Archive for the ‘Food & drink’ Category

When protecting farmers hurts consumers — and farmers

Monday, October 27th, 2014

Sign in dairy case telling shoppers they are limited to only one package of butter per person

Sign in dairy case telling shoppers they are limited to only one package of butter per person

Butter isn’t as essential in Japanese cuisine as it is in certain other countries’ national styles of cooking, but it does have its place, most commonly in white sauces and baking, and anyone here who uses it regularly has had to pay premium prices for it. Lately, they’ve been paying even more.

In a recent Asahi Shimbun feature a housewife shopping in Minato Ward, Tokyo, is tempted to pick up a package of “luxury brand” butter because all the regular butter is sold out, but in the end she leaves the store without it because she just can’t see spending that much money. The article doesn’t say what that price is, but regular butter right now is said to cost “¥400 or more” for 200 grams, and the luxury butter is “twice as expensive.”

The implication is that ¥400 is already too much to pay, but in any case wherever you go, regular butter tends to be sold out, and many supermarkets now limit customers to only one package per trip. More significantly, businesses such as ramen restaurants and bakeries, which rely on butter as an essential ingredient, are also suffering from the price increase. That’s because there is an acute butter shortage.

And the reason there’s a butter shortage is that there’s a milk shortage and butter is the least prioritized of dairy products. Most milk that’s produced in Japan is sold as milk, and only when there is milk left over after being channeled into by-products like cheese and yogurt does butter get made. Unlike most other dairy products, butter can be frozen and stored for a long period of time.

But why is there a shortage of milk, especially since milk is fiercely protected by the government, making it one of the most contentious items on the table for the Trans-Pacific Partnership negotiations? Japanese dairy farmers insist that if the market is opened to imports of milk products they will be underpriced out of existence, but as it stands the dairy industy in Japan is dying anyway due to attrition. According to the National Federation of Agricultural Cooperative Associations (JA), Hokkaido, which contains the bulk of Japan’s dairy farmers, is seeing a shortage of labor in the dairy field, but more importantly the price of feed has gone up greatly in the last year due to the drop in value of the yen. Three-quarters of livestock feed in Japan is imported. One Hokkaido dairy farmer told the Asahi that production has dropped 10 percent since spring and he doesn’t expect it to return to “normal” since he’s already reduced the number of cows on his farm.

Dairy prices are basically controlled by the three large food manufacturers, Meiji, Snow Brand (Yukijirushi), and Morinaga, all of which have enjoyed healthy profits due to the natural price increase brought about by their own control of shipments starting last winter. The ostensible explanation for the shortage was the unusually hot summers of 2012 and 2013. In hot weather, cows are less likely to become pregnant and thus milk production decreases. But a longer view shows that milk production has been steadily declining for almost 20 years. Total milk production in 2014 is expected to be 7.32 million tons, which is 15 percent less than the amount produced in the industry’s peak year of 1996.

Technically, all the butter sold in Japan is supposed to be domestically produced, but even during so-called normal years there is never enough for demand, so food companies make up the difference by buying foreign butter, which comes with a heavy tariff. But during particularly bad years the agricultural ministry will implement “emergency imports” of butter to meet demand, and such stopgap purchases have become more frequent as the number of dairy farms decrease and production drops.

There were emergency imports in 2008, 2011 and 2012. This year, however, there have already been two emergency imports —  7,000 tons in May and 3,000 tons in September. It’s the first time there has been more than one emergency import order in a given year. For purposes of reference, 10,000 tons of butter typically fulfills demand in Japan for 1.5 months.

Consequently, the situation will continue as it is, and will probably worsen, especially for consumers, unless real structural change is implemented, and not necessarily through TPP. What’s needed is internal structural change. Recently, a joint program began in Hokkaido to transfer dairy production technology from New Zealand. Twenty years ago Japan and New Zealand produced roughly about the same amount of milk, about 8.6 million tons each. In 2013 Japan’s output was 7.45 million tons, while New Zealand’s was 20 million.

