Grain and Feed Annual

An Expert's View about Sales in Japan

Last updated: 19 Mar 2011

Despite a series of animal disease outbreaks (foot-and-mouth disease and avian influenza) that have impacted Japan’s livestock population, Japan continues to be a stable and consistent market for U.S. grains.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: March 11, 2011 GAIN Report Number: JA1006 Japan Grain and Feed Annual Enter a Descriptive Report Name Approved By: Jeffrey V. Nawn, Senior Agricultural Attaché Prepared By: Hisao Fukuda, Senior Agricultural Specialist Report Highlights: Despite a series of animal disease outbreaks (foot-and-mouth disease and avian influenza) that have impacted Japan?s livestock population, Japan continues to be a stable and consistent market for U.S. grains. The spike in commodity prices in the last several months has been stirring serious concerns amongst livestock producers, consumer, and traders, as practically all of Japan?s grain supplies, except rice, rely on imports. Japan has a well-established feed price subsidy program that absorbs increases in the cost of feed ingredients (refer to the Corn section). The subsidy helped alleviate farmers? burdens when commodity prices soared in 2007-08. With the corn price hike that began in late 2010, the subsidy was activated once again in January 2011 (refer to Chart 3). Although it is premature to fully evaluate the impact of the recent commodity price increases, Japan?s imports of major grains are expected to remain stable in 2011. Commodities: Rice, Milled Wheat Corn Sorghum Barley Rye Author Defined: RICE Production Two Percent Lower Than Normal Primarily due to high temperatures in many regions, overall national production of rice in 2010 ended 2 percent below a normal year at 8,483,000 metric tons (MT), brown rice basis, and remained at last year?s level. Table 1. Japan's Rice Production (Brown Basis) Planted Area (1,000 hectares) Production (1,000 MT) Yield/10 ares (kilograms) Total Paddy Upland Total Paddy Upland Paddy Upland 2006 1,688 1,684 4 8,556 8,546 10 507 246 2007 1,673 1,669 4 8,714 8,705 9 522 257 2008 1,627 1,624 3 8,823 8,815 8 543 265 2009 1,624 1,621 3 8,474 8,466 8 522 276 2010 1,628 1,625 3 8,483 8,478 5 522 189 Source: MAFF Stagnant Consumption and Chronic Surplus Continue Per capita consumption of rice in Japan has been steadily declining since its peak in 1962, and finally went below the 60 KG mark in 2008. MAFF forecasts the aggregate rice demand for 2010/11 to be 8,108,000 MT. The 2010 harvest of 8,483,000 MT will add some 375,000 MT to the stocks. In order to reduce surplus rice supply, MAFF has been pushing rice into the feed sector where the utilization ratio of rice in compound and mixed feed increased from 0.1 percent (or 13,464 MT) in 2003 to 2.3 percent (or 557,571 MT) in 2007 (Chart 1). However, in 2008, the feed use of rice declined to 468,000 MT and to 256,020 MT in 2009. It appears that feed rice, competing with conventional feed grains, has to be discounted heavily to attract feed millers, but this incentive is beginning to expire. On the table rice side, the four-decade-long downward trend in consumption will not likely be reversed, given the demographic situation depicted in Chart 2, where Japan?s population peaked in 2005, faster than previously forecast, and is also aging rapidly (one out of four Japanese will be older than 65 by 2015). Table 2. Annual Per Capita Consumption of Rice in Japan (Kilograms) 1962 1965 1975 1985 1995 2005 2008 2009 2010* 118.3 111.7 88.0 74.6 67.8 61.4 59.0 58.5 58.0 * Ag Office estimate Source: MAFF Chart 2: Japan's Past Demographic Trends and Future Forecast Source: Compiled by AgAffairs/Tokyo based on Japanese government statistics 140 120 100 80 60 40 20 0 5 5 5 5 5 5 5 5 5 5 5 4 5 6 7 8 9 0 1 2 3 4 9 9 9 9 9 9 0 0 0 0 0 1 1 1 1 1 1 2 2 2 2 2 0-14 years old 15-64 years old Over 65 years old As a result of a reduction in rice consumption, as well as a decline in price over the years, household expenditures on rice have been cut by more than half during the last two decades. The average Japanese household now spends less than four percent of food expenditures on rice. (million people) Table 3. Average Monthly Expenditures on Rice by Japanese Household (in Yen) 2000 2005 2006 2007 2008 2009 2010 Total 317,133 302,903 295,332 297,139 297,102 291,737 290,244 Expenditure Food 73,844 68,910 68,178 68,522 69,145 68,322 67,563 Expenditure Expenditure 3,291 2,681 2,523 2,506 2,515 2,419 2,276 on Rice % rice/food 4.50% 3.89% 3.70% 3.66% 3.64% 3.54% 3.37% Source: Ministry of Management, Home Affairs, Post and Telecommunications Overall Downward Trend in Rice Price Continues The table below shows the wholesale and retail process of three popular varieties/brands of rice: 1) Niigata Koshihikari, the most popular household brand; 2) Akitakomachi, another popular, yet less expensive brand and; 3) Kirara 397, the most popular brand by foodservice operators. Although there are some fluctuations, overall trend in rice prices is unmistakably down. Table 4. Wholesale and Retail Prices of Popular Rice Varieties (Yen/10 kilograms) Variety 2005 Crop 2006 Crop 2007 Crop 2008 Crop 2009 Crop Niigata Koshihikari Wholesale 4,311 4,239 4,125 4,147 4,015 Retail 5,191 5,010 5,057 4,882 4,548 Akitakomachi Wholesale 3,579 3,547 3,420 3,605 3,579 Retail 4,220 4,107 4,189 4,117 3,855 Kirara 397 Wholesale 3,097 3,154 3,178 3,290 3,231 Retail 3,599 3,561 3,680 3,632 3,472 Japan Expected to Meet Import Commitment in 2010 As of February 23, 2011, eight Simultaneous Buy and Sell (SBS) tenders and nine Ordinary Minimum Access (OMA) tenders have been held for the current Japan Fiscal Year 2010 (April 2010-March 2011). Every year, Japan is expected to fulfill its WTO commitment of 682,000 MT on the milled rice basis. Table 5. Results of Japan's Minimum Access Rice Tenders JFY 1995-2010 (Actual Tonnage) U.S. Thailand Australia China Others Total JFY2010 (as of 02/24/11) SBS 18,274 9,700 0 3,028 418 31,420 Share 58.2% 30.9% 0.0% 9.6% 1.3% 100.0% OMA 270,000 263,000 24,000 13,000 0 570,000 Share 47.4% 46.1% 4.2% 2.3% 0.0% 100.0% Total 288,274 272,700 24,000 16,028 418 601,420 Share 47.9% 45.3% 4.0% 2.7% 0.1% 100.0% JFY2009 SBS 22,191 13,628 0 63,835 346 100,000 Share 22.2% 13.6% 0.0% 63.8% 0.3% 100.0% OMA 296,500 283,710 0 0 0 580,210 Share 51.1% 48.9% 0.0% 0.0% 0.0% 100.0% Total 318,691 297,338 0 63,835 346 680,210 Share 46.9% 43.7% 0.0% 9.4% 0.1% 100.0% JFY2008 SBS 18,652 15,548 0 65,254 546 100,000 Share 18.7% 15.5% 0.0% 65.3% 0.5% 100.0% OMA 364,000 217,000 0 0 0 581,000 Share 62.7% 37.3% 0.0% 0.0% 0.0% 100.0% Total 382,652 232,548 0 65,254 546 681,000 Share 56.2% 34.1% 0.0% 9.6% 0.1% 100.0% JFY2007 SBS 24,629 1,506 0 73,456 409 100,000 Share 24.6% 1.5% 0.0% 73.5% 0.4% 100.0% OMA 294,550 215,000 0 0 7,000 516,550 Share 57.0% 41.6% 0.0% 0.0% 1.4% 100.0% Total 319,179 216,506 0 73,456 7,409 616,550 Share 51.8% 35.1% 0.0% 11.9% 1.2% 100.0% JFY2006 SBS 22,566 1,048 7,535 68,013 838 100,000 Share 22.6% 1.0% 7.5% 68.0% 0.8% 100.0% OMA 296,316 158,050 39,000 0 85,050 578,416 Share 51.2% 27.3% 6.7% 0.0% 14.7% 100.0% Total 318,882 159,098 46,535 68,013 85,888 678,416 Share 47.0% 23.5% 6.9% 10.0% 12.7% 100.0% JFY2005 SBS 17,894 1,784 4,084 75,684 554 100,000 Share 18.2% 1.1% 1.6% 