October 5, 2010
Japan searches for new food sources amid pressure from China
Japan is increasingly turning to new food sources in foreign lands amid mounting competition from developing countries such as China.
Since China started importing soy in 2000 - after joining the World Trade Organisation - annual Chinese imports have surged from about 13 million tonnes to an estimated 50 million tonnes this year, according to the US Department of Agriculture.
Japan, which used to be the largest soy importer, now has to compete with a country that purchases more than 10 times the 3.6 million tonnes of soy it purchases each year. Consequently, Japan has lost much of its former bargaining power and finds itself at a competitive disadvantage in the face of China''s huge buying clout.
Japanese buyers also face higher prices, according to executives working in Japan''s domestic food industry. One industry executive says suppliers prefer customers who buy a lot of products steadily at a good price, unlike Japanese companies which tend to purchase small amounts and are particular about quality and price.
Trading companies said Japan''s vulnerability is being highlighted this year as China''s demand for soy is putting a squeeze on supplies.
"Since the end of August, soy and corn for shipments in October and November have run out because China has been buying," says Koji Fukuda, head of the grain section of Japan''s Marubeni trading corporation. "Those who came into the market late will probably have had to buy at high prices," he said.
Japan is also feeling the impact of Russia''s wheat export ban, even though it does not import wheat from Russia. The decline in availability of Russian wheat has increased the demand for corn and soy for animal feed, pushing up prices of those grains, according to Eiryu Sanatani, director of food security at the Japanese agriculture ministry.
Earlier this year, market data showed that China was importing a larger amount of corn than usual. China imported about 1.3 million tonnes in the year to the end of September, a 27-fold increase from the prior year, according to the US Department of Agriculture.
One trading company worker said that if China were to became a major importer of corn, it would have a major impact on the availability of the crop for Japan.
"If China starts buying US land or export terminals, we don''t know what will happen because export terminals will control the flow of grains," the executive said.
Marubeni has recently signed a deal that gives it access to wheat from France -- something that has not been done before. "France was never even an option as a wheat supplier, but it has become an option now because of the changed situation in the world," said Fukuda.