The difference, as pointed out in a different Asahi article, is that New Zealand did away with subsidies and government support, forcing dairy farmers to rationalize production methods, while Japan’s dairy industry continues to fall under the sway of the agricultural ministry, whose main priority is maintaining influence, and JA, whose importance with regard to dairy farmers is tied to the fact that JA is their exclusive source for feed. The New Zealand protocol doesn’t use feed or factory methods.

It stresses pastures, short grass that is more nutritious than grain, and “seasonal reproduction,” meaning planned pregnancies that make it easier for farmers to plan their years. One reason young people don’t want to go into dairy farming is because the Japan method is time-intensive: year round and round-the-clock. With the New Zealand  method, work stops at dusk, and in the winter both farmers and cows get to take a break.

The irony is that despite all the work Japanese dairy farmers perform, they produce less than half of the milk New Zealand  dairy farmers do, and New Zealand’s population is smaller than Japan’s. Granted, milk products don’t have the traditional traction in the Japanese diet that they do in New Zealand’s, but that is because domestic dairy products or, at least, the kind sold by the three big food companies, aren’t appealing. T

These companies, JA and the agricultural ministry, in order to protect their own interests, have kept high quality imported cheese and butter outside the reach of average consumers, and as a result the domestic dairy industry is now suffering. Farmers are quitting because they think there is no future. They assume tariffs will fall and put them out of business. It doesn’t have to happen that way, but bureaucratic and corporate myopia seems to guarantee that it will.

Foreign tourists expected to take up (some of) the slack in consumption

Monday, October 6th, 2014

Everyday low prices: Duty Free store at Narita Airport

Everyday low prices: Duty Free store at Narita Airport

According to a survey of 12,000 tourists in 2013 carried out by the Tokyo Metropolitan Government, the Chinese spend more than any other group, which isn’t surprising. What is surprising is by how much they outspend other nationalities.

On average, a Chinese visitor spends ¥191,741 in Tokyo. The average spent by all foreign tourists in Tokyo is only ¥46,546, which means Chinese spend about three times as much.

After China, the most spent is by Singaporeans (¥135,377), and then Spaniards (¥129,558). Another notable aspect of Chinese spending is that the bulk is not spend on accommodations or dining, but rather on souvenirs, about ¥122,000. The most popular area for Chinese shoppers is Ginza, because that’s where all the luxury brand stores are.

The government wants them to spend even more, and is thus expanding the list of items that foreign tourists can buy without having to pay consumption tax. Previously, consumables like food, liquor and cosmetics were not exempt from CT when bought by foreign tourists at stores in Japan, but since Oct. 1 they are.

The main beneficiary of this new regulation is department stores, which have been doing badly since the consumption tax went up in April. One of the reasons consumables weren’t exempt before was that there was no way to check if the items were consumed in Japan or overseas, and anything consumed in Japan should be subject to tax. But many Chinese buy food and liquor in Japan as souvenirs for relatives and friends.

The discount is given at the point of purchase, which means the store has to be registered to waive the consumption tax. They check the buyers passport to make sure he or she is not a Japanese national. Technically, the item can be checked at the airport to make sure it wasn’t consumed before leaving the country, but that sounds almost impossible to do.

At present foreign tourism is one of the only bright spots in terms of revenues. In August, spending by foreign tourists was 40 percent more than it was last August, and ¥4.7 billion of it was spent in department stores alone. These numbers will probably go up more now that the yen is dropping.

The Ministry of Economy, Trade and Industry estimates that the new duty-free rule will mean a loss of ¥9 billion in CT revenues for the year, but it will also mean a boost in sales of about ¥78 billion, which means it will make up for at least some of the domestic consumption that was lost after the tax increase was implemented.

