Grain Policies An Analysis of Japanese Food 106

advertisement
106
)IC, 3_23
etT
An Analysis of Japanese
Food Grain Policies
SPECIAL REPORT 323
APRIL 1971
Agricultural Experiment Station
Oregon State University
Corvallis
CONTENTS
Summary
Introduction
1
2
Japanese Food Grain Policies
2
Estimated Effects of Food Grain Programs
4
Food Grain Prices
4
Farm Income Transfer
4
Consumer Transfer
7
Budgetary Balance
8
Potential Effect of the International Grains
Arrangement
Implications for Pacific Northwest White Wheat Exports .
14
14
Implications of Food Grain Policies
14
Broader Policy Changes
16
Appendix A (Rice)
18
Appendix B (Wheat)
19
Bibliography
21
AUTHORS: William F. Payne is Assistant Professor, Department of
Economics, South Dakota State University, and Gary L. Seevers is
Assistant Professor, Department of Agricultural Economics, Oregon
State University, Corvallis.
This study was conducted under Oregon Agricultural Experiment Station Project No. 892, 'Problems and Prospects Facing Oregon Wheat
Growers.'
AN ANALYSIS OF JAPANESE FOOD GRAIN POLICIES
William F. Payne and Gary L. Seevers
SUMMARY
Although the basic structure of Japanese food grain policies was stable
during the period analyzed in this study, 1963-1969, the prices administered
under the policies changed rather dramatically. The guaranteed price support
to rice and wheat producers increased 46 percent and 23 percent respectively.
Government resale price of domestic rice was increased 30 percent, while the
wheat (imported) resale price rose 3 percent. These changes occurred in the
face of a 19 percent increase in rice import prices and a 6 percent decline
in wheat import prices.
In combination, these price changes had significant effects on the three
policy objectives estimated in this study. Farm income transfer was defined
as the increase in total revenue to food grain producers above a hypothetical
free trade situation. With free trade, domestic farm prices would have been
equal to import prices. Farm income transfer rose from $743 million to $2,181
million between 1963 and 1968, and declined slightly to $2,110 million in 1969.
The policies had a similar impact on consumer expenditures. Consumer transfer
was defined as the increase in total expenditures on wheat and rice above what
would have been spent if the same quantities had been purchased at•import prices.
This assumes changes in resale prices were passed along fully to consumers by
the food distribution system. Consumer transfer increased from $871 million in
1963 to $1,856 million in 1969.
The third effect of policies was on the government budgetary balance associated with the food grain program. The resale of imported grains above import
prices led to a net government revenue, mostly from wheat imports. In contrast,
the resale of domestically produced grains below purchase (support) prices resulted in a net budgetary cost, mostly from the rice program. The net effect was
to increase the budgetary deficit from only $190 million in 1963 to $1,001 million
in 1968. The 1969 deficit was slightly less. The rise in support prices, designed
to meet the objective of improving farmers' incomes, would have led to a larger
deficit if resale prices for rice had not been increased along with support
prices. This latter action, however, caused a conflict with the objective of
maintaining low consumer prices and the broader objective of restraining general inflation.
2
Although there are several potential effects of Japanese food grain policy
changes on Pacific Northwest (PNW) wheat exports, these do not appear to have
sweeping consequences. The inelastic price nature of demand and supply of food
grains suggests that changes in incomes and consumer preferences are the most
important factors affecting Japanese food wheat imports.
Food grains are only one component of the overall food policy in Japan.
Broader policy changes with respect to increasing meat consumption could have
an effect upon PNW white wheat exports for feed. However, Japan's policy of
diversifying sources of agricultural imports may prevent the PNW from realizing
a significant increase in feed wheat exports.
INTRODUCTION
Japan imports more wheat on a cash basis from the Pacific Northwest (PNW)
than any other country. Over 75 percent of all cash wheat exports from the PNW
have been shipped to Japan in recent years. Foreign demand is especially important to white wheat producers because approximately 80 percent of PNW white
wheat is exported each year. Of every four bushels of white wheat exported
from the PNW during the 1960's, one bushel was shipped to Japan. Only India
imported more white wheat from the PNW, and Indian shipments were exclusively
on a concessional basis (government sponsored) under Public Law (PL) 480. With
recent declines in PL 480 shipments, maintaining and expanding cash markets has
become essential to the export-oriented wheat industry in the Pacific Northwest.
The Japanese market is at the center of this challenge.
In addition to holding a prominent position in the PNW export scene, Japan
also follows domestic food grain policies that are closely related to her trade
policies. This publication reports the findings of a study undertaken to anal/
lyze Japanese food grain policies.— The basic premise of this work is that
a better understanding of Japanese policies is necessary in order to anticipate
changes in policies and the probable effects of these changes on Japanese food
grain imports. Specifically, the study estimates the effects of policies on
income transfers between consumers and producers, and on the budget of the
Japanese government.
JAPANESE FOOD GRAIN POLICIES
Most developed countries follow policies designed to improve incomes for
producers of farm products. This usually requires a close coordination between
domestic policy and foreign trade policy. For example, price support programs
may raise farmers' incomes, but protectionistic trade policies are necessary
to prevent imports from flooding the domestic market.
1/
For a complete report of the study, see William F. Payne, Jr., "An Analysis
of the Japanese Food Grain Policies." Doctoral dissertation, Oregon State
University, 1971.
3
The Japanese government conducts an extensive price-support and price21
stabilization program in the production and marketing of food grains (9).
Domestic producers are protected from international competition by means of
state trading, which permits the government to directly control imports. Because food grains have traditionally been in short supply, the government has
not encouraged wheat and rice exports.
