TRADE: Japan Keen to Develop Muscle in Agricultural Exports

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Aug 25 2003 (IPS) - Mention ‘Japanese exports’ and cars, machines and electronic gadgets come to mind, but the country’s economic planners now want this list to be joined by expensive but high-quality agricultural produce from fruits to Japanese rice.

Mention ‘Japanese exports’ and cars, machines and electronic gadgets come to mind, but the country’s economic planners now want this list to be joined by expensive but high-quality agricultural produce from fruits to Japanese rice.

This is part of a new official policy by the Japanese government to change the traditional composition its exports, which have been heavy on industrial goods but not agricultural produce.

"Japan is planning to export more farm products to Asia. We are keen to reduce the huge imbalance between industrial and agriculture exports," says Takeshi Kanai, an official in charge of rice exports at Zenchu, the powerful Central Union of Agricultural Cooperatives.

Zenchu is part of cooperation agreement between the Japan’s agricultural ministry, local governments, and agricultural cooperatives to promote exports among farmers, who are now eyeing upmarket consumers for their goods across Asia and the world.

The new policy, which has received mixed reviews from some analysts, is also seen here as a way for to help Japanese farmers, who are smarting from increased competition as the local market liberalises – a sensitive issue in a country that has traditionally been closed to agricultural imports.

”We hope to stimulate demand overseas for Japanese farmers who are struggling with more global competition as the Japanese market liberalises," Kanai pointed out in an interview.

Figures in Japan’s agricultural trade show that its imports were about 6.8 billion U.S. dollars in 2002, far exceeding its exports, which include pearls and tobacco, at 350 billion yen (2.96 billion dollars).

Against this backdrop, Japan continues to fiercely resist attempts by foreign countries to reform its highly protected agricultural sector, saying for instance that its rice production is a matter of culture as much as trade.

Even when Tokyo made a long-awaited decision in 1994 to start taking in limited rice imports, it slapped tariffs of up to 410 percent to protect the domestic market.

Japan’s agricultural imports soared as the country embarked on its rapid economic miracle after World War II. Currently, Japan’s food self-sufficiency is only 27 percent compared to 137 percent in the United States and 100 percent recorded in China.

The issue is a major grouse in a nation of 127 million people that is resource-poor, still haunted by memories of starvation during World War II and has to obtain a lot of its needs from outside.

Trade analysts say a successful effort to push Japanese agricultural exports may stimulate willingness to open local markets, although there are questions about how far these exports can go.

Yukio Minagawa, director of the Overseas Market Development Board for the Japanese Agricultural, Forestry and Fishery Products, launched in July, acknowledges that exports of Japanese agricultural produce would be expensive.

But he says farmers can compete by catering to rich consumers who have emerged following high growth elsewhere in Asia, and take advantage of markets that Japanese products have developed among high-income consumers.

"Asia is important for the Japanese farmer. There is a niche market patronised by rich shoppers that our farmers can tap into," he explains.

Right now, the United States is the largest market for Japanese farm products. But Minagawa says that Asia, headed by industrialised economies Hong Kong and Taiwan, comprise 62 percent of the trade that includes pearls and tobacco followed by fruits.

Japanese pears, apples, and yams are already being exported to Taiwan, Hong Kong, Singapore and China, according to ministry statistics. Farmers in Shimane, southern Japan, are also planning low-chemical rice exports to Taiwan under a government-sponsored plan.

Japanese beef exports to the U.S. Hong Kong and Singapore were suspended last year due to a scare over ‘mad cow’ disease.

Minagawa points out that Taiwan is the biggest market for Japanese apples, whose export value reached 22.9 million dollars in 2002 although its prices were almost 20 times higher than their local counterparts.

But Daisuki Hiratsuka, an economist and Thai specialist at the Institute of Developing Economies, brushes off the latest project as a minor impetus for the agricultural industry.

"Japanese products are far too expensive even for the Japanese consumer. Even if they get anywhere in Asia by providing high-quality fruits and vegetables, the market will be too small to make a difference," he argues.

Indeed, statistics provided by Zenchu shows that exports of Japanese rice – appreciated for its high quality and fragrance – to six countries in Asia were a dismal 120 tonnes annually.

The situation in Thailand, itself a major world exporter of its rice, supports this viewpoint. Japanese rice sold in Thai supermarkets is at least 10 times the price of local rice. In addition, to cater to the rising demand for Japanese food, Thai farmers have begun to produce and sell at lower prices similar strains of rice being sold in Japan.

In the end, Hiratsuka contends, the latest policy underscores the government’s keenness to keep Japanese farmers, a key vote bank for the ruling conservative Liberal Democratic Party, happy.

"By providing a central government-sponsored incentive, the protected farming population and the ministry that works hard to maintain this dependence do not feel abandoned," he explains.

Kanai says Zenchu is not expecting official subsidies but hopes the agricultural ministry can help with marketing exports. "The first steps in the process to increase exports will be undertaken in the fall with teams of experts going to China to investigate the market," he says.

A report by the ‘Asahi’ newspaper on Aug. 8 suggests that the plan to increase farm exports is also part of a larger plan by the agriculture ministry to protect it against bureaucratic reforms by the government of Prime Minister Junichiro Koizumi.

A system where ministry officials are employed by the Japan External Trade Organisation (JETRO), a semi-governmental trade group, is in danger, remarks the article, pointing to a streamlining measure now underway in the organisation.

Hirastuka agrees. The Japanese farmer, he says, needs to become more competitive and weaned from dependence on government subsidies, instead of being given yet another official project that sounds good but is not profitable.

TRADE: Japan Keen to Develop Muscle in Agricultural Exports

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Aug 25 2003 (IPS) - Mention ‘Japanese exports’ and cars, machines and electronic gadgets come to mind, but the country’s economic planners now want this list to be joined by expensive but high-quality agricultural produce from fruits to Japanese rice.
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