The duty free system was established in the early 1950s, when less than 40,000 foreign tourists visited Japan in a year. Department stores have always been lobbying the government to expand the list of exempt items, even though administering the system is bothersome for retailers, as well as for tourists, who have to fill out forms. METI is thus thinking of streamlining the system even more by 2020, when the Olympics will be held. At present 5,777 stores belong to the duty-free system.

Rice is nice when the price is right

Wednesday, October 1st, 2014

Early birds: Harvesting rice crop in northern Chiba prefecture in September

Early birds: Harvesting rice crop in northern Chiba Prefecture in September

The main rallying cry of those opposed to the Trans-Pacific Partnership negotations, such as JA (National Federation of Agricultural Cooperative Associations), is that Japan can no long feed itself with the food it produces, since its self-sufficiency rate is a meager 39 percent. But as attorney Colin P.A. Jones recently pointed out in his Japan Times “Law of the Land” column, this figure is misleading since it measures food consumed in calories.

In terms of production, Japan’s self-sufficiency rate is 65 percent. Moreover, in terms of total volume of food produced, Japan is fifth in the world. The point is, Japan produces plenty of food for itself, and it also imports lots of food. It is a wealthy country by any measure. However, its agricultural sector is lopsided in that it doesn’t produce food in a way that matches demand.

Rice is the culprit. Even without American threatening their livelihood with shiploads at the ready of cheap short-grained rice, farmers in Japan are already seeing prices drop precipitously. There is just too much rice being produced, despite the fact that the government still pays farmers not to produce so much.

According to Tokyo Shimbun the problem started in 2011 after the Great East Japan Earthquake destroyed much of the crop in the Tohoku region, a major rice-producing region. Consequently, rice stocks became low and the price skyrocketed. This situation lasted through the 2012 harvest. As a result, restaurants and prepared food makers cut back on the amount of rice they used. But by the middle of 2013, stocks of rice had increased to the point of a surplus, and a bumper crop was produced in the fall. But demand didn’t follow suit and the surplus grew considerably. Again, the situation remained unchanged and the price has been dropping steadily since then to the point where it’s lower than it was before the earthquake.

CONTINUE READING about domestic vs. foreign rice →

European winemakers fret over competition from Chile

Monday, August 25th, 2014

The competition: Wines from Australia, Chile and France with retail prices below ¥1,000

The competition: Wines from Australia, Chile and France with retail prices below ¥1,000

During the first half of the year, sales of wine from Chile exceeded those of wines from Italy, thus making Chilean wine the second most popular imported wine in Japan, and apparently, Chile is now gaining rapidly on No. 1, France. The main reason is the Chile-Japan Economic Partnership Agreement signed in September 2007, after which the tariff on Chilean wine started to decrease gradually from the standard duty on foreign wines of either 15 percent of import price or ¥125 per liter. Right now the tariff rate for Chilean wines is 5.8 percent, and it will be zero in April 2019.

According to a Jiji Press report, the further the tariff drops, the more sales increase. More significantly, the amount of wine being imported has gone up. In 2007, when the EPA went into effect, Japan imported 10,517 kiloliters. But 2013, the volume was 36,435 kiloliters, which is an average annual growth rate of 20 percent. For the first half of this year alone, 17,349 kl entered Japan, and since the end of the year is the big season for wine, it’s clear that this year’s volume will exceed last year’s. And note that France exported 19,093 kl to Japan in the first six months of 2014.

Nevertheless, importers have told Jiji that the EPA isn’t as big an influence as it seems. One wine industry association said that Chile’s product is more suited to Japanese tastes, whatever that means. But the fact is that other wine-making countries and regions are paying close attention to the Japanese market and may be worried about Chile’s ascendance. For one thing, while sales of alcoholic beverages in general have been on the decline, the consumption of wine has been going up. At present, the average Japanese person consumes a little less than three bottles a year. Consequently, Japan signed another EPA with Australia in July. According to the terms of the agreement, the tariff on Australian wine will disappear in seven years, which is faster than the rate reduction with Chile.

