MAFF Budget Cut for a Fourth Year, Falling 1.9% to 3,052.2 Bn Yen

The government's fiscal 2004 budget proposal was decided by a meeting of the Cabinet on December 24, 2003. The budget proposal is a restrained one, raising the General Account budget, which represents the scale of the government budget as a whole, by 0.4% as compared with the fiscal 2003 initial budget to 82,110.9 billion yen and general expenditure, i.e. policy-related expenditure, by 0.1% to 47,632 billion yen. The agriculture, forestry and fisheries budget is to be cut by 1.9% as compared with the fiscal 2003 initial budget, to 3,052.2 billion yen.

The proposal represents a fourth year-on-year reduction of the budget in as many years, but provides for new projects such as production area development measures as part of a rice reform program, environmental protection measures, and export promotion measures.

In view of the difficult fiscal conditions at present, the Ministry of Finance aims to ensure the total budget is no greater than in fiscal 2003, so that the increased spending on social security necessary to cater to population aging and the growth of government bond-related expenditure (costs relating to redemption of and interest payments on government bonds, which are a form of government borrowing) has had repercussions on policy expenditure, including the agriculture, forestry and fisheries budget.

The agriculture, forestry and fisheries budget is an austere one, cutting public works expenditure by 4.6% to 1,371.2 billion yen. Spending on the expansion and improvement of agricultural/farming community infrastructure is to be cut by 5%, well in excess of the 3.5% average reduction in public works expenditure for the entire government.

General agricultural administration expenditure is to be raised by 2% (20 billion yen) year-on-year to 1,006.1 billion yen to allow for increased personnel costs relating to the assurance of food safety and for the fact that the five-yearly census of agriculture and forestry is to be carried out in 2004.

FY 2004 Agriculture, Forestry and Fisheries Outline Budget as Approved by Cabinet

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MAFF Organizational Review to Enhance Food Safety, Establish Export Promotion Office

On January 6, the Ministry of Agriculture, Forestry and Fisheries (MAFF) finalized proposals for its fiscal 2004 organizational review. Key proposals include stronger measures for the assurance of food safety, the promotion of exports of agricultural products and the strengthening of measures relating to wildlife damage to crops.

An Export Promotion Office will be established within the International Trade and Tariff Division of the Minister's Secretariat International Affairs Department, to promote exports of agricultural, forestry and fisheries products. The Office will support prefectural government initiatives for the promotion of domestic agricultural products.

To enhance systems for the assurance of food safety and peace of mind, MAFF will also be strengthening the organization of the Animal Quarantine Service, with a view to tackling diseases common to humans and animals, transmitted by pets.

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MAFF's Vision for Restructuring of Food Processing Industry

The Ministry of Agriculture, Forestry and Fisheries (MAFF) revealed on January 4 that plans to draw up a "Vision for the Food Processing Industry (provisional name)" with a view to promoting mergers and restructuring in the primary food processing industry (the industry that produces flour, sugar and other primary food products). It will be the first time that MAFF has published a vision for restructuring of the industry. A senior official indicated MAFF believes it would be desirable to reduce the number of major companies in each segment of the industry to about three, and such a push from the government is likely to lend momentum to the trend for mergers and business integrations under the provisions of the Industrial Revitalization Law and other legislation.

In fiscal 2001, the value of domestic output for the food processing industry as a whole was 36.4 trillion yen. However, more than 99% of the 60,000 or so companies in the industry are small and medium-sized firms, and the industry needs to improve its management efficiency by boosting equipment utilization and improving technological capability.

The primary food processing industry has been particularly slow to restructure and merge business operations, largely because there is little competition. The flour milling, sugar refining and oil manufacturing sectors each consist of a number of major companies and over 100 small and medium-sized firms.

If the FTA (free trade agreement) negotiations and the new round of WTO (World Trade Organization) multilateral trade talks make progress in lowering border protections, Japan's agricultural sector will need to enhance its international competitiveness. The food processing industry will also be exposed to international competition and will need to cut its costs through economies of scale.