78.8% 0.3% 100.0% OMA 304,000 163,500 13,000 0 98,078 578,578 Share 52.2% 23.6% 13.7% 3.4% 7.1% 100.0% Total 321,894 165,284 17,084 75,684 98,632 678,578 Share 47.4% 24.4% 2.5% 11.2% 14.5% 100.0% JFY 2004 SBS 23,413 1,211 4,658 63,877 829 93,988 Share 24.9% 1.3% 5.0% 68.0% 0.9% 100.0% OMA 298,500 163,300 13,000 24,000 85,944 584,744 Share 51.0% 27.9% 2.2% 4.1% 14.7% 100.0% Total 321,913 164,511 17,658 87,877 86,773 678,732 Share 47.4% 24.2% 2.6% 12.9% 12.8% 100.0% JFY 2003 SBS 18,216 1,145 1,570 78,803 266 100,000 Share 18.2% 1.1% 1.6% 78.8% 0.3% 100.0% OMA 298,000 134,700 78,400 19,500 40,500 571,100 Share 52.2% 23.6% 13.7% 3.4% 7.1% 100.0% Total 316,216 135,845 79,970 98,303 40,766 671,100 Share 47.1% 20.2% 11.9% 14.6% 6.1% 100.0% JFY 2002 SBS 20,122 1,327 4,077 24,247 294 50,067 Share 40.2% 2.7% 8.1% 48.4% 0.6% 100.0% OMA 301,676 134,808 82,500 75,690 34,800 629,474 Share 47.9% 21.4% 13.1% 12.0% 5.5% 100.0% Total 321,798 136,135 86,577 99,937 35,094 679,541 Share 47.4% 20.0% 12.7% 14.7% 5.2% 100.0% JFY 2001 SBS 25,173 421 8,529 65,702 175 100,000 Share 25.2% 0.4% 8.5% 65.7% 0.2% 100.0% OMA 298,877 129,376 91,500 55,516 4,700 579,969 Share 51.5% 22.3% 15.8% 9.6% 0.8% 100.0% Total 324,050 129,797 100,029 121,218 4,875 679,969 Share 47.7% 19.1% 14.7% 17.8% 0.7% 100.0% JFY 2000 SBS 46,273 4,960 14,269 53,264 1,234 120,000 Share 38.6% 4.1% 11.9% 44.4% 1.0% 100.0% OMA 284,000 144,370 94,000 35,000 15,669 573,039 Share 49.6% 25.2% 16.4% 6.1% 2.7% 100.0% Total 330,273 149,330 108,269 88,264 16,903 693,039 Share 47.7% 21.5% 15.6% 12.7% 2.4% 100.0% JFY 1999 SBS 36,826 3,753 14,587 62,611 2,223 120,000 Share 30.7% 3.1% 12.2% 52.2% 1.9% 100.0% OMA 276,000 138,200 90,000 13,900 15,000 533,100 Share 51.8% 25.9% 16.9% 2.6% 2.8% 100.0% Total 312,826 141,953 104,587 76,511 17,223 653,100 Share 47.9% 21.7% 16.0% 11.7% 2.6% 100.0% JFY 1998 SBS 36,498 5,297 14,538 61,965 1,702 120,000 Share 30.4% 4.4% 12.1% 51.6% 1.4% 100.0% OMA 265,400 130,000 87,000 10,000 20,000 512,400 Share 51.8% 25.4% 17.0% 2.0% 3.9% 100.0% Total 301,898 135,297 101,538 71,965 21,702 632,400 Share 47.7% 21.4% 16.1% 11.4% 3.4% 100.0% JFY 1997 SBS 34,657 911 3,159 13,882 2,532 55,141 Share 62.9% 1.7% 5.7% 25.2% 4.6% 100.0% OMA 237,900 133,900 82,400 30,000 5,000 489,200 Share 48.6% 27.4% 16.8% 6.1% 1.0% 100.0% Total 272,557 134,811 85,559 43,882 7,532 544,341 Share 50.1% 24.8% 15.7% 8.1% 1.4% 100.0% JFY 1996 SBS 14,134 360 1,173 5,113 1,220 22,000 Share 64.2% 1.6% 5.3% 23.2% 5.5% 100.0% OMA 201,000 127,650 80,000 35,000 0 443,650 Share 45.3% 28.8% 18.0% 7.9% 0.0% 100.0% Total 215,134 128,010 81,173 40,113 1,220 465,650 Share 46.2% 27.5% 17.4% 8.6% 0.3% 100.0% JFY 1995 SBS 5,715 246 1,935 2,390 408 10,694 Share 53.4% 2.3% 18.1% 22.3% 3.8% 100.0% OMA 188,000 95,100 85,000 30,000 0 398,100 Share 47.2% 23.9% 21.4% 7.5% 0.0% 100.0% Total 193,715 95,346 86,935 32,390 408 408,794 Share 47.4% 23.3% 21.3% 7.9% 0.1% 100.0% Source: MAFF New Rice Traceability Program Begins In an effort to prevent a recurrence of the tainted rice incident of 2008 (synopsis below), traceability on rice was legislated in 2009 and part of the new requirements under the law came into effect on October 1, 2010. ??????????????????????? Tainted Rice Incident of 2008 In September, 2008, a whistle blower unveiled that Mikasa Foods, an Osaka-based food processing company, had been fraudulently selling so called ?incident rice? designated for non-human consumption to food processing and foodservice users since 2003 and perhaps longer. ?Incident rice? is the term the Ministry of Agriculture (MAFF) uses for the rice, stored in government warehouses, whose quality is deemed unsuitable for human consumption due to pesticide residues exceeding the regulatory limits or to quality deterioration like mold. Since most of the government stocks of rice are imported under Japan?s Uruguay Round Minimum Access (MA) commitment, to the rice industry ?incident rice? generally refers to MA rice disqualified for human consumption. At the time MAFF allowed incident rice or what the media now calls ?tainted rice? to be sold only for industrial uses such as glue manufacturing. According to MAFF?s records, Mikasa had bought some 1,800 metric tons of tainted rice from MAFF since 2003 and sold most of it to over 390 companies which then used it to make products for human consumption. These companies claim that they did not know the rice was tainted. The list of purchasers includes sake breweries, confectionery manufacturers, and even foodservice companies catering to day care centers and kindergartens. There was actually suspicion of Mikasa?a fraudulent activity more than a year before and MAFF officials had inspected Mikasa almost a hundred times since the first whistle blowing but found no wrongdoing. New findings of other companies? involvement in similar activities kept surfacing and made the front page of the newspapers daily. This so-called ?tainted rice incident? became MAFF?s biggest crisis since BSE was discovered in Japan in 2001. ???????????????????????? The rice traceability program consists of two requirements: 1) record keeping of transactions; and 2) communication of place/country of origin. As stated in the law: 1. When a business entity buys/sells, transports or abolishes rice and rice products (Note 1), it is required (as of October 1, 2010) to keep the related records (Note 2) either on paper or electronically for three months up to three years depending on the product?s use-by date. Note 1: Brown rice, milled rice, rice flour, rice malt, steamed rice, rice cake (mochi and dango), rice crackers, sake, shochu and mirin Note 2: Name of product, place of origin (prefecture in the case of domestic rice and country of origin in the case of imported rice), quantity, date of action/transaction, parties involved in the action/transaction, etc. 2. Starting July 1, 2011, each business entity involved in the sales of rice and rice products will be required to communicate the place/country of origin information to the buyer. This includes from the retailer to the consumer (Note 3). The method of communication can be either on the product label, on the company?s website or via the company?s customer service center (Note 4). Under the JAS Law, communication of the product?s place/country of origin information is already required for brown rice, milled rice, and mochi/dango, therefore, excluded from this new regulation (Note 5). Note 3: Restaurants are exempt (except when they serve steamed rice or menu items using steamed rice as a main ingredient, e.g. curried rice). Note 4: e.g.) on the product label; on the point-of-sales materials; in the product brochure; information on the company?s website; or by customer service on the phone/internet. Note 5: This new regulation now covers rice flour, rice malt, rice crackers, sake, shochu and mirin. Stocks MAFF holds emergency stocks of rice, whose appropriate level is targeted at 1 million MT. However, this does not include stocks of the Minimum Access (MA) rice, also at the 1 million MT level in the last few years. As shown below, stocks of domestic rice have been reduced over the years, and since 2004 have been below the targeted level, subsequent to a poor crop in 2003. In contrast, stocks of MA rice had been piling up and peaked in 