So Europe is especially anxious to get its own EPA hammered out, since it’s losing ground to these New World winemakers. Wine and cheese are two of the main products under discussion.

It may already be too late. According to a report in the Hokkaido Shimbun, Hokkaido Prefecture’s most prominent convenient store chain, Seico Mart, has seen a 10 percent increase in the sale of Chilean wines over the past year, or one-fourth of the chain’s entire wine sales revenue. That’s even more than French wines. The newspaper narrows the appeal down better than Jiji, saying that Japanese people prefer the slightly sweeter flavor of Chilean wine. But the real reason is the price. The bestselling wine in the chain is a Chilean wine that goes for ¥480.

A common retail belief when it comes to selling wine to people who aren’t connoisseurs in Japan is that ¥1,000 tends to be the limit, and Chilean wine is consistently below that ceiling.

Whatever you do, don’t call Nestle’s coffee ‘instant’

Friday, August 15th, 2014

According to the business magazine Toyo Keizai, on July 24, Nestle Japan announced that it was quitting four industry groups it belonged to: the Japan Fair Trade Coffee Conference, the All Japan Coffee Association, the Japan Instant Coffee Association and the Japan Coffee Importers Association. These groups have, according to Toyo, had problems acknowledging Nestle’s description of its new manufacturing method for coffee products that it started using last September.

Nestle's Dolce Gusto capsule-style self-service machine set up in a grocery store

Nestle’s Dolce Gusto capsule-style self-service machine set up in a grocery store

Nestle no longer calls its Gold Blend and Nescafe Excella brands “instant coffees,” but rather “regular soluble coffee,” and insists that others do the same. Two months ago, these associations revised their industry fair competition rules, saying that they couldn’t allow Nestle to use such a description in their advertising, so Nestle decided to not work with them any more.

Nestle says the manufacturing method is different, so it has a right to call its coffee something different. Most coffee called “instant” these days is made by freeze-drying liquid concentrated coffee liquor. Soluble coffee, however, is a “unique” blend of pulverized roasted coffee beans and dried coffee concentrate. To the layman and, obviously, other members of the coffee industry in Japan, that description doesn’t qualify as much of a distinction, but Nestle wants to stress that the new method makes for coffee that is closer to the real thing, meaning coffee brewed from ground roasted beans.

An executive of the All Japan Coffee Association explained to Toyo that his group’s reluctance to accept the new designation is based on complaints it’s received from consumer groups that say people may buy Nestle’s new product under the mistaken assumption that it’s “real regular coffee.” And as far as the new designation goes, people who don’t know what “soluble” means may think that regular coffee grounds dissolve in hot water, which, of course, they don’t. In any case, “soluble” is a pretty good description of instant coffee in general, so the distinction is moot.

But Nestle Japan can pretty much do whatever it wants since its products account for 70 percent of the — pardon us — instant coffee market in Japan. It wasn’t until 1960 that the importation of coffee beans to Japan was liberalized. The next year importers started bringing in instant coffee, and by the middle of the decade Nestle’s Nescafe was the best-selling brand in Japan, as it was in the world.

Then, in 1967, Nestle Japan started selling Gold Blend, the first instant coffee to use the freeze-dried method developed by Nestle at its headquarters in Switzerland. The Japan affiliate was nervous, though, because it thought Gold Blend would “cannibalize” sales of Nescafe, so it made two different advertising campaigns: Nescafe for everyone, Gold Blend for more discerning consumers.

The Gold Blend commercials became famous for using well-known “artistic” talent, like novelists, classical musicians and kabuki actors. The ads were a success. Instead of eating up sales of Nescafe (which soon became Excella) Gold Blend’s sales augmented them. Eventually, Excella had a 50 percent share and Gold Blend a 20 percent share.

