Japan - Grain and Feed Annual 2013

An Expert's View about Agriculture and Animal Husbandry in Japan

Posted on: 29 Mar 2013

With little commercial production of feed grains domestically, Japan’s feed industry relies almost entirely on imported 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: 3/19/2013 GAIN Report Number: JA1007 Japan Grain and Feed Annual Grain and Feed Annual 2013 Approved By: Elizabeth Autry Prepared By: Hisao Fukuda Report Highlights: With little commercial production of feed grains domestically, Japan’s feed industry relies almost entirely on imported grains. Corn is the most important commodity by far, traditionally taking up 50 percent of feed ingredients. For decades, the United States has provided over 90 percent of import supplies of corn to Japan. The sharp rise in U.S. corn price this season, largely a result of last summer’s drought, has led Japan to: 1) shift the supply source increasingly to South American and East European countries; 2) decrease the ratio of corn used in feed and increase that of non-conventional grains such as rice, wheat, and sorghum; and 3) enact subsidies to absorb surges in the overall price of feed. OVERALL MARKET SITUATION With very little commercial production of feed grains domestically, Japan’s feed industry relies almost entirely on imported grains. Therefore, the rise in international feed grain prices directly affects the cost of feed manufacturing. Corn is the most important crop, which ordinarily makes up about half of all feed ingredients. To cope with the sharp rise in U.S. corn prices since the summer of 2012, Japan has made the following adjustments: 1. Shift the supply source increasingly to South American and East European countries; 2. Decrease the ratio of corn used in compound feed, and increase that of non-conventional grains such as rice, wheat, and sorghum; 3. Enact subsidies to absorb surges in the overall price of compound feed. Ordinarily, Japan imports over 90 percent of its corn supply from the United States. However, since September 2012, imports from Brazil have been rising sharply and in December surpassed imports from the United States. Imports from Argentina and the Ukraine are also notable. Table 1: Japan’s Imports of Corn in Recent Months Japan Import Statistics Commodity: Corn Total, Monthly Series: 07/2012 - 12/2012 Quantity Partner Country Unit 07/2012 08/2012 09/2012 10/2012 11/2012 12/2012 World MT 1167965 1154017 1126806 1175121 1288080 1335811 Brazil MT 0 0 156114 387912 562006 681096 United States MT 934970 936459 826049 708380 700814 580862 Argentina MT 126079 117177 115282 77170 12857 37796 Ukraine MT 58013 78926 21373 650 0 31754 Australia MT 326 1499 2175 213 1523 3728 India MT 170 337 610 390 217 351 Indonesia MT 340 402 234 231 337 169 Belgium MT 29 48 47 31 26 27 Peru MT 33 38 33 76 152 16 Taiwan MT 19 19 0 17 22 12 Other MT 47986 19112 4889 51 10126 0 The table below shows a detailed breakdown of the feed ingredient utilization ratio. The ratio of corn, normally almost 50 percent, has now declined to the lower 40 percent range. Instead, utilization of rice, wheat, and sorghum has advanced. Table 2: Feed Utilization by Ingredients (Unit: MT) Japan Wheat Other Non-grain Fiscal Ingredient Year Corn Sorghum Wheat Flour Barley Rice Rye Grains DDGS s TOTAL (April- March) 12,037,26 1,683,41 113,82 121,43 725,97 337,94 117,25 24,446,49 2002 2 2 1 7 8 69,185 4 4 NA 9,240,205 8 49.2% 6.9% 0.5% 0.5% 3.0% 0.3% 1.4% 0.5% 37.8% 100.0% 12,384,23 1,499,27 123,36 127,50 744,53 359,70 120,31 24,654,97 2003 7 9 9 0 7 13,464 4 0 NA 9,282,579 9 50.2% 6.1% 0.5% 0.5% 3.0% 0.1% 1.5% 0.5% 37.6% 100.0% 11,853,34 1,395,74 127,38 770,92 285,93 259,44 123,39 23,969,35 2004 8 9 90,306 2 1 2 2 9 NA 9,062,877 6 49.5% 5.8% 0.4% 0.5% 3.2% 1.2% 1.1% 0.5% 37.8% 100.0% 11,894,30 1,335,57 101,53 122,73 792,15 325,60 233,51 119,15 24,153,30 2005 3 4 9 8 9 5 8 0 NA 9,228,722 8 49.2% 5.5% 0.4% 0.5% 3.3% 1.3% 1.0% 0.5% 38.2% 100.0% 12,017,33 1,280,43 103,64 129,21 826,68 425,94 219,25 126,81 24,420,58 2006 0 8 0 2 2 2 4 0 NA 9,291,274 2 49.2% 5.2% 0.4% 0.5% 3.4% 1.7% 0.9% 0.5% 38.0% 100.0% 12,005,86 1,137,80 131,69 859,95 557,57 152,50 143,97 24,518,51 2007 3 9 95,075 5 2 1 6 9 NA 9,434,064 4 49.0% 4.6% 0.4% 0.5% 3.5% 2.3% 0.6% 0.6% 38.5% 100.0% 12,059,73 1,240,34 111,59 145,38 859,02 468,00 153,13 24,547,38 2008 2 4 7 7 4 0 60,739 8 NA 9,449,421 2 49.1% 5.1% 0.5% 0.6% 3.5% 1.9% 0.2% 0.6% 38.5% 100.0% 11,908,85 1,722,92 164,01 136,56 911,01 256,02 145,61 24,853,43 2009 9 3 4 7 9 0 53,924 4 NA 9,554,496 6 47.9% 6.9% 0.7% 0.5% 3.7% 1.0% 0.2% 0.6% 38.4% 100.0% 11,614,83 1,464,18 223,42 135,37 901,68 401,46 103,38 152,54 219,18 24,537,68 2010 4 1 9 9 0 3 9 5 9 9,321,592 1 47.3% 6.0% 0.9% 0.6% 3.7% 1.6% 0.4% 0.6% 0.9% 38.0% 100.0% 10,935,80 1,413,78 402,60 151,53 878,04 652,57 149,39 362,97 24,239,74 2011 8 7 9 7 7 3 74,028 3 0 9,218,996 8 45.1% 5.8% 1.7% 0.6% 3.6% 2.7% 0.3% 0.6% 1.5% 38.0% 100.0% 2012/Apr il 866,024 107,035 63,322 12,323 72,356 52,073 2,228 12,258 30,270 753,090 1,970,979 43.9% 5.4% 3.2% 0.6% 3.7% 2.6% 0.1% 0.6% 1.5% 38.2% 100.0% May 896,391 116,076 74,770 12,679 74,791 54,375 1,859 12,838 33,821 774,982 2,052,582 43.7% 5.7% 3.6% 0.6% 3.6% 2.6% 0.1% 0.6% 1.6% 37.8% 100.0% June 856,194 112,764 77,251 12,391 72,922 51,633 1,479 12,981 32,862 744,751 1,975,228 43.3% 5.7% 3.9% 0.6% 3.7% 2.6% 0.1% 0.7% 1.7% 37.7% 100.0% July 815,373 121,235 77,458 12,394 71,828 41,288 1,313 11,048 33,077 715,291 1,900,305 42.9% 6.4% 4.1% 0.7% 3.8% 2.2% 0.1% 0.6% 1.7% 37.6% 100.0% Aug 834,063 125,722 83,348 13,338 74,077 40,633 1,363 11,600 34,602 736,447 1,955,193 42.7% 6.4% 4.3% 0.7% 3.8% 2.1% 0.1% 0.6% 1.8% 37.7% 100.0% Sept 811,957 125,296 84,902 12,765 70,499 40,676 1,239 11,311 34,409 717,714 1,910,768 42.5% 6.6% 4.4% 0.7% 3.7% 2.1% 0.1% 0.6% 1.8% 37.6% 100.0% 461,05 436,47 280,67 199,04 11,765,05 2012 5,080,002 708,128 1 75,890 3 8 9,481 72,036 1 4,442,275 5 April-Sept 43.2% 6.0% 3.9% 0.6% 3.7% 2.4% 0.1% 0.6% 1.7% 37.8% 100.0% Source: Feed Supply Stabilization Organization Table 3: Feed Utilization by Ingredients and Use in Japan Fiscal Year 2011 (April 2011-March 2012, Unit: MT)) Wheat Other Grain Non-grain Ingredient Corn Sorghum Wheat Flour Barley Rice Rye Grains DDGS Total s Total Layer 224,55 193,16 3,052,050 197,495 29,256 4,160 118 0 0 5,192 9 3,705,990 2,582,086 6,288,076 48.5% 3.1% 0.5% 0.1% 0.0% 3.6% 0.0% 0.1% 3.1% 58.9% 41.1% 100.0% Broiler 208,32 1,617,793 541,766 27,858 10,740 580 8 242 7,670 36,438 2,451,415 1,440,472 