Japan's Food Consumers
Japan's Food Producers
Crops and Livestock
Japan's population and gross domestic product (GDP) are both roughly 40 percent as large as U.S. levels. GDP per person is very high, and Japan's consumers are quite wealthy by world standards. When Japan's higher living costs are taken into account, income per person is 70-80 percent of the U.S. level.
There are key differences between the Japanese and U.S. societies. Japan has a shrinking labor force. Its population is getting older because the birth rate is very low. Strict policies deter immigration. Japanese statistics indicate that population growth turned negative in 2010, and population is projected to continue to shrink. Women's labor force participation has been growing, but remains lower than in the United States. In general, Japan's workers are working shorter hours than in the past. The paucity of labor makes production in Japan expensive, and has forced Japan's firms to investigate strategies that use less Japanese labor, including further automation and moving production to other countries.
Current economic conditions in Japan still reflect the impact of a growth "bubble" in the late 1980s. After the bubble burst in 1990, industrial firms, financial firms, and households all found that their portfolio of speculative investments in real estate and stocks was suddenly worth much less than during the bubble. The value of real estate and stocks continued to decline in the 1990s. Most households are solvent, due to the traditionally high savings rate of Japan's population. However, a significant share of Japan's industrial and financial firms was heavily burdened by debt, which was often incurred through the purchase of high-priced assets during the bubble period. The assets were worth much less after the bubble burst. The value of the debt fell slowly, in part, because Japan has had very little inflation in its currency and, since 1999, has experienced deflation (falling prices). If the current deflation continues, the cost of past borrowing will grow even larger. For example, 1,000 yen borrowed in 1989 could grow to the equivalent of 1,100 yen today, because the yen is more valuable (within Japan) today.
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Japan's government has tried to keep industrial and banking companies from collapsing, with increasing success in recent years. Banks and industrial companies, however, were slow to invest in new projects, and economic growth was meager through 2002. Government attempts to stimulate growth with public-sector spending helped increase the government's accumulated deficits, so that in 2009 public debt amounted to over 185 percent of the value of Japan's GDP. Japan's economy grew in 2003-07 (although deflation persisted), and signs of increased investment encouraged hopes that the growth could be sustained. However, Japan entered a recession in 2008 as a result of the global financial crisis. The recession deepened in 2009, but growth resumed in 2010.
The yen's value is a key determinant of the prices of imported foods in Japan and, thus, of imports' ability to compete in Japan's markets. Before 2008, the yen was as strong as 94 yen per U.S. dollar (in 1995) and as weak as 360 yen per U.S. dollar (the fixed rate prior to 1970). The financial crisis in 2008 led to unprecedented strength in the yen, which averaged 79.7 yen/dollar in 2010. This allowed Japanese to purchase more U.S. agricultural products for the same amount of yen. The yen began to weaken against the dollar in early 2013, making U.S. imports more expensive in Japan. For 2013 as a whole, the dollar’s average value against the yen was 97.6. Trade barriers are another major determinant of food prices. Japan maintains high protection for some commodities and has not been a forceful proponent of agricultural trade liberalization. The country's declining population means that consumption is unlikely to grow much from current levels. Production could fall, however, if trade barriers are lowered, leading to greater agricultural imports in the future.
Densely populated and wealthy, Japan does not have enough farmland to support both direct human food use and animal feeding. As a result, Japan has been one of the world's largest net importers of agricultural products, beginning with raw materials (e.g., cotton and rubber) and feedstuffs (e.g., corn and soybeans), but increasingly turning to consumer-ready food products, such as meats, vegetables, fruits, processed foods, and beverages.
