Vegetable Imports Approaching 20% of Total Domestic Supply The taste of imported vegetables has become more familiar to the palates of Japanese consumers in recent years. According to the Ministry of Finance, vegetable imports reached 2.71 million tons in 2001, declined 11% the following year due in part to the discovery of residual pesticides in Chinese frozen spinach, and then rebounded 4.9% to 2.53 million tons in 2003. China accounted for roughly half of the total. Figures for the January to September 2004 period came to 1.93 million tons, a pace about to equal that in 2003. Fig.1 Japan's Vegetable Imports Sources: Ministry of Finance, "Trade Statistics" The total growing area for domestic vegetable production declined approximately 20% between 1990 and 2002, in part because farmers both declined in numbers and increased in average age. Shipments of domestically grown produce in 2003 totaled 12.70 million tons, or 83% of total shipments in 1
the country. Chilled vegetables accounted for 37% of imports in 2003 and frozen vegetables 28%. Other items included bamboo shoots, sweet corn, mushrooms and other prepared vegetable products excluding tomatoes (16%), salted products such as cucumbers, gherkins, ginger, lotus root, shallots and other vegetables (8%), prepared tomato products like tomato puree, tomato juice and ketchup (7%), dehydrated vegetables including shiitake mushrooms, daikon radishes and cloud ear mushrooms (2%), pickled products from ginger, cucumber and other vegetables (1%) and sweet potatoes (0.6%). Imported Vegetables Sink Roots in Japanese Market Imported fresh and chilled vegetables had previously been used to supplement domestic products in times of bad harvests and between seasons. But imports are now commonly conducted year-round, regardless of domestic crop yields, leading to direct competition with domestic produce owing to improved quality and greater variety. Mass merchandisers, restaurant chains and other businesses are importing vegetables to ensure stable supplies. Some companies are even dispatching production engineers to production sites in China, South Korea and elsewhere, resulting in produce that not only complies with Japanese regulations but also meets specific Japanese preferences. Imports of fresh and chilled vegetables reached a record 1.0 million tons in 2001, then declined roughly 20% to 809,000 tons in 2002, the year when pesticides were discovered in Chinese frozen spinach. But high prices for domestic produce in the following year prompted imports of fresh and chilled vegetables to rise 14.6% to 927,000 tons in 2003. Moreover, poor weather brought about a domestic supply shortage in 2004, which led to rapidly increased imports of cabbage, lettuce and other vegetables toward the end of the year. Import volumes were particularly high for onions (243,000 tons in 2003), pumpkins 2
(140,000 tons) and broccoli (68,000 tons), as well as burdock, ginger, green onions, carrots and turnips, in 2003. Pumpkin from New Zealand, Mexico and Tonga accounted for 45% of total shipments in Japan in 2003; imported ginger and garlic mostly from China held a near-70% share; imported broccoli, 85% of which was from the United States, had a 42% share; asparagus from primarily Australia, the Philippines and Mexico accounted for 40%; green peas almost entirely from China held a 40% share; onions 20%; and green bell peppers 15%. Taro and lotus root are among the many other imported vegetables now sold in supermarkets. Broadening culinary preferences have also whetted Japanese consumers' appetites for once-unfamiliar items such as chicory, shallots, beets and salsify, which are now being imported, albeit in small amounts. Fig.2 Percentages of Major Items Imported (2003) HS Code Item Shipments Imports Import Major Exporters (%) (t) (t) Percentage (%) 070190000 Potatoes 2,394,000 5 0.00% China (100) 070200000 Tomatoes 668,100 4,280 0.64% S. Korea (75.1), Canada (12.2), U.S. (12.0) 070310011 Onions 1,013,000 233,486 19.11% China(57.1), U.S.(20.3), New Zealand (14.5) 070310012 2,736 China(47.3), Thailand (18.6), New Zealand (10.0) 3
070310013 3,205 China(60.9), Thailand (13.0), Taiwan (10.9) 070320000 Garlic 11,400 27,639 70.80% China(99.8) 070390010 Green onions 394,900 47,458 10.73% China(99.7) 070490010 Broccoli 91,200 68,009 42.72% U.S.(83.7), China(14.6) 070490090 Cabbage 1,182,000 35,164 1.80% China(94.6) - Chinese cabbage 728,200 070511000 Head lettuce 509,100 3,369 0.84% U.S.(84.9), Taiwan (14.1) 070519000 Other lettuce 971 U.S.(89.0), Taiwan (9.4) 070610000 Carrots 571,100 - Turnips 140,600 44,929 5.93% China(74.5), Netherlands (13.2), Australia (8.9) 070690010 Burdock 138,800 57,166 29.17% China(83.7), Taiwan (16.0) 070690090 Daikon 1,330,000 4,637 0.35% China(98) 070700000 Cucumber 571,300 2,374 0.41% S. Korea (100) 070810000 Green peas 18,400 12,225 39.92% China(99.7) 070920000 Asparagus 24,400 17,850 42.25% Australia (21.6), 4
