neither export or import figures include alcoholic beverages, cigarettes and pearls. Of the approximately 374 billion yen's worth of Japanese exports in 2006, 195 billion yen came from agricultural products, 170 billion yen from marine products and the remaining 9 billion yen from forestry products. Among the agricultural and marine products whose exports are growing strongly are apples, strawberries, Chinese yam, Japanese green tea, mackerels, walleye pollacks, dried sea cucumber, salmon and trout.

By region, the United States remained the largest export market in 2006, buying 18% of the overall Japanese exports. But the huge bulk of Japanese exports went to Asian neighbors. Mainland China and Hong Kong imported 16% each; South Korea 13%; Taiwan 11%; Thailand 5%; and Singapore 2%. The European Union purchased 5% of Japan's overall exports. China's share has surged by 5 points from 11% in 2002 to 16% in 2006, but the other regions have seen their shares edge down or remain flat, at best, during the same period.

Rice shipments to China
The long-awaited resumption this month of Japanese rice exports to China, the world's largest consumer of the crop, is expected to give a momentum to Japan's drive to boost exports of farm produce.

A ship carrying the first of the resumed rice shipments by the Japan Agricultural Cooperatives (JA) left Yokohama on Sunday bound for China. The first shipment totaled 24 tonnes of Koshihikari-produced in Niigata prefecture and Hitomebore grown in Miyagi prefecture, two of the most famous Japanese varieties.

The Japanese rice is to hit the shelves of department stores and upscale supermarkets in Beijing and Shanghai as early as mid-July, targeting the wealthy. Prices for the two varieties are expected to be set at levels about 20 times those for ordinary rice sold locally.

China formally agreed in April to resume imports of Japanese rice. The agreement came during Premier Wen Jiabao's first visit to Tokyo since taking office in 2003. China's agreement to resume Japanese rice imports came amid a thaw in relations, which had plunged to their lowest point by Koizumi's repeated visits to Yasukuni Shrine.

China placed an import ban on Japanese rice in 2003, citing the risk of harmful insect pests. China had imported only a few tonnes of rice annually before that. But now Japan pins its hopes on a possible sharp rise in Chinese imports, as the ranks of wealthy people who can afford the more expensive Japanese rice are rapidly growing in China, especially in its coastal areas, amid its red-hot economic growth.

According to experts, there are many Chinese who prefer Japanese rice, which they say is shiny, sticky and sweet. China's annual rice consumption is said to be about 200 million tonnes, more than 20 times Japan's.

Meanwhile, Japan's rice market is continuing to shrink because of significant changes in Japanese eating habits and also because of the nation's rapidly aging population. While Japanese cuisine is catching on globally, Japanese consumers now eat less rice and other domestically grown farm produce. Their diet has shifted from traditional vegetable-based Japanese cuisine to bread, pasta and other Western dishes. People tend to eat less as they grow older.

In fiscal 1960, annual per capita rice consumption was 114.9 kilograms. But the figure nearly halved to 61.4kg in fiscal 2005. As Japan's population of some 127 million is expected to keep shrinking over the long term, the declining trend of domestic consumption will very likely continue. Japan's population declined for the first time since the end of World War II in 2005. Although the population slightly rose in 2006, that is widely seen as a temporary phenomenon.

At present, Japan produces about 8.5 million tonnes of rice annually. Japan ships abroad only a tiny fraction of its output, although exports are growing steadily. In 2006, Japan exported about 1,000 tonnes, worth 400 million yen, to the rest of the world. The 2006 export value was up 34% from 2005 and nearly double the 2002 figure.

The 'sushi police' controversy
Of the 2.3 billion yen to be spent by the government for the farm-export drive during fiscal 2007, 276 million yen is to go toward the controversial Japanese Restaurant Recommendation Program.

Last autumn, the then farm minister, Toshikatsu Matsuoka, announced plans to award "pure Japanese" restaurants around the world with official Japanese government seals of approval. But the plans drew an immediate barrage of criticism both at home and abroad, especially in the US, as being discriminatory and tantamount to setting up a "sushi police" force.

The Agriculture, Forestry and Fisheries Ministry's advisory panel, set up to discuss the details of the Japanese Restaurant Recommendation Program, ditched the proposed official-certification plan for overseas Japanese restaurants in March, although it kept the program itself alive.

In its report making recommendations about the specifics of the program, the advisory council, chaired by Kazuo Ogura, president of the Japan Foundation, pointed to problems that could hurt consumer confidence in Japanese restaurants - and Japanese foods - and thereby undermine Japan's efforts to increase exports of agricultural and marine products.

The report said, "Although the menu and other aspects vary from restaurant to restaurant, there are some that operate under the guise of a Japanese restaurant just because of the upmarket image that is associated with Japanese foods. There are restaurants that are using ingredients that are not suited to Japanese cuisine, or there is simply not enough range or quantity of ingredients suited to Japanese food being provided to cope with the rapidly increasing number of restaurants."

The report also specifically said, "Fish and shellfish are often eaten raw in Japanese restaurants, but in places where it is not customary to eat raw fish, the knowledge or skills required for handling, processing and consuming fresh fish are often lacking. The possibility of an incident as a result of such shortcomings has the potential to damage the image of Japanese foods."

The report went on to note, "The rapid increase of Japanese restaurants has led to a shortage of professionals who are skilled in and have a detailed knowledge of Japanese foods, particularly in overseas countries. It has also been strongly suggested that it is necessary to spread these skills and knowledge. In addition to the above points, there is a lack of information concerning Japanese cuisine being transmitted overseas."

But the advisory council's report concluded that the program "shall be an initiative primarily managed by private bodies and relevant parties", rather than by the government itself, and that the government will be limited to a supportive role, such as providing necessary information. The report added that the program "should take into consideration the fact that a diverse range of Japanese foods fused with cuisine from the local area is being provided" and that the program "should not be discriminatory or exclusive in any sense".

The Japanese Restaurant Recommendation Program is to be launched anyway during fiscal 2007, which ends in March 2008. It remains to be seen, however, how the significantly diluted program will actually take shape.

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