Japan
Nr. 194 vom April 2005
Agricultural Sector in Japan
INHALTSVERZEICHNIS
Part I:
Interest Group Activity of the Agricultural Lobby
Nokyo in Japan and its Implications
Michele Graßal
1
Part II: The Japanese Food Business – Selected Facts and
Figures
Angelika Stahl
13
Zu den Autoren
23
1
Japan Analysen Prognosen
Nr. 194 vom April 2005
Japan-Zentrum der Ludwig-Maximilians-Universität, München
Deutsch-Japanischer Wirtschaftskreis, Düsseldorf
Redaktion: DJW-Team, Franz Waldenberger
Düsseldorf/München, 2005
(ISSN 1617-139X; 194 2005)
Weitere Informationen:
Herausgeber:
Japan-Zentrum der Ludwig-Maximilians-Universität
Oettingenstraße 67, 80538 München
Tel. 089/2178-2820
www.japan.uni-muenchen.de
und
DJW (Deutsch-Japanischer Wirtschaftskreis)
Stockumer Kirchstr. 61, 40474 Düsseldorf
Tel.: 0211 5649 8381
www.djw.de
Eine Liste der früheren Ausgaben ab dem Jahr 2000
und kostenlose Downloads finden sich auf den folgenden
Homepages:
www.japan.bwl.uni-muenchen.de
www.djw.de
Prof. Dr. Franz Waldenberger
E-mail: waldenberger@japanprofessionals.com
DJW.
E-mail: info@djw.de
Nachdruck und sonstige Verbreitung (auch auszugsweise):
Nur mit Quellenangabe und gegen Einsendung eines Belegexemplars.
© Japan-Zentrum der Ludwig-Maximilians-Universität/DJW, München/Düsseldorf 2005
Japan Analysen Prognosen Nr. 194 vom April 2005
1
Part I: Interest Group Activity of the Agricultural Lobby – Nokyo in
Japan and its Implications
Abstract
This paper shall investigate and explain the activities of the Japanese farmers’
cooperative organisation Nokyo as an interest group. Attention is drawn to its interaction
with politicians and bureaucrats. On the one hand, vote generation and rent extortion as
incentives for politicians to cooperate will be discussed. On the other hand, rent-seeking
as an incentive for Nokyo will be analysed. The resulting social costs are borne by other
interests and the citizens. In the following, the consequences and implications for the
community, namely budgetary growth and stagnation, will be presented. Hereby, it can
be shown that apart from negative external effects for the society, even the lobbied group
itself does not benefit from the rent seeking activity by the interest group on the long run.
As a conclusion, the analysis will be summarised and an explanation will be offered for
the recent electoral success of politicians who oppose the hitherto exerted policies by
championing standpoints departing from Nokyo’s interests.
1.
Introduction
Japan has been giving many reasons for concern since the bubble economy burst in the
late 80’s. Since the 90’s the economy has been faltering and is in permanent stagnation.
Also in 2003 the unemployment rate remained on the relatively high level of 5.3%1, the
public debt has more than doubled in the last ten years and the budget deficit has been
7.4% of the GDP in 20032. As this is not sustainable in the long run3, the restrictions and
the leeway of governments are bound to change.
Once Japan Inc.’s corporate identity – meaning the high degree of organisation and
collusion – was praised as a major force. Nowadays, though, it rather seems to be
counterproductive against the challenge of tackling urgently needed structural reforms.
As a consequence, public opinion is increasingly critical on lobbyism and vested
interests. Especially agricultural lobbyism and extensive public works whose
representation is embodied by the agricultural cooperatives (Nokyo), have increasingly
come under attack. This paper shall investigate how the farmers’ lobbying organisation
Nokyo as an interest group has contributed to the problems Japan has to cope with and
shall hereby touch the question why it has to face opposition.
After presenting Nokyo as an interest group, the attention is drawn to its interaction with
politicians and bureaucrats. At this point, the incentives for politicians, bureaucrats and
1
Statistics Bureau, Ministry of Public Management, Home Affairs, Post and Telecommunications.
th
www.stat.go.jp/english/data/roudou/154b.htm; downloaded on: January 8 2004. Calculated according to the
labour force concept.
2
Monthly Statistics of Japan, March 2003, Statistics Bureau. To enter EU only up to 3% are allowed.
3
Roubini et al. (1998). Roubini et al. argue that a new indebtedness higher than 4% of the GDP is not sustainable
in the long run.
Japan Analysen Prognosen Nr. 194 vom April 2005
2
Nokyo for cooperating will be presented followed by the consequences and implications
for the community, namely budgetary growth and stagnation. Finally, some conclusions
will be drawn from the analysis and an outlook will be sketched.
2.
2.1.
Nokyo’s Activity
What is Nokyo?
The Agricultural Cooperative Association (Nokyo) is the cooperative movement for
farmers in Japan and has a multi-layered framework. Nokyo is structured in three levels;
local, prefectural and national.
Historically Nokyo’s foundation derives from this presumption as the foundation of its
predecessor was encouraged by the early Meiji government in the end of the 19th century
with the assignment of promoting rural development.4 After being reorganised at the end
of WW II its focus was limited to marketing and sales of agricultural products whatsoever,
but over time it has emerged as a giant in services and trade. Nokyo “nourishes those in
its care with services both economic and political and, in return, absorbs and distributes
the goods produced to the broader community”5. In addition, it is mandated to implement
various agricultural policy programmes.6
Nokyo’s privileges as a co-operative also favoured significantly its emergence as one of
the biggest financial institutions in the world. Zenkyoren, Nokyo’s insurance arm, ranks
as the largest in the world and its banking arm was the principal underwriter of Japanese
government bonds. 7 Its banking business is organised analogously with a three-tier
system, with the national level, Norinchukin, being the financially strongest. Net saving
by the members and the high degree of regulation in Japan favoured its evolution as
major cash-cow within Nokyo. Due to financial liberalisation in the 90’s the profit margins
plummeted, thus, also reducing Nokyo’s financial leeway.8 Nevertheless, Norinchukin’s
balance sheets are sound.9
2.2.
