Japan-Asean agri-food trade: What is the score?

JAPAN, with 125 million people and a high per capita income, is a large food market. It imports about 60 percent of its food.

The Japanese give utmost importance to quality, and in particular, freshness of food. They are increasingly concerned about food safety and traceability, and are willing to pay higher prices to guarantee such (www.agr.gc.ca/eng/industry-markets-and-trade/).

Japan’s agricultural imports reached nearly $60 billion in 2013, making it the world’s fourth-largest importer, after the United States, China and the European Union, according to the US Department of Agriculture. The United States is the leading agricultural supplier with $13.8 billion, comprising about one-fourth of Japan’s total agricultural imports. The Association of Southeast Asian Nations, China and the EU-27 are the next large suppliers.

Two-way trade

In 2013, Japan’s two-way trade with Asean for agri-food products reached $15.8 billion: only $2.8 billion of exports, and $13 billion of imports, or a large trade deficit of over $10 billion.

This article will track the agri-food trade performance of selected Asean countries with Japan between 2003 and 2013. It will also identify the major exports and imports to the said country.

Over the past 10 years, Japan’s exports to the Asean-6 grew 2.9 times from less than $1 billion to $2.8 billion but its imports also increased 1.9 times from $6.7 billion to $13 billion. Thus, Japan’s trade deficit deteriorated from $5.7 billion in 2003 to $10.2 billion in 2013. Without rubber products exports, the deficit would be over $12 billion.

Who are the Asean leaders and laggards?

Indonesia. Japan’s exports to Indonesia reached $660 million in 2013, a marked improvement from only $160 million in 2003. By contrast, its imports stood at $2.67 billion from $1.31 billion during the same period. As a result, its trade deficit worsened to about $2.01 billion from $1.31 billion in the past 10 years.

Main exports: rubber tires and synthetic rubber goods

Main imports: natural rubber, frozen shrimps, prepared fish, shrimp and crab, whole fish, coffee beans, palm oil and fraction, pepper.

Malaysia. Japan exported $270 million in 2013, up from $120 million in 2003. Its imports also jumped to $1.38 billion from almost $53 million during the period. Japan has a trade deficit with Malaysia of $1.11 billion in 2013 compared to only $410 million in 2003.

Main exports: rubber tires and synthetic rubber goods.

Main imports: palm oil and fractions, rubber goods, cut-flowers and foliage, cocoa products, and tobacco products.

Philippines. Japan exported a minimal $160 million to the Philippines in 2013 as against $100 million in 2003. Meanwhile, its imports amounted to $1.37 billion and $770 million, respectively.

Main exports: rubber goods.

Main imports: bananas, pineapple, mango, frozen tuna and shrimp, prepared fish, sugar, preserved fruits and rubber goods. Banana (55 percent of all imports) is the dominant product.

Singapore. Japan’s shipments to non-agricultural country Singapore were at $270 million in 2013 from $210 million in 2003. By contrast, its imports amounted to $640 million from $220 million during the same period.

Main exports: rubber tires and rubber goods, miscellaneous food preparation.

Main imports: chocolates, cocoa products, bread and biscuits, malt extract, miscellaneous food preparation, tobacco products.

Thailand. Japan’s exports to Thailand increased to $940 million in 2013 from only $310 million in 2003. Meanwhile, its imports were valued at $5.5 billion from $3.13 billion during the 10-year period. Overall, it had a huge trade deficit of $4.56 billion in 2013 as compared to only $2.82 billion in 2003. Thailand has the most diversified exports to Japan.

Main exports: rubber products, frozen tuna (for processing).

Main imports: prepared chicken, shrimp and fish, natural rubber and tires, frozen shrimp, fish and cuttlefish, sugar, pet food, miscellaneous food preparation, condiments and sauces, rice, and frozen vegetables.

Vietnam. From a low base of only $50 million in 2003, Japan’s exports ballooned to $460 million in 2013. Its imports also nearly doubled to some $1.43 billion from $740 million during the same period.

Main exports: rubber products, frozen seafood.

Main imports: frozen shrimp, cuttlefish and octopus, prepared shrimp, coffee.

Comparison

Japan’s agri-food exports to Asean are principally rubber goods, with some of the raw materials also imported from the region.

The main imports of Japan are varied but dominated by rubber products, prepared seafoods (mainly shrimp), frozen shrimps and fruits. Others of significance are pet food, sugar, food preparations, rice, and cocoa products.

Thailand and Indonesia are the largest suppliers to Japan.

The Philippines is the leading supplier of tropical fruits (e.g. banana).

Thailand and Vietnam have the widest variety of exports. True to its name, Thailand is a “kitchen of the world.”

In closing, there are 13 metropolitan areas in Japan with over one million people each. The largest are Kanto, with Tokyo, Yokohama and Chiba as main cities; Keihansien (Osaka, Kobe, Kyoto); Chukyo (Nagoya), and Kitakyushu-Fukuoka.

Differences

Agriculture Canada reported that: “regional differences in consumer preferences exist. Consumers in Tokyo are less conscious about food costs and prefer salty and spicy foods as well as western products. In Osaka, consumers are more price-conscious and prefer less salty and spicy products. Western goods are also less popular in Osaka, with consumers favoring more traditional Japanese foods.”

The key success factors in the Japanese market include product freshness and quality, and good packaging, including the ease of disposal and recycling of the packaging material. As Japanese families tend to be very small, small serving sizes are also preferred. The aging population presents opportunities for “health-food products, dietary supplements, functional foods, and nutraceuticals.”

The Philippines is a key supplier of many agri food exports to Japan but it is not an easy market to penetrate and maintain. The country dominates the banana market but its demand is not growing as Japan ages. Competitiveness in the Japanese market means more than value—chain cost competitiveness. In a highly sophisticated but aging market, it demands food quality and safety standards standing on good marketing strategies.

An area for competitive intelligence is the extent of Japanese agri-food investments in each Asean country.

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is the Vice Chair of the MAP Agribusiness and Countryside Development Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at <[email protected]> and < [email protected]>. For previous articles, please visit <map.org.ph>)