3,891,887 41.6% 13.9% 0.7% 0.3% 0.0% 5.4% 0.0% 0.2% 0.9% 63.0% 37.0% 100.0% Poultry Total 432,87 229,60 10,179,96 4,669,843 739,261 57,114 14,900 698 8 242 12,862 7 6,157,405 4,022,558 3 45.9% 7.3% 0.6% 0.1% 0.0% 4.3% 0.0% 0.1% 2.3% 60.5% 39.5% 100.0% Dairy Cattle 13,95 1,322,762 13,140 58,477 28,298 53,909 44,357 3 21,932 58,723 1,615,551 1,493,674 3,109,225 42.5% 0.4% 1.9% 0.9% 1.7% 1.4% 0.4% 0.7% 1.9% 52.0% 48.0% 100.0% Beef Cattle 737,16 1,759,067 53,295 61,577 45,896 6 23,461 9,650 18,092 22,215 2,730,419 1,744,307 4,474,726 39.3% 1.2% 1.4% 1.0% 16.5% 0.5% 0.2% 0.4% 0.5% 61.0% 39.0% 100.0% Cattle Total 120,05 791,07 23,60 3,081,829 66,435 4 74,194 5 67,818 3 40,024 80,938 4,345,970 3,237,981 7,583,951 40.6% 0.9% 1.6% 1.0% 10.4% 0.9% 0.3% 0.5% 1.1% 57.3% 42.7% 100.0% Swine 217,35 151,36 48,46 2,945,574 604,165 7 59,722 70,264 4 5 82,923 48,177 4,228,011 1,801,687 6,029,698 48.9% 10.0% 3.6% 1.0% 1.2% 2.5% 0.8% 1.4% 0.8% 70.1% 29.9% 100.0% Feed, other 18,421 2,591 164 1,759 1,625 55 0 1,058 6 25,679 28,242 53,278 34.6% 4.9% 0.3% 3.3% 3.1% 0.1% 0.0% 2.0% 0.0% 48.2% 53.0% 100.0% Compound Feed Total 10,715,66 1,412,45 394,68 150,57 863,66 652,11 72,31 136,86 358,72 14,757,06 23,846,89 7 2 9 5 2 5 0 7 8 5 9,090,468 0 44.9% 5.9% 1.7% 0.6% 3.6% 2.7% 0.3% 0.6% 1.5% 61.9% 38.1% 100.0% Mixed Feed 220,141 1,335 7,920 962 14,385 458 1,718 12,526 4,242 263,687 129,171 392,858 56.0% 0.3% 2.0% 0.2% 3.7% 0.1% 0.4% 3.2% 1.1% 67.1% 32.9% 100.0% Feed Total 10,935,80 1,413,78 402,60 151,53 878,04 652,57 74,02 149,39 362,97 15,020,75 24,239,74 8 7 9 7 7 3 8 3 0 2 9,218,996 8 45.1% 5.8% 1.7% 0.6% 3.6% 2.7% 0.3% 0.6% 1.5% 62.0% 38.0% 100.0% Source: Feed Supply Stabilization Organization Japan has a feed price stabilization program, whereby the combination of a subsidy by the Ministry of Agriculture, Forestry and Fisheries (MAFF) and an industry fund help absorb sudden surges in the compound feed price. It is activated when the import cost of ingredients in a particular quarter exceeds the average import cost of ingredients in the previous year. As the following graph shows, during the most recent quarter (October-December 2012), compound feed prices increased by 4,750 yen per metric ton, from 58,500 yen to 63,250 yen. The subsidy entirely absorbed this increase. As a result of these adjustments, Japan’s feed production continues to be highly stable, with an annual output of approximately 24 million metric tons. COMMODITY REPORT RICE Production Up 1.4 Percent As a result of a slight increase in planted area and a favorable yield due to an absence of inclement weather conditions throughout the growing season, overall rice production volume increased 1.4 percent over the previous year. Post expects that the bullish 2012 wholesale price, explained in the following price section, should encourage increased planting in 2013. However, given the average yield of the past five years, total production volume is forecast downward at 8,484,000 metric tons (MT), which converts to 7,720,000 MT on a milled basis. Table 4: Japan’s Rice Production (Brown Basis) Planted Area (1,000 hectares) Production (1,000 metric tons) Yield/10 ares (kilograms) Total Paddy Upland Total Total, Milled Paddy Upland Paddy Upland 2008 1,627 1,624 3 8,823 8,029 8,815 8 543 265 2009 1,624 1,621 3 8,474 7,711 8,466 8 522 276 2010 1,628 1,625 3 8,483 7,720 8,478 5 522 189 2011 1,576 1,574 2 8,402 7,646 8,397 5 522 220 2012 1,581 1,579 2 8,523 7,756 8,519 4 540 172 *2013 1,602 1,600 2 8,484 7,720 8,480 4 530 224 Source: MAFF *FAS/Tokyo forecast Overall Consumption Remains Sluggish and Chronic Surplus Continues 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 table rice demand for 2012/13 to be nearly 8 million metric tons (MMT). The 2012 harvest of 8.5 MMT is expected to add approximately 0.5 MMT to stocks. In order to reduce the 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 (Table 2). The feed use of rice declined to 468,000 MT in 2008 and to 256,020 MT in 2009. It appeared that incentive to use feed rice, as opposed to conventional feed grains, had diminished. However, as coarse grain prices started to surge once again, feed millers returned to rice in 2010/2011 and rice utilization in feed recovered to 401,463 MT and 652,573 MT in 2011/2012. For table rice, the four- decade downward trend in consumption is not expected to be reversed, given the demographic situation depicted in Chart 3, where Japan’s population started declining in 2006, earlier than previously forecast. It is aging rapidly, and one out of four Japanese will be older than 65 by 2015. In addition, bread consumption has taken dietary share from rice as a main source of carbohydrate as Japanese tastes have increasingly shifted to more Western diets. (See Table 6.) Table 5: Annual Per Capita Consumption of Rice in Japan (Kilograms) 1962 1965 1975 1985 1995 2005 2008 2009 2010 *2011 118.3 111.7 88.0 74.6 67.8 61.4 59.0 58.5 59.5 57.8 *Preliminary Source: MAFF As a result of a reduction in rice consumption, as well as a decline in retail price over the years, household expenditures on rice have been cut by more than half during the last two decades. Table 6: Average Monthly Expenditures on Rice and Bread by Japanese Household (in Yen) 2000 2007 2008 2009 2010 2011 2012 Total Expenditure 317,328 297,782 296,932 291,737 290,244 282,966 282,966 Food Expenditure 73,954 68,536 69,001 68,322 67,563 66,904 66,904 % Food/Total 23.3% 23.0% 23.2% 23.4% 23.3% 23.6% 23.6% Expenditure on Rice 3,243 2,467 2,485 2,419 2,276 2,193 2,290 % Rice/Food 4.4% 3.6% 3.6% 3.5% 3.4% 3.3% 3.4% Expenditure on Bread 2,267 2,230 2,318 2,376 2,316 2,323 2,320 % Bread/Food 3.1% 3.3% 3.4% 3.5% 3.4% 3.5% 3.5% Source: Ministry of Management, Home Affairs, Post and Telecommunications Wholesale Price of 2012 Crop Starts above 2011 Level; Retail Price Rebounds The charts below show the wholesale and retail price trends. Following the Great East Japan Earthquake of March 2011, there was some consumer hoarding of rice for emergency household stocks. Then, the radiation scare caused by the Fukushima Daiichi Nuclear Power Plant failure and subsequent detection of radionuclides above the regulatory limit in rice harvested near the nuclear power plant drove up the wholesale price. The price for the 2011 crop stayed above 15,000 yen per 60 kilograms throughout 2012. As the farmers and farmers’ cooperatives are reportedly hesitant to release the new crop in the hope of sustaining this strong price, the wholesale price