JETRO AGROTRADE HANDBOOK 2007

Contents Japan’s Agricultural, Forestry and Fisheries Trade in 2006 1. Overview . 1 2. Exports . 2 (1) Overview (2) Exports by Sector (3) Exports by Destination Country/Area (4) Major Export Items 3. Imports 9 (1) Overview (2) Imports by Sector (3) Imports by Supplier Country/Area (4) Major Import Items Table Contents Table 1: Exports / Imports of agricultural, forestry and fisheries products (in dollar terms) 2 Table 2: Exports / Imports of agricultural, forestry and fisheries products (in yen terms) .2 Table 3: Exports of agricultural, forestry and fisheries products .3 Table 4: Exports of agricultural products 4 Table 5: Exports of fisheries products 5 Table 6: Exports of forestry products 5 Table 7: Exports of agricultural, forestry and fisheries products (by destination country/area) .6 Table 8: Major export items 8 Table 9-1: Export items increase/decrease (based on value) 9 Table 9-2: Export items increase/decrease (based on quantity) 9 Table 10: Imports of agricultural, forestry and fisheries products .10 Table 11: Imports of agricultural products .11 Table 12: Imports of agriculutural products <by supplier country> .12 Table 13: Imports of fisheries products .13 Table 14: Imports of fisheries products <by supplier country> .13 Table 15: Imports of forestry products 14 Table 16: Imports of forestry products <by supplier country> .14 Table 17: Imports of agricultural, forestry and fisheries products <by supplier country> 15 Table 18 : Major import items .16 Table 19-1: Import items increase/decrease (based on value) .18 Table 19-2: Import items increase/decrease (based on quantity) .18 Explanatory Notes • Since April 1996, Japanese trade statistics have been issued on a yen basis only, so the dollar conversion rate and dollar-based trade values were calculated by JETRO based on the official rate announced by the customs director. • Unit abbreviations in the general statement and statistics indicate the following. NO . Number of items TH Thousands KG . Kilograms 1 Japan’s Agricultural, Forestry and Fisheries Trade in 2006 1. Overview In 2006, Japan’s trade (in dollar terms) consisted of exports totaling $647.29 billion (up 8.2% y/y) and imports amounting to $579.29 billion (up 11.7% y/y), both far exceeding the record all-time highs of the previous year. The trade surplus in 2006 declined for two straight years. Exports of agricultural, forestry and fisheries products in 2006 totaled $3.87 billion (up 6.2% y/y), or ¥449.7 billion (up 12.2% y/y), with their ratio to Japan’s total exports (in dollar terms) declining to 0.60% from 0.61% in 2005. Imports of agriculture, forestry and fisheries amounted to $67.86 billion (down 0.6% y/y), or ¥7.89 trillion (up 5.4% y/y), with their share of total imports (in dollar terms) declining to 11.7% from 13.2% in 2005. Japan’s trade in agricultural, forestry and fisheries products continued to be in large structural deficit as Japan is significantly dependent on acquiring agriculture, forestry and fisheries products from overseas. However, a recent increase in export of agriculture, forestry and fisheries products slightly improved trade imbalance in this field from a 1:20 ratio of exports to imports (in dollar terms, the same applies to the following figures) in 2004 to 1:19 in 2005, and 1:18 in 2006. The background of such an increase in exports lies in the aggressive stance of producers and municipalities throughout the nation targeting at an increased popularity of Japanese food overseas and increased demand for Japan’s food products caused by a general increase in income in other countries. The popularity of Japanese food is becoming increasingly established in the U.S. and same popularity is growing more than ever in England and France. Even for wealthy Chinese people including overseas Chinese and the rich in Russia, Japanese food is becoming popular for its delicious taste and healthiness. With this positive tail wind, in March 2005, the former Koizumi administration decided, as a cabinet decision, to formulate a basic plan for foods, agriculture and farming villages. In this plan, the “Doubling of exports for agricultural, forestry and fisheries products” was set in motion in which exports amounting ¥300 billion in 2004 would double over a five year period finishing in 2009. The Abe administration took over the plan and accelerated it to aim at ¥1 trillion by 2013. In May 2007, the “Comprehensive Export Strategy for Japan’s Agricultural, Forestry, Fisheries and General Food Products” was agreed at the general meeting of the National Committee for Export Promotion of Agricultural, Forestry and Fisheries Products (Established in April 2005), which consisted of government officials and private 2 companies’ managers. The strategy included the improvement of the export environment through negotiations with the destination countries into the acceleration of the quarantine procedures and introduction of GAP (Good Agricultural Practice) methodology at the production stage, strategic export promotion through the encouragement of an intellectual property strategy and brand strategy by item type and spreading international awareness of Japanese food and food culture, showing that we are entering into a stage where Japan’s exports of agricultural, forestry, fisheries and general foods