IntroductionFriday, 11 March 2011, Japan experienced the most powerful earthquake in the country’s historyat a magnitude of 9.0, with the epicentre only a few hundred miles off the northeastern coast.The devastating tsunami that followed causedsevere damage to the provinces of Tohoku andKanto on the Pacific coastline and radiationcontamination from the Fukushima Daiichi nuclearplant, which continues to cause concern. Whileexpert resources have been deployed to stabilisethe situation, detection of radiation in food andwater supplies continues to reach worrying levels.In addition to the tragic loss of human life, theWorld Bank has estimated the 2011 earthquake to be the costliest since records began in 1965,with losses estimated at USD 235 billion, or 4 percent of Japan’s gross domestic product (GDP).Although the full impact of this disaster remainsunknown, the effect on Japan’s food andagriculture industry could be dire, leading to increased imports throughout 2011.

In order to gauge the possible magnitude of theimpact on domestic agricultural production and, in turn, global trade, it is necessary to first establishthe significance of the impacted area to Japan’sfood supply across various product categories. As Japan is the world’s third-largest economy and a major exporter and importer of agriculturalproducts, the impacts of this natural disaster will be felt far beyond its borders. Japan’s share of global trade is significant for key foodcommodities such as seafood, meat, corn andwheat (see Figure 1). The disaster’s consequencesfor trade flows are of great concern to Japan’strading partners. Although food demand in Japan is expected to contract, the potential lossesin the country’s agriculture industry, combinedwith the export constraints due to food-safetyconcerns, will increase Japan’s food trade deficit. As a result, Japan’s self-sufficiency will likely befurther challenged (see Figure 2).

Demand Impacts Moderate and TemporaryThe first effect of a natural disaster is usually a contraction in demand for food due to a drop in consumer confidence and distributiondisruptions that limit purchases. However, food is a basic necessity and consumption levels should normalise rapidly. For Q2 2011, consumerswill likely prioritise spending on staple foods and products with a longer shelf-life, such ascanned and dried foods, as the cold chain may beparalysed for some time. Demand for dining outand high-end food will soften with price-erodingconsequences as the spending mood dampens.Despite the drop in demand, power interruptionswill lead to perishable food being discarded, which will tighten supply. However, within the

The recent earthquake and tsunami in Japan caused tragic loss of life and untold damage to livelihoods, coastal areas and infrastructure. As the consequences of the unprecedentedearthquake and tsunami continue to have a domino effect on the nation, food availability andsafety are immediate issues for concern. Although many aspects of the situation are still unclear, it is likely that exports will be limited and imports will rise as a combined effect of food-safetyconcerns and supply shortages. The overall impact on the global food commodity market will likely be moderate, but imports from trade partners such as the US, Australia and China will likelyincrease as Japan grapples with the magnitude of this disaster and the recovery efforts.

ContentsIntroduction 1

Demand ImpactsModerate and Temporary 1

Food Safety to Contribute Further to Net Import Increase 2

Magnitude of Impact on Supply and Trade 2

Sector Review: Grains,Meat, Dairy, Fruits andVegetables, Seafood 3

Conclusion 7

Japan Earthquake

Magnitude of Impact on Food and Agriculture1

1 This report was finalised

4 April 2011

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Bee

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Source: Ministry of Agriculture, Forestry and Fisheries (Japan), USDA, FAO, Rabobank estimate, 2011

share of global food imports by volume (percent) world ranking

#3#3

#1#2

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Figure 1: Japan’s Share of Global Food Imports for Selected Commodities

foodservice industry, the quick-service restaurantchains will be more resilient thanks to affordabilityand the ability to leverage supply chains fromneighbouring markets. Overall, demandcontraction should be temporary. Past experiencesupports this view: the Kobe earthquake in Q1 1995 was followed by above-average GDPgrowth in the following three quarters, which leads analysts to believe that demand couldrebuild reasonably quickly. Demand levels for foodare expected to stabilise by the end of Q2 2011and consumers could begin to return to high-endfood products in Q3 2011, assuming no additionalsetback to the economy. However, the growingconcerns over radiation add an element ofuncertainty when it comes to consumers’behaviour toward locally produced food.