for the 2012 crop started even higher than the 2011 level. Given the larger overall volume of production in 2012, Post’s trade sources see this situation as artificial, in that there is an abundant supply of rice given the 2012 harvest size. As mentioned in the previous section, the chronic over-supply situation continues, and market forces are expected to put downward pressure on both the wholesale and retail prices. Japan Expected to Meet Import Commitment in 2012 As of February 27, 2012, four Simultaneous Buy and Sell (SBS) tenders and eleven Ordinary Minimum Access (OMA) tenders had been held for the current Japan Fiscal Year 2012 (April 2012-March 2013). Every year, Japan is expected to fulfill its WTO commitment of importing 682,000 MT (milled rice basis). Due to the tight supply of domestic rice, even though speculative in nature, Japanese importers/wholesalers have been participating in SBS tenders more actively since 2011. While SBS rice goes to retailers and foodservice users and is consumed as table rice, OMA rice does not enter the table rice market. Including the OMA rice taken out for the government reserve (refer to Table 8 below), Post estimates that, on an annual basis, between 200,000 and 300,000 metric tons are turned into rice flour and used by food processors, mainly in the confectionery sector; between 300,000 and 400,000 tons are consumed by feed millers; and between 100,000 and 200,000 tons are re-exported under food aid programs. Table 7: Historic Results of Japan’s Minimum Access Rice Tenders (JFY 1995-2012, Unit: MT) U.S. Thailand Australia China Others Total JFY 2012 (as of February 27, 2013) SBS 40,974 4,870 23,873 28,164 2,119 100,000 Share 41.0% 4.9% 23.9% 28.2% 2.1% 100.0% OMA 281,000 188,539 35,000 13,000 5,000 522,539 Share 53.8% 36.1% 6.7% 2.5% 1.0% 100.0% Total 321,974 193,409 58,873 41,164 7,119 622,539 Share 51.7% 31.1% 9.5% 6.6% 1.1% 100.0% JFY 2011 SBS 23,928 7,822 16,134 51,095 1,021 100,000 Share 23.9% 7.8% 16.1% 51.1% 1.0% 100.0% OMA 295,000 206,761 49,000 0 30,000 580,761 Share 50.8% 35.6% 8.4% 0.0% 5.2% 100.0% Total 318,928 214,583 65,134 51,095 31,021 680,761 Share 46.8% 31.5% 9.6% 7.5% 4.6% 100.0% JFY 2010 SBS 22,210 11,010 0 3,468 538 37,226 Share 59.7% 29.6% 0.0% 9.3% 1.4% 100.0% OMA 295,000 296,482 36,000 13,000 0 640,482 Share 46.1% 46.3% 5.6% 2.0% 0.0% 100.0% Total 317,210 307,492 36,000 16,468 538 677,708 Share 46.8% 45.4% 5.3% 2.4% 0.1% 100.0% JFY 2009 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% JFY 2008 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% JFY 2007 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% JFY 2006 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% JFY 2005 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 Stocks MAFF holds emergency stocks of rice, the level of which is targeted at 1 million MT. However, this does not include stocks of the OMA rice. 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. However, the Great East Japan Earthquake of 2011 triggered an effort to renew government stocks of rice, leading to an increase in stock levels in 2012. MAFF has been selling OMA rice aggressively into the feed sector for the last several years, running down the stock level from its 2006 peak. As mentioned in the previous section, Post estimates 300,000 to 400,000 metric tons of OMA rice are now going into the feed sector. Table 8: Japan’s Rice Reserve (Unit: MT) Government Commercial Domestic OMA 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 2011 0 880,000 960,000 1,840,000 2012 0 950,000 780,000 1,730,000 Source: Food Department/MAFF Minimum Access Commitment Continues into 2013 As a result of the Government of Japan’s (GOJ) tariffication of rice in JFY 2000, the Minimum Access commitment was reduced from the non-tariffied rate of 8.0 percent to 7.2 percent of total domestic consumption, from 758,000 MT to 682,000 MT (milled basis), as shown below. Table 9: Japan's Market Access Obligations for Rice (Unit: MT) Without Tariffication With Tariffication Volume Percent of Volume Percent of Domestic Consumption Domestic Consumption JFY 2000 Onward 758,000 8.0 % 682,000 7.2 % Source: MAFF WHEAT Production in 2012 Up 15 Percent Despite a slight decline in the total planted area, wheat production in 2012 increased 15 percent over 2011 thanks to favorable weather conditions, particularly in the major growing region of Hokkaido, which resulted in the highest yield since 2008. Since wheat is an alternative crop to rice in some areas, Post forecast planted areas for wheat will decrease slightly in 2013 as planted areas for rice are expected to expand. Given an average yield of the past five years, production volume is forecast to decline by 13 percent. Table 10: Japan’s Wheat Production Planted Area Production Yield (hectares) (MT) (MT/ha) 2008 208,800 881,200 4.22 2009 208,300 674,200 3.24 2010 206,900 571,300 2.76 2011 211,500 746,300 3.53 2012 209,200 855,200 4.09 *2013 208,000 742,560 3.57 Source: MAFF *FAS/Tokyo forecast Food Wheat Consumption Stays Flat While Feed Use Expands Consumption levels of food wheat have been flat in the last three decades at around 32 kilograms per capita. The Ministry of Agriculture, Forestry and Fisheries (MAFF) estimates the total food wheat demand to be 5.61 million metric tons for the 2012/13 Japan fiscal year (April 2012-March 2013). Combined with the wheat equivalent of wheat product imports of 200,000 to 300,000 metric tons (refer to Table 14-2 and 14-3 below), Japan’s aggregate food wheat demand is estimated to be 5.8 to 5.9 million metric tons. As corn prices have soared (see Overall Market Situation), wheat utilization has been expanding dramatically since 2012 and is now reaching the 800,000 MT level. As for MY2014, as the demand for corn is expected to recover (see the following CORN section), wheat consumption in the feed sector is forecast to decline. Wheat Imports by MAFF as a State Trading Enterprise MAFF operates as a State Trading Enterprise (STE) and conducts three types of imports: 1) direct purchase of food wheat; 2) SBS imports of food wheat; and 3) SBS imports of feed wheat. 