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MAFF to Introduce DNA Testing of Beef to Help Prevent False Labeling

With a view to preventing the false labeling of beef, the Ministry of Agriculture, Forestry and Fisheries (MAFF) has decided to introduce DNA testing by the end of fiscal 2003 as a means of checking that beef labeled as wagyu [Japanese beef] really does come from animals of the Japanese breed. The decision is based on concern that, in the wake of the outbreak of BSE (bovine spongiform encephalopathy) in the United States, another false labeling scandal might further damage consumer confidence in beef. DNA testing will be used in spot tests at stores, to be conducted on a random basis, with a view to discouraging false labeling. MAFF also intends to apply the DNA tests to kuro-buta [Japanese black pig] pork among other products.

Many of the series of false labeling incidents in 2002 involved the labeling of cheaper meat from animals of the Holstein breed or Holstein-wagyu crossbreeds as wagyu. Beef from crossbreeds is particularly difficult to distinguish from true wagyu beef, being very similar in quality. Monitoring of labeling under the Law Concerning Standardization and Proper Labeling of Agricultural and Forestry Products (JAS Law) has been based on the checking of documentation and has proved of limited efficacy in preventing false labeling.

DNA testing already applies to rice (since 2001) and eels. Technical progress means that it is now possible to ascertain with nearly 100 percent accuracy whether or not beef is wagyu. In the wake of the BSE outbreak in the United States, MAFF is hastening to strengthen its monitoring arrangements with a view to allaying fears that American beef may be falsely labeled as domestically produced.

MAFF plans to select beef labeled as wagyu from stores at random. MAFF-affiliated organizations will perform DNA tests and if the results are suspect, MAFF will initiate on-site investigations. The tests are not 100% accurate, but are considered to be adequate for sifting out false labeling. MAFF intends to extend the scope of DNA testing to kuro-buta pork and fish among other foods.

Since December 2003, the Beef Traceability Law has made it compulsory for the labeling of beef products to show details of production history from the distribution stage onwards. MAFF also plans to use the DNA tests to confirm the accuracy of labeling.

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First Avian Flu Outbreak in 79 Years; MAFF Establishes Countermeasures HQ

The Ministry of Agriculture, Forestry and Fisheries (MAFF) and Yamaguchi Prefectural Government announced on January 12 that an outbreak of a highly pathogenic strain of avian influenza (fowl plague) had been confirmed at a chicken farm in Ato, Yamaguchi Prefecture. The outbreak of avian influenza confirmed in central Korea in December 2003 is spreading, and Japanese chicken farmers have been harboring a growing sense of crisis. Although there have been cases of humans contracting avian influenza after contact with live chickens, there are no known cases of humans catching the disease after consuming the meat, edible offal or eggs of infected birds. It is 79 years since the last outbreak of avian influenza was confirmed in Japan, in 1925.

On January 13, in view of the outbreak of a highly pathogenic strain of avian influenza in this country, MAFF established a countermeasures headquarters within the Ministry to coordinate action against the disease, headed by Senior Vice Minister of Agriculture, Forestry and Fisheries Eikou Kaneta, and said it would do everything in its power to prevent an epidemic.

Mr. Kaneta opened an address to the countermeasures headquarters by calling on the new body to do everything in its power to ascertain the details of the outbreak, identify its source, prevent an epidemic, ensure the safety of chicken and chicken products, and assure public confidence in their safety. At a press conference on the same day, Minister of Agriculture, Forestry and Fisheries Yoshiyuki Kamei said MAFF was working with the Ministry of Health, Labour and Welfare and the Food Safety Commission to ensure that countermeasures were effective. Mr. Kamei also called for a calm response to the outbreak, telling reporters that there had been no reported cases of humans catching the disease from chicken eggs, meat or offal and urging consumers to act calmly.

Also on January 13, MAFF confirmed that the highly pathogenic strain of avian influenza detected in Yamaguchi Prefecture was of the "H5N1" type, the same as the strain responsible for the major outbreak in Korea and the outbreak in Hong Kong in 2003.

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Mamoru Ishihara Appointed Vice Minister of Agriculture, Forestry and Fisheries

On January 30, Mr. Yoshiaki Watanabe resigned as Vice Minister of Agriculture, Forestry and Fisheries, and was replaced by Mr. Mamoru Ishihara, previously Director-General of the Forestry Agency. Mr. Naoto Maeda was promoted to Director-General of the Forestry Agency. At a press conference following his appointment, Mr. Ishihara declared his intention of devoting all his energies to the drafting of the new Basic Plan for Food, Agriculture and Rural Areas.