will be vigorously promoted. Table 1: Exports / Imports of agricultural, forestry and fisheries products (in dollar terms) (Unit: $1 million, %) Japan's total trade Agricultural, forestry and fisheries products trade 2004 2005 2006(A) Y/Y 2004 2005 2006(B) Y/Y (B)/(A)×100 Exports 565,039 598,215 647,290 8.2 3,338 3,642 3,867 6.2 0.6 Imports 454,676 518,638 579,294 11.7 67,271 68,270 67,856 △ 0.6 11.7 Balance 110,363 79,577 67,996 △ 14.6 △ 63,933 △ 64,628 △ 63,989 △ 1.0 ／ (Source) Ministry of Finance, trade statistics Table 2: Exports / Imports of agricultural, forestry and fisheries products (in yen terms) (Unit: ¥ billion, %) 2004 2005 2006 Year on year Exports 361.1 400.8 449.7 12.2 Imports 7,281.8 7,480.7 7,887.7 5.4 Balance △ 6,920.7 △ 7,079.9 △ 7,438.0 5.1 (Source) Ministry of Finance, trade statistics 2. Exports (1) Overview Of the total agricultural, forestry and fisheries exports amounting to $3.87 billion in 2006, agricultural products accounted for $2.06 billion (up 3.2% y/y), fisheries products $1.74 billion (up 10.4% y/y) and forestry products $69 million (down 5.5% y/y). Exports have been increasing yearly for agricultural and fisheries products since 2003, this time increasing by 23.4%, and 60.6% in total over the past four years. On the other hand, forestry product exports have decreased from the previous year. However, they have increased by 30.2% over the past four years. Since 2001, the ratio of agricultural exports has been gradually declining, while 3 the ratio of fisheries exports has been gradually increasing. Agricultural exports account for 53.2%, and fisheries exports account for 44.9% of the total exports in 2006. Table 3: Exports of agricultural, forestry and fisheries products (Unit: $1 million, %) Agricultural, forestry & fisheries products Aguricultural products Fisheries products Forestry products 2004 3,338 1,905 1,364 69 2005 3,642 1,995 1,574 73 2006 3,867 2,059 1,738 69 Year on year 6.2 3.2 10.4 △ 5.5 (Source) Ministry of Finance, trade statistics (2) Exports by Sector 1) Agricultural Products Exports of farm produce (grains, fruits and vegetables), which have generally accounted for over 90% of agricultural products, rose 3.6% y/y. Of this total, exports of grains as a whole gained 2.3% y/y, as wheat and flour dropped, while macaroni/spaghetti and rice increased. Rice exports increased with food aid for developing countries, which accounts for some 95% of total rice exports in weight value. On a commercial basis, 593 tons of rice was exported to Taiwan (up 43.6% y/y) and 128 tons to the U.S. (an 8 times increase). In addition to these, 302 tons were newly exported to the Philippines. All these results shows that export efforts from the production side came to fruition. A ban of four years was lifted in July 2007 regarding Japanese rice exports to China and the products were seen in the markets of Beijing and Shanghai. In the category of fruit exports, both grapes and apples, which account for nearly 40% of total fruit exports increased (centering on Taiwan and Hong Kong), but pears, Satsuma oranges and persimmons fell due to a decrease in yield caused by the negative impact of climate instability and pests. As a result, total fruit exports remained unchanged from the previous year. Out of fruit exports, apple exports to Taiwan accounted for little more than one third (34.8%). Exports of vegetables increased 12.0% y/y centering on the Asian market where a new breed of wealthy citizens made an appearance and in the U.S. market where Japanese food popularity continued. In foreign countries, interests in Japanese foods were on the rise and the opinion that “Japanese foods are safe to eat” was established. The largest item ratio in vegetable exports were arrow roots/potatoes which accounted for 27.6%. Fresh mushrooms continued to increase but dried mushrooms continued to 4 decline because the established markets were overwhelmed by Chinese products. Exports of livestock products slightly rose 0.7% y/y, showing an increasing trend from 2004. Untreated hides/fur skins and wool/animal hair which account for 58.6% of the total exports decreased by 5.3%. Dairy goods increased by 37.3% y/y, chicken/animal flesh meat and meat preparations increased 8.7% y/y and live animals gained 24.4% y/y. Due to the occurrence of foot-and-mouth disease and BSE, the U.S. suspended importation of Japanese beef. In February 2005, these bans were lifted, and as a result, export of beef to the U.S. jumped from $4,000 to $2.90 million. Overall exports of silk threads decreased by one third. Exports of raw silk to India, which was the biggest export destination, hit zero. Its main product of silk waist exported to China was down 30.9% y/y and to Thailand was down 77.7% y/y. In 2006, silk threads were exported to South Korea and Italy where Japan had no success in the previous year. Table 4: Exports of agricultural products (Unit: $1 million, %) Farm products All agricultural products Grains Fruits Vegetables Livestock products Silk threads 2004 1,905 1,771 184 97 46 122 12 2005 1,995 1,842 176 130 50 147 6 2006 2,059 1,909 180 130 56 148 2 Year on year 3.2 3.6 2.3 0.0 12.0 0.7 △ 66.7 (Source) Ministry of Finance, trade statistics 2) Fisheries products In fisheries products, exports of fish (fresh, chilled, frozen and living), which account for a little