1) Direct Purchase of Food Wheat MAFF purchases different types of wheat, mainly from the United States, Canada and Australia, to best meet the needs of Japanese users. Table 11: Major Types of Imported Wheat and Their Uses (Unit: MT) Brand Use FY2011 Import Volume U.S. Western White (WW) Confectionery products 852,000 U.S. Hard Red Winter (HRW) Bread and Chinese noodles 863,000 U.S. Dark Northern Spring (DNS) Bread and Chinese noodles 1,520,000 Canada Western Red Spring #1 (1CW) Bread 1,043,000 Canada Western Amber Durum (DRM) Western noodles (pasta) 260,000 Australia Standard White (ASW) Japanese noodles 905,000 Australia Prime Hard (PH) Chinese noodles 117,000 Other 8,000 Total: 5,568,000 Source: MAFF MAFF controls both producer and resale prices of domestic wheat, and the resale price of imported wheat. MAFF buys imported wheat at international prices and sells it to domestic flour millers at a markup. As shown in Table 12 below, the markup ratio fluctuated between 1.3 and 2.0 over the last two years due to volatile international wheat prices. MAFF reportedly intends to maintain this rate 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. 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, in an effort to ensure stable consumer prices, as mandated by the Food Law, the resale price at which Japanese millers bought wheat from MAFF was set once a year for each type and country and fixed at that price throughout the year. MAFF's purchase price (CIF price), however, has always fluctuated with international prices. Therefore, MAFF assumed the risk for changes in currency exchange rates and increases in import prices. The new system, which started in JFY 2007, allows MAFF to revise the resale price twice a year (in April and October) based on fluctuations in the market, resulting in a resale price that better reflects the market (FOB) price. Table 12: MAFF Purchase and Resale Prices of Imported Wheat (JFY2011-2012) (Yen/MT) Average CIF Resale Month-Year Price* (a) Price* (b) (b)/(a) Apr-11 41,266 56,710 1.4 May-11 42,390 1.3 Jun-11 39,823 1.4 Jul-11 35,048 1.6 Aug-11 33,290 1.7 Sep-11 32,987 1.7 Oct-11 30,638 57,720 1.9 Nov-11 30,079 1.9 Dec-11 28,618 2.0 Jan-12 28,458 2.0 Feb-12 30,454 1.9 Mar-12 32,026 1.8 Apr-12 31,542 48,780 1.5 May-12 29,533 1.7 Jun-12 28,703 1.7 Jul-12 33,116 1.5 Aug-12 35,444 1.4 Sep-12 34,664 1.4 Oct-12 34,533 50,130 1.5 Nov-12 35,831 1.4 Dec-12 36,716 1.4 Jan-13 NA Feb-13 NA Mar-13 NA Source: MAFF and Ministry of Finance *Average of five types: WW, HRW, DNS, 1CW and ASW The price includes 5% consumption tax. 2) SBS Imports of Food Wheat MAFF has conducted a Simultaneous-Buy-Sell (SBS) system for food quality wheat and barley since 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. MAFF holds SBS tenders under the following two categories. Category I: Prime Hard and Durum Category II: Any 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) During the most recent complete Japanese fiscal year (JFY2011), a total of about 345,000 MT of wheat (Category I and II combined) was imported as shown below. Due to relatively expensive freight rates for containers, wheat imported by containers (Category II) was small in volume. To date this fiscal year, MAFF has held fourteen tenders and approximately 260,000 MT has been imported, and by the end of the fiscal year, imports of 300,000 MT are expected. According to trade sources, the decline in imports this fiscal year is primarily due to a smaller supply of Prime Hard from Australia. Table 13: SBS Imports of Food Wheat – JFY2011 (April 2011-March 2012, Unit: MT) Country Brand Category Apr-Sept Oct-Mar Total Australia Prime Hard Category I 35,850 49,875 85,725 Category II 15,700 7,500 23,200 Australia Total 51,550 57,375 108,925 Canada Durum Category I 126,850 102,900 229,750 Canada Total 126,850 102,900 229,750 France French Category II 1,348 1,249 2,597 France Total 1,348 1,249 2,597 Other Other Category II 2,580 1,496 4,076 Total 182,328 163,020 345,348 Source: MAFF 3) SBS Imports of Feed Wheat Imports MAFF also imports wheat and barley for feed use under the SBS system. In JFY 2012, MAFF has so far conducted forty- two SBS tenders, through which 713,050 MT of imported wheat was contracted. As shown in Table 15 and Chart 6 below, imports of feed wheat have dramatically increased in the last several years as high corn prices lead feed mills to seek substitutes. Table 14: SBS Imports of Feed Wheat and Barley (Unit: MT) Wheat Barley 1st tender 600 4,000 2nd 58,550 39,785 3rd 18,470 0 4th 0 0 5th 0 4,280 6th 57,325 41,220 7th 32,000 89,000 8th 2,150 10,100 9th 62,695 37,495 10th 0 0 11th 3,000 0 12th 0 0 13th 0 37,530 14th 26,000 77,250 15th 0 0 16th 42,570 0 17th 0 0 18th 0 1,500 19th 8,760 16,000 20th 10,710 0 21st 44,690 93,500 22nd 13,050 0 23rd 51,890 36,555 24th 62,970 39,130 25th 3,530 19,400 26th 70,960 32,285 27th 6,480 0 28th 20,000 0 29th 0 7,000 30th 1,160 90,300 31st 0 0 32nd 0 0 33rd 0 0 34th 12,000 0 35th 21,530 31,030 36th 27,060 114,330 37th 36,450 38,580 38th 650 0 39th 17,800 0 40th 0 0 41st 0 0 42nd 0 0 Total 713,050 860,270 Source: MAFF As of February 13, 2013 Table 15: Feed Wheat Imports Year Ending Series: June, 2007 - 2012 Quantity Partner Country Unit 2007 2008 2009 2010 2011 2012 World MT 95548 81906 81963 136149 122609 577336 United States MT 16758 55834 36162 1486 10887 248614 Australia MT 0 3720 35982 55129 59277 231759 Canada MT 64665 6465 0 8206 39494 77674 Russia MT 0 0 1463 42059 0 19289 Ukraine MT 0 0 8356 29269 12951 0 China MT 14125 15887 0 0 0 0 Source of Data: Japan Customs MAFF allows flour millers to import wheat outside of MAFF’s control as long as they export an equivalent amount of wheat flour. Flour millers that successfully find export markets can import this so-called "free wheat" at global market prices. Table 16: Japan’s Exports of Wheat Flour Year Ending: June Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 192431 190390 194922 100.00 100.00 100.00 2.38 Hong Kong MT 116867 112730 122587 60.73 59.21 62.89 8.74 Singapore MT 29644 32324 32372 15.41 16.98 16.61 0.15 Vietnam MT 17661 18630 18313 9.18 9.79 9.40 - 1.70 Thailand MT 10886 9635 10035 5.66 5.06 5.15 4.15 Taiwan MT 8411 9348 8870 4.37 4.91 4.55 - 5.11 Malaysia MT 672 1018 939 0.35 0.53 0.48 - 7.76 United States MT 759 797 623 0.39 0.42 0.32 - 21.83 Indonesia MT 3999 3148 540 2.08 1.65 0.28 - 82.85 Korea South MT 109 84 378 0.06 0.04 0.19 350.00 Other MT 3423 2676 265 0.02 0.01 0.00 -90.1 Source of Data: Japan Customs Feed Wheat Imports Elevate Total Wheat Imports in 2012 Total imports of wheat, including wheat products, in 2011/12 increased by 8 percent to 6.35 million MT (see Table 17-3). The increase is primarily owing to a sharp increase in feed wheat imports. As corn prices soared (see Overall Market Situation), wheat utilization dramatically increased in 2012. This trend in