Mr. Ishihara said a key element of the Basic Plan was the fostering of "professional farmers", and told reporters, "In this age of concentration and choice, we cannot provide equal support to all farmers. [Support measures] must focus on farmers who will play a central role in agriculture in Japan in the future."

However, Mr. Ishihara admitted the need for a degree of support for small farmers, telling reporters that MAFF would not be leaving small farmers to fend for themselves and adding that it was important to recognize that they played a multi-functional role, helping to protect the natural environment, etc.

With regard to the shift of emphasis in agriculture, forestry and fisheries administration towards food safety and peace of mind, Mr. Ishihara told reporters, "[The people of Japan] do not at present have unqualified faith in the government, but I believe they do, to some extent, acknowledge the efforts it has made to date," indicating that he intended to continue the measures to assure food safety and peace of mind, with a view to restoring public confidence.

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Japan Suspends Beef Imports from US Following First Outbreak of BSE

At a press conference on December 23, 2003, US Secretary of Agriculture Ann M. Veneman revealed that a dairy cow of the Holstein breed highly likely to be infected with BSE (bovine spongiform encephalopathy) had been discovered in Washington State. On December 24, the Japanese government responded by suspending imports of beef, beef products, live cattle, and lamb and goat meat from the United States, as of the same day. If BSE infection is confirmed, the cow will be America's first known case of the disease. At a press conference on December 24, Minister of Agriculture, Forestry and Fisheries Yoshiyuki Kamei and Minister of Health, Labour and Welfare Chikara Sakaguchi told reporters that when negotiating with the United States, they intended to demand that all slaughtered cattle be tested for BSE, as is current practice in Japan, as a condition for the lifting of the import ban. The Ministry of Agriculture, Forestry and Fisheries (MAFF) established a BSE countermeasures headquarters and issued a statement to the effect that it would do everything in its power to assure the safety of beef and restore peace of mind.

The Ministry of Health, Labour and Welfare (MHLW) will instruct importers to recall "specified risk parts" such as the brain but will not ban the distribution of American beef that has already entered Japan.

Minister of Agriculture Yoshiyuki Kamei said the import ban was unlikely to cause a supply problem in the short term, telling reporters, "We estimate that Japan has stocks equivalent to a month's supply and has enough beef to cope with the peak in demand at the end of the year."

However, in fiscal 2002 Japan imported 240,000 tons of beef from the United States, a quarter of its domestic consumption. As a prolonged import ban could make the supply of beef tight, MAFF is to send officials to Australia and New Zealand to investigate the possibility of raising the volume of exports to Japan. MAFF will continue to conduct and publish the results of its weekly survey of beef prices, checking for opportunistic price increases, etc.

Japan has suspended imports of beef, etc. from all countries where there has been an outbreak of BSE and to date has not lifted any such ban. The procedure and criteria for the lifting of import bans have yet to be decided.

The MAFF Food Safety & Consumer Affairs Bureau said it would no doubt be difficult for MAFF to make the decision to lift the import ban on its own if BSE infection were confirmed. If the US government asks that the ban be lifted, it is likely that the Food Safety Commission will make the final decision, having first debated the conditions required to assure safety.

Secretary of Agriculture Veneman said tests to confirm the presence or absence of BSE infection would be carried out in the United Kingdom. Confirmation is expected to take 3-5 days. The animal in question has already been slaughtered and its meat has entered the distribution system. The US Department of Agriculture is tracing its movements. The origin of the infection is not known.

Update: On December 25, precision tests performed at a laboratory in the United Kingdom confirmed the Washington State cow to be BSE-infected.

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BSE Testing of All Animals Exported to Japan a Condition for Lifting of Ban on US Beef Imports

A senior official of the Ministry of Agriculture, Forestry and Fisheries (MAFF) said on January 5 that the lifting of the ban on imports of beef produced in the United States, imposed following the outbreak of BSE (bovine spongiform encephalopathy) in that country was "at the very least" conditional on testing of all animals to be exported to Japan, but indicated that Japan would not necessarily insist on the testing of all animals slaughtered in the United States. MAFF statement is based on the view that safety and peace of mind can be assured if all animals for export to Japan are tested.

MAFF has also revealed that it will be sending a team of investigators to the United States within the week. The team is likely to include representatives of the Ministry of Health, Labour and Welfare and the Food Safety Commission and will seek to establish details such as the origin of the outbreak.