Nokyo as an Interest Group
In addition to its financial muscle, Nokyo has its 9.13 million people membership (farmers
and associates)10 throughout Japan as a lever to maximise the utility for its members.
The associates consist mainly of construction companies that joined Nokyo as “vote
collecting machines for the LDP in rural areas” 11 . Although there are two other
agricultural organisations, their impact can be neglected given their small size compared
to Nokyo.
4
Longworth J. (1983), p. 56.
Op. cit., p. 55.
6
Mulgan A. (2001), p. 6.
7
Amyx J. (2000), p.66.
8
Godo (2003).
9
Norinchukin’s long term debt has been rated A1 by Moody’s Investor Service and A+ by Standard & Poors. See:
Norinchukin Annual Report 2003.
10
According to ZENCHU in 1998. See: www.e-zenchu-ja.org/06/no04.pdf , downloaded on: January 11th 2004.
11
Mulgan A. (2001), p. 12.
5
Japan Analysen Prognosen Nr. 194 vom April 2005
3
Most of the farmers only pursue part time farming on 1.2 hectare on average with little
deviation thanks to the land reform of 1947-1950 in Japan. Furthermore they share a
common interest with construction companies for development projects in rural areas, as
farmers benefit from infrastructural improvements as well as the construction companies,
who have to provide them.12
As the focus of this paper is on the political activity of Nokyo, only the top level will be
considered since it is in charge of achieving national policy goals. Officially, Nokyo is not
allowed to engage directly into political activities, but a separate organisational arm
called ZENCHU is. However, “while ZENCHU may be the spear-head of the farmers’
lobby, the real political power of Nokyo lies in its massive grass-roots membership”13, as
will be elaborated in the following.
2.3.
Relations between LDP, Bureaucracy and Nokyo
2.3.1. The Iron Triangle
The relationship between LDP being in power almost all the time from 195514 on, the
bureaucracy in the form of the Ministry for Forestry and Fishing (MAFF) and Nokyo has
been referred to as “iron triangle”15 describing the strength of their links and their shared
vested interests. A deeper analysis of the relationship especially with the informal
groupings of LDP’s farming politicians in the Diet 16 reinforces the interest group
approach.
In Japan “most agricultural policies are adopted only after a lengthy process of
consensus seeking” 17 among interest groups with the MAFF on the one hand and
politicians on the other. As a consequence, they are also slow to react to changes in the
economic environment18 and impose costs on the community. In this setting of a strong
interest group structure stagflation is encouraged. As politicians consult and seek
consensus with the other members of the triangle, they lose time and hence, necessary
reforms are stalled and their pace remains low.
The incentive structure for all members of the triangle is evident. On the one hand there
are benefits for the interest group, namely rents, opposed by costs for both the
organisation and for the described transfers to give incentives to the bureaucrats and
politicians to act pleasantly. Hence, there prevails a market situation with the demand for
12
However, other authors suggest that Nokyo does not enjoy a monopoly, but admit a preponderant role in the
economic, social and political lives of farmers to it. Hence, the assumption approximates the reality.
13
Longworth J. (1983), p. 55.
14
Andermann G., “Die Entwicklung von Landwirtschaft und Agrarpolitik in Japan und Deutschland nach 1945”, in:
Rothacher A. (1992), p. 207.
15
Mulgan A. (2001), p. 7.
16
The parliamentary representation of LDP is usually subdivided into factions. However, rather the specialisation
of the individual Diet member than the faction reflects the representation of the interests. The tribe (zoku)
consisting of a group of policy bosses stands at the core of the formal grouping. The farming tribe (norin zoku)
has been weakened over the past years, and has found difficulties in finding successors. See: Mulgan A.
(2001), p.14.
17
Op. cit., p. 63.
18
Mueller D. (1989), p. 318.
Japan Analysen Prognosen Nr. 194 vom April 2005
4
favours by the interest group and the supply by bureaucrats and politicians. 19 Nokyo
derives the advantage of a cooperation with politicians as well as the MAFF from the fact
that politicians can enact policies whatsoever and bureaucrats can implement them.
Both LDP and the MAFF have relied heavily on Nokyo as an administrative mechanism
and political means to rally the rural sector behind national policy.20 Of course, corruption
cannot be sketched as no figures exist, but several bribery scandals in the MAFF
suggest “that the collusion between bureaucrats and those they supervise is endemic in
the MAFF as it is elsewhere. In the MAFF’s case, its supervised entities include […]
agricultural groups such as Nokyo”.21 In a way, this means to set the fox to keep the
geese as the MAFF and Nokyo have relatively uniform interests, given that bureaucrats
strive for a high budget, which also benefits Nokyo. Viceversa, a strong agricultural
sector ensured by favourable legislation preserves the power base of the MAFF as its
main attention is dedicated to the agricultural sector. Moreover, “the presence of exMAFF officials has helped the LDP consolidate ties with agricultural special-interest
groups and extend its patronage.”22 Therefore, identical goals will be assumed for the
MAFF and Nokyo.23
2.3.2. The Pillar of Nokyo's Influence – The Vote Generation
Japan has a bicameral parliamentary system with a Lower and an Upper House. The
Upper House has 247 members, of whom 149 are elected directly and 98 through
proportional representation. The Lower House has 480 seats (300 direct, 180 proportional). Japan’s electoral system favours rural areas in the sense that a single vote has
more weight than in urban areas. When the constitution was drafted in 1947 each
electoral district was defined such that the number of voters per elected Member of
Parliament (Dietmen) would be roughly equal. However, at that time many people who
had fled to the countryside from the bombs during the war had not returned to the cities
yet, which spawned a significantly biased population distribution. Accompanied by urban
migration between 1955 and 1970 the ratios of urban votes against one rural vote in
1990 had become up to 6.25:1 for the Upper House and 3.38:1 for the Lower House in
the extreme.24 428 out of 511 Dietmen in the Lower House (84%) were chosen from
electoral districts including farming communities. Albeit not being the majority in many
cases, as Nokyo has been so highly organised and has been able to rally many votes
behind a supported candidate due to its uniformly orientated membership and due to the
first-past-the-post principle, a targeted candidate had auspices to enter Parliament (The
Diet). Given that candidates receive relatively little support from their parties they have a
strong incentive to accept other organisational assistance as power base. 25 As a
consequence, Japanese politicians, especially those belonging to the LDP and the
19
Ekelund Jr. R., Tollison R., “The interest-group theory of government”, in: Shugart W., Razzolini L. (2001), p.