2006. However, MAFF has been selling MA rice aggressively into the feed sector for the last several years, running down the stock level. As reported in the earlier consumption section, about 256,000 MT of MA rice is now going into the feed sector. Post will continue closely monitoring this development where an increasing amount of high quality U.S. rice, intended for human consumption, is going into non- food sectors. Table 6. Japan's Rice Reserve (MT) Government Commercial Domestic MA rice Total 1995 370,000 1,180,000 0 1,550,000 1996 390,000 2,240,000 310,000 2,940,000 1997 850,000 2,670,000 390,000 3,910,000 1998 470,000 2,970,000 420,000 3,860,000 1999 220,000 2,330,000 440,000 2,990,000 2000 110,000 1,620,000 560,000 2,290,000 2001 370,000 1,760,000 750,000 2,880,000 2002 460,000 1,550,000 950,000 2,960,000 2003 130,000 1,310,000 1,270,000 2,710,000 2004 20,000 570,000 1,480,000 2,070,000 2005 0 710,000 1,700,000 2,410,000 2006 0 680,000 1,890,000 2,570,000 2007 0 770,000 1,520,000 2,290,000 2008 0 990,000 970,000 1,960,000 2009 0 860,000 950,000 1,810,000 2010 0 980,000 880,000 1,860,000 Source: Food Department/MAFF Minimum Access Commitment Continues into 2010 As a result of the Government of Japan?s (GOJ) tariffication of rice in JFY 2000, the Minimum Access commitment was reduced to 7.2 percent of total domestic consumption from the non-tariffied rate of 8.0 percent. In terms of volume, 7.2 percent is equivalent to 682,000 MT (milled basis). This volume will remain in effect until renegotiated. Japan intends to position rice as a most sensitive item, therefore, excluding it from the across the board expansion of tariff rate quotas (TRQs) and tariff capping in the WTO Doha Round. Table 7. Japan's Market Access Obligations for Rice (MT, Minimum Access as Percent of Domestic Rice Consumption) Without Tariffication With Tariffication Volume Percent of Volume Percent of Domestic Consumption Domestic Consumption JFY 2000 Onward 758,000 8.0 percent 682,000 7.2 percent Source: MAFF Export of Rice under Food Aid The GOJ sets aside about 200,000 MT of rice under food aid programs on an annual basis. This amount does not show up in the export statistics by the Ministry of Finance, which appears to record only exports of Japanese domestic rice (38,242 MT in the calendar year 2010 which includes a negligible amount of commercial exports). The discrepancy between the total food aid exports and the amount recorded in the official export statistics is considered to be rice imported under the OMA regime and diverted for food aid exports. WHEAT Production in 2010 Declines 16 Percent The total planted area for wheat in 2010 stayed about the same as the previous year. However, the production volume declined 16 percent due to unfavorable weather conditions in the major production area of Hokkaido as well as Kyushu. Yield has significantly declined over the past several years. Table 8. Japan's Wheat Production Planted Area Production Yield (hectares) (MT) (MT/ha) 2006 218,300 837,200 3.84 2007 209,700 910,100 4.34 2008 208,800 881,200 4.22 2009 208,300 674,600 3.24 2010 206,900 567,800 2.74 Source: MAFF Wheat Consumption Stays Flat Up until the 1980?s, wheat consumption had been increasing gradually as consumers shifted from rice to processed wheat products such as bread and pasta. However, consumption has been flat in the last three decades at 31-32 kilograms per capita. The Ministry of Agriculture, Forestry and Fisheries (MAFF) estimates the total food wheat demand to be 5.69 million metric tons for 2010/11 Japan fiscal year (April 2010-March 2011). In addition, Post estimates that the feed industry consumes 300,000 to 350,000 metric tons, which makes Japan?s aggregate wheat demand around 6 million metric tons. Table 9. Per Capita Consumption of Wheat in Japan (Kilograms) 1985 2000 2005 2006 2007 2008 2009 2010* 31.7 32.6 31.7 31.8 32.3 31.1 31.8 31.5 Source: MAFF * Ag Office estimate Wheat Utilization Due to limited domestic wheat supplies, nearly 90 percent of Japan?s wheat demand must be met by imports. Most of the imported wheat comes through the state trading system administered by MAFF. MAFF purchases different types/brands of wheat mainly from the United States, Canada and Australia to best meet the usage/needs by Japanese users. Table 10. Major Brands of Imported Wheat and Their Uses (MT) FY2009 Brand Use import Volume U.S. Western White (WW) Confectionery products 761,000 U.S. Hard Red Winter (HRW) Bread and Chinese noodles 852,000 U.S. Dark Northern Spring (DNS) Bread and Chinese noodles 1,348,000 Canada Western Red Spring #1 (1CW) Bread 671,000 Canada Western Amber Durum (DRM) Western noodles (pasta) 204,000 Australia Standard White (ASW) Japanese noodles 803,000 Australia Prime Hard (PH) Chinese noodles 159,000 4,798,000 Source: MAFF Wheat Resale Price Declines as International Wheat Prices Fall MAFF controls both producer and resale prices of domestic and imported wheat. MAFF buys imported wheat at international prices and sells it to domestic flour millers at a markup. As shown in Table 11 below, the ratio has recently been around 2 to 1, which means MAFF sells imported wheat at twice the purchase price. On the other hand, MAFF buys domestic wheat at a high price and sells it to domestic flour millers at a significantly lower price, lower than imported wheat, so that the lower quality domestic wheat will be accepted. Revenues from transactions for imported wheat are used to help cover the cost difference between the purchase and resale of domestic wheat. This is referred to as the ?Cost Pool System?. Until 2007 the resale price at which Japanese millers bought wheat from MAFF was set once a year for each brand/country and fixed at that price throughout the year. MAFF's purchase price (CIF price), however, has always fluctuated with international prices. Therefore, MAFF took the risk for changes in currency exchange rates and increases in import prices. This system was established in 1951 to ensure stable consumer prices as mandated under the Food Law. The new system which started in JFY 2007 allows MAFF to revise the resale price twice a year (April and October), based on fluctuations in the market, and thus better reflects the market price situation (FOB price) on the resale price. Thus, the resale price, average of five brands (U.S. Western White, Hard Red Winter, Dark Northern Spring, Canadian Western Red Spring and Australian Standard White) in the second half of JFY2009 dropped over 20 percent to 49,820 yen per metric ton from 64,750 yen in the first half as international wheat prices fell. Table 11. GOJ Purchase and Resale Prices of Imported Wheat JFY 2009 (Yen per MT) Average CIF Resale Month-Year Price* (a) Price* (b) (b)/(a) Apr-09 28,889 64,750 2.2 May-09 30,574 2.1 Jun-09 30,998 2.1 Jul-09 27,466 2.4 Aug-09 27,210 2.4 Sep-09 26,816 2.4 Oct-09 26,123 49,820 1.9 Nov-09 26,260 1.9 Dec-09 26,158 1.9 Jan-10 26,298 1.9 Feb-10 26,426 1.9 Mar-10 26,911 1.9 Source: MAFF and Ministry of Finance *Average of five brands: WW, HRW, DNS, 1CW and ASW The price includes 5% consumption tax. Wheat Imports Remain Steady in 2010 Total imports of wheat in calendar year (CY) 2010 increased by 16.4 percent to 5,475,586 MT. The increase is not as sharp on the marketing year (MY) basis (July-June): from 