CONTINUE READING about Nestle Japan →

Inflation Watch: Food manufacturers offering less

Saturday, August 2nd, 2014

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Use your noodle: ¥198 regular price 5-pack of Aeon instant ramen vs. ¥198 sale price 3-pack of Sapporo Ichiban instant chanpon

Economists in Japan have been carefully scrutinizing buying trends since the consumption tax was raised in April. Everyone has noted that buying has dipped by at least 4 percent since the 3 percent tax hike went into effect, but many think that it will rebound later in the year since so many consumers bought a lot of stuff just before the hike. And it is also true that some prices of goods and services have gone up, as well, especially food, but for the most part makers have tried to keep them the same, despite the fact that the lower yen has resulted in higher prices for imported ingredients, not to mention increased demand for all food products in developing countries. In addition, the higher price of oil has boosted the cost for packaging.

There’s, of course, one tried-and-true solution to the problem of stabilizing resale prices when costs go up: reducing volume. Rather than raise prices, especially at a time when consumers are specially sensitive to any change, manufacturers trim the amount being sold, according to Asahi Shimbun. Nippon Ham, for instance, did not change prices on 82 items in its product line but did reduce the amount being sold by an average of 10 percent. The company’s European sausage used to come in bags of 7 weighing 140 grams. For the same price, it’s now 6 sausages, or 120 grams. The company’s main competitor, Ito Ham, however, has decided to take a chance and increased the price of its pork products, saying that it was inevitable because worldwide demand for pork has risen recently.

The confection industry has been affected as well. Lotte cut the volume and weight of 6 products. Meiji shrunk 10 of its chocolate items, citing a 20 percent increase in cocoa prices from two years ago: Its best-selling Almond Chocolate treat went from 23 pieces to 21.

Chain restaurants are also dealing with the environment. Ringer Hut has increased prices on a number of its chanpon dishes by 3 to 5 percent, mainly due to higher prices for shrimp grown in Thailand, as well as higher transportation costs.

CONTINUE READING about cost-cutting measures →

A modest proposal for alleviating the endangerment of Japanese eels

Sunday, July 27th, 2014

Fish fans: People waiting in line at a popular eel restaurant near Minami Senju Station in Tokyo

Fish fans: People waiting in line at a popular eel restaurant near Minami Senju Station in Tokyo

This year, doyo no ushi no hi, the “day of the ox,” falls on July 29 in accordance with the old Chinese calendar. Counterintuitively, Japanese people don’t celebrate the day by eating beef but rather eel, because, supposedly, eel, or unagi, helps maintain a person’s stamina during the hottest days of summer. But it should be noted that the custom of eating eel is commercial in origin. According to legend, the tradition started in the 18th century in Hino, Western Tokyo, where nobody ate eel because the fish was a kind of local deity. An inventor named Hiraga Gennai came up with a publicity campaign to get people to eat unagi on doyo no ushi no hi because both ushi and unagi start with the “u” sound. The campaign worked, and now everybody eats unagi on doyo no ushi no hi. Well, maybe not everybody, but enough to drive Japanese eel to the brink of extinction.

Japanese eel for consumption are caught in the wild as fry and transported to eel farms throughout Asia. Eel is now on the International Union for Conservation of Nature‘s endangered red list, and so the environment ministry made the same designation on its list of at-risk species. However, this information has been tempered somewhat lately by media reports saying that the eel catch was higher this past year, thus driving the price of imported eel, mainly from China and Taiwan, down considerably. Consequently, eel dishes on the 29th may be cheaper in some places than they were last year.

Unagi fans will see this as good news, but it isn’t. The reason eel is on the endangered list is that Japanese people catch and eat too much of the fish, which wasn’t the case before the mid-1980s, when eel was considered something of a delicacy eaten only on special occasions. In other words, the cheaper the eel, the more likely eel stocks will be decimated.

CONTINUE READING about the unagi shortage →

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