The US government is pressing for an early lifting of the import ban on the grounds that the BSE-infected cow was from Canada. However, at a press conference, Vice-Minister of Agriculture, Forestry and Fisheries Yoshiaki Watanabe argued that, given the feeding history, etc., "The animal did not pass through [the United States] without stopping, which means [the United States] cannot be considered a BSE-free country," and stressed that Japan would be pressing for tests of the same level of efficacy as those performed in Japan.

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FAO Urges Testing of All Slaughtered Cattle

Following the discovery of a BSE-infected cow in the United States, the Food and Agriculture Organization of the United Nations (FAO) issued a statement on January 12 in which it says that BSE controls in many countries are still not sufficient. The FAO takes the view that testing of all cattle over the age of 30 months sent to meat processors would help to reassure consumers and urges the United States, which has until now been reluctant to adopt testing of all slaughtered animals, to strengthen its BSE control measures.

The statement points out that the number of cattle tested each year is far higher in France (nearly 3 million animals) and Japan (500,000 animals) than in the United States (20,000 animals) and emphasizes that as testing costs are estimated at around $50 per animal, testing can be considered cost-effective given the potential damage of BSE outbreaks to human health and the meat markets.

Given the risk that infection will spread due to the global trade in feeds, etc., FAO also calls for a ban on the use of meat-and-bone-meal and strict controls to ensure the removal of specified risk materials such as brain and spinal cord.

The United States has shown itself ready to strengthen testing arrangements with a view to securing the lifting of bans on imports of American beef by a number of countries including Japan but has so far taken a negative stance on the introduction of testing of all slaughtered animals for which the Japanese government is pressing.

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Japanese Lead Long, Healthy Lives; World's Longest Life Expectancy for Both Sexes

According to the World Health Report 2003, published by the World Health Organization (WHO) on December 18, 2003, "average life expectancy" and "healthy life expectancy" (the number of years for which a person can expect to enjoy good health) for both men and women in Japan continued to be the world's longest last year. Average life expectancy was 78.4 years for men and 85.3 years for women. Healthy life expectancy was 72.3 years for men and 77.7 years for women, representing a significant increase in healthy life expectancy.

Healthy life expectancy is based on average life expectancy minus the number of years during which daily life is seriously affected by illness or injury. In Japan, average life expectancy rose by 0.3 years during 2003 for both men and women, but healthy life expectancy rose by 0.9 years for men and 1.9 years for women. Japanese people have had the world's longest healthy life expectancy for four years in succession.

Second place in healthy life expectancy was taken by Iceland for men and by the small European country of San Marino for women.

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Natto is Most Commonly Cited Health Food, Followed by Dairy Products and Tofu

The results of a survey conducted by the Japan Management Association Research Institute, Inc. (JMAR) reveal that natto [fermented soybeans] is the health food most commonly cited by consumers. When consumers were asked to name the ten foods they most commonly ate for their health, natto, cited by 70% of respondents, took first place. It was followed by yoghurt, milk and tofu [soybean curd], all cited by 60% of respondents. These four items have remained in the top five for the past three years and their image as health-giving foods is firmly established.

Just under 60% of consumers put "green and yellow vegetables" (tomatoes, spinach, carrots, etc.) while 50% cited green tea.

When asked whether they gave priority to "nutritional balance" or "foods I like to eat", 60% of female respondents chose "nutritional balance", while 60% of men chose "foods I like to eat". However, the ratio of respondents choosing "nutritional balance" rose among both men and women in parallel with the age of respondents. The ratio was less than 30% among male respondents in their teens through 20s but more than 50% among those in their 60s.

The survey was conducted in October 2003 and was answered by 1,100 consumers in the Tokyo area.

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MAFF to Issue JAS Mark for Agricultural Products With Accurate and Clear Production History

The Ministry of Agriculture, Forestry and Fisheries (MAFF) aims to introduce a new system that will give government certification to agricultural products whose production history is accurately recorded and displayed, by 2005. MAFF will establish new standards under the Japanese Standard of Agricultural and Forestry Products system and issue a "certification mark" applicable to all agricultural products, with a view to making it easier for consumers to judge the safety of foods in the store. The move anticipates the opening up of the Japanese market as a result of future FTAs (free trade agreements), aiming to enhance the competitiveness domestic agricultural products.