359.
20
See: Op. cit., p. 6.
21
Longworth J. (1983), p. 65, also see MULGAN A. (2001).
22
Amyx J. (2000), p. 68.
23
Of course, this is only an approximation. Mulgan A. (2001) even suggests identical interests for all the three
members of the triangle. As will be shown, this hypothesis can not be sustained for politicians.
24
Mulgan A. (2000), p. 330.
25
Mulgan A. (2001).
Japan Analysen Prognosen Nr. 194 vom April 2005
5
Japanese Socialist Party (JSP), were rather identified by the interest group they
represent than their ideological positions.26
Whilst hitherto the election system has remained unchanged for the Upper House
leaving the ratio up to 5.02:1 in 2000 27 , the election system for the Lower House
underwent several reforms from 1994 on, reducing the maximum disparity to 2.40:1 in
199828 by adjusting the size of the voting districts. Thus, the number of Diet members
with voting bases in rural or agricultural districts was reduced. For example, rural regions
like Tohoku, Shikoku and Kyushu lost up to 20% of their seats.29 Moreover, the abolition
of multi-seated districts has compelled the candidates to garner more support and,
hence, to espouse more general positions.30 As a consequence, it has become more
difficult for Nokyo to promote and dominate a candidate on its own in the direct
representation, as candidates have to reconcile more interests by embarking on more
general issues to run for election successfully. Nevertheless, Nokyo is still a force to
count on; despite its weakening, it has still the power to block a candidate in many
districts. Moreover, the introduction of a proportional representation element is of
advantage for financially powerful interest groups, as candidates with high fundraising
skills get a better posting.31 Given Norinchukin’s and Zenkyoren’s financial power, the
proportional representation enables Nokyo to successfully promote suitable candidates
by equipping them with the necessary funds.
Candidates supported by Nokyo usually do well in elections; on average over two thirds
of the recommended candidates succeed32. Consequently, an interest group is rewarded
for a high degree of organisation by successfully promoting a favoured candidate to
parliament. As a result, the representation in the assembly will not exactly reflect the
electorate’s preference distribution, but be biased towards well organised interests. In
2001, around 150 of 727 (20.6%) members in both houses were associated with Nokyo
of whom 100 (13.8%) were considered very active and enthusiastic 33 , although
population in farm households only represents about 10.6% of the total population.34
Nokyo’s large membership and its financial strength burden “Diet members [with] a
degree of policy ‘debt’ that exceeds that normally observed amongst politicians in other
systems of representative democracy.”35 In order to ensure compliance, Nokyo observes
the voting behaviour in parliamentary sessions and the record of each politician in
championing agricultural interests and bases its future support on these.36
26
Op. cit., p.4.
Op. cit., p. 11.
28
Mulgan A. (2000), p. 330.
29
Mulgan A. (2001), p. 11.
30
In the old system two or three seats could be won in elections in several districts. Therefore, the threshold to
enter the Diet was lower. Under the new system only one seat is contested directly on principle in every district.
31
Mulgan A. (2000), p. 464.
32
Mulgan A. (2001), p. 25.
33
Op. cit., p. 3.
34
MAFF (2000).
35
Mulgan A. (2000), p. 547.
36
See: Rothacher A., "Agrarpolitik: Hyperprotektion und die Folgen” in: Rothacher A. (1992), pp. 68.
27
Japan Analysen Prognosen Nr. 194 vom April 2005
6
2.4.
Social Costs of Interest Group Activity
The interest group Nokyo can be considered an accumulation of rationalist individuals
with identical preferences that intends to maximise its members’ interests when
bargaining with the government and its institutions. On the one hand, there are benefits
for the interest-group, namely rents, opposed by the costs for both the organisation and
for the described transfers to give incentives to bureaucrats and politicians to act
pleasantly. Hence, the model can be defined as a market situation with demand of
favours by the interest-group and the supply by bureaucrats and politicians.37
Rent seeking is one of the core incentives for interest group activity. By definition, rent
seeking embraces efforts and resources to seek rents a government can provide. 38
Usually, this additional rent is paid by a third party that has to bear the cost in form of
higher prices. As for Japan, the consumers are charged for the preservation of the lack
of competitiveness of the agricultural sector and the protectionism by paying higher
prices. However, also other social costs can be identified:
Firstly, the efforts and expenditures for the potential recipients of protection constitute
costs. These do not refer to direct donations or incentives themselves but to additional
costs to allocate them. Also regarding Japan these costs do arise. One example is the so
called AMAKUDARI 39 , which means that retired MAFF bureaucrats are absorbed by
Nokyo to provide them with incentives and rewards for favourable enactment. The
potential cost for Nokyo lies in the possible loss of efficiency in not choosing the most
productive candidate in a competition, but a possibly less suitable bureaucrat to ensure
the rent collection.40
Secondly, costs might arise from the efforts of politicians and government officials to
react to or to obtain the recipients’ expenditures. As both are subject to a time restriction,
like all human beings, these efforts will lead to opportunity costs for the public; for
instance, if a government official dedicates his attention to the interest group to gain
personal advantages instead of devoting himself to more pressing issues that would be
more productive for the public. The same is true for politicians: “To the extent that
politicians’ time has a positive opportunity cost, it is costly for them to negotiate over
division of the rents generated by private investments.”41 As a consequence, they cannot
dedicate their attention to the sovereign.
Thirdly, third party distortions can be induced as a consequence of the rent seeking
activity. One can imagine that also other interest groups might be interested in political
representation by a candidate of their choice of their interests. Assuming a scenario of
demand for political representation on the one side and the supply on the other side,
37
Ekelund Jr. R., Tollison R. (2001), p. 359.
