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Japan losing out in the bidding war for food

Leo Lewis, Asia Business Correspondent

Japan has been told that it must make radical changes to its diet and also undertake a complete overhaul of its traditional business practices if it is to avert a food crisis that could send Asia's biggest economy “back to the 1950s”.

Analysts have even introduced a new word to the Japanese vocabulary - kaimake, or “deal-blowing” - as the country comes to terms with the ever-rising challenges posed by China and India in the race for resources.

For several post-war generations of executives, who have only ever known Japan as a remorselessly successful buyer, kaimake implies a grim new reality: a nation that has long been used to getting first pick of nearly all goods on offer by exporting countries is now losing out regularly in buying competitions.

For Japan, one of the least self-sufficient in terms of food production of all the world's developed countries, it is a particularly dangerous threat.

Deals are being blown, a senior executive at one of Japan's largest trading houses said, because corporate Japan is not financially prepared for the ferocity of price competition with China and not culturally nimble enough to outbid its rivals.

The food industry is on the front-line of kaimake. It is in the world's great fish and seafood auctions that the legendary buying power that accompanied Japan's rise to economic superpower has begun to fail. The world's best tuna is not ending up on the sushi counters of Tokyo any more, but is heading for Shanghai and New York.

Food industry veterans are clear that it will not stop with tuna, eels and crabs. Japan may find itself the runner-up buyer in dozens of markets where it has not experienced serious competition, including beef, fruit, soybeans, flour and cooking oil. Moreover, energy and commodities analysts believe that Japan will soon feel kaimake effects in liquefied natural gas, coal and metals markets.

The effect on the daily Japanese diet, according to Akio Shibata, director of the Marubeni Research Institute, could be profound. Government figures show Japan's food self-sufficiency ratio (in terms of calories) at a historic low of 39 per cent - a reflection of the westernisation of Japanese diets that began in the 1960s when self-sufficiency levels were more than twice as high.

The only commodities in which Japan is approaching self-sufficiency are rice, eggs, whale meat and tangerines.

Japanese people aged under 50 have grown up with fried foods, a variety of meats, bread and other cereals, so few can imagine the simple tofu, rice and locally caught fish diets of their grandparents. They may have to get used to that, Mr Shibata said, because government efforts to improve self-sufficiency have failed. Japanese consumers face a choice between huge price rises to maintain their diets or a simpler menu.

The Foodex trade fair - an annual opportunity for the global industry to tout its wares in Japan - highlighted the growing frustration with Japan as a buyer. Exporters said that the days when Japan could dawdle over signing contracts were over.

Top ten

Japanese food imports in 2006

Pork $3.3bn

Corn $2.5bn

Tuna $2.0bn

Prawns $1.9bn

Beef $1.9bn

Banana $1.5bn

Soya $1.3bn

Wheat $1.2bn

Coffee $1.0bn

Sugar $480m

Source: Japan External Trade Organisation