Japan continues its struggle with food self-sufficiency…

By Peter McMeekin

Japan is the world's second-largest importer of agricultural produce, with food self-sufficiency on a value basis continuing a decade-long downward trend in the 2022/23 fiscal year (April to March), and the nation’s caloric intake sits amongst the lowest of the world's major economies.

According to a recent report by the farm ministry, Japan’s food self-sufficiency rate on a caloric intake basis stood at 38 per cent in the last fiscal year. While this was unchanged from the previous year, it is still very close to the record low of 37 per cent recorded in the 2020/21 financial year.

When measured by the value of domestic food production relative to food supply, the rate was 58 per cent, down five percentage points year-on-year. This was the lowest among comparable data available since such records began in 1965, with strong global grain prices and the yen's downtrend raising the value of imports.

The Japanese government holds longstanding ambitions to boost the nation’s food self-sufficiency, setting some quite ambitious targets of 45 per cent on a caloric intake basis and 75 per cent on a production value basis by fiscal year 2030. However, they continue to meet strong headwinds, and the most recent data underscores the struggle faced by Tokyo. Last year, Japan imported a record US$70.2 billion worth of agricultural produce, up 16.4 per cent on pre-pandemic levels and eclipsing the previous high mark set in FY2012.

Domestic production challenges continue to beset the industry. Farmland utilisation in Japan has declined steadily since the 1960s, with land being lost to urban sprawl, roads, industrial growth and other types of development. At the same time, the continued decline and aging of Japan’s population has led to a shortage of suitable labour to assist and succeed existing farmers, leading to a significant increase in farmland abandonment. Consequently, the cultivated farmland area, which excludes unutilised farmland, has declined by 51 per cent since 1960. The total number of farms has almost halved in the last 15 years, falling from 2 million to 1.1 million.

The decline in farmland has slowed in recent years, particularly after the early 2000s. While total cultivated land declined 18 per cent between 1990 and 2005, the fall was only 9 per cent between 2005 and 2020. A stabilisation in cultivated area is especially evident among wheat, barley oat, rye and pulse crops.

By contrast, livestock numbers have increased for all beef cattle, dairy cows, hogs, egg-laying chickens, and broilers since 1960, reaching a peak in the early 1990’s. While livestock numbers have gradually declined for beef cattle, dairy cow, and swine since then, they remain well above 1960 levels, and the number of chickens, both layers and broilers, have continued their steady increase.
While wheat plantings in Japan continue to increase at the expense of rice, production in 2022/23 of 1.04MMT off 227,000 hectares is only 16.4 per cent of domestic demand, which currently sits at around 6.35MMT. The rice equation is a little more balanced with production in 2022/23 at 7.48MMT off 1.47 million hectares, against projected domestic demand of 8.2MMT, with imports of around 0.7MMT supplementing supply.

Japan's poultry, swine, and cattle farmers depend entirely on purchased formula feed, which includes compound and mixed feeds and is predominantly made with imported raw materials. Demand has remained relatively stable in recent years, with production around 24.2 million metric tonne. The chicken industry is the biggest consumer, with layers taking 27 per cent and broilers 16.3 per cent for a total of 43.3 per cent. Swine is the next biggest demand sector at 24 per cent, followed by beef cattle at 19.5 per cent and dairy at 13.2 per cent.

Despite lower global feed grain prices and freight costs, compound feed prices have remained high in Japan since reaching a record in October 2022, due mainly to the weak Japanese yen. This forced the Ministry of Agriculture, Forestry and Fisheries (MAFF) to revise the compound feed support program, enabling activation of compensation payments to farmers when compound feed prices remain above a value benchmark for more than 12 months.

MAFF announced last month that it will reduce the selling price of imported wheat for the first time in three years. Commencing this month, the selling price will be lowered by 11.1 per cent compared to the April to September period to an average of 68,240 Yen (AU$720) per metric tonne.

Corn is Japan’s most significant grain import at 15MMT in the 2022/23 marketing year, the same as the previous corresponding period but forecast to increase to 15.5MMT in 2023/24. Around 80 per cent, or 12MMT goes into the stockfeed sector, making up about 48 per cent of the formula feed ration. Food, seed and industrial (FSI) consumption is around 3.5MMT, 95 per cent of which goes into cornstarch, in turn driven by demand for high fructose corn syrup.

Wheat imports in 2022/23 totalled 5.5MMT, according to the most recent grain and feed update from the USDA's Foreign Agricultural Service. This is down from 5.6MMT the previous season and is expected to remain steady in the current marketing year. Australian wheat exports to Japan totalled 1.36MMT in the 12 months to June 30 this year, up from 1.19MMT in the previous corresponding period. In contrast to corn, 90 per cent of the wheat goes into FSI consumption, primarily flour mills, with the balance going into the stockfeed sector, with wheat and wheat flour making up around 3 per cent of rations.

The other major grain import is barley with 1.3MMT imported in 2022/23, up from 1.2MMT the previous year. Imports in the 2023/24 marketing year are expected to be slightly lower at 1.1MMT. Around 75 per cent goes into the stockfeed sector, making up around 4 per cent of the formula feed ration, with the balance going into FSI uses such as malt for the beer and whiskey and food industries, producing barley tea, shochu (distilled liquor), miso (fermented soybean paste), and as a rice extender.

Australian barley exports to Japan in 2021/22 and 2022/23 came to 1.22MMT each year, with feed barley averaging around 95 per cent of the annual consignment.
While the new food security framework aims to reduce Japan’s reliance on imported food by boosting domestic production of wheat, soybeans, feed grains and hay, the decline in available farmland and utilisation, falling farm numbers, shortages of labour, changes in consumer diets, and the opening of the Japanese market have all contrived to boost the import of many agricultural products in recent years.

Call your local Grain Brokers Australia representative on 1300 946 544 to discuss your grain marketing needs.