Japanese agricultural policies have evolved from the Food Control system,
set up during a period of food shortage when indirect controls could not stabilize supply and price. Established in 1942, the Food Control system was given
the initial objectives of increasing food grain production, controlling distribution, and maintaining low consumer food grain prices.
After World War II other objectives were included in the Japanese agricultural policy. Rapid industrial growth placed the average income of Japanese
factory workers far above that of farmers. To help alleviate this problem,
agricultural policy was given the additional objective during the late 1950's
of increasing farm income.
Japan's industrial development was dependent upon importing raw materials and exporting manufactured products. This created a critical need for
foreign exchange to purchase raw material imports. Thus agricultural policy
also assumed the objective of conserving foreign exchange, which was consistent with the earlier objective of increasing food grain production.
In recent years, with a rice surplus beginning to appear, the emphasis
upon stimulating production has been reduced. Conserving foreign exchange
has also decreased in importance as Japan obtains increasing amounts of foreign exchange from expanding export markets. Emphasis upon controlling the
distribution of food grains has also been relaxed. As changing circumstances
have altered the need to meet the original objectives of the Food Control system, the policy focus has changed.
Increasing farm income continues to be an important objective of Japanese food grain policy. Although maintaining low consumer foodstuff prices
remains an objective, it is becoming more difficult as consumer incomes rise.
Still another policy consideration has emerged during the 1960's. The rising cost of food grain programs to the government has become a source of
concern to Japanese officials.
To attain the objectives of the Food Control system, the government has
employed the following policies:
(1) Price supports to food grain producers, implemented by guaranteed government purchase at the announced support price.
Underlined numbers in parentheses refer to Bibliography, page 21.
4
(2) Resale of food grains purchased from producers, at a price
below the support price.
(3) Government purchase of imported food grains at world prices,
and resale to processors at higher prices. This process will
be referred to as "skimming."
This study analyzes the above policies in relation to the objectives of
the Japanese Food Control system. Particular emphasis is placed upon identifying the effect of Japanese food grain policies upon farmers' income, consumers'
income, and the government budget.
ESTIMATED EFFECTS OF FOOD GRAIN PROGRAMS
Food Grain Prices
Before reporting the estimated effects of Japanese food grain policies, it
will be helpful to review how the policies relating specifically to food grain
prices have changed during the period studied. Figures 1 and 2 show trends in
support prices, resale prices, and import (landed) prices for rice and wheat,
respectively. Support prices for rice and wheat have been raised substantially
over the period; however, rice prices have increased more than wheat prices.
The purchase price of imported wheat has been relatively steady, as has the
resale price of domestic and imported wheat.
Farm Income Transfer
The concept of farm income transfer is employed to quantify the income
added to total farm income as a result of wheat and rice policies. This involves a comparison of (1) total money income received from food grains marketed
under the price support programs, and (2) total money income which would have
been received if domestic food grain prices had been equal to world food grain
prices. Total farm income transfer for each year is then obtained by simply
summing the additional income from the rice and wheat programs. This approach
will provide an indication of the relative importance of each program in the
total farm income transfer.
Rice Program
Farm income transfer from the rice program (FIT ) is calculated by multiplying the quantity of rice sold to the government trmes the difference between
the domestic support price and the price of imported rice. Price variables are
expressed in U.S. dollars per metric ton, quantity variables in metric tons,
and FITRin U.S. dollars. All data are based on Japanese fiscal years (JFY),
April to March.
The calculations yielded estimates ranging from $722 million in 1963 to
$2,011 million in 1969 (the year ending March 31, 1970). FIT R has grown steadily and substantially over the 1963-1969 period, as shown in Figure 3. Appendix
5
400
350
Support price: brown rice, grade 3
Resale price: domestic rice
300
250
Resale price: imported rice
200
150
Average import price
100
50
1963 1964 1965 1966 1967 1968 1969
Figure 1. Japanese rice prices, 1963-1969.
200 150 -
Support price: class 2, grade 3
100
Resale price: imported wheat
Resale price: domestic wheat
Average import price: food wheat
50
1963 1964 1965 1966 1967 1968 1969
Figure 2. Japanese wheat prices, 1963-1969.
Source: William F. Payne, Jr. "An Analysis of Japanese Food Grain Policies."
Doctoral dissertation. Oregon State University, Corvallis, 1971.
6
FIT
w
FIT
Million dollars
2,200
R
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1963
1965
1967
1969
Figure 3. Total farm income transfer, Japanese fiscal years 1963-1969.
7
A gives the numerical estimates of FITR.
Wheat Program
Farm income transfer from the wheat program (FIT w ) is calculated by subtracting the estimated value of wheat that would have been produced at the world price
from the value of wheat actually sold to the government under the support program.
Quality differences between domestic and imported wheat are a potential source
of error in calculating FIT w . Accurate measurement requires comparison of domestic prices with the import price of equal quality wheat. To correct for quality
differences, the support price of Japanese wheat was compared to the landed price
of Western White #2, which is most comparable to Japanese wheat. The landed
price of W.W. #2 is below the average landed price of all classes of imported
wheat. Thus FITWwould be biased downward if domestic prices were compared with
the average import price of all wheat.
FIT increased from $21 million in 1963 to $107 million in 1968. The
1969 transfer decreased to $99 million because of a smaller wheat crop. This
is shown along with FIT R in Figure 3. Appendix B gives the numerical estimate
of FITw.