Mueller D. (1989), p. 229. Buchanan identified social costs for monopoly seeking suppliers. Nevertheless, the
same approach is also valid in the case of the agricultural producers represented by Nokyo, who seek a
protection from competition from outside.
39
Literally "falling from heaven” in Japanese.
40
Anne Krueger makes a similar argument with relatives of customs officials. See: Mueller D. (1989), p. 241.
However, it is highlighted by several scholars that Japanese bureaucrats have an excellent reputation and
range among the best university graduates.
41
McChesney F., "Rent seeking and rent extraction” in: Shugart W., Razzolini L. (2001), p. 387.
38
Japan Analysen Prognosen Nr. 194 vom April 2005
7
other interest groups will also be required to employ more resources if they want to foster
a candidate successfully. Further presuming that those funds could have been allocated
in a socially more useful way this point can also be considered a social cost. Moreover,
other interest groups might pay the price for rent seeking in form of higher taxation to
subsidise the agricultural sector. Here lies one explanation why the industrial lobby is in
permanent conflict with Nokyo as it has opposed interests.42
2.5.
Nokyo and Liberalisation
Another bone of contention between the agricultural and the industrial lobby are
questions of liberalisation. The Japanese industry was punished with higher tariffs as the
political price for the resistance to the liberalisation of the agricultural market. Thus, again
industrial interests are affected as the Japanese industry in contrast to the agricultural
sector depends heavily on export. The exporting industry with the affiliated trade unions,
interest groups and several ministries, like METI and the Foreign Ministry, perceived the
resistance to the liberalisation of the agricultural market as a potential irritation of the
USA, Japan’s most important export market, and as a source of possible transpacific
tradewars.43
Unnecessary to say that, in turn, Nokyo has never been a friend of liberalisation of the
agricultural market, as it endangers at least a fraction of its rents by exposing the farmers
to more competition. Reference to consumers as a putative driving force is frequently
used in this context to make support for satisfaction of agricultural needs more palatable,
although primarily producers are protected. 44 The rice market was kept closed by
maintaining in all seriousness the opinion that Japanese stomachs are unable to digest
any other rice than domestic one.45 However, the Hosokawa government successfully
championed the liberalisation of the rice market.46 In this light, the gradual opening of the
market implies that Nokyo could slow down the process, but had not enough resources
to halt it, given the exposition of the politicians to the high internal and external pressure.
Therefore, it would have required more contributions by Nokyo to prevent liberalisation
that the lost rents, i.e. costs exceeded benefit. Thus, Nokyo had some impact, but was
unable to determine the final outcome entirely. Nevertheless, Nokyo’s resistance proved
to be very effective in some realms, impinging on imports such that, “imports are barely
42
Bundeszentrale für politische Bildung (1998), p. 102.
Rothacher A., ”Agrarpolitik: Hyperprotektion und die Folgen”, in: Rothacher (1992), p. 69. Leader of several
companies (e.g. Sony, Ajinomoto and Daiei in 1984) had to withdraw from espousing import liberalisation for
the agriculture and to apologise publicly after Nokyo appealed for boycott.
44
Mulgan A. (2001), p. 71. Another more recent example is the ban of European beef in 2000, because of the
mad cow disease in Europe without prohibiting the feed of bone flour, which is considered as the main hazard,
to the cattle. [See: The Japan Times, “Safety of cows and food”, September 14th 2001, p.4.] As experts
predicted, in the end also Japan was not spared from this sickness. Even worse, the infected beef managed to
enter the selling channel, because of negligent handling of the case. Also this example strongly suggests by its
nature that consumer protection was used as a dodge to prevent competition and to secure the rents for Nokyo,
given that especially Nokyo sponsored Diet members belong to the strongest supporters of the described
regulation.
45
Bundeszentrale für politische Bildung (1998), p.351.
46
Remarkably, the LDP was not part of the Hosokawa administration. However, the JSP which chaired that
government has also received donations from Nokyo.
43
Japan Analysen Prognosen Nr. 194 vom April 2005
8
increasing if at all under the […] tariff regime” from 1995.47 Furthermore, government
sponsored construction projects in rural areas have become a popular channel for
“reducing the political costs of unpopular policies, in the sense that it was used by
politicians to compensate farmers” 48 for various rent losses. The farmers benefit in a
twofold way: Not only can they directly take advantage of the preponderantly additional
rural infrastructure, but also in the form of side employment in the construction sector.49
There is strong empirical evidence for this assumption, given that government
expenditure on agriculture has been increasingly skewed towards public works in the last
three decades 50 coinciding with the gradual liberalisation. Obviously, the benefits for
Nokyo through this redistributive measure mitigated the cost for its members. It is quite
likely that Nokyo through its rent seeking activity raises and biases government
spending.
2.6.
Nokyo’s Impact on Growth
2.6.1. Fiscal Growth
Especially, when Nokyo prompts policies that are also publicly popular, it can easily
garner support from politicians. Japan’s agricultural budget share of the national budget
has been dithering around 4% over the time.51 This value does not depart from other
industrial countries, but the agricultural budget per cultivated hectare is significantly
higher in Japan.52 This means that Japan’s lack of productivity was not only reflected in
the form of higher prices, but also set off through subsidies from government funds,
which increase the size of the budget. Indeed, generosity to farmers, like the
compensation package to the agricultural sector associated with the Uruguay Round
Agreement on Agriculture, has met fierce criticism from the urban population. 53
Consequently, government spending in the agricultural sector, as mentioned, was
directed increasingly towards construction projects in rural areas, which have a public
good character.
2.6.2. Economic Growth
It goes without saying that it would be more efficient “to redirect the massive investments
into large cities, which have much worse housing and transportation systems, and where
expenditure is more likely to boost economic growth by improving efficiency. Investment
in infrastructure projects in large cities, unlike in rural areas, has a large multiplier effect
on the economy”.54 In this sense, Nokyo’s rent-seeking also harms its own members, as
most of the part time farmers obtain their main income from activities outside the
agricultural realm and, thus, would be better off by policies leading to a more efficient
47
Mulgan A. (2001), p. 43.
Op. cit., p. 11.
49
Op. cit., p. 10.
50
Op. cit.