4,938,417 in MY07/08 to 5,280,149 MT in MY09/10, up 6.9 percent. MAFF?s inflated purchase in mid-2008, when C&F prices started to come down, forced purchases to shrink in 2009. Considering Japan?s aggregate wheat demand to be 6 million metric tons, minus 600,000-700,000 MT of domestic wheat in the market, expected annual import volume should be 5.3 to 5.4 million MT. In the medium term, imports of wheat are forecast to decline slowly but steadily as Japan?s demographics change. Table 12. Japan's Wheat Imports (MT) Calendar Year Year U.S. Share Canada Australia TOTAL CY 2008 3,658,265 63.3% 1,180,784 932,665 5,780,711 CY 2009 2,839,897 60.4% 942,449 878,043 4,702,565 CY 2010 3,305,142 60.4% 1,017,907 1,093,092 5,475,586 Source: Ministry of Finance Marketing Year Year U.S. Share Canada Australia TOTAL MY 2008 3,464,612 63.1% 1,151,695 855,689 5,491,503 MY 2009 3,051,697 61.8% 1,036,444 836,474 4,938,417 MY 2010 3,152,029 59.7% 971,924 1,081,542 5,280,149 Source: Ministry of Finance MAFF allows flour millers to import wheat outside of MAFF?s control as long as they export an equivalent amount of wheat flour. This so-called ?free wheat? is imported at world prices and is thus very profitable. This system also provides millers with an export market for their lower quality flour, which otherwise would have little value in the domestic market. Table 13. Japanese Exports of Wheat Flour by Destination (MT) Destination CY 2008 CY 2009 CY2010 Hong Kong 116,746 111,277 114,796 Vietnam 11,983 16,632 20,390 Singapore 32,164 29,574 31,635 Thailand 9,503 10,597 11,203 United States 985 703 723 Other 15,659 16,620 17,436 Total 187,040 185,403 196,183 Source: Ministry of Finance Feed Wheat Imports through SBS System In 1999, MAFF introduced the Simultaneous Buy and Sell (SBS) system for imported wheat and barley for feed use. Thus far in JFY 2010 MAFF has conducted twenty-nine SBS tenders, through which 125,180 MT of imported wheat has been contracted. Table 14. SBS Imports of Feed Wheat and Barley (MT) Wheat Barley 1st tender 0 0 2nd 12,720 61,130 3rd 7,200 137,800 4th 22,470 187,870 5th 0 18,000 6th 0 0 7th 0 0 8th 7,000 104,950 9th 13,735 91,360 10th 16,110 88,617 11th 0 90,218 12th 0 0 13th 0 0 14th 0 0 15th 0 21,200 16th 0 0 17th 0 97,133 18th 0 8,700 19th 0 0 20th 27,755 141,590 21th 350 31,520 22th 0 0 23th 700 300 24th 0 8,800 25th 0 0 26th 0 0 27th 16,240 77,885 28th 900 12,300 29th 0 8,000 Total 125,180 1,187,373 Source: MAFF As of February 28, 2009 MAFF Introduces New SBS System for Food Quality Wheat and Barley MAFF started a new Simultaneous-Buy-Sell (SBS) system for food quality wheat and barley in Japan?s new fiscal year, beginning April 2007. The idea behind the SBS system is to allow for greater flexibility of imports and transparency in a portion of food quality wheat. However, MAFF still remains a ?middle man? in the transaction. Plans for Wheat SBS Tenders: There are two categories of SBS wheat imports: Category I (vessel trade) and Category II (container trade). In Category I, MAFF plans to transfer state purchases of 240,000 to 250,000 MT of Australian Prime Hard and 240,000 to 250,000 MT of Durum to Category I (note: these quantities are tentative). Traditionally, MAFF has bought durum only from Canada, but this system will theoretically open up the system to U.S. durum. As for Prime Hard, Australia is the only supplier. In Category II, MAFF designates wheat varieties that are not imported under the state trading regime into Category II. Category I is intended for vessel trade and Category II for container trade. The idea is that this would provide a vehicle for importing new varieties ? including U.S. durum, which could be imported under Category I or II. Category I: Prime Hard and Durum Category II: Any variety/brand except: U.S. Western White (WW) U.S. Hard Red Winter (HRW) U.S. Dark Northern Spring (DNS) Australia Standard White (ASW) Canada Western Red Spring (CWRS) A total of about 362,000 MT of wheat (Category I and II combined) was imported under this system during JFY2010. Due to relatively expensive freight rates for containers, wheat imported by containers (Category II) was small in volume. Table 15. SBS Imports of Food Wheat - Japan Fiscal 2009 (April 2009-March 2010) (MT) Country Brand Category Apr-Sept Oct-Mar Total Australia Prime Hard Category I 53,700 68,250 121,950 Category II 17,221 21,985 39,206 Australia Total 70,921 90,235 161,156 Canada Durum Category I 102,400 94,200 196,600 Canada Total 102,400 94,200 196,600 France French Category II 1,044 1,950 2,994 France Total 1,044 1,950 2,994 Other Other Category II 546 944 1,490 Total 174,911 187,329 362,240 Source: MAFF Stocks Japan has held emergency stocks of wheat at a level equivalent to 2.6 months? worth of the amount of food wheat imported annually. Due to the shortened time necessary to obtain alternative supplies in case of an emergency, the government stocks have been reduced to 1.8 months? worth. Adding the stocks held by the private sector (about 0.5 month?s worth), the government sets the targeted amount of stocks at 950,000 metric tons. Starting October 2010, the government stocks have been transferred to the private sector, and within 2011, all of Japan?s wheat stocks will be held by the private sector. However, the government will subsidize the cost of storing the 1.8 months? worth of stocks the government used to keep. CORN Production Corn production is negligible in Japan. Overall Demand Stable despite Foot-and-Mouth Disease and Avian Influenza Corn is an indispensable ingredient in animal feed and starch making in Japan. Despite price fluctuations, demand for imported corn has generally remained stable, both in the feed sector and food sector. From late 2006 until the third quarter of 2008 the price of compound feed increased by almost 60 percent. To help smooth livestock producers costs the GOJ manages a feed price stabilization program whereby a combination of a MAFF subsidy and an industry fund help absorb sudden surges in the compound feed price. As the graph below shows, since the second quarter of 2006 this subsidy has helped curb feed price increases. As grain prices declined in the fourth quarter of 2008, subsidies ceased. From the third quarter of 2006 through the third quarter of 2008 the total amount of subsidies reached 353 billion yen (approx. 4 billion dollars), 45 billion yen (approx. 