Food Safety to Contribute Further to Net Import IncreaseRadiation leaking from the Fukushima nuclearplant 250 kilometres north of Tokyo has heightened food-safety concerns. Tests on milk and vegetables from Fukushima and tap water in Tokyo have revealed unsafe radiation levels.Although the degree of danger for humanconsumption is under debate and depends onvarious factors, such as quantity of intake andnature of radiation, consumers’ natural riskaverseness, combined with high media coverage,supports concerns over purchasing domesticallyproduced food. In monitoring the risk factors, some large importers of Japanese food such as the United States (US), Hong Kong and Singapore have banned imports of some products, includingdairy, fruits and vegetables, from the Japaneseprefectures under the radiation zone (Fukushima,Ibaraki, Tochigi and Gunma). As a result, reluctanceto purchase Japanese food products, especiallythose clearly labelled ‘Made in Japan’ —traditionally associated with delicacy and premium— has reached overseas retail and restaurantdistribution channels.

Predicting consumers’ perception of Japanese food safety is challenging, as the outcome willdepend on how the Japanese governmentresolves the nuclear radiation crisis to bring back confidence. If global concerns aboutcontamination persist, exports of Japanese foodproducts will fall sharply, either because of theexport bans or consumers’ cautiousness — even if products are available and safe. At the domesticlevel, imports of foods with low tolerance for risk,such as baby food, will gain traction, while somebasic foods, such as vegetables, grains and animalprotein will also see rising imports due toconsumer cautiousness. One upside is that food-safety concern is not endemic to the Japanesefood industry itself, but instead, related to theexternal factor of the nuclear radiation.Furthermore, Japan’s food sanitisation laws andinspection standards are among the strictest in the world. Thus, local consumers’ confidence inJapan’s food system is not questioned and thepreference for imported goods for safety reasonswill only play a temporary role until the radiationrisk is fully controlled. All in all, the magnitude ofdemand contraction is uncertain and evolving, but following export bans and consumers’temporary preference for imported goods, thedemand factor will likely increase Japan’s foodtrade deficit in 2011.

Magnitude of Impact on Supply and TradeAlthough it is premature to measure the totaldamage to Japan’s agriculture base, it is possible to gauge the magnitude of the impact byassessing the current food supply in the impactedarea. The tsunami mostly damaged the threeprefectures of Iwate, Miyagi and Fukushima, while the US Food and Drug Administration (FDA)declared Ibaraki, Tochigi and Gunma prefectures an import alert zone on 22 March due to the leakfrom the Fukushima nuclear plant. These sixprefectures make up the ‘impacted area’, as theyhave all suffered damage from the earthquake, the tsunami, radiation or a combination thereof(see Figure 3). An assessment of the agriculturaloutput of the impacted area gives some indicationof the extent of the damage to the country’soverall production.

According to the regional output data provided byJapan’s Ministry of Agriculture, Fishery and Forestry(MAFF), the impacted area is a major producer of meat protein, seafood, vegetables and rice. The potential output loss from damage to this areacan be gauged by assuming a range of losses; froma low level of 10 percent to a severe case whichcould affect up to 50 percent of the productionbase. According to these scenarios, potential losses to Japan’s major agricultural products could rangefrom a modest loss of between 1 percent and

2 | Rabobank Industry Note 260-2011

0

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Caloricintake

WheatDairyVegetablesFruitSeafoodRicePoultryPorkBeef

Figure 2: Japan’s Self-sufficiency Ratio for Key Commodities, Selected Years

1965

Source: Ministry of Agriculture, Forestry and Fisheries (Japan), 2010

percent

1985 2009

2 percent to a significant loss of between 9 percentand 13 percent, especially for meat and riceproduction (see Figure 4).

