Peak Food and Japan Part 3 – Japan’s Current Situation

Rising food prices

The worldwide price rises in food are beginning to have a serious effect in Japan. Last year the government raised the price at which it sells imported wheat to millers for the first time since 1983. In November, the country was forced to use emergency funds to support noodle-makers, bakers and breweries.

Now butter is running out due to the price of animal feed increasing. The government is again raising wholesale wheat prices this month, this time by about 30%. This will further inflate the price of what little butter is available. The prices of soy beans and cooking oil have also surged, leading some restaurants to buy in bulk.

In recent analysis, Ken Worsley of Japan Economy News shows that the household spending on food has risen 2.2% from February 2007 to February 2008. These spending figures are yet to be hit by the big April rises:

CPI data showed that food prices rose 1.2% in February, while instant noodle prices shot up 17%, spaghetti was up 13.2%, and mayonnaise prices jumped 10%. We also know that further price hikes are expected from today, especially with regard to wheat-based products…

With wages not showing much upward pressure, it seems inevitable that households will tighten their spending in nonessential areas, and that could cause damage to domestic spending, which accounts for about 55% of GDP.

The effect that this tightening of spending will have on the huge restaurant industry in Japan remains to be seen. As an anecdotal example, one of my acquaintances will no longer eat her lunch at an Italian restaurant from next week, as they are due to put their prices up by 100 yen a meal.

With 86% of Japanese people fearing that the prices will continue to rise, I will be looking at the possible impacts of this situation on the country. First, I want to write about Japan’s food security, or its lack thereof.

Low self-sufficiency

Japan is the world’s largest net food importer, as it only produces around 39% of the food for its 128 million inhabitants. This statistic means that it has one of the lowest self-sufficiency rates of any of the Organisation for Economic Co-operation and Development (OECD) countries, and is 124^th in the whole world. It only produces 27% of its grain, the world’s lowest rate.

According to a BBC report on the country’s food situation:

Japan grows just about enough rice, potatoes and vegetables to feed itself.

But it has to import huge amounts of wheat, beans, fruit and most of its animal feed.

Japan is only able to produce roughly half the meat the country needs and its fishermen catch just half the fish needed.

A Japan Times article reveals that in 1960, the country produced 79% of its food, but this dropped to below 50% for the first time in 1989.

This low level of food production has placed the country in a dangerous situation, as other countries are limiting their food exports in order to protect their own consumption. I wrote about this in Part 2 – The Developing World Erupts.

Japan’s decreasing food security is often linked to changes in eating habits. Japanese people eat more restaurant and processed foods, both of which rely mainly on cheap imports. An increase in their meat consumption has required vast amounts of imported animal feed. The Japan Times report states that:

Although Japan’s self-sufficiency rate for rice, eggs, whale meat and mandarin oranges exceeds 90 percent, the rate for essential ingredients for Japanese cuisine, including soy beans, is a mere 5 percent, and just 13 percent for daily necessities like cooking oil.

While self-sufficiency in rice, traditionally thought of as the staple diet of Japan, is very high, other traditional crops such as soy beans have not fared so well. These beans are often imported from countries an ocean away, such as Brazil, where environmental destruction is wreaking havoc on the rainforests.

As Tony Boys notes in his short summary paper “Agriculture and Energy in Japan – 2000 to 2050” even the level of rice self-sufficiency is not as reassuring as it once was. Diets have undergone a major shift to being higher in wheat, meat, eggs, milk and dairy, fish and oily fats, at the expense of rice consumption.

History of trade

The diet change, and with it the change in self-sufficiency, is often explained as being due to the effects of development and the influence of Western culture. This may be the case, but trade, in particular with the United States, has also had a large role to play. The Japan Organic Agriculture Association (JOAA) has this to say on their website:

Until the 1960’s agriculture was complex and basically self-sufficient at the local level, farmers’ lives were almost self-reliant, too.

However, the USA started to export its surplus wheat to Japan in 1954, as a by-product of a military agreement between the two countries, which gave vent to an increasing amount of agricultural products exported by the USA into this country. Since 1960 the greatest emphasis has been placed on the economic growth in Japan and rural areas have been victims, supplying their labor to urban cities… “Modern Agriculture” has been supposed to be large scale, monocultural, mechanized, well-equipped, specialized, and dependent on chemicals and fossil fuels energy since then.

Tony Boys, in his detailed analysis of “Food and Energy in Japan” (2000), provides more information about this change in farming.

He tells how most of the barley and wheat production in Japan was halted in the 1960s as the United States targeted Japan with its surplus grain. This was also beneficial politically as it balanced Japan’s burgeoning exports.

Boys also shows how vegetable imports have recently been driving down prices, hurting farmers. These imports increased by 250% from 1991 to 1999 and most of the rise from 1995 was due to greater imports from China. The Japan times article mentioned previously gives some recent information about this trade with China:

According to a survey by the Japan Frozen Food Association of 31 member companies, 200,634 tons out of 315,436 tons of precooked frozen imported food in 2006 came from China. Farm ministry data show that of the roughly 778,000 tons of frozen vegetables imported that year, about 326,000 tons came from China and 285,000 tons from the U.S.