500 million dollars) of which came out of MAFF?s budget. Grain prices rose sharply in the last quarter of 2010 and subsidies were once again activated at 3,250 yen per metric ton. Post estimates that this fund will be able to provide a significant buffer for an extended period of time, as demonstrated during the 2007-2008 commodity price surge. Japan experienced outbreaks of Foot and Mouth Disease (FMD) in spring/summer of 2010. Since the first case was reported in April, 292 cases were detected, and a total of 174,132 pigs and 37,454 heads of cattle were depopulated. Japan was successful in containing the outbreaks in the prefecture of Miyazaki on the island of Kyushu, and was able to obtain FMD- free status by the International Office of Animal Health (OIE) on February 5, 2010. In late January 2011, a case of high-pathogenic avian influenza was detected in Miyazaki Prefecture. Since wild birds appear to be the carrier, outbreaks have spread to other prefectures and new cases have been reported every week. As of February 15, over 1.2 million birds have been depopulated. Although these FMD and avian influenza outbreaks may shrink Japan?s swine and poultry population slightly, the percentage of affected population will be too insignificant to expect any impact on the overall demand for feed. Table 16. Japan's Livestock Population (1,000 heads) % change 2000 2005 2006 2007 2008 2009 2010 2010/2000 Dairy cows 1,764 1,655 1,636 1,592 1,533 1,500 1,484 -15.9% Beef cattle 2,824 2,747 2,755 2,806 2,890 2,923 2,892 +2.4% Swine 9,806 9,750* 9,620 9,759 9,745 9,899 9,750* -0.6% Layers 140,365 136,000* 136,894 142,765 142,523 139,910 139,200* -0.8% Broilers 108,410 102,520 103,687 105,287 102,987 107,141 106,400* -1.9% Source: MAFF (as of February each year) * Ag Office Estimate Utilization Patterns Of the total demand for corn in Japan (approximately 16.3 million MT), roughly 70 percent comes from the feed sector, 22 percent from starch manufacturers, and 8 percent from other food-use sectors including manufacturers of corn grits (used as a fermentation ingredient in liquors), cornflakes and confections. Corn is the largest ingredient used in compound and mixed feed. The ingredient ratio is adjusted from year-to-year, depending on the prices of various grains, but the corn ratio has been fairly constant at 47?50 percent in recent years. Of the total demand for feed corn (roughly 12 million MT), about 42 percent (5 million MT) comes from the poultry sector. The declining trend in the livestock population appears irreversible and feed demand in Japan is expected to decline slowly but surely in years to come. The future of corn demand in Japan relies heavily on developing and enhancing demand in the non-feed sector. In the past several years, a robust demand for food corn has been driven by a strong beverage demand for corn sweeteners and for light beer called happoshu. Table 17-1. Feed Utilization by Ingredients 2009 (MT) Wheat Corn Sorghum Wheat Barley Rice Flour Layer Feed MT 3,371,571 265,617 2,045 0 58,990 3,033 % 52.9% 4.2% 0.0% 0.0% 0.9% 0.0% Broiler Feed MT 1,667,704 713,346 1,892 996 99,661 10,688 % 41.9% 17.9% 0.0% 0.0% 2.5% 0.3% Poultry Total MT 5,039,275 978,963 3,937 996 158,651 13,721 % 48.7% 9.5% 0.0% 0.0% 1.5% 0.1% Dairy Cattle MT 1,355,482 22,644 33,536 47,968 25,891 28,237 % 43.3% 0.7% 1.1% 1.5% 0.8% 0.9% Beef Cattle MT 1,825,186 66,725 49,331 762,113 10,150 40,898 % 39.8% 1.5% 1.1% 16.6% 0.2% 0.9% Cattle Feed Total MT 3,180,668 89,369 82,867 810,081 36,041 69,135 % 41.2% 1.2% 1.1% 10.5% 0.5% 0.9% Swine Feed MT 3,374,212 649,778 66,719 79,639 60,949 51,292 % 54.1% 10.4% 1.1% 1.3% 1.0% 0.8% Feed, other MT 19,316 2,648 174 1,696 118 1,650 % 35.8% 4.9% 0.3% 3.1% 0.2% 3.1% Compound Feed Total MT 11,613,471 1,720,758 153,697 892,412 255,759 135,798 % 47.7% 7.1% 0.6% 3.7% 1.0% 0.6% Mixed Feed MT 295,388 2,165 10,317 18,607 261 769 % 61.0% 0.4% 2.1% 3.8% 0.1% 0.2% Feed Total MT 11,908,859 1,722,923 164,014 911,019 256,020 136,567 % 47.9% 6.9% 0.7% 3.7% 1.0% 0.5% Source: Feed Supply Stabilization Organization Table 17-2. Feed Utilization by Ingredients 2009 (MT) Other Grain Other Rye Oats Grains Total Ingredients Total Layer Feed 0 0 4,274 3,705,530 2,666,127 6,371,657 0.0% 0.0% 0.1% 58.2% 41.8% 100.0% Broiler Feed 84 0 8,906 2,503,277 1,477,973 3,981,250 0.0% 0.0% 0.2% 62.9% 37.1% 100.0% Poultry Total 84 0 13,180 6,208,807 4,144,100 10,352,907 0.0% 0.0% 0.1% 60.0% 40.0% 100.0% Dairy Cattle 15,861 5,247 16,132 1,550,998 1,581,739 3,132,737 0.5% 0.2% 0.5% 49.5% 50.5% 100.0% Beef Cattle 9,915 1,893 14,192 2,780,403 1,811,195 4,591,598 0.2% 0.0% 0.3% 60.6% 39.4% 100.0% Cattle Feed Total 25,776 7,140 30,324 4,331,401 3,392,934 7,724,335 0.3% 0.1% 0.4% 56.1% 43.9% 100.0% Swine Feed 24,622 10 77,615 4,384,836 1,852,996 6,237,832 0.4% 0.0% 1.2% 70.3% 29.7% 100.0% Feed, other 0 1,149 185 26,936 27,053 53,989 0.0% 2.1% 0.3% 49.9% 50.1% 100.0% Compound Feed Total 50,482 8,299 121,304 14,951,980 9,417,083 24,369,063 0.2% 0.0% 0.5% 61.4% 38.6% 100.0% Mixed Feed 3,442 771 15,240 346,960 137,413 484,373 0.7% 0.2% 3.1% 71.6% 28.4% 100.0% Feed Total 53,924 9,070 136,544 15,298,940 9,554,496 24,853,436 0.2% 0.0% 0.5% 61.6% 38.4% 100.0% Source: Feed Supply Stabilization Organization Table 18. Japanese Compound and Mixed Feed Production by Type of Animal (1,000 MT) Compound Feed Mixed Grand- Poultry Swine Cattle Subtotal* Feed Total JFY 2005 10,216 5,872 7,376 23,553 556 24,109 JFY 2006 10,301 5,964 7,504 23,863 517 24,381 JFY 2007 10,378 5,911 7,674 24,048 441 24,489 JFY 2008 10,282 6,033 7,761 24,138 360 24,498 JFY 2009 10,344 6,232 7,717 24,347 455 24,802 JFY 2010** 10,140 5,910 7,639 23,689 430 24,119 * Includes feed for other animals ** Ag Office preliminary estimates Source: MAFF Prices The CIF price of U.S. corn, which jumped nearly 50 percent in 2008 over 2007, returned to the pre-2007 levels in 2009 and remained stable throughout 2010. Fluctuations in U.S. corn prices directly translate to feed prices in Japan as explained in the previous sections. The recent rise in corn prices has already resulted in a significant price increase of compound feed. (Refer to Chart 3.) Table 19. Average CIF Price of Corn for Feed by Origin ($US per MT) CY 2008 CY 2009 CY 2010 % change 2010/2008 United States 333.04 224.90 239.27 -28.2% Argentina 386.25 248.87 242.34 -37.3% China 283.48 254.45 256.24 -9.6% Brazil 218.60 220.74 230.16 +5.3% Source: Ministry of Finance Trade The 2009 U.S. corn crop suffered from several quality concerns: BCFM (broken kernel, foreign materials), low test weight (low grain density), low protein content, and DON (vomitoxin). These quality issues drove Japanese importers to divert supply sources to Brazil and Argentina, as depicted in CY 2010 figures in Table 20 below. Although the quick trade statistics report issued by the Ministry of Finance (MOF) shows that total feed corn imports in 2010 were 9,282,244 MT, Post estimates that they were actually higher by around 1 million MT. Food corn imports, on the other hand, should be lowered by 1 million MT to 4.1 MMT. Historically, MOF has often revised its corn import statistics later in the year. The general trend in recent years is that increases in food corn imports have been compensating for declines in feed corn imports. The driving force in food corn demand comes from the beverage sector, particularly for high fructose corn syrup (HFCS) used in low alcoholic drinks like happoshu (light beer) and other alcoholic beverages, in addition to a continued strong demand for soft drinks. As a result of the lack of availability and higher premiums for identity preserved (IP) ?non- GMO? food use corn, many Japanese users have started buying non-IP corn. Table 20. Imports of Corn by Origin (MT) CY 2008 CY 2009 CY 2010 Corn for feed United States 11,726,815 11,066,051 9,282,244 Share 98.7% 96.1% 87.4% Argentina 85,991 148,084 578,460 China 2,254 11,241 23,702 Brazil 1,050 23,532 515,503 Others 61,662 264,033 218,603 Total 11,877,772 11,512,941 10,618,512 Corn for manufacturing United States 4,550,373 4,655,059 5,097,527 Share 99.3% 97.4% 91.4% Argentina 733 42,864 310,226 Australia 284 197 20 China 439 10,271 3 South Africa 0 0 10,000 