The size of the losses can be used to calculate thepotential impact on Japan’s imports and on globaltrade. To simplify the equation for calculating thepotential increase of imports, we assume that the production losses cannot be covered by anyexisting stocks and that demand stays at currentlevels. In such a scenario, we simplistically assumethat potential losses equal imports. Although this simplistic approach does not take into account fluctuations of demand and inventory, the potential shortfalls can tell us which foodcommodity will be most affected. Potential importsrange from an insignificant volume for wheat to a large amount of rice and vegetables, reachingalmost 1 million tonnes (see Figure 5). Rice and skim milk powder (SMP) imports could — in theory — increase dramatically, but inventorylevels will act as a buffer. Even so, the questionremains whether the stock will even bereplenished. Perishable products, such as meat,seafood, fruits and vegetables, will likely requireadditional imports. These products have lowinventory levels, leading us to assume thatproduction losses will lead to equivalent shortages.Still, even if Japan takes the hypothetical lossesfrom the global market, the impact on globalcommodity trading will, in fact, be minimal.

The ranges of production loss figures given hereare not based on reported damage — they areonly intended to illustrate the scale of the impacton Japanese imports and global trade. Assumingthe impact falls reasonably within the estimatedranges, it is likely that the potential output gap will have limited impact on global trade. Althoughsuch bulk analysis can confirm the minimumimpact on the global market, further analysis by subsector is needed to confirm the predictedtrade dynamics.

Sector Review: Grains, Meat, Dairy, Fruits and Vegetables, SeafoodGrains: Limited Downward Pressure on Demand Rice is the staple food in Japan and considered the country’s agriculture icon given its high self-sufficiency of 95 percent. Japan’s total riceproduction is about 7.7 million tonnes and thecountry imports approximately 650,000 tonnes,mainly from the US and Thailand, which togetheraccount for 92 percent of imports. Japan’s currentending stocks for rice are estimated at 2.7 milliontonnes — almost the highest level in the currentdecade with a 32 percent of stock/usage ratio.

The impacted region accounts for 22 percent ofJapan’s total rice output with about 1.98 million

tonnes. The earthquake had no immediate impacton rice production as the harvest took place lastautumn, but concerns about soil contamination,either through salinity or radiation, will affect thenext planting in April and May. Radiation in the soilcould have a large impact on the country’s supply,as rice harvested from the Fukushima prefecturealone accounts for around 440,000 tonnes,equivalent to 6 percent of the total production,

Japan Earthquake | 3

Nagasaki

Sapporo

Aomori

Akita

Sendai

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TokyoMatsue

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Source: US Geological Survey, US Department of State, Ministry of Health, Labour and Welfare (Japan), Rabobank, 2011

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Earthquake epicentre

Evacuation zone 20 km

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Figure 3: Japan’s Damaged Area and Radiation Zone as of 4 April 2011

0 200 km 400 km

Figure 4: Magnitude of Potential Losses to Japan’s Agricultural Production

2010 production inimpacted area

(tonnes)

Contribution to national production(percent)

Potential loss to national production (tonnes)

Potential loss to national production (percent)

Beef 90,000 18 9,000-45,000 2-9

Pork 330,000 25 33,000-165,000 3-13

Poultry 280,000 22 28,000-140,000 2-11

Rice 1,980,000 22 198,000-990,000 2-11

Seafood 920,000 16 92,000-460,000 2-8

Fruits 280,000 10 28,000-140,000 1-5

Vegetables 2,180,000 16 218,000-1,090,000 2-8

Milk 1,260,000 15 126,000-630,000 1-7

Wheat 60,000 7 6,000-30,000 1-4

Source: Ministry of Agriculture, Forestry and Fisheries (Japan), Rabobank, March, 2011

or 67 percent of last year’s imports. However, as the extent of the radiation damage is stilluncertain, it is important to understand themagnitude of damage caused solely by thetsunami and the potential impact on Japanese rice production. According to FAO, about 40,000 hectares of land were affected by the quakeand the tsunami. If the entire area of damaged landwere dedicated to rice production, the future cropdeficit would translate into 216,000 tonnes, or 2.8 percent of the total domestic production. A fewrice stocks may have been affected by the flooding,but no serious loss has been reported. Consideringthe high level of ending stocks, the availability of rice is not immediately threatened and there is therefore no immediate need for imports as aresponse to the natural disaster. Future potentialloss (in 2010/11) due to lower cultivation inimpacted areas could put pressure on the nationalreserve — in some extreme cases pushing theending stock below the last decade average of 2.45 million tonnes. However, given the importanceof rice to local agriculture, Japan will likely chooseto replenish its rice stocks primarily throughincreases in domestic production, rather thanrelying on increased imports.