Total Farm Income Transfer
Total farm income transfer is a measure of additional income accruing to
rice and wheat producers because of government price support activities. Figure 3 indicates that food grain price support programs have added over $2 billion annually to Japanese farm income in recent years. This is approximately
$174 per person engaged in farming operations, or $488 per household selling
food grains.—/
The rice program dominates farm income transfer because of high support
prices and the large quantity of rice produced. Average 1969 farm price for
brown rice (grade three) was $374.53 per metric ton, compared to $165.00 per
metric ton for imported rice. Average 1969 farm price for wheat was $148.10
per metric ton, compared to $71.76 per metric ton for imported food wheat.
Consumer Transfer
Food grain price supports are a social transfer payment, with wheat and
rice producers being supported by government budgetary deficits and higher
consumer prices. Farm income transfer results in a government budgetary deficit, because food grains are purchased at the high support price and re-sold
at a lower price. To help reduce the deficit, domestic wheat and rice are
re-sold above the imported price of similar quality food grains. Thus, much
2/ Based on the following estimates:
5,400,000 farm households with 80 percent selling food grains (3).
2.8 members per farming household (4).
8
of the potential budgetary deficit from price support activities is transferred
to consumers in the form of higher wheat and rice prices.
Additional expense is originally incurred by millers (for wheat) and
processors (for rice). The exact additional cost is assumed to be passed on
to consumers. Consumer transfer will involve a comparison of (1) expense
resulting from purchasing grain at government resale price, and (2) expense
which would have resulted from purchasing the same quantities of grain at
import prices.
Rice Program
Consumer transfer from the rice program (CT R) is calculated by determining
the additional expense incurred because the government re-sells domestic and
imported rice above the price of imported rice. Detailed purchase information
was unavailable for rice, so quality adjustments were not made between domestic
and imported rice. Figure 4 indicates that the consumer transfer from the rice
program increased steadily from 1963 to 1967, rising from $803 million to $1,671
million. Since 1967 it has been relatively stable. Appendix A gives the numerical estimates of CT .
R
Wheat Program
Consumer transfer from the wheat program (CT w ) is calculated by determining
the additional expense incurred because the government re-sells domestic and
imported wheat above the price of similar quality imported wheat. Like rice,
the wheat program led to an increasing consumer transfer over the 1963-1969
period. But unlike rice, the transfer did not stabilize in the latter year;
it actually increased sharply in 1969. Appendix B contains the numerical estimation of CTw .
Total Consumer Transfer
The combined effects of food grain policies on consumer transfer are given
in Figure 4. Japanese wheat and rice programs have resulted in a consumer transfer of about $1.8 billion per year since 1967. This is an'average of $18 per
year for each of Japan's approximately 100 million consumers. Approximately 95
percent of total consumer transfer results from the rice program.
Budgetary Balance
Budgetary balance is a measure of net government deficit or surplus resulting from the wheat and rice programs. This involves the calculation of (1) government budgetary deficit caused by re-selling domestic grain below the purchase
(support) price, (2) government revenue gained from re-selling imported grain
at a profit, and (3) government handling cost of imported and domestic grain.
Rice Program
Table 1 indicates budgetary balance of the rice program for the period
1963-1969. The budgetary deficit was only $224 million in 1963, but it rose
9
,
Million dollars
CT
w
CT
2,000 -
R
1,800
1,600
1,400
r
1,200
1,000
%
800
600
400
200
1963
1965
1967
1969'
Figure 4. Total consumer transfer, Japanese fiscal years 1963-1969.
10
......
r- 0 ON .0 0
44 01
Lel .0 I
NI N. NI Lel 0 r-I 0
t, 0 C)
.0-.. .0 N4 CO N. .0 -..t 0a
-1-1
a
a
a
a
.
.
03
Clj cu $.1 1.4
4..) u
00 14 ..4- Cfl cv 1--- co es.1 . - I
C) 0 r-i 0 0 ch cn cn Li") .1' OD /el
1--en a",
00 AI (0 I-1 r-I -4- .0. eel. CO
.
.
.
.
na .--1 43 Ca. .-1.
O 0 o
0 -7 .--1 0 CO in r-) el
•0 cv a' in cv r-I C. r-I
ccl .0 4-1
..." CV CV Ui 00 N ON N.
I
I
I
I
I
I
I
$.4
O
r-I
▪ 14-1 0 0
to 0 ev 0
▪ -.7 NI 0 0
• N 0 ON 10 0 Er) 0a
cd
a
w
N Cr) ON -.I
r-1
r- 1
1--1 N. er) N ON C
t
O AO Cn
Cn
• .a a
A r`•
r0
a a
1-I .7 NJ Cr) 0 Cr) Cn
N. In C.r)
O
es.
U)
a)
•rt
ra
0
0.1
.0
...-..
U
0 0 0 0 0 1-••• 0
•1-1 ..-... ....t 0 un 0 0 ■.0 0
(..) C.) U) r... 0 1"..r-I• 1,1a •-..1-a 0a
a)
$.4
a
a
a
0) • r., • ,..4
C)
U) CA
r-I 4-4 4-1 0 Cr) CO N. 0 ,-.1 (NI c‘i
cd
O 0 0 (A (1) r-I in N.0 0 0 N. (11 r-I
CV C'N
"0 r0-I r-Ia N.a ina 00a eei
C.) 1 .O 0 co
0) E0),....,
›.4
a
a
a
() .,-/
CM
0
N0
0
11-1
10 •...1' .0
ri
440440
td
O
10 W v ...1- ("4 0 Crl N. cn in
r-I •••1' N.0 •O• N.
(.1
C.)