51
In 2003 3.8% and in 2002 3.9% of the budget had been earmarked for agriculture, fishery and forestry. Own
calculation from budget data provided by the MOF. See:www.mof.go.jp.
52
Kuroyanagi T (1991), pp. 4.
53
Mulgan A. (2001), p.18.
54
Op. cit., p. 32.
48
Japan Analysen Prognosen Nr. 194 vom April 2005
9
allocation of resources, as they could be absorbed by the additional employment
possibilities spawned by the additional economic growth.55 In other words, if there were
not the interest group activity, funds would be invested in projects yielding a higher
return, and, consequently, the country would grow at higher rates. In fact, Japan can be
characterised by a high penetration of vested interests and interest groups championing
a broad variety of policies. Under the described conditions, their activity frequently leads
to inefficient policies and sub-optimal allocation of funds. This is one reason why
stagnation in Japan has been going on for so long under this aspect.
Even worse, Nokyo’s activity proves to impede the lobbied group itself. As can be seen
from Table 1, Japanese agriculture lags behind the USA and France in productivity.
There are several Nokyo related reasons for this pattern, namely protectionism and small
farm sizes56. Around 1960 the most efficient farm size was around 2.5 ha, in the 1990’s
between 10 and 20 ha. 57 In contrast to this in 2000 58.4% of the Japanese farm
households had less than one ha and 91.5% less than three ha under management.58
This is in Nokyo’s interest to preserve its power base, given that a small farm size means
more farms and, thus, more members for Nokyo. As a consequence, Nokyo also strongly
defied the admission of more efficient corporate farms.59 The resulting loss of productivity
was set off by subsidies and price schemes to maintain the farm incomes stable. In this
context, Nokyo could rely on its political backing.60
In addition, one can identify a direct connection between the “success” of lobbying for
high tariffs and the poor productivity. Facing the gradual liberalisation and the declining
protection, farmers are exposed to more and more competition with their international
counterparts. Being more productive, importers could supply the same commodities at a
fraction of the domestic price, and hence, domestic producers would be dragged out of
the market.61
Chart 1:
Productivity compared to the USA and France and tariff rate of
several agricultural commodities in Japan
Commodity
Productivity in %
Tariff rate in %
Vegetable oil
87
5.3
Chicken
73
12.3
Flour
55
160
Dairy
48
227
Meat
43
700
Source: McKinsey (2000), p. 35.
55
Riethmuller P., "Reformansätze in der japanischen Agrarpolitik”, in: Rothacher (1992), pp. 85.
One reason not linked to Nokyo, surely are different preferences for food in Japan.
57
Godo (2001), p. 10.
58
Own calculation with data from The 2000 World Census of Agricultural and Forestry, MAFF.
59
Mulgan A. (2000), pp. 250. A higher number of farms also bear the advantage of selling more equipment for
Nokyo. Thus, also the farmers themselves are disadvantaged.
60
Godo (2001), p. 11.
61
Distress can also result, when lower productivity and production cannot be set off by higher prices.
56
Japan Analysen Prognosen Nr. 194 vom April 2005
10
Note: Assumption: France and the USA have a similar productivity. F, USA = 100%
Every protectionist measure, such as tariffs, quotas or restrictions on entry, reduces
competition and deprives the consumer of the choice of an originally cheaper product.
The lower the level of productivity, due for example to national circumstances, the higher
the tariff needed to protect national producers. But also the domestic producers lose an
incentive to raise their efficiency, because they are freed of competition with imports and,
thus, lack competitive pressure that would force them to innovate. As can be seen from
Table 1, the stronger the relief of pressure is, the smaller the incentive and the lower the
productivity.
3.
Conclusion
Originally, Nokyo and its predecessors were founded to carry out desperately needed
land reforms, which helped to prevent and end social unrest then. Furthermore, it tackled
the organisation of cooperative sale channels and to offer other services to farmers
mutually. Out of this it developed to a commercial heavyweight and exerts power by
providing funds and garnering political support as a vote collector for politicians. By
prompting them to subsidise and protect the agricultural sector, Nokyo slows down
growth and inhibits an efficient allocation of the governmental budget. Protectionism at
best is of benefit for few actors and makes the large majority worse off. Here, even the
lobbied group itself does not take advantage.
With the time, restrictions have altered as government growth has become less
sustainable. As a consequence, interest groups like Nokyo are curbed, given that job
security and life long employment ceased to be the rule and the population have started
to care more about redistribution and the allocation of public funds. This offers an
explanation why obsolete structures in Japan start to move and the members of the iron
triangle have to realign themselves. Junichiro Koizumi won the nomination and the
election as Prime Minister for the LDP, because he promised reforms and polls
suggested an overwhelming support of his person. Although Junichiro Koizumi has
disappointed so far, encouraging signs remain.
“[The governor of Nagano Prefecture] Yasuo Tanaka gained a fresh term by taking
precisely the sort of risks that the prime minister has so far avoided. Like Mr Koizumi, Mr
Tanaka first got into office by promising a thorough structural overhaul of government,
and by distilling these sweeping pledges into specific and pragmatic reforms - most
importantly, in Mr Tanaka's case, by vowing to stop the building of new dams. Also like
Mr Koizumi, the rural governor has faced a hostile political assembly determined to
thwart his reforms. Unlike Mr Koizumi, however, Mr Tanaka has stuck to his pledges
despite this, halting construction on two dams and braving a vote of no confidence by the
assembly. After refusing to compromise and appealing to the public, he has been
rewarded with a convincing re-election.”62
62
The Economist, “Roads to ruin”, September 5th 2002.
Japan Analysen Prognosen Nr. 194 vom April 2005
11
Hence, the political market, as it was described, possesses a self correcting mechanism
against the negative externalities of lobbyism, such as Nokyo’s, once certain limits are
reached and restrictions become binding.
4.
Outlook
Nokyo has to cope with new circumstances as its goals are more and more subject to
criticism and both politicians and bureaucrats are less receptive to its goals. From my
point of view, its power will decline, but prevail on a lower level.