With only between 0.8 million tonnes and 0.9 million tonnes of domestic wheat productionper year, Japan is heavily dependent on importedwheat. In 2010/11, wheat imports to Japan couldreach 5.2 million tonnes. Japan’s key trade partnersfor wheat are the US (55 percent), Canada (over 20 percent) and Australia (15 percent). Theimported wheat is primarily supplied to flour mills. The majority of flour mills and baking plantsare located close to the Tokyo Bay area and in the south — away from the damage zone. Thus, the earthquake and the tsunami had a limiteddirect impact on wheat and flour availability.However, some processors are having operating

difficulties due to periodic power interruptions,although the negative impact should only be temporary.

Large volumes of stored grain were lost in thedisaster and damage to four of Japan’s majorimport terminals and the attached feedmanufacturing industry has been reported, butthis will likely put limited downward pressure ondemand for agri-commodities. Japan estimatedthat around 15 percent of its total 25 million tonnecompound feed industry capacity was damaged,which jeopardises approximately 3.7 milliontonnes of feed production. Japan is the world’slargest corn importer with 16 million tonnes,largely sourced from the US. Bottlenecks in feedcapacity will likely defer demand for corn andpotential damage to domestic livestock could even decrease demand. Global soybean demand is least exposed to Japan as the country onlyimports 3.4 million tonnes of soybeans. This couldpotentially fall to between 3.2 million tonnes and 3.3 million tonnes. A decrease partially offsetby higher demand for imports of soy products.Damage to grain ports in Japan appears to belimited, given their locations are generally awayfrom the worst-impacted regions of the country.

Red Meat and Poultry Imports to Increase in 2011A significant part of Japan’s pork, poultry and beef industries are located in the impacted region,generating 25 percent, 22 percent and 18 percentof the livestock supply, respectively. It is likely thatpart of the primary production in this region hasbeen damaged, which could translate into a loss of total meat output of between 70,000 tonnes and 350,000 tonnes in the severe case scenario. The impact on local livestock, which will have bothshort-term and long-term effects on production,has not been the only issue facing Japanese meat buyers. Meat stocks have also been lostthroughout the supply chain during theearthquake as well as due to the impact ofelectricity restrictions in the weeks following thetsunami. Although exact numbers for Japan’s coldstorage are not available, the volume can beestimated, based on the percentage of productionin cold storage in the US, at around 2.3 percent.Based on this figure, affected volumes of meatcould be about 8,000 tonnes of beef, 29,000 tonnesof pork and 26,000 tonnes of poultry. Although theloss of stocks incurred is supportive of increasedimports, rolling blackouts — expected until theinfrastructure is rebuilt — present an ongoingchallenge for the entire domestic cold chain supply— a further constraint to support demand. Anotherfactor local buyers will be considering is consumerconcerns surrounding the safety of locally producedproducts in the wake of the nuclear radiation leaksat the Fukushima power plant.

