Market Report, "Japan Agribusiness Report Q1 2013", Published

New Food market report from Business Monitor International: "Japan Agribusiness Report Q1 2013"

by Bill Thompson

(WireNews+Co) - Boston, MA - 11 February 2013

BMI View: While the economy continues on its path of marginal growth, the agribusiness industry will also expand slowly. In 2013, higher domestic prices for foods such as beef, pork and even rice could keep imports strong. However, this also could curb profit margins of food producers and ultimately hurt consumers. Indeed, the Agriculture, Forestry and Fisheries Ministry reported in August 2012 that selfsufficiency on the basis of intake of calories has fallen to a 17-year low of 39%, highlighting fundamental weaknesses in the sector that may be further exposed if Japan returns to the Trans-Pacific Partnership table. To battle this decline in food self-sufficiency, the government will continue its search for overseas farmland as well as invest in foreign trading companies.

Key Forecasts

- Rice production to 2016/17: -9.8% to 7.1mn tonnes. This will bring the rice self-sufficiency ratio down from 0.96 to 0.95 despite an overall decline in rice consumption per capita.
- Beef production growth to 2016/17: 0.8% to reach 508,100 tonnes. Production will grow marginally as consumers on tight budgets prefer cheaper poultry meat and pork to beef.
- Soybean consumption growth to 2017: -13.7% to 2.6mn tonnes. With soybean prices remaining high and Japan heavily dependent on imports, and given a weakening beef sector (the main demand driver for feed soybean), we forecast soybean consumption to continue its decline.
- 2013 real GDP growth: 0.5% (up from -0.6% in 2012, forecast to average 1.0% out to 2017).
- 2013 consumer price inflation: 0.2% average (up from 0.0% average in 2012, forecast to average 1.0% to 2017).

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/529395_japan_agribusiness_report_q1_2013.aspx?afid=201) (http://www.fastmr.com/prod/529395_japan_agribusiness_report_q1_2013.aspx?afid=201)

Industry Outlook

Despite a reasonably good rice harvest in 2011/12, the price of the national staple rose to a six-year high in October 2012, leading to increased demand for imported rice. In September, for example, the average trading price was JPY16,650 per 60kg (US$202) for brown rice, and JPY308/kg of polished rice - about 10% higher year-on-year (y-o-y). This has been attributed to the higher prices farmer groups have been paying farmers. Another possible reason is the increase in rice brands and varieties, especially for higherquality rice such as the Hokkaido-produced Yumepirika rice brand, which has received the top 'special A' ranking for particularly sticky rice, which Japanese consumers tend to prefer.

The higher price of rice in Q411 led to a surge in imported rice from China and the US, pushing the total import tender for November 2012 to 88,840 tonnes, more than three times the limit for rice imports. Domestic food companies such as Yoshinoya and Matsuya have also started to see profit margins erode as food-rice prices in Japan jumped 17% y-o-y for the year ended August 2012.

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