Japan's Food Consumers
Food consumption patterns in Japan are distinct in some ways but also share many characteristics with consumption patterns in other developed countries. Japan's people eat less than Americans: caloric consumption per person per day is almost 1,000 kilocalories less in Japan than in the United States, according to the Food and Agriculture Organization of the United Nations. Still, the Japanese spend more of their income on food and beverages than Americans. High food spending reflects higher food prices in Japan, and also the desire among consumers for a varied, high-quality diet. Japan's people eat at home and in restaurants but also purchase food in convenience stores. Workdays and commute times are often long, and picking up lunch or snacks in convenience stores is very popular. Many convenience stores are open 24 hours a day. In addition, vending machines offering a variety of foods and drinks are widely available, so that consumers can find something to eat anytime. In recent years, the government has eased operating-hour limits and size restrictions for retail food outlets. Partly in response to these regulatory changes and the competition from convenience storesthe pace of change in Japan's supermarket industry has picked up. The traditional Japanese diet emphasizes rice, fish, eggs, vegetables, and soy products. Culturally, Japan identifies a divide between west (Osaka and south) and east (Tokyo and north), which leads to some differences in traditional food preferences. While traditional food preferences persist, the desire for variety is also strong, and Japan has a reputation for embracing new foods. The Mediterranean diet popular in the late 1990s, for example, drove imports of wine, olive oil, cheese, and pasta to very high levels, which have been sustained. Although personal incomes have stagnated along with the economy, Japan's consumers still are willing to pay for upscale food products, such as Wagyu beef--heavily marbled beef from Japan's traditional draft animals. The average bargain sale price for Wagyu sirloin was $44 per pound in 2013; the price for Wagyu chuck was over $22 per pound. Even with these high prices, Japanese consumption of Wagyu beef is relatively stable at about 160,000 metric tons.
Japan's Food Producers
Japan has a high number of farms on a relatively small area. In 2010, Japan counted 1.63 million commercial farms (defined as farming more than three-quarters of an acre or with annual sales of more than 500,000 yen [$5,695]). Commercial farms managed an average of only 1.96 hectares (ha), or 4.8 acres. Land ownership is even more fragmented than land management. About 6 million people live on these farms, and among them, 1.8 million are engaged more in farming than in other activities. Of these 1.8 million individuals, more than 45 percent are over age 70 and 75 percent are over age 60. Over 40 percent are female.
About 250,000 men under age 60 engage mainly in farming and are designated 'core' farmers. Since the number of farms operated by a woman alone is small, it is possible to look at this number--male core farmers under age 60--as an indicator of the number of farm operations in Japan with farming as the main focus of labor in the household and which expect to be in operation in the coming decades. These households likely have major parts of Japan's 4.7 million ha of farmland at their disposal, either as owned or rented farmland or as farmland on which they perform contract farming. If they farmed all cultivated land in Japan, each farm household would farm about 18.6 ha (46 acres). Since many elderly and part-time farmers, noncommercial operations, and female core farmers also cultivate some of the available land, 18.6 ha is a large overestimate of current average farm size. The actual average farm operation in Japan is likely to farm an area closer to 2 ha than to 18.6 ha (i.e., to 5 acres rather than to 46 acres).
Households farming rice, wheat, barley, or forage crops have often found it advantageous to contract out some or all farm operations. It is a financial burden to own equipment to prepare, cultivate, and harvest small fields. Elderly farm households or households in which the adults have full-time jobs outside farming may find the labor demands of farming to be particularly onerous. A variety of arrangements exist for these farm households. Farmers can contract with specialists to perform individual tasks, such as planting, or to carry out all tasks. Cooperative farm ventures, in which one farmer is designated to carry out the operations for a group or in which a specialist is hired, are common but have met with varying degrees of success. The sale of farmland is uncommon.
Farms are dispersed throughout Japan, which has most of its land base on four major islands: Honshu, Kyushu, Shikoku, and Hokkaido. Japan stretches as far from north to south as does the U.S. East Coast and has similar climatic variations. Farming in the northern island of Hokkaido is larger scale than in the rest of Japan and reflects the influence of government planning in the late 19th century, which included assistance from U.S. farm specialists.