Brazil 4,900 23,170 134,397 Others 23,944 47,689 25,476 Total 4,580,673 4,779,250 5,577,649 Total corn United States 16,277,188 15,721,110 14,379,771 Share 98.9% 96.5% 88.8% Total 16,458,445 16,292,191 16,196,161 Source: Ministry of Finance Stocks Japan holds emergency stocks of essential feed grains, i.e. corn, sorghum, and rice. The stock level since 2005 has been set at approximately 950,000 MT in total. The breakdown is 600,000 MT of corn and sorghum combined (roughly 90 percent is corn) and 350,000 MT of rice. In addition, the government advises the feed manufacturers to hold inventory of major feed grains at the volume equivalent of one month demand. DDGS Imports on the Rise One of the positive side effects of the ethanol boom in the United States is the increasing availability of a high value co- product, Distiller?s Dried Grains with Solubles (DDGS). As a result of aggressive educational activities led by the U.S. Grains Council, Japan?s imports of DDGS from the United Sates have been increasing remarkably and surpassed the 100,000 MT mark in 2007, and 275,000 MT in 2009. In 2010, however, the demand for DDGS stalled as corn prices stabilized. The majority of these DDGS are currently used in dairy cattle feed. Given the recent surge in corn prices, DDGS imports will likely hit new highs in 2011. SORGHUM Production Like corn, production of sorghum is negligible in Japan. Consumption As sorghum is a substitute for corn, its utilization rate in the production of compound and mixed feeds fluctuates depending on its relative price to corn and other ingredients. Due to a declining price appeal as well as to MAFF?s aggressive promotion of ?rice for feed,? the utilization ratio of sorghum in feed has been declining steadily over the last several years. The sorghum utilization ratio went down to 4.6 percent in 2007 from 7.6 percent in 2001, but recovered to 6.9 percent in 2009 due to improved price relative to corn, as shown in Table 22 below. Prices Similarly to corn prices, CIF prices for sorghum rose sharply in 2008, returned to the 2007 level in 2009, and then returned to historically average prices throughout most of 2010. Table 21. Average CIF Price of Sorghum for Feed by Origin ($US per MT) CY 2008 CY 2009 CY 2010 % change 2010/2008 United States 336.44 221.59 245.12 -27.1% Argentina 333.95 170.34 207.33 -37.9% Australia 342.28 208.16 229.58 -32.9% China 282.39 NA NA NA Source: Ministry of Finance Table 22. Comparative CIF Price; US Sorghum versus Corn ($US per MT) CY 2008 CY 2009 CY 2010 Sorghum 336.44 221.59 245.12 Corn 333.41 224.90 239.27 Sorghum/Corn 100.9% 98.5% 102.4% Source: Ministry of Finance Trade Since sorghum is mainly a substitute for corn, potential growth in Japan?s sorghum imports largely depend on its relative price to corn. As the U.S. and Argentine sorghum prices soared in 2008, Australia returned as a major supplier in 2008 and further strengthened its position in 2009, lowering the U.S. share to below 23 percent in 2009. With the U.S. prices having stabilized, 2010 imports from the United States recovered in volume and market share. Imports are classified as being either for feed or food, however, despite this technicality, much of the sorghum imported under the food HS code eventually ends up in the feed sector. Because the price of sorghum, relative to the price of corn, has declined since 2008, demand for sorghum has expanded. According to the 2009 industry statistics (Table 17) total demand for sorghum used in feed increased 39 percent, or .48 MMT, to 1.72 MMT over the previous year. Table 23. Imports of Sorghum by Origin (MT) CY 2008 CY 2009 CY 2010 Sorghum for feed United States 427,469 348,656 627,656 Share 47.6% 23.4% 52.4% Argentina 50,099 169,658 442,749 Australia 326,303 970,413 126,560 China 78,504 0 0 Total 898,223 1,492,025 1,197,464 Sorghum, others United States 92,797 51,551 188,133 Share 41.6% 19.9% 47.5% Argentina 12,851 51,826 172,862 Australia 71,623 155,002 33,858 China 37,032 190 111 Total 222,827 258,896 395,764 Total sorghum United States 520,266 400,207 815,789 Share 46.4% 22.9% 51.2% Total 1,121,050 1,750,921 1,593,228 Source: Ministry of Finance Stocks As written in the previous CORN section, Japan holds emergency stocks of essential feed grains, i.e. corn, sorghum, and rice. The stocks of sorghum had been kept at 130,000-170,000 MT over a decade until 2003. Following the policy of reducing the overall feed grain stocks, sorghum stocks were reduced to 75,000 MT in 2003, 66,000 MT in 2004, 65,000 MT in 2005 and 64,000 MT since then. BARLEY Production According to Japan?s Ministry of Agriculture, Forestry and Fisheries? (MAFF) survey for the 2010 barley crop, production decreased nearly 10 percent despite an increase in the planted area. Compared with the 2008 crop, production has shrunk by 25 percent. This is due to a significantly lower yields caused by a combination of wet weather conditions during the growing season and a lack of sunshine as well as low temperatures in spring in many growing areas, particularly on the island of Kyushu. Table 24. Crop Area and Production of Barley in Japan Crop Area Production (hectares) (MT) 2006 53,820 174,200 2007 54,220 194,600 2008 56,650 217,300 2009 57,950 179,200 2010 58,720 161,600 Source: MAFF Consumption In Japan, roughly 80 percent of barley is consumed in the feed sector. Barley is used for compound and mixed feed production for the cattle sector (beef and dairy). It is particularly important in feeding beef cattle because it produces high quality beef with the white marbling that Japanese consumers favor. The largest non-feed uses are for the production of shochu, a traditionally distilled liquor, and beer. Other uses include miso (soybean paste) and barley tea. Aggregate consumption of barley (feed and food) is estimated to be 1.5-1.6 million MT. There is little indication that the demand will increase in the near future. On the contrary some decline is expected as Japan?s cattle population shrinks. Prices As in the case with other feed grains, the average CIF price of barley soared in 2007 and 2008. In 2009 it returned to the pre- surge level. The U.S. CIF price increased by almost 50 percent in 2007 over 2006, by 45 percent in 2008 over 2007, and declined to the 2006 level in 2009 and remained stable in 2010. Table 25. Average CIF Prices of Barley for Feed by Origin ($US per MT) CY 2008 CY 2009 CY 2010 % change 2010/2008 United States 424.24 203.08 220.55 -48.0% Canada 445.90 207.67 271.93 -39.0% Australia 384.45 182.03 216.25 -43.8% Ukraine NA 202.08 198.16 NA Source: Ministry of Finance Trade Along with rice and wheat, barley imports are controlled by MAFF as a ?Staple Food?. MAFF has been hesitant to remove barley from the state system entirely because it is a strategic alternative crop under the rice crop diversion program. As described in detail in the WHEAT section, starting April 2007, food barley can be imported under the Simultaneous Buy and Sell (SBS) system. Since 2009 imports from the United States have dropped significantly due to the resurgence of Australia ? which had suffered from drought - as the leading supplier due to its price competitiveness and proximity to Japan?s major barley importing port in Kyushu. The Ukraine also came back on the supplier map with