Agricultural Productivity Organization (APO)

Conference on State-of-the-Art Technology to Drive Agriculture Productivity

in the Next Quarter of the Century, 2830 June 2016
Tokyo, Japan

Japanese Agriculture in an
Era of Globalization
-- Recent developments, issues and challenges,
and way forward -Shoichi Ito, Ph.D.

sito@agr.kyushu-u.ac.jp

Kyushu University, Japan,

http://worldfood.apionet.or.jp
June 28, 2016

Todays key points

1.

Current problems of agriculture in Japan

Down sizing agriculture in production volume/value, farm population,
Small size, 2ha per farm in average,
Aging agriculture, now farm operators older than 65 account for 65%,
Continuous pressure to import food from outside, more rice imports with the TPP,

2.

Potential for better agriculture in Japan

Economies of scale & Cutting production costs,
Emergence of upsizing farms,
Export oriented agriculture,
Selective subsidy,
New technology,

3.

Structural changes for Japanese agriculture

Weaker Japanese yen,
Lower domestic rice prices,
High international japonica rice prices,
Setting up corporate farms in each village,
Global booming of Japanese restaurants: Sushi, Tempura, Sake, etc.,
Washoku, Japanese traditional food/culture, registered as an Intangible Cultural Heritage
of UNESCO, Dec. 13

4.

Roles of Japanese agriculture for the future

From small farms and import oriented agriculture To larger size and export oriented agriculture,
Supply fresh food for Japanese,
Employment opportunity for rural residence,
Existence of agriculture in highly industrialized country,
Become competitive with other countries,
Natural environments for rural/city people,
Environmentally friendly, sustainable, profitable, ICT, high quality products

Rice and wheat production in Japan

Rice

Wheat

Yields

Area harv.

The compulsory rice diversion program started in 1971.

Sources: http://worldfood.apionet.or.jp/graph/index.html
USDA: PS&D Online , November 2015;
USBC: International Data Base, July 2003.

Production and consumption of broiler and pork in Japan

Broiler

Pork

Consumpn

Production

Sources: http://worldfood.apionet.or.jp/graph/index.html
USDA: PS&D Online , November 2015;
USBC: International Data Base, July 2003.

Consumpn

Production

Production and consumption of beef and cheese in Japan

Beef

Cheese

Consumpn

Consumpn

Production
Production

Sources: http://worldfood.apionet.or.jp/graph/index.html
USDA: PS&D Online , November 2015;
USBC: International Data Base, July 2003.

Evolution of number of farms with different types

10,000
farms

Decreases in number of marketing farms, and

increases in number of no-farming with farm-land

Part-time
Semi-full

Marketing
farms

Full-time

Self-consuming

No farming with
farm-land

Reasons for the failure of rice

farms in Japan
Ag-Coop sought to keep small and many farms,
For the stronger political power
For the greater buying power of inputs,
Agricultural inputs: machines, fertilizer, chemicals, etc.

Politicians and Ag-Coop collaborate for political arenas,

More agricultural representatives,
Strong political power,

Production of rice, the major agricultural products, getting

smaller and smaller along with the declining domestic
consumption,
High output prices tend to keep the input prices high rending to high
production costs:
No intentions for exports of their own products,
Yamashita, K. 2015

Causes of ag. failure in Japan

Farms
Small/many farms retained

Production Costly/Inefficient
More part-time farmers

Ag. Coops
(Nokyo)
Politically strong,
More profits with more members

Grow by insurances, banking, services

for non-ag. people,
Retain high prices for inputs,

Keeping high prices,

Unable to export,
More imports but limited,
Less ag. income,
Dependent on subsidies,

10

Implications from the history of

rice diversion prog. in Japan
Inefficiency in rice production remained,

Having kept small farms,

Not well mechanized by them due to high costs,
Implies more labor costs, which can be a vicious-circle,
Even in 2014, machinery and labor costs account for 15% and 31%,
respectively,

Compulsory program make the whole national ag. inefficient,

The entire national agriculture becomes unindulged to advance
agriculture,
End up with being more costly,

Political strength tends to seek more subsidies and become

less efficient and less independent,
Producer side may work on political arena more than on agricultural
efficiency, delaying cost performance,
11

Rice Diversion programs to be

ended in 2018, but how?
The Central Government (MAFF)
does not allocate production limits
to each Province, any more.
Instead,
High subsidies on non-table-rice
production: rice for process,
feeding, and whole-crop-silage
(WCS).
12

Current income support programs in Japan

Wheat1
6,320 yen/60kg
Barley (2 rows)
5,130 yen/50kg
Barley (6 rows)
5,490 yen/50kg
Barley (naked)
7,380 yen/60kg
Soybeans
11,660 yen/60kg
Sugar beet2
7,260 yen/MT (metric ton)
Potato (starch)3 12,840 yen/MT
Buckwheat
13,030 yen/45kg
Rape-seeds
9,640 yen/60kg

103 yen /USD

(June 24, 2016)

---------------------------------------------------------------------------1Note:
2Note:
3Note:

If the wheat are for bread or noodle, then 2,550 yen/60kg is added.
The standard sugar level is 16.3 degrees.
The standard contents of starch is 19.5%.
Note: The rates are to be adjusted to the quality of the products.