0.4
•r4
U)
1,4
(1)
C)
4-1
00
0
44
4-1
.r-I
C.7
0
0 •
Cz4 co
vi
0) r-1
U) r-1
(1) CO
CO
a, 0
cc) 0
.0 ■-I in
......., (V '1/40 in r-I Cr) -...1- 0
n
■1 • .73 . . . st co a\ ON 0
(
'0
00
a
a
a
a
a
a
44
a
0
(1)
CC
Cn .0 en r4 -...? ..O• in
•al
4.1
0)
$.1 0 ,..1 U) ,-.I Ce) L.r) tr) in N Cr) CO
N.0 CYN N. ••10 •r4 '10 0 r-i ON CV N.
a
A
a
a
a
a
G. $•• 0 0 0
"0
NI
NO
CO
10
Cr/ r-I
O
.....
H
.0
0 0 0 0 0 N. 0
.•••■ .0 -..,1* -4' 0 0 0 0
-I CO In LI-1 NI ((.4 0
VI
r
00
C.)
a
a
a
a
a
$.,
a
a
•v-I
0
W
.r4 4.1 CA -..0- 141 V) 141 ND 01 ...7
CO C.) r-I U) .-4 co s..I' .....? 0 en 0 0
M
01 CV CO r-4
00
0.) •r4 "0 0 •-I CV
A
A
A
A
a
A
et
8 1-I 0 t) 0
7:1 CYN NI N. ...1" N In NO
CO
.....,
ON
0
0
.1'
VO
10
NO
A
4
r•-1 CV CV CV CV CV CV
4-I >,
O 1-)
9-1
(f)
•f-I
r-i •r4
14 0
4.1
O 43
0
_
(I)
03
• 0
i3 0
cO
W0
a
CC
›,
0 •
a
0)
O
•
fri 4.1
r-1
CO
C.)
01
•r4
C)
CA H
0) CO 1-1
U
cO co W
ttl 4.4
•
N.
cd r-I
cO
•,-1 a)
■•-1 U)
1-4 CA
•r4
0)
1f1
N. CO al
C")
N.0
N.0 vr) N.0 N.0 N.0
ON ON 01 ON ON 01 ON
r-I
r
1
1 -4
r-I
?.4 1-1
cn
3 .0
••
O
CCO
I
1.4
O
.0I
11
to $993 million in 1968 when a record domestic crop was harvested. The 1969
deficit declined to $713 million, primarily 7.cause domestic production declined substantially from the previous year.
Domestic price support and handling costs dominate the budgetary deficit.
Costs associated with price support activities range from $44 million to $739
million, with the 1969 cost being $450 million. Handling costs have ranged
from $199 million to $267 million, with 1969 handling cost being $266 million.
Rice imports have declined from a high of 902,416 metric tons in 1965 to
50,000 metric tons in 1969. The result has been corresponding declines in
handling cost and "skimming" revenue. Handling costs have declined from $8
million to $485 thousand, while "skimming" revenue has been reduced from $72
million to $3 million.
Government "skimming" operations cause the budgetary deficit to be negatively related to imports. Increasing imports result in increasing government revenue. However, government price support policy causes the budgetary
deficit to be positively related to domestic production. So increasing domestic production and decreasing imports result in a larger budgetary deficit.
Wheat Program
Government budgetary balance from the wheat program (BB w ) has been subject
to considerable variation, from a $33.8 million surplus in 1963 to a $7.8
million deficit in 1967. Table 2 emphasizes the contributions of imported
wheat toward obtaining a budgetary surplus. A high import dependency rate has
contributed substantially to the budgetary surplus. Just as in the rice program, an increase in imports or a decrease in domestic purchases will improve
the budgetary balance.
Total Budgetary Balance
5/
Total budgetary balance has been in continuous deficit from 1963 to 1969.
Occasional budgetary surpluses from the wheat program have not offset continuous and generally increasing rice program deficits. Figure 5 illustrates that
the deficit increased rather dramatically until 1968. The 1969 deficit was
$704 million, down from the 1968 high of $1 billion. The budgetary deficit
involves a government expenditure of approximately $7 for each of Japan's estimated 100 million consumers. Total cost of the food grain programs per consumer
This does not include the handling cost for approximately 5,100,000 metric
tons of stored rice on hand at the end of 1969. Handling costs are calculated only for the quantity sold by the government.
5/
Total budgetary balance does not include government expenditures for food
grain research, education, land development, or advisory services.
12
r -i
a, C.) 4.3
4-1 0 0
0I a) Cd 40.0
cd 44
0 .0
as)
0
"C)
4.1
t 14 •-1
a) oo •-4
4 0 0
$.4
(:L
c0
re/
•-■•
M
0
CV ON %.0 00
CS cC.13 111-1
"
0 03
C1
c0 cr,
c (NI co
A
Le)
O.
Mc0 c‘.1
A
trl r•-•
cp%
A
Cs4
I
1
I
O
O
•-I ....-. in •-1 ....1- (V •-1 0 0
a) ^0 ca. u) N. 0 0 Cc/ 0 ....7 N.
r.. a.,
W U) CO al 1.1
N. %.0 N. Co
. . O'A A
•-I 0 0 4.J 0 CC!
A
.
Cd 0 4 /4 CO •-4 CD M in •-•I CO ON CT
44 I rn • -1 U 0 ••-' r-I 01 CO VI N. c.,1 (-.4 ,-1
CU 6 140L.
0 -..1 01 .7 VD CV ■0 ..7
0 0 4-)
^
Q • -1 Cti
CU
'0
...*
r-I 1-1 .7 CV CO v--1 N.
s.0 1.r1 ul ,..0 tr1 s..0 N
ro
O
4.3
U
O
cdclt‘
cri
••.4
CO
0
, «CI
'-71 C
i4
0
W
ON
u
W N-C 4-I
.--i 4) a)
cd 0) 13
CD CD ••••••
Cd 6
i-1 0 4-■
'0 0
U •,-I
CU
co
Z
0
4-4
E
0)
ri
}.4
'0
......
r
0
r
in
r
•-i
w
....?
c
w
w
....t
i-I eN) cel cn M ....t
U
••-I
0
w
1.-4
cs4
.7
0.
