The Foreign Agricultural Service of the USDA has released a new report on the grain and feed market in Japan.

 

Japan is one of the steadiest buyers of wheat and feed grains in the world. The impact of soaring grain prices in 2007 and 2008 was minimal because of Japan's solid purchase power and steady import regime including state purchases of wheat.

 

Subsidies to absorb cost increases in animal feed also alleviated pains of livestock producers. Japan's robust and solid purchases continued in 2009.

 

Looking in the long-term span, however, demand for wheat, rice and feed grains is bound to shrink as Japan's demographics change.

 

Wheat production in Japan declined 23% in 2009. Total planted area stayed about the same as the previous year, however, production volume declined. This significantly lower yield was caused by low temperatures, a long rainy period, and a lack of sunshine in the major production area of Hokkaido, as well as humidity damage in other areas such as Kyushu and Tokai.

 

Corn production is negligible in Japan. As corn is an indispensable ingredient in animal feed and starch making, demand for imported corn stays stable, both in the feed sector and food sector despite price fluctuations.

 

Due to soaring feed grain prices, the price of compound feed by the third quarter of 2008 had increased almost 60% since late 2006.

 

Japan has a feed price stabilisation programme, where a combination of a Ministry of Agriculture (MAFF) subsidy and an industry fund help absorb sudden surges in the compound feed price.

 

From the third quarter of 2006 through the third quarter of 2008 the total amount of subsidies reached JPY353 billion (US$4 billion), JPY45 billion (US$500 million) of which came out of MAFF's budget.