attractive price offers. Table 26. Imports of Barley by Origin (MT) CY 2008 CY 2009 CY 2010 Barley for feed United States 413,662 26,598 35,214 Share 42.4% 2.3% 3.0% Canada 226,289 198,589 148,756 Australia 315,566 697,162 917,910 Ukraine 0 159,160 70,710 China 4,759 0 0 Others 14,195 66,369 10,187 Total 974,471 1,147,878 1,182,777 Barley, others United States 2,107 1,117 837 Share 0.7% 0.5% 0.4% Canada 55,907 66,760 61,880 Australia 257,804 169,005 166,629 Others 262 5,623 5,763 Total 316,080 242,505 235,109 Total Barley United States 415,769 27,715 36,051 Share Total 1,290,551 1,390,383 1,417,886 Source: Ministry of Finance SBS Tender for Feed Barley MAFF introduced the SBS system for barley for feed in JFY 1999 with approximately 360,000 MT contracted under three tenders. The allocation amount has been greatly raised since then, and for the Japanese fiscal year 2010, is set at 1.2 million MT. The frequency of bidding has been raised from ten in 2008 to fourteen in 2009, and to twenty-nine in 2010 to allow for more commercially viable trade. Table 27. SBS Imports of Feed Wheat and Barley (MT) Wheat Barley 1st tender 0 0 2nd 12,720 61,130 3rd 7,200 137,800 4th 22,470 187,870 5th 0 18,000 6th 0 0 7th 0 0 8th 7,000 104,950 9th 13,735 91,360 10th 16,110 88,617 11th 0 90,218 12th 0 0 13th 0 0 14th 0 0 15th 0 21,200 16th 0 0 17th 0 97,133 18th 0 8,700 19th 0 0 20th 27,755 141,590 21th 350 31,520 22th 0 0 23th 700 300 24th 0 8,800 25th 0 0 26th 0 0 27th 16,240 77,885 28th 900 12,300 29th 0 8,000 Total 125,180 1,187,373 Source: MAFF As of February 28, 2009 New SBS Tender for Food Barley As reported in the wheat section in detail, MAFF started a new Simultaneous-Buy-Sell (SBS) system for food quality wheat and barley in Japan?s fiscal year (JFY) 2007 beginning April 2007. The idea behind the SBS system is to allow for greater flexibility of imports and transparency so that traders/users can obtain the quality and quantity they desire in a system that resembles commercial trade. Since Japanese fiscal year (JFY) 2008, all of food use barley has been imported under the SBS regime. Plans for Barley SBS Tenders: Annual imports of food barley have been around 250,000 MT: roughly 200,000 MT from Australia for shochu, a distilled liquor, and beer; 40,000 from Canada for beer and barley tea; and a few thousand tons from the United States mainly for beer. Post estimates 200,000 MT are intended for shochu, 45,000 MT for beer, and 5,000 MT for barley tea. As with wheat there are two categories for barley. Category I is for vessel trade. Although most barley is imported by vessel, there is also Category II for container units. Category II provides a means for new varieties to enter the market. Table 28. SBS Imports of Food Barley - Japan Fiscal Year 2009 (April 2009-March 2010) (MT) Country Category Apr-Sept Oct-Mar Total Australia Category I 66,000 91,000 157,000 Category II 4,008 1,008 5,016 Australia Total 70,008 92,008 162,016 Canada Category I 29,740 18,830 48,570 Category II 2,200 52 2,252 Canada Total 31,940 18,882 50,822 USA Category I 0 0 0 Category II 1,100 525 1,625 USA Total 1,100 525 1,625 Other Category I 0 0 0 Category II 2,750 2,500 5,250 Total 105,798 113,915 219,713 Source: MAFF Stocks Japan used to hold 350,000 MT of emergency barley stocks, but since 2006 they have been replaced by rice stocks. Since practically all of feed barley Japan needs can be imported through the SBS tenders with an ample allocation (1.2 million MT), MAFF explains that government-held emergency stocks are no longer necessary. RYE Production Production of rye is minimal in Japan. Consumption Rye is almost exclusively used for feed in Japan. The main uses of rye are for cattle feed and swine feed. Like sorghum, most rye users consider it as a substitute for corn. Since there is practically no domestic production, annual rye consumption and imports are directly linked with domestic cattle and swine production, and corn prices. In 2009, the latest statistics available (Table 17), total rye utilization in feed was 53,924 MT: 15,861 MT for dairy cattle; 9,915 for beef cattle; and 24,622 MT for swine. The ratio of rye in compound and mixed feed has been declining in the last several years due to declining price competitiveness, and the total utilization went down significantly from 150,000 MT in 2007 to 60,000 MT in 2008 because of the fall in imports from Germany as explained in the following trade section. With the price having stabilized since 2009, Post estimates the utilization of rye in feed has picked up to a 100,000 MT level in 2010 as reflected in increased imports. Prices As shown below, U.S. rye is significantly less price competitive than that of Germany or Canada, the two major suppliers for Japan. The price of German rye soared in 2008 due to a fervent demand in the EU caused by poor Russian and Ukraine crops, but it returned to the 2007 level in 2009 and stayed relatively flat in 2010. Table 29. Average CIF Price of Rye by Origin ($US per MT) CY2008 CY 2009 CY 2010 % change 2010/2008 United States 748.13 906.82 629.74 -15.8% Canada 414.36 238.23 234.04 -43.5% Germany 424.82 226.95 234.85 -44.7% Poland NA 222.53 255.04 NA Source: Ministry of Finance Trade Germany dominates rye exports to the Japanese market because of its price competitiveness. Imports from Germany in CY 2008 declined dramatically due to the price situation as explained above. Although the price situation improved in 2009, imports did not recover in 2009 mainly because sorghum became more attractive. In 2010, as the rye/sorghum price ratio moved in favor of rye, imports of rye recovered to the 100,000 MT mark. In the medium term, rye imports are expected to be on a declining trend as Japan?s cattle and swine populations will likely shrink. Prospects for U.S. rye exports to Japan are directly linked to the relative price of U.S. rye. Table 30. Imports of Rye by Origin (MT) CY 2008 CY 2009 CY 2010 United States 1,087 640 1,267 Canada 53,241 13,761 22,904 Germany 4,911 44,717 56,603 Poland 0 5,548 40,128 Other 42 23 55 Total 59,281 64,689 120,957 Source: Ministry of Finance Stocks Unlike corn, sorghum and barley, Japan does not hold strategic emergency stocks of rye. Commercial stocks are estimated to be smaller than 20,000 MT. Appendix Table 31. Japan's Self-Sufficiency Ratio (%) 1960 1975 1985 1990 1995 2000 2005 2006 2007 2008 2009* Rice 96 110 107 100 104 95 95 94 94 95 95 Wheat 28 4 14 15 7 11 14 13 14 14 11 Beans 25 9 8 8 5 7 7 7 7 9 8 Soybeans 11 4 5 5 2 5 5 5 5 6 6 Vegetables 100 99 95 91 85 82 79 79 81 82 83 Fruit 90 84 77 63 49 44 41 38 40 41 41 Meats 90 77 81 70 57 52 54 56 56 56 57 Beef 95 81 72 51 39 34 43 43 43 44 43 Eggs 100 97 98 98 96 95 94 95 96 96 96 Milk/Dairy Products 86 81 85 78 72 68 68 67 66 70 71 Seafood (for humans) 110 100 86 72 57 53 57 60 62 62 62 Sugar 31 15 33 32 31 29 34 32 33 38 33 Self-sufficiency (Calorie Basis) 73 54 53 48 43 40 40 39 40 41 40 Self-sufficiency (Major Food Grains) 80 69 69 67 65 60 61 60 60 61 58 Self-sufficiency (Major Feed Grains) 55 34 27 26 26 26 25 25 25 26 25 Self-sufficiency (Food + Feed Grains) 62 40 31 30 30 28 28 27 28 28 26 Source: MAFF * Preliminary Table 32. Japan's Agriculture, Forestry and Fisheries at Glance Items Data Year Note Basic Indicators GDP 474,040 billion yen 