13

Current rice diversion program in Japan

For the farmers who grow crops on the paddy fields instead of rice for food,
more payments are provided as follows:
Wheat, soybeans, and feed crops
350,000 yen/ha
103 yen /USD
(June 24, 2016)
Whole-crop silage of rice (feed)1
800,000 yen/ha
Rice for processing
200,000 yen/ha
Rice for feeding or flour2
550,000 1,050,000 yen/ha
depending on yields.
----------------------------- Additionally,
150,000 yen/ha for double-cropping3, and
130,000 yen/ha for usage of bi-products by livestock farmers4.
-----------------------------------------------------------------------------1Note:

The whole rice plants process for silage for feeding purpose.
The harvested rice crop determined to be used for feeding or rice-flour.
3Note: For example, rice for processing and wheat produced within a year.
4Note: For example, the rice straw used by livestock farmers through a contract.
2Note:

14

Rice Diversion programs in

2018 and after?

Continuous subsidies on nontable rice make rice producers

stay away from table-rice
production.
When are the subsidies finished?
15

Aging Farmers

Evolution of number of family members at different age groups, 00The number of farms decreased by a third to 2.61 million during
10a decade. The average age increased from 61.1 to 65.8.
10,000 persons

Average age of farmers

years old
years old
years old

Ages

85 or older

Change in numbers of principal ag. producers by age groups over time

, Ag. Census, 2015, Japan

Ag operators over 65 years old:

16% in 1960

65 now.
MAFF

19

Successors in the farms

Successors

Successors uncertain

No successors

Structural Changes
Scale of economies
Employing young people
Introduction of ITC
Cheaper JP Yen

Changes in number of farms (agricultural producer units) over time

1000
2,500

2,009
2,000
1,679
1,377

1,500

1,000

500

2005

2010

2015

, Ag. Census, 2015, Japan

Changes in number of farms (agricultural producer units) by size between 2005 and 2015

Hokkaido Province

2005

Farm Sizes

2015

The other Provinces

Changes

Farm Sizes

2005

2015

1,899,393

1,262,058

-33.6

51,634

64,428

24.8

3,119

8,107

159.9

50ha < F < 100ha

459

1,537

234.9

100ha or larger

159

422

165.4

Less than 5ha

16,312

10,195

-37.5

Less than 5ha

5ha < F < 20ha

20,553

13,197

-35.8

5ha < F < 20ha

20ha < F < 50ha

12,608

11,570

-8.2

20ha < F < 50ha

50ha < F < 100ha

4,438

4,584

3.3

705

1,168

65.7

100ha or larger

Changes

, Ag. Census, 2015, Japan

Increases in number of larger farms!!

Changes in number of livestock farms and sizes per farm between 2005 and 2015

Numbers of animals/chickens per farm

Numbers of livestock farms

Beef cattle

Dairy

2005

Hokkaido Province

2015

2005

2015

8,830

6,680

97.1

118.6

18,800

11,000

42.4

52.6

89,600

54,400

30.7

45.8

76,200

47,200

8.2

12.3

13,600

8,210

52.7

90.2

7,910

5,320

132.6

155.6

Pigs

8,880

5,270

1,095.0

1,809.7

Chicken for eggs

4,090

2,560

33,500

52,200

2,652

2,380

38,600

57,000

The other Provinces

Cows for offspring

Cattle for beef
Dairy male cattle

Broiler

1) 1716
2) 2726

Significant increases in
Japanese restaurants in the
world!!

25

Table 1. Total number of Japanese restaurants in the world in 2006 - 2013.

Numbers

2006
24,000

2010
30,000

2013
55,000

2015
88,650

Note: The numbers are approximated ased on the reports from Japanese Embassies/Consulates
Source: MAFF, 2013

2015

26

Table 2. Numbers of Japanese restaurants in individual regions in the world.