feed wheat imports is expected continue into 2013. In MY2013, given the increase in domestic wheat production and a stagnant food wheat demand, total imports are expected to decrease. Although movements in corn prices are expected to continue to dictate imports of feed wheat, in the long term, overall wheat imports are forecast to decline slowly but steadily as Japan’s demographics change. Table 17-1: Japan’s Wheat Imports Year Ending: June Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 5280149 5627720 6116209 100.00 100.00 100.00 8.68 United States MT 3152029 3292933 3545674 59.70 58.51 57.97 7.68 Canada MT 971924 1170030 1350656 18.41 20.79 22.08 15.44 Australia MT 1081542 1146798 1197624 20.48 20.38 19.58 4.43 Other MT 74654 17959 22255 1.41 0.32 0.36 1.24 Source of Data: Japan Customs Table 17-2: Japan’s Wheat Product Imports Year Ending: June Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 162208 176054 173896 100.00 100.00 100.00 - 1.23 Italy MT 83046 89408 82955 51.20 50.78 47.70 - 7.22 United States MT 21855 21401 22504 13.47 12.16 12.94 5.16 Turkey MT 13486 16775 19587 8.31 9.53 11.26 16.76 China MT 15996 17188 18943 9.86 9.76 10.89 10.21 Korea South MT 8097 11198 10859 4.99 6.36 6.24 - 3.02 Thailand MT 6971 7859 6986 4.30 4.46 4.02 - 11.11 Greece MT 3256 2486 3082 2.01 1.41 1.77 23.96 UAE MT 2524 2968 2622 1.56 1.69 1.51 - 11.63 Tunisia MT 2696 2268 1725 1.66 1.29 0.99 - 23.93 Vietnam MT 1421 1424 1469 0.88 0.81 0.84 3.12 Other MT 2858 3080 3163 0.02 0.02 0.02 1.03 Source of Data: Japan Customs Table 17-3: Japan’s 2011/12 Total Wheat Imports (Unit: MT) Wheat Product Wheat Equivalent Wheat TOTAL a b = a x 1.368 c b + c World 173,896 237,890 6,116,209 6,354,099 United States 22,504 30,785 3,545,674 3,576,459 Stocks In the past, Japan held emergency stocks of wheat at a level equivalent to 2.6 months’ worth of the amount of food wheat imported annually. However, due to the shortened time necessary to obtain alternative supplies in case of an emergency, the stocks have been reduced to 2.3 months’ worth. For JFY2012 the government set the targeted amount of stocks at 930,000 metric tons. CORN Production Corn production is negligible in Japan. Prolonged Price Volatility Leads to Adjustment in Utilization Corn is the largest ingredient used in compound and mixed feed. The ingredient ratio is adjusted from year to year, depending on the price of various grains. As shown in Table 2, the corn utilization ratio of about 50 percent, pre-2008 price surge, was lowered to 48 percent in 2009, then to 47 percent in 2010, and with the recent price re-surge, the Japanese feed industry has been forced to once again adjust the ratio down to the 43 percent range. Given the total feed production in Japan is approximated at 24 million metric tons, a decline of 7 percent in utilization translates to a 1.68 million ton reduction in corn demand. Japan’s Feed Industry Has Overcome the Great East Japan Earthquake Devastation The Great East Japan Earthquake and tsunami of March 11, 2011 destroyed five major ports and adjacent feed mills on the Northeastern Pacific coast, the combined production capacity of which amounted to 30 percent of Japan’s total feed production. Japan’s feed industry gathered its strength and overcame this unprecedented crisis by increasing the production in Western Japan and Hokkaido and transporting feed to unaffected northwestern ports by vessel and ground transportation. The affected ports are now open, and feed mills are back in operation. On a side note, the post-disaster experience and response to expand capacities in the unaffected regions may accelerate rationalization/consolidation of the feed manufacturing industry in Japan. Table 18: Japan’s Livestock and Poultry Population (Unit: 1,000 heads) 2000 2008 2009 2010 2011 2012 2013* %2013/00 Dairy cows 1,764 1,533 1,500 1,484 1,467 1,449 1,400 79.4% Beef cattle 2,824 2,890 2,923 2,892 2,763 2,723 2,700 95.6% Swine 9,806 9,745 9,899 9,750* 9,768 9,735 9,720 99.1% Layers 140,365 142,523 139,910 139,200* 137,352 135,477 135,000 96.2% Broilers 108,410 102,987 107,141 106,400* 103,800* 106,900* 106,000 97.8% Source: MAFF (as of February each year) *FAS/Tokyo forecast The table above shows the trend in the population of Japan’s major livestock animals. The figures are reported as of February each year. According to MAFF, damage caused by the Great East Japan Earthquake to the cattle and swine population was negligible. However, approximately 4.5 million birds (broilers and layers combined) died, primarily from starvation. This is a fraction of Japan’s overall broiler/layer population, and the industry has reportedly recovered. Over the last decade, the dairy cattle population has declined by a notable 20 percent. (Refer to Japan Dairy Products Annual of October 2012.) Prices The CIF price of U.S. corn during MY2012 jumped nearly 50 percent over MY2010, and the price for the 2012 new crop that is currently being marketed jumped even higher, as shown in Table 20 below. The recent re-surge in corn prices has resulted in a significant price increase in compound feed. (Refer to Chart 1.) Table: 19: CIF Price of Feed Corn Year Ending: September Unit Value(United States Dollars) % Change Partner Country Unit 2010 2011 2012 2012/2011 World MT 230.1 316.09 337.86 6.89 United States MT 230.24 318.19 340.96 7.16 Ukraine MT 204.69 0 309.71 0.00 Brazil MT 227.4 255.47 350.63 37.25 Argentina MT 239.35 314.55 334.93 6.48 Romania MT 0 0 314.29 0.00 Serbia MT 0 0 316.57 0.00 Hungary MT 0 0 314.57 0.00 Bulgaria MT 0 0 313.87 0.00 Source of Data: Japan Customs Table 20: CIF Price of Feed Corn in Recent Months Monthly Series: 07/2012 - 12/2012 Unit Value (United States Dollars) Partner Country Unit 07/2012 08/2012 09/2012 10/2012 11/2012 12/2012 World MT 324.64 323.25 326.06 350.49 362.95 354.95 United States MT 326.95 326.69 335.54 378.19 390.16 380.78 Argentina MT 318.46 317.48 314.94 308.75 345.21 369.51 Brazil MT 0 0 308.77 326.41 344.99 344.28 Ukraine MT 317.56 309.22 302.53 318.1 0 270.74 Bulgaria MT 319.54 308.22 0 0 0 0 Hungary MT 320.14 312.03 316.13 0 0 0 Romania MT 318.33 0 0 0 0 0 Source of Date: Japan Customs Trade As shown in Table 21 below, the higher price of corn and the consequent reduction in corn utilization in feed led to a significant decline in feed corn imports. Ordinarily, Japan imports over 90 percent of its corn supply from the United States. However, since September 2012, imports from Brazil have been rising sharply and in December surpassed imports from the United States. Imports from Argentina and the Ukraine have also notably increased. 