0
4-1
•
O ..-4
ro
•-4 CO ON 0 0 irl
CO ...0 CN cs1 '-1 0 .7 O ...t crl 0 0 ,..c) ■0 %c)
co
as
.
n
es
.
es
.,
ri V3 N.• u10.1 M .4 -I0
...-1 O\ N. O. r-4 0 %.0 0
O 0 en -...7 .7 ON 0 ON
•CS
A
A
A
A
A
A
A
s•-• 1-4 0 ,--4 cn ,r.1 c ..1
r-I ,-1 r-I i--I ,--I .--1 r-I
r--II
....... ...1*
-13 4.j 00 ED
O.
N
.1-1 Cd -1-1 1-
I
U3
ro
01
1-1
0
$.4
Pr
ro
••
co
cr\ r-1 ..0
...? 00 C4 0 0
0
.--1 NN,-I• 01 0 •-•1 CO
.--1 N. cri MM,,o M0
O Nin %.0 ON N ..l• N
3
CA
1-)
0 0
0 (= 0 c0
u) 0 0 010 ,...1- Ls, 00
.•••••■
)4 a) ,-i co
0 ,4 -0 0
0
0
1-I
4
c)
IX
cO
•)-1
4..) 4-J0
03 .ri 4.10
CO W •-•1 VI
a) 4 -0 0
0 3 0 C.)
0
0
01
•0
'0
a)
4-) 4-)
1:10 J
bCd14
0 a) 0
0 4 0.,
Vz• 3 0
4-i
C1)
<41
.--, 0 0 0 0 0 1,1 0'
0) N. U.) Cn crl cV en a,
S.4 04 C`') CV N. CV 1-1 M
aj
w
e,
as
.
n
.
r7.4 co
•1-4
r....I
0 0
O >
O $.4
C. 0
0 c_)
a) i-I
4-I
a) ti)
•r-I $.4
co a)
%.1
›',
rI .r4
00
•=d
a 0 ...1` N. in ,--I .4
CO trl CV CV VO N. ...1'
N. •-I ‘..0 MN• 03 ,--1
w
w
ot
.
.
e■
r- Iw
,.0 r-I CO 0 N.1 0\ Cel
in c:r1 ..I. ON -4- rN.
0
1.1-1 re) ,s13 0 N N CV
.
.
. A
A
A
A
CV CV CV M CV CV M
a)
O..%
•
0 .1.)
<0 0
-
4J
cn
• 0
)4 0
1-) b0
Cd
.. 1.4
00
0
0 •
P.4 0
0
. •ri
44 .6/
a)
4.)
Cd
0
4.)
co
a)
ch
•ri
Irt 43 N. 00 CA
,.0 ....0 '.0 s..0 s.0 V.)
a% O. ch 01 01 01 CT
r-1I 1-4 v-i v--I r-I 1-1 1-1
.1-1
di
4.4 >-,
1-)
C•.3 O.
■••`I
•c)
0
•
I-)
.-i %.0 cN 01 LNI %-t 00 0
,-I N '0 .4. -.7 ,-) ..y. N.
O eq en CO N. -4- ON Lrl
"0 ..,
0.
.,
.s
...0,
..,
)4 es.) m (NI eN.1 cv •-i
.-i i--I •-I •-I v-I I-I
rn ....?
N.
c4-1 >,
0 41
A
'0
U
W
0 0 0 0 CD 0 ...0
•ri 4-1 2 /. CD 0 0 0 0 00 a%
4-3 0
• 0 0 0 0 0 00 r--1
ra (1) ..5 4)
.
a
a
...
...
.
.
. in Irl 1.-4 N. CO 00 ON
w ,.
0
7.4 0 1/40 e--1 0 Mr-I ...I* N.0
en N. 03 N N. N %.0.
0
0
A
G.
10
a)
c0 •-4
a) 0 $4
0 U Cd
Cd u) a)
•
.0
01
r-I
-.....
cd i
0
0
I
A
I
W
I
PT.
II
C_1
--....
41
cad
0 S4
4-1 01
s-I cd
i-.I co
-1-4 •rf
a)
U
&.i
0
cn
-0
13
Million dollars
200
0
-200
-400
-600
-800
-1,000
-1,200
1963
1965
1967
1969
Figure 5. Total budgetary balance, Japanese fiscal years 1963-1969.
14
(consumer transfer plus budgetary deficit) is estimated to be $21 per year.
Potential Effect of the International
Arrangement (I.G.A.)
j
Grains
The International Grains Arrangement went into effect July 1, 1968, for a
period of three years. This arrangement replaced the International Wheat Agreement (I.W.A.) which expired July 30, 1967. The I.G.A. resulted from agreements
reached in the Kennedy Round negotiations conducted within the framework of the
General Agreement on Tariffs and Trade (10).
The I.G.A. consists of two parts: a Wheat Trade Convention and a Food Aid
Convention. The Wheat Trade Convention set minimum and maximum prices for 14
major wheats moving in world trade. The minimum prices were higher than those
established under the I.W.A. For instance, the minimum prices for most wheats,
under the new arrangement, were about 20 cents per bushel higher than the minimum under the I.W.A.
Failure to maintain the minimum prices has led to the collapse of the
Wheat Trade Convention. Although a detailed analysis of factors leading to
the collapse is beyond the scope of this study, the previous framework can
, and
be employed to study the potential impact of the I.G.A. upon FIT w , CTW
W'
BB within Japan.