A problem with gyoza?

In March, The Daily Yomiuri reported that the importation of food from China has been dropping. This is mostly blamed on faltering consumer confidence, following the recent gyoza incident, where tainted Chinese dumplings sold in Japan were found to have made a number of people ill. It was reported that some restaurants chose to stop using imported food immediately.

However, some shops and restaurants are being forced to change suppliers away from the Chinese market. Agricultural output was down in China this winter due to unusually cold weather. Also, environmental damage, transportation fuel prices, the Chinese yuan increasing in value, local demand and, ironically, increased safety measures being implemented, have increased the costs for the Japanese importers. From The Daily Yomiuri:

An official of a major Japanese food maker said: “We can secure supplies from inventories for a month or two, but if the situation continues for longer, there may be a panic. As for boiled soybeans and other seasonal products, we may miss opportunities during the periods of highest demand.”

Japan has become reliant on cheap Chinese food, and this was only possible partly because of China’s developing status and lax safety measures. As China becomes richer and the prices of its food exports increase, there is the danger that Japan will be caught without a supply of vegetables.

A Japan Focus article by Yoshinobu Motegi shows that China could become a corn importer by 2010, which will further put pressure on other countries in the region, including Japan. As previously mentioned, the Chinese too are feeling the pressure over increasing food prices and have limited exports of rice accordingly.

The agricultural industry today

Japan used to be mostly self-sufficient, but is it possible to return to that condition in a country whose population has doubled since the 1930s, to its current 128 million?

In such a crowded country it is often assumed that a lack of agricultural land would be the limiting factor to any expansion in farming. While Boys shows that this will be a problem due to natural limits, agricultural land is still being kept fallow in Japan. As Yoshinobu Motegi explains:

Japan actually has more than 380,000 hectares of farmland nationwide that has been left fallow in efforts to control overproduction of rice. The area is 1.8 times the size of Tokyo.
Takagi at the Agriculture, Forestry and Fisheries Finance Corp. said, “We really need to reassess the subsidy system so that farmers can use their farmland to produce rice that can be used as a cheap (livestock) feed source, instead of growing rice intended as a principal foodstuff.”

However, as the BBC reported in 2006, worries are rife among farmers over the possibility of a decrease in government subsidies. The government pays farmers four times the market price for their rice and sells it on to consumers at a loss. Young people continue to leave agricultural areas as they view the industry as dead-end. As a result, many farms are left without heirs and some are sold to building developers.

The government allowed rice prices to start falling in 1995, after it was forced to start World Trade Organisation talks on rice imports, making it harder for farmers’ businesses to survive. (Boys 2000)

Japan continues to come under pressure from exporting countries to also limit its import tariffs on agricultural goods, which average 25% but are as high as 700% for rice. Australia in particular is keen to see the market opened, due to its massive farming industry.

The high agricultural subsidies and tariffs in Japan are often blamed on the perceived political benefits of keeping the disproportionately powerful rural electorate happy, but these arguments should be dismissed. As peak oil looms, protecting Japan’s agriculture is vital and removing its protection at this stage would be a disaster. Domestic subsidies are very different in nature to those export subsidies that can cause so much damage through food dumping, as seen in Part 2.

JOAA also point to other problems in Japan’s farming industry. These include damaged soil fertility from pollution and intensive farming, and the unwillingness of young people to enter into the profession. The largest group willing to take up farming as an occupation are actually retirees from the cities, further increasing the average age in the industry. (Boys 2000)

Food wastage

Growing more food in-country to reduce their dependence on the world markets and fossil fuels is vital for Japan’s future. However, in the mainstream media here, the issue of food miles is usually framed within the debate on environment effects and food waste.

For example, 50 million people could be fed with the food that Japan throws away every year, and its value is the same as Britain spends altogether on its food.

Also, excess packaging of food is a problem in a country with little space for new land-fills. Surveys show that the Japanese are the least willing to lose any packaging from their food, but changes must be made to combat the mass waste of plastic and other materials currently occurring.

Another problem that Japan faces, and that I will be returning to in a future post, is that of the loss of nutrients in the vast amounts of human waste that is washed away. As Boys says in “Food and Energy in Japan”:

Human waste from the giant Japanese conurbations of Saitama-Tokyo-Yokohama-Kanagawa, Osaka-Kyoto-Kobe and so on are simply flushed out into the oceans, symbolically represented by the image of the water and soil fertility of the American breadbasket being flushed down the toilets of the capital and out into Tokyo Bay.

Misplaced investment

Japan’s industrialized farming is not sustainable and neither is the infrastructure that brings its products to the tables of the Japanese people. As was mentioned in Part 1, the current methods of food production in the developed world are based on cheap fossil fuels, especially for farm machinery, chemical fertilizers, and transportation. For Japan there is also the issue of the refrigeration needed to move all of their vegetables by intercontinental shipping.