Nokyo will be weakened even further because sheer demography is eroding the
traditional agricultural power base. 29.6% of the commercial farm households had no
heir in 2000.63 Moreover, competitive pressure will let many farms and thus members
disappear. Since a farm requires a size of 15 hectare for rice cultivation and 25 hectare
for dairy farming to be competitive64 many farms in Japan will be forced to give up or to
merge given the predominantly small farm size in Japan.
However, Nokyo will remain a force to reckon with. Despite its weakening, Nokyo still has
enough members and the financial ability to play an influential role. Albeit numbers are
decreasing, the future also offers chances to Nokyo. The number of farms managing
more than 10 ha has more than doubled between 1990 and 2000.65 Although Nokyo has
failed to address their needs adequately yet, if Nokyo manages to attract these emerging
competitive farms as members, it will have a stable power base in the future, too. The
same holds for producers of perishable goods, such as fresh fruits and vegetables and
ornamental plants, which cannot be transported over longer distances.66 Thus, Nokyo’s
strength in the future will hinge upon its ability to meet the challenges.
63
The 2000 World Census of Agricultural and Forestry, MAFF.
Op. cit.. See: Rothacher A., "Agrarpolitik: Hyperprotektion und die Folgen”, in: Rothacher (1992), p. 70.
65
The 2000 World Census of Agricultural and Forestry, MAFF.
66
McKinsey (2000) notices that the top-three producers of perishable goods were already at par with the US in
terms of productivity.
64
Japan Analysen Prognosen Nr. 194 vom April 2005
12
References
Amyx J. (2000), The Political Economy of Japanese Agriculture, in Trevin R. et al.
Improving Japanese Trade Policies: issues, options and strategies, Pacific
Economic Paper No. 300, p. 59-74; download at:
http://apseg.anu.edu.au/pdf/pep/pep-300.pdf on January 14th 2004.
Bundeszentrale für politische Bildung (1998), Länderbericht Japan, Bonn.
Godo Y. (2001), The changing economic performance and political significance of
Japan's agricultural cooperatives, Canberra; download at:
http://apseg.anu.edu.au/pdf/pep/pep-318.pdf on January 14th 2004.
Kuroyanagi T. (1991), Economic Effects of the Agricultural Policies in Japan, Sapporo.
Longworth J. (1983), Beef in Japan, Queensland.
McKinsey Global Institute (2000), Why the Japanese Economy is Not Growing; download
at: www.mckinsey.com/knowledge/mgi/reports/japan0700.asp , on January 14th
2004.
MAFF (2000), The 2000 World Census of Agricultural and Forestry, Tokyo; download at
www.maff.go.jp/esokuhou/2000_cen.PDF on January 14th 2004.
Mueller D. (1989), Public Choice II, Cambridge.
Mulgan A. (2000), The Politics of Agriculture in Japan, London and New York.
Mulgan A. (2001), ’Japan Inc.’ In the Agricultural Sector: Reform or Regression?, in
Pacific Economic Paper Series, No. 314, April 2001, p. 92 pp.; downloaded at
http://apseg.anu.edu.au/pdf/pep/pep-314.pdf on January 14th 2004.
Rothacher A. (1992), Landwirtschaft und Ökologie in Japan, Munich.
Roubini N. et al. (1998), What Caused the Asian Currency and Financial Crisis? Part I :
A Macroeconomic Overview, NBER Working Paper No. w6833; download at:
www.stern.nyu.edu/globalmacro/ on January 14th 2004.
Shugart W., Razzolini L. (2001), The Elgar companion of public choice.
Statistics Bureau, Ministry of Public Management, Home Affairs, Post and
Telecommunications, data downloads at: www.stat.go.jp/english/index.htm on
January 14th 2004.
The Economist, various issues, London.
The Japan Times, Tokyo, September 14th 2001.
The Norinchukin Bank (2003), Norinchukin Annual Report 2003, Tokyo; downloaded at:
www.nochubank.or.jp/review/pdf/ar2003.pdf on January 14th 2004.
Japan Analysen Prognosen Nr. 194 vom April 2005
13
Part II: The Japanese Food Business – Selected Facts and Figures
Introduction
As pointed out in the previous article, there exists a conflict of interests between the
Japanese industry sector which is very export orientated and the agricultural sector
which is a recipient of subsidies and is interested in protectionism. Nevertheless products
are imported to augment low supplies during the off-seasons, in case of poor harvests or
insufficient supply of requested food e.g. fish or beef. Furthermore today, there are
additional reasons for importing products, including lower prices, a strong yen and
popularity of Western cuisine that require certain imported products not cultivated in
Japan. Food imports have a share of 12.4% in total imports, whereas meat and fish
constitute the biggest stake.67
Market Structure
Food industry market structure in Japan is stamped by large manufacturers and
wholesalers and additionally by a large and fragmented retail sector.
Food manufacturing enterprises make up 10.9 per cent of all manufacturing enterprises
and employ 12.2 per cent of the country’s workforce. The Japanese wholesale and retail
market is now facing tremendous changes due to prolonged recession, deregulation,
demographic transformation and globalization of economy. Structural adjustment of
market takes place rapidly but steadily, and it provides lots of new opportunities as well
as challenges. Perhaps the most significant regulatory change in recent years has been
the replacement of the Large Scale Retail Store Law by the Large Scale Retail Store
Location Law in 2000, because many restrictions to protect small businesses were
removed under the new law.
Changes are occurring in the wholesale industry. It is common for purchasing to be
carried out not directly with a manufacturer but via a wholesaler. Until recently, one of the
characteristics of the Japanese distribution structure was a large number of wholesalers
of numerous levels, which can also be divided in local, regional and national wholesalers.
But along with the decline of smaller stores, the number of small- and medium-scale
wholesalers is declining. Moreover certain new types of retailers such as superstores like
Aeon, home centres and drugstores conclude direct contracts with manufacturers, but
these are still limited. To sum it up large wholesalers are growing in size, and the total
number of wholesalers is shrinking rapidly but albeit direct purchase at foreign
wholesalers and manufacturers seems to be an option for retail chains to differentiate
their products.