Japanese fiscal year 1966 was chosen to illustrate the potential effect
of the I.G.A. Raising world wheat prices 20 cents per bushel would have increased the 1966 landed price of Western White #2 from $77.90 to $85.25 per
metric ton. The estimated area that would have been planted in wheat at a
price of $81.88 per metric ton increased to 114,899 hectares. This raised
estimated 1966 production from 162,340 to 279,434 metric tons.
The impact of higher world wheat prices and greater domestic production would have decreased farm income transfer (wheat) 13 percent, from $85
million to $74 million. Consumer transfer (wheat) would have registered a
38 percent decline, from $74 million to $46 million. The greatest potential
impact of I.G.A. upon Japanese wheat policy is reflected in the budgetary
balance. The government budgetary balance (wheat) for 1966 under I.G.A.
prices would have been a $21,161,525 deficit, compared to the non-I.G.A.
surplus of $1,588,282.
IMPLICATIONS FOR PACIFIC NORTHWEST
WHITE WHEAT EXPORTS
Implications of Food Grain Policies
Although Japanese food grain policies have been successful in raising
6/ For similar estimates of the annual budgetary and excess food costs resulting from E.E.C.'s common agricultural policy, see Kruer and Bernston (5). The
Kruer and Bernston study includes costs of all agricultural programs, so the
results are not directly comparable with those of the present study.
15
farm incomes, they also have resulted in steadily increasing budgetary and
consumer costs. Increasing costs represent growing pressures to alter food
grain policies. For instance, the 1969 support price of rice was held at
the 1968 level. However, the rice resale price and wheat support price continued to be increased. Assuming that pressures invoked by the present
policies lead to further changes, how may this affect PNW white wheat exports?
Based upon the framework of this study, the principal effect of the present policies will be on Japanese wheat production. Rice production and demand
were assumed to be nonresponsive to price, based on available empirical studies.
Wheat acreage decreased by 50 percent between 1963 and 1969, although production
and government purchases of that production decreased by a smaller percentage.
The cause of this decrease has been rising nonfarm job opportunities that more
than offset the increase in wheat price supports. It was estimated that if
wheat prices had been set at world prices, wheat production would have been
nearly zero in Japan. In view of the probable expansion in nonfarm job opportunities, a leveling off of wheat price supports can be expected to further
diminish wheat production. Since Japanese wheat is comparable to Western White
and other non-bread wheats, this could lead to greater imports of Western White
wheat. Indeed, the strong position of white wheat in Japanese imports during
the past decade has probably been influenced by declining domestic production.
Rice price policies do not affect wheat imports in this study. 2 However,
the development of nearly a year's surplus of rice could generate indirect effects. First, the Japanese may launch a concessional export program to developing countries of Asia. This could reduce concessional wheat exports from the
PNW, which have constituted about two-thirds of total exports. Concessional
exports have been shipped almost exclusively to developing Asian countries.
A second indirect effect could arise if policies are changed to make rice
a feed grain in Japan. By affecting feed grain imports, the potential for expanding PNW exports for this market (which has been minor to date)'woul be re88
duced.The third possible indirect effect arises because new policies may
be adapted to deal with the rice surplus problem. Already a program has been
implemented to divert land from rice production (6). Although participation
has been weak, such a program could bring about a reduction in rice production.
If this land were diverted to wheat (which seems improbable), the need for
imports would decline.
In summary, although there are several potential effects of food grain
policy changes on PNW exports, these would not appear to have sweeping consequences. Indeed, given the inelastic price nature of demand and supply of
food grains, the more important factors affecting food wheat imports are changes
in incomes and consumer preferences. These factors have been contributing to a
decline in per capita consumption of rice.
//
8/
This assumes no major changes in the present structure of rice programs.
This is discussed further in the following section.
16
Unlike rice, per capita wheat consumption has been increasing. However,
future dietary patterns within Japan are expected to reflect a shift away
from white wheat products toward bread and other products made from hard
wheats. While this expectation bears careful monitoring, no trend in that
direction has so far emerged. The proportion of white and soft wheats to
total Japanese food wheat imports has been relatively stable at 25 percent
throughout the 1960's.
Broader Policy Changes
Food grains are only one component of overall food policies in Japan.
In 1966 the Ministry of Agriculture and Forestry predicted that total consumption of meat, milk and dairy products, and fruits would more than double within
10 years. The consumption of soybeans, green vegetables, sugar, and fats and
oils was also predicted to increase by more than 50 percent. Consumption of
wheat and eggs was expected to increase substantially, but rice consumption was
expected to remain about the same (8). This prediction reflects a substantial
change in Japanese dietary habits.
Japanese economic growth in commerce and industry has generated new consumer purchasing power. The result has been rising food prices, because food
supplies are constrained by production problems and state control of imports.
This has led the government to adopt the following objectives to deal with
growing consumer purchasing power: (1) Increase of the per capita supply of
all food in total, to lessen nutritional deficiencies and help satisfy economic
demand, and (2) increase of supplies of high-cost energy faster than supplies of
low-cost energy (2). High-cost energy refers to fruits, vegetables, and animal products, which absorb larger amounts of consumer purchasing power.
Increasing the supply of animal products could have an effect upon PNW
white wheat exports. The geography of Japan severely limits land area for cultivation of feed grains. Thus, any significant increase in the supply of livestock
products must be obtained either by permitting more imports from other countries
or by increasing imported feed grains to supply domestic livestock producers.
The Japanese government has chos en the latter approach, and is beginning to
decision to stimulate Livestock produc2
stimulate livestock production.—
tion could have an impact on the PNW by increasing feed wheat sales.