2009 Gross Agricultural Product 4,430 billion yen 2008 Peaked at 7,938 billion in 1990 Gross Forestry Product 387 billion yen 2009 Gross Fisheries Product 766 billion yen 2008 Self-sufficiency Calorie Basis 40% 2009 Goal: 50% by 2020 Production Value Basis 70% 2009 Goal: 70% by 2020 Food Industry Food Industry's Domestic Output 82,090 billion yen 2009 % in all economic activities 8% 2008 # of workers in food industry 8.07 million 2009 % in all workers 13% 2009 Consumption Final value of food and beverages consumed 73,584 billion yen 2005 Trade Total Imports of Ag, Forestry and Fisheries Products 6,666 billion yen 2009 Agricultural Products 4,561 billion yen 2009 Forestry Products 809 billion yen 2009 Fisheries Products 1,297 billion yen 2009 Total Exports of Ag, Forestry and Fisheries Products 445 billion yen 2009 Goal: 1 trillion yen by 2017 Agricultural Products 264 billion yen 2009 Forestry Products 9 billion yen 2009 Fisheries Products 172 billion yen 2009 Production Peaked at 11,717 billion in Total Agricultural Output 8,049 billion yen 2009 1984 Rice 1,795 billion yen 2009 Peaked at 3,930 billion in 1984 Vegetables 2,033 billion yen 2009 Peaked at 2,801 billion in 1991 Fruit 675 billion yen 2009 Peaked at 1,103 billion in 1991 Livestock 2,510 billion yen 2009 Peaked at 3,290 billion in 1984 Farm Total # of People Living in Farming Households 6.98 million 2009 # of Farming Households 2.53 million 2010 Peaked at 6.18 billion in 1950 # of Commercial Farmers 1.63 million 2010 # of Noncommercial Farmers 0.90 million 2010 Full-time Farmers 0.36 million 2010 # of People Involved in Farming 2.61 million 2010 Peaked at 14.54 million in 1960 65 Years Old and Older 62% 2010 Average Age 65.8 years old 2010 # of New Comers 67,000 2009 Younger than 40 Years Old 15,000 2009 Arable Farmland 4.59 million hectares 2010 Peaked at 6.09 million in 1961 Rice Paddy 2.50 million hectares 2010 Peaked at 3.44 million in 1969 Farmland for Field Crops 2.10 million hectares 2010 Peaked at 2.72 million in 1958 Fallow Paddy/Land 0.40 million hectares 2010 0.24 million in 1995 20.50 hectares in Commercial Farmer"s Average Size of Farmland Hokkaido 2009 17.46 in 2004 1.41 hectares elsewhere 2009 1.26 in 2004 Average Income of Farming Households 4.57 million yen 2009 Income from Farming 1.04 million yen 2009 Average Income of Full-time Farmers 5.55 million yen 2009 Income from Farming 4.38 million yen 2009 Agricultural Co-ops (JA) # of Local JA's 754 2010 # of Members 9.49 million 2008 # of Regular Members 4.83 million 2008 of Non-regular Members 4.67 million 2008 Total Savings at JA Banks 85,394 billion yen 2010 Forestry % of Woods/Forests in Japan's Land Mass 67% 2007 Total Forestry Output 412 billion yen 2009 Peaked at 1,158 billion in 1970 # of Households Involved in Forestry 0.92 million 2005 # of People Involved in Forestry 47,000 1005 Average Income 103,000 yen 2008 Peaked at 1.27 million in 1979 # of Forestry Co-ops 711 2008 # of Members 1.58 million 2008 Fisheries Exclusive Economic Zone 4,470,000 km2 6th in the world Total Fisheries Output 1.628 billion yen 2008 Peaked at 2,977 billion in 1982 Total Catch 5.43 million metric tons 2009 Peaked at 12.82 million in 1984 # of People Involved in Fisheries 212,000 2009 # of Boats 185,465 2008 Average Income 2.51 million yen 2009 # of Fisheries Co-ops 1,028 2009 # of Members 0.37 million 2008 Source: Compiled by Ag Office based on GOJ data Production, Supply and Demand Statistics Rice, Milled Japan 2009/2010 2010/2011 2011/2012 Market Year Begin: Nov 2009 Market Year Begin: Nov 2010 Market Year Begin: Nov 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 1,624 1,624 1,628 1,628 1,630 Beginning Stocks 2,715 2,715 2,693 2,533 2,395 Milled Production 7,711 7,711 7,720 7,720 7,887 Rough Production 10,592 10,592 10,604 10,604 10,834 Milling Rate (.9999) 7,280 7,280 7,280 7,280 7,280 MY Imports 667 698 700 700 700 TY Imports 650 698 700 700 700 TY Imp. from U.S. 0 345 0 350 350 Total Supply 11,093 11,124 11,113 10,953 10,982 MY Exports 200 200 200 200 200 TY Exports 200 200 200 200 200 Consumption and Residual 8,200 8,391 8,125 8,358 8,354 Ending Stocks 2,693 2,533 2,788 2,395 2,428 Total Distribution 11,093 11,124 11,113 10,953 10,982 1000 HA, 1000 MT Wheat Japan 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul 2009 Market Year Begin: Jul 2010 Market Year Begin: Jul 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 208 208 205 207 208 Beginning Stocks 1,331 1,331 1,312 1,019 937 Production 675 675 843 568 760 MY Imports 5,502 5,280 5,200 5,500 5,350 TY Imports 5,502 5,280 5,200 5,500 5,350 TY Imp. from U.S. 3,297 3,152 0 3,400 3,200 Total Supply 7,508 7,286 7,355 7,087 7,047 MY Exports 296 267 300 300 300 TY Exports 296 267 300 300 300 Feed and Residual 300 300 300 300 250 FSI Consumption 5,600 5,700 5,550 5,550 5,550 Total Consumption 5,900 6,000 5,850 5,850 5,800 Ending Stocks 1,312 1,019 1,205 937 947 Total Distribution 7,508 7,286 7,355 7,087 7,047 1000 HA, 1000 MT Corn Japan 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 1 1 1 Beginning Stocks 998 998 978 676 627 Production 1 1 1 1 1 MY Imports 15,979 15,977 16,100 16,100 16,000 TY Imports 15,979 15,977 16,100 16,100 16,000 TY Imp. from U.S. 14,696 14,508 0 15,500 15,500 Total Supply 16,978 16,976 17,079 16,777 16,628 MY Exports 0 0 0 0 TY Exports 0 0 0 0 Feed and Residual 11,400 11,700 11,500 11,600 11,500 FSI Consumption 4,600 4,600 4,600 4,550 4,550 Total Consumption 16,000 16,300 16,100 16,150 16,050 Ending Stocks 978 676 979 627 578 Total Distribution 16,978 16,976 17,079 16,777 16,628 1000 HA, 1000 MT Sorghum Japan 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 0 0 0 0 0 Beginning Stocks 118 118 117 66 66 Production 0 0 0 0 0 MY Imports 1,649 1,648 1,600 1,600 1,550 TY Imports 1,649 1,648 1,600 1,600 1,550 TY Imp. from U.S. 828 877 0 800 780 Total Supply 1,767 1,766 1,717 1,666 1,616 MY Exports 0 0 0 0 0 TY Exports 0 0 0 0 0 Feed and Residual 1,650 1,700 1,600 1,600 1,550 FSI Consumption 0 0 0 0 Total Consumption 1,650 1,700 1,600 1,600 1,550 Ending Stocks 117 66 117 66 66 Total Distribution 1,767 1,766 1,717 1,666 1,616 1000 HA, 1000 MT Barley Japan 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 58 58 52 59 58 Beginning Stocks 449 449 439 488 420 Production 179 179 180 162 174 MY Imports 1,411 1,410 1,350 1,300 1,300 TY Imports 1,411 1,410 1,350 1,300 1,300 TY Imp. from U.S. 28 37 0 200 200 Total Supply 2,039 2,038 1,969 1,950 1,894 MY Exports 0 0 0 0 0 TY Exports 0 0 0 0 0 Feed and Residual 1,300 1,250 1,250 1,230 1,220 FSI Consumption 300 300 300 300 300 Total Consumption 1,600 1,550 1,550 1,530 1,520 Ending Stocks 439 488 419 420 374 Total Distribution 2,039 2,038 1,969 1,950 1,894 1000 HA, 1000 MT Rye Japan 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Harvested 0 0 0 0 0 Beginning Stocks 5 5 18 18 18 Production 0 0 0 0 0 MY Imports 103 103 65 65 60 TY Imports 103 103 65 65 60 TY Imp. from U.S. 1 1 0 1 1 Total Supply 108 108 83 83 78 MY Exports 0 0 0 0 0 TY Exports 0 0 0 0 0 Feed and Residual 80 80 55 55 50 FSI Consumption 10 10 10 10 10 Total Consumption 90 90 65 65 60 Ending Stocks 18 18 18 18 18 Total Distribution 108 108 83 83 78 1000 HA, 1000 MT
Posted: 18 March 2011, last updated 19 March 2011

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