less than 50% of the total, rose 10.4% y/y, resulting in an increase for 4 consecutive years, with a decrease in tuna/bonitos but an increase in the mainstay of salmon, trout, cod and mackerel. Exports of shellfish/mollusks decreased by 8.4% y/y mainly due to a decrease in the mainstay of squid. A total of 1.51 tons of Ise-lobsters (frozen) were exported to Hong Kong and South Korea where there was no success in the previous year. Oysters exported to South Korea increased 85-fold over the previous year where its demand was growing as a health food and sea squirt also increased by double over the previous year. Exports of canned and bottled products rose by 8.7% y/y, as shipments of salmon, herring and sardines increased, but mackerel, tuna, bonito and crab decreased. Exports of both natural and cultured pearls increased and the total export increased by 3.0% over the previous year. However, it remained at 0.7% up y/y in terms of numerical quantity. 5 Fisheries exports were spurred in part by a simplification of quarantine procedures for aquatic food for the Chinese market in September 2005 and the number of producing areas that aggressively dealt in exports increasing. Table 5: Exports of fisheries products (Unit: $1 million, %) All fisheries products Fish (fresh, chilled, frozen, etc.) Shellfish/ mollusks Canned and bottled preparations Pearls Other fisheries products 2004 1,364 610 181 289 248 36 2005 1,574 690 215 368 267 35 2006 1,738 821 197 400 275 48 Year on year 10.4 19.0 △ 8.4 8.7 3.0 37.1 (Source) Ministry of Finance, trade statistics 3) Forestry Products Of lumber/worked lumber, all of acicular conifer, broad leaf tree and tropical timber fell. The total exports decreased by 14.3% y/y. Exports of plywood/veneers fell 10.0% y/y because the mainstay of the Malaysian market for veneers faced fierce competition with Chinese products. Other materials and rosins increased but a decrease of particle boards offset it. Table 6: Exports of forestry products (Unit: $1 million, %) All forestry products Lumber/ worked lumber Plywood/ Veneers Other forestry products 2004 69 15 19 35 2005 73 14 20 39 2006 69 12 18 39 Year on year △ 5.5 △ 14.3 △ 10.0 0.0 (Source) Ministry of Finance, trade statistics (3) Exports by Destination Country/Area Looking at the export of agricultural, forestry and fisheries products according to the destination countries/areas, the previous pattern of Japan’s exportation, other than the assistance-rice-exports, was that the United States was the largest export market, followed by the Asian markets of Hong Kong, Taiwan, South Korea, China, Thailand and Singapore in that order. In 2005, the U.S. and Hong Kong switched its position and China and South Korea did the same. In 2006, this order remained unchanged in the top 8 6 markets. Exports to China continued in double-digit growth. All categories of fisheries exports also increased in 2006 and showed significant gain of 17.8% y/y. Producing areas and municipalities throughout Japan are aggressively developing marketing activities by focusing their attention on the wealthy of China who are enhancing purchasing capabilities. It seems as though China will soon take over Taiwan in the list. Exports to Taiwan fell mainly due to the decline of cigarettes and exports to Thailand also decreased mainly because of a decrease in tuna/bonitos. The five largest markets’ shares account for 74.8%, an increase of 0.2% points over the previous year, showing a slight increase in concentration of the biggest markets or regions. Table 7: Exports of agricultural, forestry and fisheries products (by destination country/area) (Unit: $1 million, %) Ranking 2006 2005 2006 2004 2005 2006 Year on year Composition ratio 1 1 Hong Kong 584 675 708 4.9 18.3 2 2 USA 610 662 688 3.9 17.8 3 3 Taiwan 481 580 547 △ 5.7 14.1 4 4 China 379 428 504 17.8 13.0 5 5 Korea 386 371 445 19.9 11.5 6 6 Thailand 124 179 172 △ 3.9 4.4 7 7 Singapore 75 79 86 8.9 2.2 8 8 Australia 40 42 42 0.0 1.1 12 9 Netherlands 39 35 41 17.1 1.1 11 10 Canada 38 39 39 0.0 1.0 Total of top 10 countries/areas 2,756 3,090 3,272 5.9 84.6 World total 3,338 3,642 3,867 6.2 100.0 (Source) Ministry of Finance, trade statistics (4) Major Export Items Pearls remained the largest item of export, with exports to Hong Kong, accounting for 46.6% of the total. Other than Hong Kong, this category succeeded in exporting to the United Arab Emirates, the United Kingdom and Belgium. Almost all pearls (99.7%) exported from Japan are of the cultured variety. The second largest item was cigarettes, Taiwan being the largest market, which accounts for three-quarters of the total exports. However, exports of cigarettes to almost all countries including Taiwan declined but that to the Philippines and Russia increased. The third largest item was shellfish. The main item, scallops decreased by almost 30% in the U.S., the biggest market. However, exports to the EU rose after the recommencement of exports in 2003. In particular, exports to France increased by 94.4% . the dollar conversion rate and dollar-based trade values were calculated by JETRO based on the official rate announced by the customs director. • Unit abbreviations. took over the plan and accelerated it to aim at ¥1 trillion by 2013. In May 2007, the “Comprehensive Export Strategy for Japan’s Agricultural, Forestry,