There is an urgent need to challenge the assumption that this cheap energy will be around in the long term. One of the problems is that, despite going through the motions of aiming to reduce emissions for the sake of slowing climate change, there is still a massive waste of investment and energy going into huge road building contracts, such as a plan to bury major highways in Tokyo.

These contracts have been prominent in the news recently, as politicians argue about whether the tax on petroleum should be spent directly on road contracts, or whether they should be put into a general fund.

These road projects cause huge carbon emissions in their construction, are often not needed, and will be redundant once people wake up to the unsustainable nature of the car as a transportation device. The new roads are a stark example of the short-termism common in a lot of government investments here, built mainly to fill the wallets of the powerful construction companies.

If this money was invested not in road-building, but in sustainable, fossil-fuel free agriculture, a great difference could be made to Japan’s future. Japan could lose their reliance on imports, making them partly ready for the forthcoming oil crisis.

However, a suitable infrastructure needs to be built now. If we wait for the price of oil to rise much further, then the costs of this implementation will spiral out of reach. As Boys says, with reference to peak oil:

That also means that the ability to manufacture solar (PV) panels, troughs or water heaters, wind power generators, wave power generators, geothermal power generators, fuel cells and other such “renewable energy” equipment in any quantity is effectively nil.

Economy not peak oil proof

It is not only wasted investment which is damaging Japan’s chances of a bright future. The country’s economy is currently based on the exportation of cars and electronic goods, and the importation of raw materials, including food and energy. It is at the mercy of currency fluctuations and the economic well-being of the United States, among others.

The strength of the yen is keeping the importation of food and energy affordable for now, but it is also damaging the country’s main source of income. For example, Tokyo Steel announced this week that it could no longer afford to export its girders due to the price of steel and the strength of the yen. Exports made up 20% of the company’s sales.

Japan’s current economy is not suitable for a post peak-oil world, and this situation is not helped by recent trends showing that consumer power is dropping relative to economic growth. This is due to growing inequalities in the labour market, as an article from The Wall Street Journal reported earlier this year:

One reason Japan’s rebound hasn’t gotten traction: companies’ growing reliance on temporary workers, who earn less — and spend less — than full-time employees. The shift in hiring can be seen at companies like Hino Motors Ltd. The truck-making unit of Toyota Motor Corp. is paying record dividends this year. But it also has been filling thousands of factory jobs with temporary workers, who start at $10 an hour and get few benefits.

Attitudes to change

It is expected that in the post-peak oil world, the countries that will suffer most are those who have neither food nor energy to export, such as Japan. In Boys’ assessment from 2000:

Current world and national trends suggest that it would be prudent for Japan to effect a series of key policy changes in the very near future if she wishes to prevent mass starvation and ecological devastation in the first half of the 21st century…

Japan’s trade surplus could be wiped out remarkably quickly. The inability to import needed quantities of essential goods could see Japan caught in an unstoppable downward recessional spiral.

Despite this, according to Andrew Dewit, professor of Economics at Rikkyo University in Tokyo, in 2005, media coverage usually referred to short term changes rather than the outlook for a post-peak oil world:

Japan’s mainstream media has studiously avoided addressing the issue of peak oil, even though the country has essentially no oil reserves.

I will look more at the consequences of this failure to act in a later post. For now it is interesting to look at the major political parties’ plans for increasing self-sufficiency.

Politicians, at least rhetorically, have some sense of the importance of food security. In 1996, Japan’s then agriculture minister Takao Fujimoto made a speech at the World Food Summit:

..I would like to stress that food, which is the basis of human existence, and agriculture, which is carried out in harmony with our natural environments, should both be considered not only from an economic point of view, but also from multiple viewpoints that take into account different values in our life…

He went on to stress that it was important for importing countries to move towards domestic consumption and that exporting countries “should be responsible for maintaining stable food supplies to importing countries even during periods of poor harvest.”

However, the food self-sufficiency of Japan has not changed drastically since this speech was made 12 years ago. The ruling Liberal Democrat Party (LDP) had aimed towards 45% self-sufficiency by 2010, but this target has now been pushed back to 2015.

The major opposition party, the Democratic Party of Japan (DPJ) has similar targets, saying on their website:

By means of a sweeping shift of agricultural policy, we will first raise Japan’s food self-sufficiency from 40%, its current level, to 50% within 10 years of forming the DPJ administration, and continue thereafter to raise it to at least 60%.

Even the Japanese Communist Party’s (JCP) recently announced four-point plan, “for the revitalization of Japan’s agriculture”, only aims to increase food production levels up to 50%.

It is likely that with peak oil looming, none of these plans are aiming sufficiently high enough. Before imports become untenable due to rising food and shipping costs, there somehow needs to be a revolution in Japanese farming. This will need to be coupled with a change away from the massive urbanisation which has dominated demographic shifts Japan for so long.

In Part 4 I will be looking at what the future holds in store for food production and consumption in a post-peak oil world.