Regions
Asia
North America
Europe
Central/South America
Russia
Oceania
Middle East
Africa
Total

2010 Shares
10,000 33%
14,000 46%
2,500
8%
1,500
5%
1,000
3%
1,000
3%
100
0%
50
0%
30,150

2013 Shares
27,000 49%
17,000 31%
5,500 10%
2,900
5%
1,200
2%
700
1%
250
0%
150
0%
54,700

Growth rates*
170%
21%
120%
93%
20%
-30%
150%
200%
81%

Note: The numbers are approximated ased on the reports from Japanese Embassies/Consulates

*Indicate growth rates in numbers between 2010 and 2013.

Source: MAFF, 2013
27

Table 3. The top 10 states for numbers of Japanese restaurants in the U.S. in 2005 and 2010.
Ranking

States

2005

2010

Shares
Shares
1
California
2,896 32%
3,963 28%
2
New York
838 9%
1,439 10%
3
Florida
588 6%
941
7%
4
Washington
600 7%
827
6%
5
New Joursey
284 3%
523
4%
6
Texas
295 3%
494
3%
7
Hawaii
325 4%
438
3%
8
Georgia
210 2%
422
3%
9
North Calorina
214 2%
431
3%
10
Illinois
260 3%
377
3%
Sub-total of the top 10 state
6,510 71%
9,855 70%
The rest of the US
2,672 29%
4,274 30%
Total
9,182 100%
14,129 100%
2005 and
*Indicate growth rates in numbers between 2010
and 2010.
2013.
Sources: JETRO, 2007 and 2010.

Growth rates
36.8%
71.7%
60.0%
37.8%
84.2%
67.5%
34.8%
101.0%
101.4%
45.0%
51.4%
60.0%
53.9%

28

Whats happening to Japanese

restaurants in the world?
Increasing rate of growth in
number of Japanese restaurants,
Still increasing in the U.S.,
The global boom will last next two
decades
and More

In Japan, they are cheaper!!

29

Now, rice is more expensive

in the U.S. than Japan
Japonica rice prices in the US:
Ranged from $25-$35 /15 lbs. (6.8kg)
Namely $37-$51 /10kg

4,400 yen 6,100 yen /10kg

In Japan, 2,500 yen - 3,500 yen /10kg

30

Structural changes for/in

Japanese Agriculture

Global booming of Japanese food restaurants

From 30,000 in 2010 to 89,000 in 2015, an 300% increase in 3 years (MAFF)

High global japonica rice prices

Japonica rice from $650/MT (milled) in 2013 to $850 in 2015

Indica rice from $625/MT (milled) in 2013 to $480 in 2015

Depreciation of Japanese yen

From 80 yen a dollar in 2012 to 105 yen in June 2016,

Much higher prices of japonica over indica rice

All Japanese products 33% cheaper now

Plunge of rice market prices in Japan

Akitakomachi rice from 16,000 yen a 60kg (brown rice) in April 2013
to 11,400 in October 2014 through now, July 2015 -- Cheapest ever in real term.
In US dollars, from $3,000/MT, milled to $1,700, a 45% decline during the same period.

Change in policies: Freedom to grow rice in Japan

No compulsory diversion program for rice starting 2018, with subsidies for other crops
31

Ways for the Future

Scale of economies: To be enhanced
Employing young people: More young employees
Introduction of ITC: Further advanced
Ag. exports:
Further advanced
Changes in JP Yen:
To overcome the volatility
Booming JP Food:
To grow further

Setting up ag. corporations can be a key

for young people.
Ag. jobs similar to white-color,
8 am 5 pm daily work,
off on Saturdays and Sundays

Yong people are happy to work for ag.

corporations
33

http://www.maff.go.jp/j/wpaper/w_maff/h23/pdf/e_all.pdf

Cutting production costs

Now 200 yen per 1k (brown rice base)

Target: 150 yen/kg or less

35

Indica rice
Japonica rice

36

Values of exports of agriculture, forestry, fisheries, and processed food from Japan over time

8,000

100 million yen

Agricultural
products

7,000

Forestry
products

7,451

Fishery
products

6,117
6,000
5,000

4,490

2,000

1,000

4,454

4,920

4,511 4,497

4,008

1,748
92

1,724

2,040
90

104

118

2,757

2,337
263

2,216

2,378 2,077

4,000
3,000

5,505

5,160 5,078

93

1,950

106

211

1,736 1,698
152
123

118
4,431

2,883 2,637 2,865 2,652 2,680 3,136

2,678
2,168 2,359

3,569

0
2005

2006

2007

2008

2009

, MAFF

2010

2011

2012

2013

2014

2015

Targets for the Japanese

Agriculture
Cutting production costs

Economies of scale,
Setting up corporations,
Employment of young people,
More competition among producers,
Application of ITC,

Exports/FDI oriented agriculture,

More comprehensive services domestically
Management of restaurants,
Direct sale to consumers, incl. prepared food,
Production of organic food,
38

41


: S. Itoh