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 the 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. However, due to general public restraint on holding receptions and parties in the aftermath of the Great East Japan Earthquake, sources indicate that shipments of beer and related beverages declined 3.7 percent in 2011. Consumption of alcohol and soft drinks remained stagnant in FY2012, contributing to a decrease in MY2012 food corn imports. As the utilization of corn in feed is expected to be reduced, imports of feed corn are forecast to decrease by about 200,000 MT in MY2013. However, expected recovery in beverage consumption is expected to push up food corn imports, which could more than compensate for the decline in feed corn imports. Therefore, a slight increase in overall corn imports is expected. As for MY2014, if drought does not repeat in the United States, and if U.S. corn prices stabilize, the utilization ratio of corn in feed and feed corn imports should recover to the pre-drought level, leading to an increase in overall imports. Imports from the United States are also expected to return to the pre-drought level, as the Japanese trade reportedly prefers the quality of U.S. corn to Brazilian corn. Table 21: Feed Corn Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 11480926 10720789 10144843 100.00 100.00 100.00 - 5.37 United States MT 10205735 9767939 7647599 88.89 91.11 75.38 - 21.71 Ukraine MT 230328 0 843715 2.01 0.00 8.32 0.00 Brazil MT 491009 353503 738722 4.28 3.30 7.28 108.97 Argentina MT 514971 466401 539586 4.49 4.35 5.32 15.69 Romania MT 0 0 147837 0.00 0.00 1.46 0.00 Serbia MT 0 0 95565 0.00 0.00 0.94 0.00 Hungary MT 0 0 67800 0.00 0.00 0.67 0.00 Bulgaria MT 0 0 38235 0.00 0.00 0.38 0.00 South Africa MT 0 125048 10276 0.00 1.17 0.10 - 91.78 Slovakia MT 0 0 8097 0.00 0.00 0.08 0.00 Other MT 38883 7898 7411 0.00 0.00 0.00 0.94 Table 22: Food Corn Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 4486931 4924922 4744822 100.00 100.00 100.00 - 3.66 United States MT 4297326 4755695 4435869 95.77 96.56 93.49 - 6.73 Ukraine MT 16095 0 117038 0.36 0.00 2.47 0.00 Brazil MT 19930 49088 104636 0.44 1.00 2.21 113.16 Argentina MT 139887 99125 46510 3.12 2.01 0.98 - 53.08 Australia MT 0 233 15790 0.00 0.00 0.33 6676.82 Serbia MT 0 0 11593 0.00 0.00 0.24 0.00 Hungary MT 0 0 4500 0.00 0.00 0.09 0.00 Other MT 13693 20781 8886 0.00 0.00 0.00 0.43 Source of Data: Japan Customs Table 23: Corn Imports Total Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 15967857 15645711 14889665 100.00 100.00 100.00 - 4.83 United States MT 14503061 14523634 12083468 90.83 92.83 81.15 - 16.80 Ukraine MT 246423 0 960753 1.54 0.00 6.45 0.00 Brazil MT 510939 402591 843358 3.20 2.57 5.66 109.48 Argentina MT 654858 565526 586096 4.10 3.61 3.94 3.64 Romania MT 0 0 147837 0.00 0.00 0.99 0.00 Serbia MT 0 0 107158 0.00 0.00 0.72 0.00 Hungary MT 0 0 72300 0.00 0.00 0.49 0.00 Bulgaria MT 0 0 38247 0.00 0.00 0.26 0.00 Australia MT 0 1677 23201 0.00 0.01 0.16 1283.48 South Africa MT 0 136048 10276 0.00 0.87 0.07 - 92.45 Slovakia MT 0 0 8097 0.00 0.00 0.05 0.00 Other MT 52576 16235 8874 0.00 0.00 0.00 0.55 Source of Data: Japan Customs Stocks Japan holds emergency stocks of essential feed grains, i.e. corn, sorghum, and rice. The stock level since 2005 had been set at approximately 950,000 MT in total. The breakdown is 600,000 MT of corn and sorghum combined (roughly 90 percent corn) and 350,000 MT of rice (all out of OMA rice stocks). The level of corn/sorghum/rice stocks was lowered in 2011 to 750,000 MT (i.e. reduction in corn stocks by 200,000 MT). The stocks were utilized during the post-Great East Japan Earthquake emergency response when all the major Northeastern ports were shut down. MAFF reports 350,000 MT of grain stocks were released to feed mills in the unaffected regions by the end of April 2011. Given this experience, the Government of Japan currently aims to rebuild its corn/sorghum stocks to the level of 800,000 MT. DDGS Imports Leap to a Record High Level One of the positive side-effects of the ethanol boom in the United States is the increasing availability of a high value byproduct, Distiller’s Dried Grains with Solubles (DDGS). Japan’s imports of DDGS from the United Sates have been increasing significantly and surged further in MY2012 as corn prices jumped. The majority of these DDGS are currently used in dairy cattle feed. Acceptance of Biotechnology Although there are no official statistics, virtually all of the feed corn and a majority of the food corn Japan imports from the United States and South America are produced through biotechnology. Japan also imports roughly three million metric tons of soybeans, two-thirds of which are derived using biotechnology. Japan remains the world’s largest per capita importer of biotech food and feed. Japan has approved over 160 events for food use. New events are generally reviewed and approved within a predictable time frame through a science-based and transparent review process. However, as an increasing number of new events are expected to be introduced to the market, the pace of review and approval could become a major concern. Overall, as a country that thrives on new technology, Japanese academia, experts and trade people at large accept new agriculture-related innovations including biotechnology. Consumers in general, however, remain averse to the term which in Japanese has a connotation of “genetically manipulated.” When asked, a majority of consumers state that they would rather not purchase biotech-derived food. However, at the point of purchase, their behavior tends to differ from what they say when prompted. The sheer volume of biotech food corn Japan imports is one of the objective indicators that show the level of acceptance of the technology. (Please refer to Japan Agricultural Biotechnology Annual: JA2013, dated 6/7/12, for details.) SORGHUM Production Like corn, production of sorghum is negligible in Japan. Consumption As sorghum is a substitute for corn, its utilization ratio in the production of compound and mixed feeds fluctuates, depending on its relative price to corn and other ingredients, between 5 and 7 percent, or between 1.1 and 1.7 MMT in volume as shown in Table 2. As described in the WHEAT section, use of wheat in feed expanded significantly the past couple of years, cutting into the share of