4 | Rabobank Industry Note 260-2011

Figure 5: Magnitude of Impact of Recent Disaster on Japan’s Food Trade

Potential increase in imports (tonnes)

Potential increase inimports (percent)

Impact on global trade (percent)

Beef 9,000-45,000 2-9 0.1-0.7

Pork 33,000-165,000 4-22 0.6-2.9

Poultry 28,000-140,000 7-33 0.4-1.9

Rice 198,000-990,000 31-153 0.7-3.3

Seafood 92,000-460,000 3-17 0.3-1.5

Fruits 28,000-140,000 10-52 0.0-0.2

Vegetables 218,000-1,090,000 30-151 0.7-3.6

SMP* 11,000-56,000 38-188 1.0-5.1

Wheat 6,000-30,000 0.1-0.6 0.01-0.03

*Skim milk powder; 1 tonne of SMP ≈ 11,200 litres Liquid Milk Equivalent

Source: Ministry of Agriculture, Forestry and Fisheries (Japan), FAO, USDA, Rabobank, March, 2011

Japan is already the world’s largest importer forpork and second largest for beef. The combinationof reduced local supply and consumer concernsabout local meat safety should support a furtherincrease in beef and pork imports, with US beefand pork exports to enter the country through the ports of Tokyo and Osaka. Australia is Japan’sother key source for animal protein, sending over90 percent of their exports through the ports ofOsaka and Yokohama. Fortunately, these ports aresouth of the most severely damaged areas andhave continued to operate almost as normal. One possible challenge for a major rise in sales into Japan is the ‘safeguard’ tariff, which can betriggered by a significant rise in beef or porkimports. For pork in particular, the safeguard hasbeen triggered and implemented a number oftimes over recent decades (see Figure 6). Theseincreases in tariffs can be significant. For example, if the beef safeguard is triggered, import tariffscould increase from their current level of 38.5 percent to 50 percent for the rest of thefinancial year. Should this occur, the Japanesegovernment will face the dilemma of ensuringadequate meat supplies through imports orlimiting imports to support the competitiveness of local livestock producers, some of which arefacing the challenge of rebuilding production in the wake of the tsunami.

In the last few years, an important driver for beefexporters looking to gain Japanese import marketshare has been the relative values of the US dollarand the Australian dollar versus the yen. Since thebeginning of 2009, the US dollar fell 11 percentrelative to the yen while the Australian dollarincreased 26 percent (see Figure 7). Japanese meatimporters responded to this very clear signal byincreasing chilled and frozen beef imports fromthe US by 32 percent and decreasing beef importsfrom Australia by 4 percent. The future direction ofchange in the relative value of the yen against USand Australian dollars will continue to influencethe source of Japanese imports.

Poultry: Even Tighter Supply of Fresh/ChilledMeat Given Avian Flu OutbreakIn addition to the natural disaster, Japan’s poultrysector has been hampered by recent outbreaks of high pathogenic avian influenza (HPAI) whichresulted in the culling of 1 million birds. Thepresence of HPAI in the region caused supplyreduction — with stock levels already 10 percentbelow normal levels — and reduced the country’sflexibility in shifting between regions, asveterinary restrictions on internal trade are inplace. To cover the potential shortage, SouthKorea and the Philippines will likely export morefresh poultry cuts to Japan, but total volumes willbe limited as South Korea is also affected by anHPAI outbreak. Thus, China and Thailand, which

already lead sales of finished poultry products to Japan, would benefit most from the situation.However, the growth potential of their exports willbe slightly offset by pressure on the foodservicesegment of the market, which is their natural salesdestination. To better assess the impact on poultrytrade, it is important to differentiate between localsupply (mainly chilled and fresh products) andinternational supply (mainly raw frozen and furtherprocessed products). As Japan’s poultry meatproduction will likely be reduced, consumers mayshift to further processed products or frozenproducts, but it is likely that some demand will belost due to Japanese consumers’ strong preferencefor fresh poultry meat.

Dairy: Northern Hemisphere Best Placed to Fill Short-term Demand

Japan Earthquake | 5

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Figure 6: Estimated Trigger Levels, 2011 vs. 2010 Imports (Cumulative Quarterly Basis)

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Japan has a sizeable local dairy industry with a national production of 8 billion litres, meetingaround 90 percent of consumption needs. Thedamaged area, including the Fukushima radiationzone, is responsible for the production of 1.2 billion litres of raw milk or 15 percent of thecountry’s production. The island of Hokkaido

produces 50 percent of national milk output and a significant volume of locally produced cheese. At the time of writing, the region is not reportingany food-safety issues.