Philippines (20.3), Mexico (19.2) 070930000 Eggplant 292,300 1,026 0.35% S. Korea (100) 070960010 Green bell pepper 128,600 22,556 15.30% S. Korea (63.1), Netherlands (24.1), New Zealand (12.5) 070960090 Other bell peppers 678 S. Korea (79.7), New Zealand (16.3) 070970000 Spinach 250,000 0 0.00% - 070990091 Pumpkins 172,100 139,822 44.83% New Zealand (62.6), Mexico (15.2), Tonga (15.1) 071490210 Taro 124,800 29,713 19.23% China(100) 091010231 Ginger 22,600 49,428 68.62% China(96.5) (Source) Prepared based on Ministry of Agriculture, Forestry and Fisheries press release, "Area Under Cultivation, Harvest Volumes, and Shipment Volumes for Vegetables in 2003" and Ministry of Finance "Trade Statistics". (Note1) The annual production period for carrots and turnips differs, so import volumes for these items are from April to March and based on "Import Percentages for Major Products (2002)" prepared by the Ministry of Agriculture, Forestry and Fisheries. (Note2) Import volumes for daikon are from "Other root vegetables." 5
Most Frozen Vegetables Now Imported Frozen vegetables including potatoes, green soybeans and taro are now supplied almost exclusively from overseas sources. The trend has been encouraged by price competitiveness due to the stronger yen, large demand from fast-food, family-style, etc. restaurants in the food service industry and the popularization of large refrigerators and microwave ovens. Imports of frozen vegetables peaked at 809,000 tons in 2001, dropped 7.6% to 748,000 tons in 2002 and declined another 5.1% to 709,000 tons in 2003. The previously mentioned problem with pesticide in frozen spinach hurt imports of Chinese frozen vegetables overall and the impact is still being felt. Major frozen vegetable imports in 2003 included potatoes (239,000 tons), green soybeans (60,000 tons), taro (49,000 tons), sweet corn (48,000 tons) and strawberries (29,000 tons). Kidney beans, mixed vegetables, broccoli, green peas, spinach and burdock were also imported in significant quantities. Volume between January and September 2004 came to 568,000 tons, leading to estimates that the full year would recover to the 2002 level. Fig.3 Import Volumes of Frozen Vegetables (2003) Item Imports (t) Potatoes 239,250 Green soybeans 60,711 Taro 49,071 Sweet corn 47,799 Strawberries 29,418 6
Kidney beans, etc. 29,233 Mixed frozen vegetables 28,756 Broccoli 18,585 Green peas 17,857 Other beans 16,315 Spinach, etc. 8,358 Burdock 7,618 Chinese yams, etc. 2,762 Other frozen vegetables 153,547 Total 709,280 (Source) Ministry of Finance, Trade Statistics (Note) Categories from Major Vegetable Import Trends (Agriculture & Livestock Industries Corporation) According to the Japan Frozen Food Association, domestic production of frozen vegetables amounted to roughly 100,000 tons in 2003, just one-seventh of import volume. This included 22,000 tons of potatoes, 14,000 tons of pumpkins and 9,000 tons of corn kernels. Other produce grown domestically in significant amounts included carrots and spinach. The rising trend in imported vegetables has left domestic vegetable prices sluggish, striking a stinging blow to Japanese vegetable farmers. The Ministry of Agriculture, Forestry and Fisheries has been pushing reforms to help stimulate domestic production. It has also contracted production for fixed volumes, prices, 7
deliveries and quality, aiming to reduce production and distribution costs by around 30%. The government has also conducted a program to help stabilize agricultural management and has introduced a system to encourage the production of value-added products, such as regional delicacies and organic vegetables. But these special measures are slated to finish by 2005, so it is unclear if they will have a lasting effect on efforts to slow the trend toward vegetable imports. Domestic and overseas growers appear to be poised for a serious food fight. Fig.4 Production Volumes of Frozen Vegetables (2003) Item Production volume (t) Other potatoes 22,239 Pumpkins 14,271 Corn kernels 8,702 Spinach 7,342 French fries 6,855 Carrots 6,164 Corn-on-the-cob 4,052 Fruits 2,212 Taro 1,654 Other vegetables 26,608 Total 100,099 (Source) Japan Frozen Food Association 8