Crops and Livestock
Rice is Japan's largest crop, and rice paddies account for 55 percent of Japan's farmland. However, rice is only about one-fifth of total agricultural output value and, in 2008, over 30 percent of the paddy area was diverted away from the production of rice for food use. Wheat, barley, and soybeans (all for food use) are grown both in upland fields and in diverted rice paddies. Corn is widely grown for use as fodder but almost never for harvested grain. Other field crops include sugar beets and peanuts. The important vegetable sector occupies upland fields, diverted paddies, and greenhouses. Fruit orchards--apples and pears in the north, citrus in the south, as well as other fruits throughout the country--are also major crops. Sugarcane production (in Okinawa and nearby small islands), a large floriculture sector, and tea production are also significant components of Japan's agriculture. In the 2005 census, 385,000 ha (over 950,000 acres), or 8 percent of cultivated land was classified as abandoned.
Livestock production is about 30 percent of the gross value of Japan's agricultural output. In value terms, dairy is number one, followed by hogs, beef cattle, layers, and broilers. Except for egg production, which is more than half as large as U.S. egg output, all the livestock industries are much smaller in volume than U.S. industries.
On a per-hectare basis, Japan's farmers use several key inputs more heavily than U.S. farmers. Fertilizer use has been declining in Japan but is still high compared with other parts of the world. Phosphatic fertilizer application in 2010, for instance, was over four times higher per hectare in Japan than in the United States. Nitrogenous fertilizer application was 50 percent higher in Japan, and potassium fertilizers were applied almost twice as heavily in Japan. Data show that usage of most individual insecticides, herbicides, and fungicides tends to decline over time. However, Japan uses much more pesticide per hectare than the United States—ten times as much insecticide, twice as much herbicide, and almost 50 times more fungicide, in 2007. Farmers balance the advantages of chemical use in a humid climate against strong consumer sentiment to minimize or eliminate chemical use.
Use of agricultural implements is also high in Japan relative to the United States. In 2007, the value of machinery and equipment in agriculture in Japan was estimated at $21 billion, not much less than the $27-billion estimate for the United States. In 2005, the number of tractors used in Japan per 100 ha was 41, compared with 3 in the United States. Similarly, Japan had 208 combine harvesters/threshers per 1,000 ha, compared with 2 in the United States. While the machines in Japan are much smaller than machines in the United States, in general, the heavy investment in small machines represents a large financial outlay and has helped make Japan's agriculture more expensive than U.S. farming. The number of agricultural implements has been declining fast in Japan, except for the largest sized machines. The increase in large tractor and harvester use reflects the increased consolidation of rice farming operations in the hands of contract specialists.
Japan has a large farm chemical and farm machinery manufacturing sector. In farm machinery, in particular, Japan's firms are globally competitive in exports. Similarly, Japan's seed industry competes globally, and its animal feed milling sector is highly advanced.
Japan has very large milling and crushing sectors that polish rice, mill wheat, crush oilseeds, refine sugar and corn syrup, and mix feeds. These sectors have not been fully exposed to international competition because of border protection for simply processed products, such as milled rice, wheat flour, and vegetable oil. While machinery for these processing industries is freely importable and Japanese production of milling equipment is extremely competitive, the processing industries have not faced as much pressure to lower costs through increased scale of operation as they would have without the border protection.
Japan's beverage industries are very large and increasingly seek to compete in world markets. Beer and whiskey producers rely mostly on imported ingredients, while brewers of sake and sochu (an alcoholic beverage using fermented grain or potatoes) often use rice and other Japanese products as their feedstocks. The large soft drink industry is quickly moving beyond cola drinks. Bottled cold tea and coffee drinks and bottled waters have become very large segments of the beverage market. Sweetener for the soft drinks comes from high-fructose corn syrup based on imported corn and domestic potatoes and sweet potatoes, from domestic and imported sugar, and from artificial sweeteners
Understanding the longer term outlook for Japan's agricultural production, trade, and policy is critical to the development of USDA's baseline projections for U.S. agriculture. For more information on the outlook for Japan's agriculture and trade, especially reports from USDA's Foreign Agricultural Service in Tokyo, see the Links section on the Readings page. Note: Table in spreadsheet.
For Key statistics on Japan's economy, agriculture sector and trade see all data 2000-2013.