In December 2003, MAFF introduced a system under which the JAS mark is awarded only to beef whose production history is accurately recorded and clearly displayed. The system also applies to imported beef, consumer concern over the safety of which has increased since the confirmation of the first case of BSE (bovine spongiform encephalopathy) in the United States.

The proposed new system in principle applies to all agricultural products including rice, fruit, vegetables, and beans & pulses. Major retailers and distributors already display the production history of vegetables, etc. in store, but standards vary considerably between companies. MAFF has judged it necessary to make it clear to consumers that the information disclosed is adequate and accurate. A universal standard is to be drawn up by the end of 2004.

The minimum requirement for the issue of the certification mark will be that consumers should be able to enter an ID number displayed on the product package into an in-store terminal and check production history details such as name of producer, address of farm, dates of harvest and shipping, and agricultural chemicals and fertilizers used.

Retailers and producers wishing to display the mark will apply to government-registered private-sector certifying organizations (foundations and NPOs). MAFF will impose penalties for improper acquisition of the mark. MAFF will publish the names of any producers or distributors who fail to comply with instructions to take remedial action and impose fines of up to 100 million yen.

As with beef, imported agricultural products that satisfy the standards will qualify for the approval mark.

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BSE in the United States: Japan's Worrying Reliance on Food Imports

A cow infected with BSE (bovine spongiform encephalopathy) was recently discovered in the United States, the world's largest producer of beef. The Japanese government immediately suspended imports of beef and beef products from that country. Approximately 30% of all beef consumed in Japan is produced in the United States. As beef is widely consumed in the home and by the food service industry, the impact could be immeasurable. The whole affair draws attention once more to the fact that excessive reliance on food imports is a problem in terms of assuring both the safety of food and a stable supply of food. Given that the crisis has come in the Year End/New Year period, the time of year when demand is usually at its peak, there is concern that consumption of beef in general, including domestically produced meat, will decline. The government should once more emphasize the safety of the homegrown product, which is subject to testing of all slaughtered animals, and encourage people to eat more domestic beef.

Japan imports some 500,000-600,000 tons of beef each year, of which around 45% comes from the United States. American beef accounts for approximately 30% of domestic consumption, which means that the import ban is certain to have severe repercussions. The impact on discount stores and the food service industry, which set low sales prices and obtain most of their beef from the United States, is likely to be particularly severe. The gyu-don [bowl of rice covered with boiled beef and vegetables] chains, which obtain most of their beef from the United States are still busy gathering information and have not yet been able to decide on countermeasures.

In the autumn of 2001, when the first BSE-infected cow was discovered in Japan, a director of one major retail chain boldly declared, "American beef is safe." However, one consumer group that had been pursuing the question of the safety of imported foods insisted, "There will be a BSE outbreak in the United States, too, some day. In fact, it may already have started." It seems incredible that anyone should have claimed the United States, the world's largest producer of beef, was safe although outbreaks had occurred in most of Europe, Japan and Canada, since BSE was identified as a disease in farmed cattle in the United Kingdom in 1986. Perhaps the United States was not fully aware of the difficulty of preventing this disease, which is spread by an abnormal protein known as "abnormal prions", or perhaps it did not take the problem seriously.

In February 2002, the US General Accounting Office (GAO) issued report on BSE, which mentioned the inadequacy of measures to prevent an outbreak of the disease. The US government was the first to ban imports of beef and beef products from countries where there had been an outbreak of BSE. It also prohibited the use of meat-and-bone-meal, thought to be one of the sources of infection. The GAO found fault not only with the fact that the ban on the use of meat-and-bone-meal not thoroughly enforced, but also with the inadequacy of provisions for the testing of cattle that died on farms. Besides highlighting America's over-confidence in its preventive measures, the outbreak of BSE has severely undermined the credibility of testing arrangements in the United States.

Japan has a low food self-sufficiency ratio (40% on a calorie basis). As Japan has grown increasingly dependent on imports, domestic production has declined. To assure the stability of domestic supply volume, Japan must be weaned of its excessive dependence on imports. If imports are allowed to supply 30% of domestic consumption, as is the case with beef, the balance of supply and demand will be severely disrupted and prices will rise. The lesson of the present crisis is that the only way for Japan to maintain stable production of food and keep prices steady is to overcome its excessive dependence on imports.

(from an editorial in the December 25, 2003 issue of the Nihon Nogyo Shimbun)

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