corn and sorghum in feed to a notable extent. As the price competitiveness relative to corn improved slightly, demand for sorghum in MY2013 is expected to increase. In MY2014, if drought does not repeat in the United States, and if corn prices stabilize, demand for sorghum is expected to return to previous levels. Prices Just as with corn, CIF prices for sorghum have been steadily rising. The U.S. price, in particular, increased more significantly than other suppliers in MY2012 over MY2011. Table 24: CIF Price of Feed Sorghum Year Ending: September Unit Value(United States Dollars) % Change Partner Country Unit 2010 2011 2012 2012/2011 World MT 223.66 288.56 300.76 4.23 Australia MT 224.76 304.74 308.94 1.38 Argentina MT 197.14 266.99 278.35 4.26 United States MT 238.97 304.48 340.43 11.81 Antigua & Barbuda MT 158.18 0 0 0.00 Source of Data: Japan Customs Trade Since sorghum is mainly a substitute crop, potential growth in Japan’s sorghum imports largely depends on its price relative to corn and other feed ingredients. 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. Therefore, the volume of sorghum used in feed, shown in Table 2, accurately represents the demand for sorghum in Japan: approximately 1.4 MMT in 2012. As the price competitiveness relative to corn improved slightly, sorghum imports in MY2013 are expected to increase. Assuming that drought does not repeat in the United States and that corn prices stabilize, sorghum imports are expected to return to previous levels. Table 25: Feed Sorghum Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 1388102 1261646 1244167 100.00 100.00 100.00 - 1.39 Australia MT 174815 468463 690292 12.59 37.13 55.48 47.35 Argentina MT 447791 538988 444957 32.26 42.72 35.76 - 17.45 United States MT 764997 254195 108918 55.11 20.15 8.75 - 57.15 Antigua & Barbuda MT 499 0 0 0.04 0.00 0.00 0.00 Source of Data: Japan Customs Table 27: Food Sorghum Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 254166 156292 235299 100.00 100.00 100.00 50.55 Australia MT 47653 22749 164425 18.75 14.56 69.88 622.78 Argentina MT 96798 71654 61379 38.08 45.85 26.09 - 14.34 United States MT 108964 61234 9127 42.87 39.18 3.88 - 85.09 India MT 355 173 226 0.14 0.11 0.10 30.64 China MT 133 211 136 0.05 0.14 0.06 - 35.55 Belgium MT 0 7 6 0.00 0.00 0.00 - 14.29 Thailand MT 263 264 0 0.10 0.17 0.00 - 100.00 Source of Data: Japan Customs Table 28: Sorghum Imports Total Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 1642268 1417938 1479466 100.00 100.00 100.00 4.34 Australia MT 222468 491212 854717 13.55 34.64 57.77 74.00 Argentina MT 544589 610642 506336 33.16 43.07 34.22 - 17.08 United States MT 873961 315429 118045 53.22 22.25 7.98 - 62.58 India MT 355 173 226 0.02 0.01 0.02 30.64 China MT 133 211 136 0.01 0.01 0.01 - 35.55 Belgium MT 0 7 6 0.00 0.00 0.00 - 14.29 Antigua & Barbuda MT 499 0 0 0.03 0.00 0.00 0.00 Thailand MT 263 264 0 0.02 0.02 0.00 - 100.00 Source of Data: Japan Customs Stocks Following the policy of GOJ’s 2003 policy of reducing the overall feed grain stocks, sorghum stocks have shrunk significantly. Post estimates the current government and commercial stocks to be 80,000 MT or less. BARLEY Production Japan’s barley production in 2012 remained near the 2011 level. The yield was still below average for two-row barley and naked barley due to unfavorable weather conditions, particularly rain during planting time and low temperatures in January and February. Overall production remains 20 percent lower in volume than its peak in 2008 despite a 6 percent acreage increase. For 2013, Post forecast that crop areas will remain at the 2012 level. With the average yield of the past five years, production volume is expected to increase by 7 percent over 2012. Table 31: Japan’s Barley Production Type of Barley Production 2008 2009 2010 2011 *2012 **2013 Crop Area (hectares) 35,400 36,000 36,600 37,600 38,300 38,000 Two-Row Barley Production Volume (MT) 145,100 115,800 104,300 119,100 112,000 123,500 Yield (MT/hectare) 4.10 3.22 2.85 3.17 2.92 3.25 Crop Area (hectares) 16,900 17,600 17,400 17,400 17,100 17,000 Six-Row Barley Production Volume (MT) 56,000 52,200 44,800 38,700 47,900 47,260 Yield (MT/hectare) 3.31 2.97 2.57 2.22 2.80 2.78 Crop Area (hectares) 4,350 4,350 4,720 5,130 4,970 5,000 Naked Barley Production Volume (MT) 16,100 11,200 11,800 13,700 12,300 13,900 Yield (MT/hectare) 3.70 2.57 2.50 2.67 2.47 2.78 Crop Area (hectares) 56,650 57,950 58,720 60,130 60,370 60,000 Barley Total Production Volume (MT) 217,200 179,200 160,900 171,500 172,200 184,660 Source: MAFF *Preliminary MAFF data **FAS/Tokyo forecast Consumption Aggregate consumption of barley (feed and food) is estimated to be 1.5 million MT. Roughly 80 percent of barley is consumed in the feed sector, specially compound and mixed feed for the cattle industry (beef and dairy). It is particularly important in feeding beef cattle, because it contributes to the production of high quality beef with the white marbling that Japanese consumers favor. The largest non-feed uses are for the production of shochu, a traditional distilled liquor, and beer. Other uses include miso (soybean paste) and barley tea. There is little indication that either feed or food demand will increase in the near future. In the long term, some decline in feed demand is expected as Japan’s cattle population, dairy in particular, shrinks. Prices As in the case with other feed grains, world barley prices jumped in 2011, and generally remained at the 2011 level in 2012. The price of U.S. barley, however, rose even further in 2012. Table 29: CIF Price of Barley for Feed Year Ending: September Unit Value(United States Dollars) % Change Partner Country Unit 2010 2011 2012 2012/2011 World MT 208.92 302.26 300.95 - 0.44 Australia MT 208.77 310.27 298.39 - 3.83 Canada MT 223.83 299.47 308.45 3.00 Russia MT 231.43 0 310.84 0.00 United States MT 200.67 271.12 342.48 26.32 Argentina MT 226.25 0 0 0.00 Ukraine MT 201.74 196.2 0 0.00 Source of Data: Japan Customs 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 trading system entirely, because it is a strategic alternative crop under the rice crop diversion program. Since 2009, imports from the United States have dropped significantly with the resurgence of Australia as the leading supplier due to its price competitiveness and proximity to Japan’s major barley importing port in Kyushu. As overall barley consumption, as well as Japan’s domestic barley production, is expected to stay flat, imports