Given Japan’s importance in the global market as a large cheese importer, attention is focusedpredominantly on trade flows for this productsector. On average, Japan imports 190,000 tonnesof cheese each year. Any disruption to raw milkoutput could impact across the dairy productrange, which could be filled by commodityproducts such as SMP. While Japan imports 30,000 tonnes of SMP each year on average, thelocal industry does have 70,000 tonnes of surplusSMP (and 30,000 tonnes of butter) in storage asbackup inventory, which could be used in thesupply chain as a replacement in some foodapplications — sufficient to cover volumerequirements in the severe damage scenario.

Contamination could reduce local raw milksupplies, creating a spike in import demand.Matching actual demand with the necessarysupplies could prove challenging, depending onwhere product shortages emerge. The local dairyindustry is protected by high import barriers forfresh products which prohibit trade in productssuch as liquid milk. Access for cheese imports isfeasible and could enter the market if needed. TheNorthern Hemisphere producers may be betterplaced to meet additional cheese demand, giventhat the milk production seasons in Australia andNew Zealand are winding down and have lowcarryover inventories.

Fruit and Vegetables: More Traction for ChinaThe earthquake and the tsunami are reported to have destroyed some vegetable farms andorchards in the northeastern part of Japan. More importantly, the excessive radioactive matter found in locally produced vegetables and fruits could harm the confidence of Japanese consumers, at least in the short term.Consequently, in the coming months, vegetableand fruit imports are estimated to increase.

Currently, imported vegetables account for roughly between 15 percent and 18 percent oftotal domestic consumption. In 2010, Japan’s totalvegetable imports (fresh and chilled) were around0.72 million tonnes, with China — the world’slargest vegetable producer and exporter —accounting for 63 percent (0.46 million tonnes),and the rest coming from the US and South East Asian countries.

Japan has a high rate of fruit consumption, with a local production volume of around 4 milliontonnes. Japan’s main domestic fruits by volume are tangerines, apples, water melons, pears,persimmons, grapes, strawberries and peaches.

However, Japanese consumers’ concerns overradioactive material residue in domestic temperatefruits could stimulate imports from China.

Seafood: World’s Largest Seafood ImporterSuffers Multiple ImpactsDespite the long-term trend towards more meatprotein consumption in the last decades, seafoodremains by far the largest source of protein,accounting for over 50 percent of Japanese intake.The consequences of the earthquake on thismarket are numerous and are impactingsimultaneously: Japanese production, domesticconsumption preferences, import needs and, inturn, global market prices of some species have all been impacted.

Although it is too early to estimate the full extentof the damage, there are reports of wide-spreaddamage to the seafood industry in Japan. The impacted regions had a large fishing andseafood-processing industry. According to aJapanese professor of marine and ocean policy, theimpacted region had been home to 30,000 fishingvessels employing 40,000 fishermen and a further40,000 people otherwise employed in the seafoodindustry and some 1,100 industrial facilities. In theprefectures worst affected by the disaster, Miyagiand Iwate, 253 fishing harbours were destroyed.Miyagi prefecture’s seafood industry, once Japan’s second-largest with a production of380,000 tonnes, has been virtually obliterated. Of its 14,000 registered fishing vessels, at least12,000 have been destroyed. Major species landedin Miyagi and Iwate prefectures include Pacific saury, mackerel, salmon and skipjack tuna. Many seafood-processing facilities across thelarger Tohoku region also report reduced ordiscontinued production due to direct damage,power interruptions, raw-material shortages,damaged infrastructure or some combination of these factors.

Japan’s Tohoku region is also a key producer of aquacultured seafood. Iwate and Miyagi inparticular had significant aquaculture of Cohosalmon, molluscs such as scallops, and a number of marine white fish. The region was also a keyproducer of several types of seaweed. Most ofJapan’s famous wakame seaweed was producedthere. Reports indicate that most of theaquaculture industry has been destroyed and thatthere has been extensive damage to scallop andoyster operations, with between 20 percent and 30 percent of Japan’s scallop industry — theworld’s largest — affected when the tsunamiwashed away both aquaculture operations andwild seedbeds. Reportedly, salmon aquaculturepens in Miyagi prefecture have been washed awayas well. Moreover, fresh and frozen inventories havebeen lost because of power interruptions and

6 | Rabobank Industry Note 260-2011

damage to the infrastructure, adding to theshortage of domestically produced seafood.