In 1969 Japan imported 420,198 metric tons of feed wheat from the United
States, including 30,156 tons of white wheat. This compares with feed wheat
imports from the United States of 376,550 metric tons in 1968, and 433,660 metric tons in 1967. White wheat was not included in the 1967 and 1968 feed wheat
imports. While the 1969 quantity was insignificant compared to food wheat exports, there is potential for increasing feed wheat sales because of the expected
—9/For a roughly chronological listing of policy decisions leading to the
new food strategy, see Barse (2), pp. 22-24.
17
10 /
growth in total Japanese feed grain imports.— However, wheat will have to
be competitively priced to share in the expanding Japanese feed grain market.
Appendix B, Table 3, contains a detailed listing of Japanese feed wheat imports,
11/
by country of origin.-An important consideration involves how Japan's regulated imports of feed
grains will be allocated to various geographic regions. Japan's long-term
policy of diversifying sources of agricultural imports can prevent the expansion not only of PNW feed wheat exports, but also of total U.S. exports. This
policy appears to be based on the following objectives: (1) Providing a hedge
against supplies being shut off by major suppliers; (2) improving Japan's
bargaining strength with existing countries; and (3) encouraging other countries to purchase Japan's industrial products. The policy of diversifying
import supply is being implemented by Japan's foreign aid programs in all developing regions of the world. The commodities on which major emphasis is
being placed are corn, grain sorghum, cassava (for animal feed), oil seeds,
tropical fruits, and silk. Most of these products compete directly with wheat
as a source of livestock feed. By 1975 Japan is expected to import 1.5 to 2
million metric tons of corn and 200,000 to 300,000 metric tons of grain sorghum
from southeast Asia. An equivalent amount also may be imported from Australia (8).
Thus, continued analysis of Japanese food policies is necessary if Pacific
Northwest wheat producers and members of the grain trade are to continue benefitting from the Japanese market. In terms of impact on PNW white wheat exports, the broader food policy has potential implications, particularly on the
market for feed wheat.
19I/
1
1/
In 1968 feed wheat accounted for 15 percent of total Japanese feed grain
imports.
For a listing of major corn and sorghum supply centers, see Pike (8).
18
APPENDIX A
RICE
Table 1. Farm Income Transfer, Rice Program, Japanese Fiscal Years
1963-1969
Fiscal year
FIT
R
(dollars)
1963
721,790,520
1964
867,889,470
1965
1,144,039,680
1966
1,640,627,400
1967
1,883,658,000
1968
2,073,720,164
1969
2,001,488,000
Source: William F. Payne, Jr. "An Analysis of Japanese Food Grain
Policies." Doctoral dissertation. Oregon State University,
Corvallis. 1971.
Table 2. Consumer Transfer, Rice Program, Japanese Fiscal Years
1963-1969
Fiscal
year
Imports
Total
(dollars)
(dollars)
(dollars)
1963
781,116,320
22,179,116
803,295,436
1964
874,847,280
44,337,025
919,184,305
1965
994,315,390
72,094,014
1,066,409,404
1966
1,375,199,750
53,399,664
1,428,599,414
1967
1,640,470,500
30,734,025
1,671,204,525
1968
1,621,303,841
13,414,500
1,634,718,341
1969
1,760,544,000
3,750,000
1,764,294,000
Domestic
Source: William F. Payne, Jr. "An Analysis of Japanese Food Grain
Policies." Doctoral dissertation. Oregon State University,
Corvallis. 1971.
19
APPENDIX B
WHEAT
Table 1. Farm Income Transfer, Wheat Program, Japanese Fiscal Years
1963-1969
FIT
Fiscal year
W
(dollars)
1963
21,635,430
1964
55,343,804
1965
73,938,200
1966
85,059,510
1967
98,523,462
1968
107,546,657
1969
99,107,928
Source: William F. Payne, Jr. "An Analysis of Japanese Food Grain
Policies. - Doctoral dissertation. Oregon State University,
Corvallis. 1971.
Table 2. Consumer Transfer, Wheat Program, Japanese Fiscal Years
1963-1969
Fiscal
year
Domestic
Imports
Total
(dollars)
(dollars)
(dollars)
1963
6,639,270
61,490,775
68,130,045
1964
10,589,150
51,983,601
62,572,751
1965
12,335,400
54,455,709
66,791,109
1966
11,408,760
62,671,832
74,080,592
1967
12,486,020
58,228,901
70,714,921
1968
15,988,588
61,629,740
77,618,328
1969
15,204,133
77,419,990
92,624,123
Source: William F. Payne, Jr. "An Analysis of Japanese Food Grain
Policies." Doctoral dissertation. Oregon State University,
Corvallis. 1971.
20
c) c) aq ,r ,t
on cy on Ps Ps sr.r
1111
1111
CM
•
Ch
r -1
a. -a-
CO
VD
CM
H
.1. Is,
00 ON
rA Ps I rs C' 1
r-1 Cr) I H H 1
A
I
I
rA
Ps Ps
01 Cl VD 01
MD CV I VD VI I
r-I sT I HP4 I
1
I
-4
'0 VD
01 on
H
M
O N.0
z
H H
I
I
rs rs
I
fil
H
c c
C4 cy
1
VI
sT
sT I
I
1 ttl ,.0
rs C) un 1 •--1
I
ce) an
.0 -:::- r-1
s
11
cV CV 11
U
..-1
I
Opt 1
I
M
0
CD VD
CV
I
qD
-t0 HONE
II
CV CV I I
vo
O cv C" I c ..) o I
4) u .0 .0 I .0 o I
D101 1 1-4
CV 1
C'
Ul
C' I H-
'.0 01
I1
1 1
1*".•
,-4
I
00 Ps
I I
I
I CV 00 03
c3N 0.■ 1 N O M
I
I
I
I
I
I
I
I
I
i
I
1
I
•
U)
CU •
•ri •-)
U r-•
1
1
1
•x101
Hr-1
o
a.