in MY2013 and MY2014 are forecast to remain at the 2012 level. Table 30: Feed Barley Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 1175488 1136698 1045071 100.00 100.00 100.00 - 8.06 Australia MT 872992 650136 795689 74.27 57.20 76.14 22.39 Canada MT 94262 442785 224433 8.02 38.95 21.48 - 49.31 Russia MT 2002 0 21734 0.17 0.00 2.08 0.00 United States MT 36852 9021 3215 3.14 0.79 0.31 - 64.36 Argentina MT 8185 0 0 0.70 0.00 0.00 0.00 Ukraine MT 161195 34756 0 13.71 3.06 0.00 - 100.00 Source of Data: Japan Customs Table 31: Food Barley Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 233861 222581 211768 100.00 100.00 100.00 - 4.86 Australia MT 183721 162552 163724 78.56 73.03 77.31 0.72 Canada MT 46127 52993 46270 19.72 23.81 21.85 - 12.69 United States MT 521 316 1774 0.22 0.14 0.84 461.39 France MT 3492 2786 0 1.49 1.25 0.00 - 100.00 Germany MT 0 3934 0 0.00 1.77 0.00 - 100.00 Source of Data: Japan Customs Table 32: Barley Imports Total Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 1409666 1359481 1257042 100.00 100.00 100.00 - 7.54 Australia MT 1056713 812757 959413 74.96 59.78 76.32 18.04 Canada MT 140549 495782 270763 9.97 36.47 21.54 - 45.39 Russia MT 2002 0 21734 0.14 0.00 1.73 0.00 United States MT 37414 9389 5026 2.65 0.69 0.40 - 46.47 Germany MT 70 4011 105 0.00 0.30 0.01 - 97.38 Czech Republic MT 0 0 1 0.00 0.00 0.00 0.00 France MT 3502 2786 0 0.25 0.20 0.00 - 100.00 New Zealand MT 36 0 0 0.00 0.00 0.00 0.00 Ukraine MT 161195 34756 0 11.43 2.56 0.00 - 100.00 Argentina MT 8185 0 0 0.58 0.00 0.00 0.00 Source of Data: Japan Customs Barley Imports by MAFF as a State Trading Enterprise MAFF operates as a State Trading Enterprise (STE) and conducts two types of barley imports: 1) SBS imports of feed barley; and 2) SBS imports of food barley. 1) SBS Imports of 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 2012, was set at 1.28 million MT. Bidding is held almost biweekly, to allow for more commercially viable trade. So far this Japanese fiscal year, which ends in March 2013, forty-two tenders have been held, as summarized below. Table 33: SBS Imports of Feed Barley (Unit: MT) Wheat Barley 1st tender 600 4,000 2nd 58,550 39,785 3rd 18,470 0 4th 0 0 5th 0 4,280 6th 57,325 41,220 7th 32,000 89,000 8th 2,150 10,100 9th 62,695 37,495 10th 0 0 11th 3,000 0 12th 0 0 13th 0 37,530 14th 26,000 77,250 15th 0 0 16th 42,570 0 17th 0 0 18th 0 1,500 19th 8,760 16,000 20th 10,710 0 21st 44,690 93,500 22nd 13,050 0 23rd 51,890 36,555 24th 62,970 39,130 25th 3,530 19,400 26th 70,960 32,285 27th 6,480 0 28th 20,000 0 29th 0 7,000 30th 1,160 90,300 31st 0 0 32nd 0 0 33rd 0 0 34th 12,000 0 35th 21,530 31,030 36th 27,060 114,330 37th 36,450 38,580 38th 650 0 39th 17,800 0 40th 0 0 41st 0 0 42nd 0 0 Total 713,050 860,270 Source: MAFF As of February 13, 2013 2) SBS Imports of Food Barley As noted in the WHEAT section, MAFF an SBS system for food quality wheat and barley in 2007. Plans for Food Barley SBS Tenders: As shown below, nearly 200,000 MT of food barley was imported in JFY 2011: roughly 80 percent from Australia for shochu, a distilled liquor, and beer; and 20 percent from Canada for beer and barley tea. Imports from the United States are used for beer. To date this fiscal year, MAFF has held fourteen tenders, and approximately 224,000 MT have been imported. 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 34: SBS Imports of Food Barley - JFY2011 (April 2011-March 2012, Unit: MT) Country Category Apr-Sept Oct-Mar Total Australia Category I 96,206 55,000 151,206 Category II 5,500 0 5,500 Australia Total 101,706 55,000 156,706 Canada Category I 22,588 17,000 39,588 Category II 0 40 40 Canada Total 22,588 17,040 39,628 USA Category I 0 0 0 Category II 0 1,421 1,421 USA Total 0 1,421 1,421 Other Category I 0 0 0 Category II 0 0 0 Total 124,294 73,461 197,755 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 the feed barley Japan needs can be imported through the SBS tenders with an ample allocation (1.28 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 mainly 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 prices of corn and other feed grains. The utilization of rye in feed declined from about 74,000 MT in 2011 to 24,000 MT in 2012. As import prices of rye are reportedly declining in 2013, demand is expected to recover. However, this recovery is contingent upon prices of other feed grains, particularly sorghum. 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 strong demand in the EU caused by poor Russian and Ukrainian crops, but it returned to the pre-surge level in 2009, stayed relatively flat in 2010, and soared again in 2011/12 due to reduced crop size in the EU, especially Poland. Table 35: CIF Price of Rye Year Ending: September Unit Value(United States Dollars) % Change Partner Country Unit 2010 2011 2012 2012/2011 World MT 246.85 291.23 368.77 26.62 Canada MT 230.32 323.5 365.53 12.99 Germany MT 232.98 268.48 347.61 29.48 United States MT 772.15 728.62 803.88 10.33 New Zealand MT 849.75 0 992.77 0.00 Denmark MT 0 641.49 897.92 39.97 France MT 1890.51 0 0 0.00 Poland MT 274.57 224.78 0 - 100.00 South Africa MT 1161.14 0 0 0.00 Source of Data: Japan Customs Trade Before 2007, Germany had dominated rye exports to the Japanese market because of its price competitiveness. In the peak year of 2007, total imports of rye hit 405,000 MT, out of which 400,000 MT came from Germany. Imports from Germany declined dramatically in 2008, due to the price situation as explained above. Although the price situation improved in 2009, imports did not fully recover as 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, but halved in 2012 as the price spiked again. In 2013, imports are expected to recover to the 2011 level as the price situation is reportedly improving. Table 36: Rye Imports Year Ending: September Quantity % Share % Change Partner Country Unit 2010 2011 2012 2010 2011 2012 2012/2011 World MT 101987 100294 45886 100.00 100.00 100.00 - 54.25 Canada MT 32001 56540 26168 31.38 56.37 57.03 - 53.72 Germany MT 44807 12910 18643 43.93 12.87 40.63 44.41 United States MT 814 1015 1003 0.80 1.01 2.19 - 1.18 New Zealand MT 64 0 51 0.06 0.00 0.11 0.00 Denmark MT 0 18 21 0.00 0.02 0.05 16.67 France MT 4 0 0 0.00 0.00 0.00 0.00 Poland MT 24292 29811 0 23.82 29.72 0.00 - 100.00 South Africa MT 5 0 0 0.00 0.00 0.00 0.00 Source of Data: Japan Customs Stocks Unlike corn, sorghum and barley, Japan
Posted: 29 March 2013

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