Abstract
In BMI' s Japan Agribusiness Report for Q3 2009, we introduce the new Soybean
Outlook. Soybeans are
an important part of the traditional Japanese diet
and have been cultivated in the country for centuries.
Now, however, as
with most foodstuffs, Japan is reliant on imports to meet demand.
Japan' s
soybean production in 2008 of 225,000 tonnes was sufficient to meet only
around 5% of demand.
The Ministry of Agriculture, Forestry and Fisheries
(MAFF) is hoping to decrease this overwhelming
reliance on imports by
encouraging the production of more soybeans at home. In 2007, the ministry set
a
target of raising annual production to half a million tonnes by 2017.
This would be enough to meet around
half of Japan' s demand for soybeans
for direct food consumption. The country would still be totally
reliant on
imports for crushing to produce oil and meal.
The problem with domestic
soybean production, as with much of Japanese agriculture, is that in its
current form, it is not profitable. Costs are high and farms are small,
restricting economies of scale. Even
in Hokkaido, where the country' s
largest soybean farms are, the average farm size is a mere 1-2 hectares
(ha). Unless there is a major shake up in production techniques with the
development of large-scale,
commercial farms, the government will have to
continue pouring funds into subsidies if it is to have any
hope of
production reaching its modest target.
With the rapid rise in world food
prices in 2007 and 2008 followed by the fierce recession in Japan,
farming
has been pushed up the agenda, both for policymakers and the public. Job
losses in the cities and
disillusionment with the uncertainties of life in
a modern, market economy has spurred a revival of
interest in farming
among the young.
The majority of farmers in Japan are now well into old
age, with almost 50% aged over 70 and a further
20% aged between 60 and
70. This is a serious risk to the future health of the sector, at least in its
current
form. The government is hoping that rising unemployment in the
cities will see more young people
choosing the farm life. Funds have been
allocated to retraining unemployed workers in agricultural skills.
In the
local press, stories have begun to appear following the fortunes of young
urbanites who have given
up the comforts of city living and moved into the
farming sector. With Japan' s economy forecast by BMI
to contract 6.1% this
year, it is understandable that interest in the perceived security of farming
would
rise.
While an influx of new blood can only be good news for the
sector, what agriculture in Japan really needs
is a whole new system of
large efficient farms if it is to ever wean itself off government hand outs
and
become competitive internationally. Whether interest in farming will
last beyond the economic slowdown
also remains to seen.
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