I
1
I
•
0 us
•r1 9-1
at •-)
k r-1
S.+
4.4
a)
Ul
qD
ch
c
st
0
oh
H
1
CD
qD
a
-1 r•-• I at WI
0 CO rs 1%00 I
CV I
0 ON I
CD
,--1
■0■011
00 I I
NN 1 I
r-11*--....,1.111
t--4 I 1 I
OOH
-.1* 01
11 I
1
I
1
I
1
1
o C
0
0 C.)
PL,
a) ›,
U) 44
y N. co rs. C4 f
1"••• ,O H ...1. 01
CV I
ON CV
cy I
NON
CV 00 st I
on ,....i 1-1 1
0 •,-4
O U)
Wk
t3. a)
Cd >
1.-n N-I
I
un
co VD al 1 I on
fil Ch H1 1 U'N
ol c4
I
I
a) a.
a —I
as
4-4
a)
U) 4-1
..-1 Ct1
0
<4 in
41
U)
4.1
0
1-1
Cd
H
tn
cr.
r-I 1 1 1 i s
1/4011111
Cr)
I
I
I
I
I
00
)4
Cd
H
CV I r-I
•
•
•
•
•
tin •-.1- 1
rstin on 1
CN
H
•
•
•
•
1
1 ,---1
CIS 4-)
P, En
H
1
I
I
I
0
I
I
...
...
...
...
...
.
.
.
.
.
.
.
.
.
.
• •
• •
• •
• •
...
...
...
...
...
.
.
.
.
.
.
..
...
• • • •
•
•
•
•
I
1 1 .--4
I 1 oN1
•
•
•
•
.
•
•
•
•
•
• • • •
• W
• • • •
. • g 1! ti)
• • • •
• • • r-1 0 0
• • • •
• • •
4.4
• •
)
•
...../
.,•,a
• . 4.,
• -'1,... • •
• • C11 4-1 4-1 4
•
•
• Cd CU CIS CI .1 -i
• rd • •
• QS 4 11 11) 3-1
• , ul ,o
•Z X: 0
• .1-1
• o --*-=
*Ac
30
• cO
U
• U a•
• •.4 • •
• c.," u -0 ..0 ,.
•1-1 k k 4-1
cti• g C.1. L .
• '0 4 as CU Cd
'"0 :.`.:.: 0 C.)
Z P1
•• 4.1
CO
4-1 •rl
0
as 0
0
a) o
•
Cd
.0 1 c-CD I CV
•
.....
•
.....
.....•
•
.....
•
..... •
0
•,-4
a)
co
0
O
• ,•-■ • • •
• to • • •
• • ,./ • • •
• • y4 • • •
• 's 0 • '.0 •
• 4.1 4-I ...... 0•
Oi C1)
• W C.)
• QS •ri C.0 r-i 'V
u ) $0
..
. . ,, z
tt• ,3.... . . .›.,..,. . .,.z
0./ U)
H
■-H0" 0' 0' a)4-1
0 <4 <4 <4 Z 4 -1
k 44 P.+ Pz4 0 0
4.1
W
0
<4
•
•
•
•
•
•
•
•
:
•
•
.
.
•
o
•
•
.
•
.
•
.
•
•
0
U
0
cO
)4
Fx4
.
•
W
H
k
Cil
00
•-1
0
PC1
0
0 o
-0a
a)
O )4
▪ 0
_
•
. 0
14 o
in -II
4-)
. co
w 4-)
0 )4
›, 0)
CO Ca
f14 CO
4-1
• "0
W
r- I
CU 14
•,-4 o
,-) U
HU
-1-1 0
.''2..' CI
••
a)
0
14
0
0
Cf)
21
BIBLIOGRAPHY
1. Baba, Keinosuke. Food control in transition. Rural Economic Problems 1:1-21. 1964.
2. Barse, Joseph R. Japan's food demand and 1985 grain import prospects.
USDA, Economic Research Service. Foreign agricultural economic
report 53. 1969.
3. Japan Bureau of Statistics. Japan Statistical Yearbook 1953-1968.
Tokyo, Government Printing Office, 16 volumes.
4. Kawano, Sigeto. Plurality of the employment structure in Japanese
agriculture. Rural Economic Problems Preliminary Issue: 1-17.
1963.
5. Kruer, George R. and Bernston, Byron. Costs of the common agricultural policy to the European community. In: Foreign Agricultural Trade of the United States, pp. 6-12. USDA, Economic Research Service. October 1969.
6. Long, Mary Ellen. Japan. In: The agricultural situation in the Far
East and Oceania, pp. 15-19. USDA, Economic Research Service,
Foreign agricultural economic report 262. 1969.
7. Payne, William F., Jr. An Analysis of Japanese Food Grain Policies.
Doctoral dissertation . Oregon State University, Corvallis. 1971.
8. Pike, Clarence E. Japanese efforts to diversify sources of agricultural imports. USDA, Economic Research Service, Foreign agricultural economic report 297. 1970.
9. U.S. Department of Agriculture. Agricultural policies of foreign
governments, including trade policies affecting agriculture.
Economic Research Service, Agricultural Handbook No. 132 revised. 1964.
10.
International grains arrangement 1967. Washington,
D.C., 1967. (Foreign Agricultural Service. Bulletin 195.)
Download