The Japanese retail market is second largest in the world and its size was about 808
67
Further information concerning Japanese export and import data can be found in Japanese Yearbook provided
online by The Statistical Bureau www.stat.go.jp/english/data/nenkan/index.htm and in Hilpert, Hanns Günther:
Japans Agrarimporte. Strukturen, Entwicklungen, Einflussfaktoren. in: Japan. Analysen und Prognosen. Nr.
174. München, 2000. www.ub.uni-duisburg.de/japan/174.pdf.
Japan Analysen Prognosen Nr. 194 vom April 2005
14
billion Euro in 2003. Further, per capita household consumption expenditure and retail
sales are among the highest in the world. According to IGD survey on Global Retailing
2003 the size of Japanese food retail market amounts 332 billion Euro (Germany: 180
billion Euro), what means a 41 percent share of total retail sales, which figure 808 billion
Euro (Germany: 495 billion Euro; 36%). Food usually is bought at supermarkets (eg.
York Benimaru; Kasumi) that provide food products as well as other goods or at
superstores (e.g. Aeon, Daiei, Ito-Yokado, Seiyu, Uny). However, in contrast to Western
department stores foodstuffs account for a relatively high percentage of sales at
Japanese department stores. Moreover convenience stores provide processed foods,
drinks and daily goods to local customers, whereas a wide range of companies
(superstores, food wholesalers, food manufacturers etc.) are shareholders in
convenience stores. As regional differences in consumer tastes occur the retail market is
also regionally differentiated and some retailers are exclusively active in certain areas as
Kanto or Kansai region. For example regional department stores make up nearly half of
the large number of department store companies. Another characteristic of the Japanese
retail market is the fact that a number of very small scale retailers exists, particularly in
the food stuffs market. The top three retailers have only a 9% stake in business in Japan
and medium along with small sized retail stores account for more than half of total retail
sales, but this percentage continues to decrease year by year. In contrast, in Germany
the top three retailers make up 41 percentage of sales in the year 2003 and small
supermarkets as well as groceries decreased since the 1980s for more than 50%.
Nevertheless market concentration is increasing and competition as well as price
discounting is rising in Japan. Besides, deregulation of retail business has enforced a
rush by foreign retailers to establish operations in Japan.
Consumer Behaviour on the Food Market
Japanese consumers are particularly fussy when choosing products. They look for the
freshest items having rich, bright colour and good shape and prefer brand name
products. Consumers want good quality and pleasant, enjoyable shopping. On the other
hand because of economic problems Japanese consumers and above all the elderly
become more and more price conscious, so that stores begin to offer low-priced items.
Discount stores and one-coined shops gain in popularity. In Germany the low-price
sector is growing even more and discounter shops in particular registering financial gains
and rising in retailer ranking. Generally, the amount of each item bought is small, but
purchases are frequent, with most households shopping several times a week for
products, mainly at supermarkets in order to get fresh food. But purchase patterns for
food are changing as more and more women are participating in the labour market. An
increasing number of people simply buy dinner at department stores or supermarkets on
their way home. Besides, 2003 eating out expenditure accounted for 16.5% of food
expenditure. Consumers are also conscious of safety considerations when purchasing
products, but striking is, that the majority of 81% of Japanese consumers tend to think,
genetic engineering of plants is acceptable. In contrast the acceptance by German
consumers of genetic engineering of plants is only about 24%.
Japan Analysen Prognosen Nr. 194 vom April 2005
15
Chart 1:
Expenditure for selected products in Japan and Germany
Item
Japan 2003
Germany 1998*
Food expenditure (in % of living
expenditure)
23
12 (2002)
Cereals (in % of food expenditure)
9.9
10,7
Fish and shellfish (in % of food
expenditure)
11
not expl.
Meat (in % of food expenditure)
8.5
15,4
Vegetables and seaweeds (in % of food
expenditure)
12.3
5,1
Dairy products (in % of food expenditure)
not. expl.
7,8
1- or 2-person household:
Eating out (in % of food expenditure)
31,1
16.5
≥ 3-person household: 22.6
Source: DJW analysis on basis of data of the Statistical Yearbook 2005 www.stat.go.jp/data/ nenkan/
pdf/y1901000.pdf; data of Institut für Ernährungswirtschaft und Verbrauchslehre der ChristianAlbrechts-Universität Kiel www.food-econ.uni-kiel.de/Workingpaper/Ewp0302.pdf on base of Daten
der Einkommen-Verbrauchsstichprobe (EVS) 1998 (not weighted).
* Comparable data for Germany is not existing but according to the German National Farmers' Union
following a trend of decreasing expenditure for food German households spent only 12% of living
expenditure for food in 2002.
Key Players
Chart 2:
Famous retailers in Japan and Germany
Japan
Germany
Company
Net Sales Mio.
Euro
Company
Net Sales Mio. Euro
in 2003
Daiei Inc.
10,127 (2004)
Metro AG (Real, Kaufhof,
Extra, Bolle, Comet, Tip
etc.):
32,232
(44,4% food sector)
Ito Yokado Co., Ltd.
10,858 (2004)
(43.2% in food
sector in 2002)
Rewe Group (Extra
(former Metro AG),
Toom, Jumbo, Globus,
MiniMal, HL, Penny,
Sconti):
30,373
(69,7% food sector)
Aeon Co., Ltd.
17,248 (2004)
(52.3% in food
sector 2002)
Edeka/AVA Group
(Kaufmarkt, Big, Magnet,
Edeka, Edeka neukauf,
Condi, Allfrisch, Preisgut,
Herkules etc.)
29,090
(83,9% food sector)
Takashimaya Co., Ltd.
7,917 (2004)
Aldi Group (Aldi Nord,
Aldi Süd):
24
(80% food sector)
Seiyu Ltd.
8,140 (2003)
Schwarz Group
(Kaufland, Lidl, Hauser)
21,5
(80,2% food sector)
Japan Analysen Prognosen Nr. 194 vom April 2005
16
Japan
Germany
Uny Co., Ltd.
5,301 (2004)
Karstadt-Quelle Group
15,500
(5,8% food sector)
Mitsukoshi Co., Ltd.
6,935 (2003)
Tengelman Group (Plus,
Kaiser’s, Grosso,
Tengelmann etc.)
