An Urban's Rural View

What Walking Around Tokyo Reveals About Japanese Agriculture

By Urban C Lehner , Editor Emeritus
Sometimes just a stroll through a city can tell you some things about the country's ag trade issues. (Photo by Urban Lehner)

Walking the streets of Tokyo where I lived three decades ago, I was surprised to find inexpensive oranges for sale. In 1980s Japan, fruit was as overpriced as first-class plane tickets. My wife was so outraged she often refused to buy it, even though my employer supplemented my salary with an allowance designed to protect us from Japan's high cost of living.

Today she'd buy oranges in Japan. The prices I saw in late January and early February were still higher than what we pay in Washington, D.C., but not so much higher as to shock a frugal shopper's conscience. The gap has narrowed considerably.

I wish I'd had the time to track down how and when and why this narrowing came about. It would be especially interesting to assess the role imports played. Japan lowered barriers to foreign oranges in the early 1990s. This not only gave Japanese consumers access to cheaper imported fruit. It forced domestic orange producers to become more competitive if they wanted to survive.

At least some did become more competitive, a quick Internet search reveals. One community of growers focused on improving their product quality (http://tiny.cc/…). What is less clear is how many others were able to raise their games and what strategies they used.

Chances are Japanese agricultural circles are researching those questions, for the answers may shed light on the ability of Japanese rice, beef and other producers to adjust to the Trans-Pacific Partnership trade agreement. Under TPP, Japan would substantially lower its barriers to a wide assortment of agricultural imports over the next 15 years (http://tiny.cc/…).

Japanese ag groups are lobbying legislators to vote against TPP. Their cause got a boost when Japan's economic minister and chief TPP negotiator was forced to resign in a political-money scandal. But Prime Minister Shinzo Abe remains popular and the odds are he will be able to win approval for the pact. He is promising the government will help Japanese farmers become more competitive and even increase their exports.

Whether farmers will succeed in making this adjustment is open to question. Japan has about as much land as California, but more than three times California's population, and 75% of Japan's land is mountainous. Little wonder, then, that Japan barely produces 40% of its own food, measured in calories, down from more than 70% in 1965 (http://tiny.cc/…).

Plots are tiny, however, so there's potential for consolidation, trade-ups to bigger equipment and improved economies of scale. By one estimate the average farm is smaller than 5 acres. And Japanese consumers have always been willing to pay for quality, so the product differentiation strategy that worked for some orange growers might help other Japanese ag sectors.

The government is likely to throw yen at the problem, too, though past government spending on adjustment hasn't always been productive (http://tiny.cc/…). But, hey, if money is no object, Japanese farmers could always invest in automating their operations. That, according to the Guardian, is what a vegetable producer called Spread is doing (http://tiny.cc/…).

The Guardian says robots will do everything at Spread except plant the seeds. The company's managers predict the robots will more than double lettuce production in year one and increase it 50 times over five years. The article does not say how much the robots will cost.

Another thing that startled me as I walked the streets of Tokyo was how much Chinese I heard spoken. This just didn't happen during the eight years I lived here or the nine years in the 1990s when I was visiting Japan regularly from Hong Kong. Friends who live in Japan tell me it's only in the last few years that the Chinese presence has been felt.

Tourism from China is booming. According to the Yomiuri newspaper, nearly 5 million Chinese visited Japan last year, putting China at the top of the list countries sending tourists to Japan (http://tiny.cc/…). Korea was second with 4 million, Taiwan third with 3.7 million and Hong Kong fourth at 1.5 million. Only 1 million came from the U.S., for a fifth-place ranking.

Total tourism to Japan tripled in just the last five years and Chinese speakers spearheaded the trend. The signs in the Tokyo subways are no longer just in Japanese and English; they're in Chinese and Korean as well. A Sunday stroll in the massively crowded streets of Tokyo's trendy Harajuku district yielded several close encounters with Chinese families.

Despite China's slowing economic growth, the country still has 1.3 billion people, a growing middle class and proximity to Japan. Despite the tense diplomatic relationship between China and Japan, Japan has eased visa rules for Chinese tourists, allowing them to visit individually and not just in groups.

And the liberalized visa rules are not just for tourists. Student visas now allow nearly full-time employment. Chinese and Koreans are now seen clerking in convenience stores.

China has been a major supplier of food and agriculture products to Japan, second only to the U.S. many recent years. The Chinese, though, are learning the hard way just how fussy Japanese customers can be. When a Chinese supplier of chicken to McDonald's Japan was found playing games with meat dates a couple years ago, Japanese stayed away from Mickey D's in droves, even though none of the questionable chicken had been shipped to Japan.

Apparently, though, the Japanese forgive and forget. McDonald's Japan's stock price plummeted in the wake of the scandal, but has bounced back sharply since (http://tiny.cc/…). A walk-by peek into several McDonald's stores in Tokyo and Kyoto did not reveal evidence of a boycott.

Urban Lehner

urbanity@hotmail.com

(CZ)

Comments

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H. Clay Daulton 3/4/2016 | 8:21 AM CST
Vividly presented and fascinating information. Nothing like this has been in WSJ, where reports on Japan are all gloom and doom.