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Japanese consumers want more imports; trade barriers begin to fall aside.

Japanese Consumers Want More Imports; Trade Barriers Begin to Fall Aside

Pacific Rim Conference hears of growing export opportunities. And it's not just in commodities. Demand is rising for value-added products ranging from frozen bread dough to spaghetti.

Imports of food into Japan are on the increase, and that increase is likely to continue -- fueled by a strong yen, liberalized trade barriers, and a younger generation obsessed with things foreign.

That was the message delivered by Edward J.R. Scott, chairman of John Swire & Sons Ptd., Ltd., Sydney, Australia, at the International Frozen Food Association's Pacific Rim Conference in Honolulu, Hawaii, U.S.A.

Frozen food imports to Japan amount to a lot more than just vegetables and French fries. The United States alone shipped about 1.1 million tons of refrigerated products to the island nation last year, according to the Customs Office.

That included (for January through November) 110,283 tons of frozen chicken, 101,663 tons of frozen salmon, 86,653 tons of frozen beef, 76,139 tons of beef offal, 38,918 tons of frozen herring, 27,582 tons of frozen pork and 27,021 tons of frozen black cod.

None of this shows up in Japanese FF products, apparently because the imports are either used for further processing into non-frozen products (no doubt most of the chicken ends up at fast food outlets) or (in the case of some fish) are re-exported, with or without any further processing.

Although the Japanese farm lobby remains strong, and may increase its influence as a result of the Recruit scandal that brought down the Takeshita

government, Scott said, international pressure has already forced Japan to remove or reduce trade barriers on everything but rice.

Similarly, the strong currency (a recent strengthening of the dollar against the yen may be temporary and is, in any case, limited) has allowed Japanese tourists to travel more overseas and acquire a taste for foreign foods, as well as reducing the price of imports and thus encouraging consumers to try them.

The foreign cultural invasion that influences Japanese youth ranges from punk rock music to Big Macs (although some consumers, amazingly, don't know that "Makudonarudo" isn't a Japanese corporation or product). Kentucky Fried Chicken outlets, complete with plastic statues of Colonel Sanders, are blossoming in the most traditional neighborhoods.

Here are some examples Scott, who was speaking in his then capacity as chairman of the International Association of Refrigerated Warehouses, gave of vanishing trade barriers:

* Beef. Until last year, there was a quota of 214,000 tons a year and a duty of 25%. Starting last year, the quota was to be raised by 60,000 tons a year through 1991, then abolished; duties were to go up to 70% in 1991, but down to 60% in 1992 and 50% in 1993.

* Orange fruit and juice. Quotas of 126,000 and 8,500 tons, respectively, being increased by 22,000 and 4,000 tons a year, with quotas to be abolished in 1991 and 1992. Duties of 20% (summer) and 40% (winter) will remain unchanged. Pure juice imports, previously forbidden, were allowed at 15,000 kiloliters last year, to increase to 21,000 this year and 27,000 next year. Only 40% of imported juice must be mixed with at least 10% Japanese juice this year, and none next year, vs. 60% last year.

* Ice cream. Quotas were abolished last year, but duties remain at 25%. Duties on frozen yogurt, however, are being increased from 25% to 35%. That increase, and others like it, may be negotiated away in 1991.

And here, according to Scott, are highlights of frozen food consumption trends in Japan:

* Beef. Annual consumption is now about 600,000 tons, 55% of it supplied from domestic sources. Grain-fed meats are preferred by Japanese consumers, and that gives the U.S. an edge (quite aside from its image as "Marlboro Country"). Australia is trying to increase production of grain-fed marbled beef, and New Zealand will probably also benefit from removal of quotas. There should be enough market for everyone and then some if a U.S. meat industry leader's prediction of a 1.25-million ton export market by the turn of the century is fulfilled, but that may required further price cuts.

* Mutton. Japanese don't really like it, due to its smell and fat content, and imports have actually decreased to 70,000 tons from 140,000 in the 1970s. A further decline to 50,000 tons is expected. Mutton is used mostly in processed hams and sausages.

* Pork. Also used mainly in processed meat, but more popular. Denmark and Taiwan each ship more than 100,000 tons a year to Japan, and the United States and Canada 20,000-30,000 tons each. Taiwan is likely to become the dominant supplier in the long run, despite a contamination scare that reduced its export volume by 20% last year. * Chicken. Consumers don't seem to care where it comes from, but the U.S. is the leading supplier at 110,000 tons, followed by Thailand at 74,000. Supermarket sales of whole chickens (mainly U.S.-sourced) and chicken joints are steadily increasing, and this trend is expected to continue as consumers become more health-conscious. There aren't any quotas or tariffs, because local producers can't meet demand.

* Fish. Imports are free of tariffs and quotas, as Japan wants all the fish it can get. Fish is traditionally the basic source of protein in the Japanese diet, supplemented by tofu and natto (fermented soy bean) and little else. Only in the last 20 years has there been significant consumption of other meats. Imports of luxury species such as American salmon and the more expensive crustaceans are showing particularly steady growth (only interrupted briefly by semi-fasting in respect for the deceased Emperor Hirohito). Sourcing varies according to catch, price and local demand at the source -- New Zealand is said to have reached its limit, but Southeast Asia can benefit from the growth of refrigerated shipping services to Japan in increasing its exports.

* Citrus fruits, frozen and chilled combined, constitute the largest single class of refrigerated imports -- 439,000 tons last year from the United States alone. Orange fruit quotas have been relaxed over the last five years, having reached 126,000 tons last year; there will be further increases of 22,000 tons each this year and next, then total removal of quotas. Orange juice has been Japan's most jealously protected category besides rice, Scott said, but the wall is beginning to crack. Lemons and limes were freed from a five percent tariff on April 1, and haven't been under quota for more than 20 years, so no major growth is expected. Grapefruit is under a two-tier 12%-25% seasonal tariff, but this will be cut to a flat 10% in 1991; the market seems mature.

* Vegetables. Potatoes are the most spectacular success story right now, with U.S. exports having grown from nothing in 1980 to 127,421 tons in 1988. Further growth of at least 10% a year is expected, mostly in the form of French fries to feed hungry fast food chains. Frozen pea and mixed vegetable imports will probably grow about five percent a year.

Japan also exports some frozen food, notably fish (130,000 tons a year, largely in direct sales by Japanese-flag vessels at sea), imitation crab meat (14,000 tons) and fruit (23,000 tons, mostly mikan, melon and pears). There are also new FF opportunities in frozen bread dough, rice pilafs, preserved fish (sashimi), chitkin ( a substance that breaks down cholesterol), and even spaghetti.
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Publication:Quick Frozen Foods International
Date:Oct 1, 1989
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