Japan is arguably the most sophisticated seafoodmarket in the world, with an unparalleled variety of seafood, ranging from staple proteins to luxuryniche products. Initial reports indicated thatconsumption of some luxury products, such asherring roe and pollock roe, was declining due tonegative consumer sentiment, while consumptionof staples like cod, tuna and mackerel wasincreasing. However, increasing levels of radiationin the water near the Fukushima plant are having a far more profound effect on Japanese seafoodconsumption than previously anticipated.Consumers are avoiding all fresh seafood from the entire northern region of Japan or arguablyfrom the northwestern part of the Pacific. Wherepossible, Japanese consumers are switching to imported seafood. Moreover, the uncertainsituation has prompted many Japanese consumersto hoard frozen, canned and ready-to-eat seafoodproducts, fearing food shortages. Overall, there is a strong shift away from domestically producedand fresh seafood due to both supply andconsumption dynamics. This is causing a free-fall in prices for some domestic product and is halvingthe sales of fish markets such as the famous Tsukijifish market in Tokyo.

In value terms, Japan is the single largest importerof seafood in the world, importing USD 15 billion in seafood per year and accounting for 14 percentof global trade. The earthquake’s impact on Japan’simport requirements is profound, due to thedamaged domestic production facilities, thegeneral avoidance of domestically producedseafood and the change in consumer sentiment.There are wide-spread reports of an increasingneed for imports of Chilean salmon and trout, Thai tuna and shrimp, US scallops, surimi, cod and pollock, Norwegian mackerel and many

other seafood products. On the other hand, a few products considered luxuries have started to experience a strong decline in price, such aspollock roe and herring roe, both importantexports of the US Alaska-based seafood industry.The bluefin tuna exporters in Australia and theMediterranean are also expecting a strongdemand contraction for this super-luxury item.

Lastly, exports of Japanese seafood products are likely to decline strongly, but not only due to falling domestic production. Some countries,such as Italy and Russia, have announced importbans due to radiation concerns, while many othercountries have stepped up radiation controls. To a large extent, this has forced many Japaneseseafood restaurants across the world to sourcelocally most of the items they previouslypurchased from Japan.

ConclusionAlthough food demand in Japan is expected to contract, the potential losses in the agricultureindustry may be enough to increase import needs.In addition, a deteriorated export market due to safety concerns over ‘made in Japan’ foodsuggests an increasing net trade deficit. At 40 percent in 2009, Japan’s food self-sufficiency in terms of caloric intake was already low — wellbelow the government’s 2020 target of 50 percent.Japan’s domestic industry and government willmost likely incentivise the recovery of the country’sagricultural production, supported by Japaneseconsumers’ preference for fresh and domesticallyproduced goods. The 2020 target could now be in question, given the additional costs ofreestablishing local production capacity todecrease reliance on imports. The food securitystrategy may now need to be revised to managethe country’s risk.

Japan Earthquake | 7

Food & Agribusiness Research and AdvisoryAuthor: Jean-Yves Chow Telephone: +852 2103 2377E-mail: JeanYves.Chow@rabobank.com

Contributing authors: Lief Chiang, CN; Erin Fitzpatrick, GB; Michael Harvey, AU; Ethan Hendricks, US; Pawan Kumar, INSG; Hayley Moynihan, NZ; Nan-Dirk Mulder, NL; Dave Nelson, US; Gorjan Nikolik, NL; Wendy Voss, AU

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This report has been published in line with Rabobank’s long-term commitment to international food and agribusiness. It is one of a series of publications undertaken by the global department of Food & Agribusiness Research and Advisory.©2011 All Rights Reserved. 11RABINN62