13,108
(60,1%
food sector)
Seibu Department
Stores, Ltd.
3,848 (2004)
Spar AG (Interspar,
Eurospar, Spar, Netto,
Bonus, Prima,
Handelshof)
9,000
(93% food sector)
Source: DJW analysis; www.lz-net.de/companies/rankings/pages/show.prl?id=68.
Chart 3:
Major food retailers world wide
Company
Home Country
Net Sales Mio.
Euro 2001
Food Sales (in %
of total net sales)
Wal-Mart
USA
243,281
40,0
Carrefour
F
69,486
70,5
Ahold
NL
66,593
92,0
Kroger
USA
55,959
91,0
Metro
D/CH
49,522
49,7
Albertson´s
USA
42,781
90,0
Kmart
USA
38,665
37,0
Safeway
USA
38,314
92,0
Costco
USA
38,131
41,0
Tesco
GB
38,059
90,0
Rewe
D
37,540
70,3
Aldi
D
32,400
84,0
ITM Entreprises
(Intermarché)
F
J. Sainsbury
GB
29,743
90,0
Ito-Yokado
J
29,624
47,0
Edeka/AVA
D
28,035
84,0
Aeon (Jusco)
J
26,680
44,0
Tengelmann
D
25,670
74,6
Auchan
F
25,500
70,0
Supervalu
USA
23,243
76,0
Source: M+M Planet Retail.
Japan Analysen Prognosen Nr. 194 vom April 2005
31,900
82,4
17
Chart 4:
Company profile of selected Japanese food industry companies
Company
Dates and facts
Morinaga Co.,
- 1899 founded
- Business activities: manufacture and sale of confectionery, foodstuff, frozen
desserts and health products; wholesale and restaurants (restaurants,
coffee shops, cafeterias); real estate and services (real estate and operation
of golf courses); financing
- Headquarter: Tokyo
- Number of employees: 2,025
- Net sales: 1,274 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Food accounted for 85% of fiscal 2002 revenues,13%; real estate and
services, 2% and other, nominal
- 1909 founded
- Business activities: manufacture of food products (Ajinomoto & other
seasonings, edible oils, processed food, beverages, daily products); fine
chemicals (pharmaceuticals, amino acids, specialty chemicals) and others
(distribution, engineering, packing)
- Head quarter: Tokyo
- Number of employees: 4,111
- Net sales: 7,651 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Food products accounted for 67% of fiscal 2002 revenues; fine chemicals,
23% and others, 10%
- Overseas subsidiaries and affiliates in Asia, Europe and America
- 1971 founded
- Main products: Manufacturing and sale of powder and liquid seasonings
(sauces, dressing), powder seasonings, ham and sausages, sale of food
processing equipment, textile goods, wrapping materials; consultation for
food processing technology
- Headquarter: Imabari City, Ehime Prefecture
- Number of employees: 2,800
- Net sales: 4,416 millions of Euro (expected for 2005)
- 1917 founded
- Business activities: production and sale of milk, ice cream, other dairy
products, juice & non-dairy beverages, desserts, baby food and other foods;
other (the manufacture and sale of pharmaceuticals, medicine, veterinary
medical supplies, foodstuffs, chemical products, fertilizers, agricultural
equipment, dairy processing equipment, management of farms, engineering
services, construction, real estate business and warehousing)
- Head quarter: Tokyo
- Number of employees: 3,352
- Net sales: 3,362 millions of Euro (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Morinaga Co., Ltd. is the major shareholder with 10.28% of issued stock
- Food and dairy products accounted for 94% of fiscal 2002 revenues; other,
6%
- 1917 founded
- Business activities: milk, yogurts, cheeses, ice creams, and other dairy
items, as well as a variety of nutraceutical and health foods; Service/other:
feedstuff, real estate, distribution, mending cars
- Head quarter: Tokyo
- Number of employees: 4,496
- Net sales: ¥ 5,313 millions of Euro (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Meiji Dairies Corporation formerly known as Meiji Milk Products Co Ltd.
Ltd.
Ajinomoto
Co., Inc.
Nihon
Shokken Co.,
Ltd.
Morinaga
Milk Industry
Co., Ltd.
Meiji
Co.
Dairies
Japan Analysen Prognosen Nr. 194 vom April 2005
18
Company
Snow
Brand
Milk Products
Co., Ltd.
Yakult
Honsha
Co.,
Ltd.
Natori
Co.,
Ltd.
Nichiro
Sunfoods
Co., Ltd.
Meiji
Seika
Kaisha Ltd.
Dates and facts
- Milk, other dairy products and food products accounted for 87% of fiscal
2002 revenues; feedstuffs, pharmaceutical products and other, 13%
- Overseas affiliates in Asia and Oceania
- 1925 founded
- Business activities: production of milk and dairy products, other food
products and pharmaceuticals; foods include ice cream, oil, milk products
and other include foodstuff, wrapping materials, and seeds
- Head quarter: Tokyo
- Number of employees: 1,459
- Net sales: 2,341 millions of Euro 2004
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Milk dairy products, oils/fats and other food accounted for 90% of fiscal
2002 revenues and feed stuffs, packaging materials and other, 10%
- Overseas subsidiaries in USA, Australia, Hong Kong, Taiwan and Siam
- 1953 founded
- Business activities: manufacture and sale of food; beverages and foods
(fermented lactic products, drink, noodles); pharmaceuticals (perception
drugs) and others (cosmetics, pharmaceuticals, baseball sponsor)
- Head quarter: Tokyo
- Number of employees: 2,864
- Net sales: 1,758 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Beverages/food accounted for 86% of fiscal 2002 revenues;
pharmaceuticals, 8% and others, 6%
- Subsidiaries in Asia, America and Oceania
- 1941 founded
- Business activities: manufacture and sale of a wide variety of nibble
relishes; processed seafood products, processed farm products, processed
meat products, processed dairy products and side dishes and others
- Head quarter: Tokyo
- Number of employees: 29,733
- Net sales: 225 millions of Euro (2003)
- First section Tokyo Stock Exchange
- activities are entirely domestic
- Processed marine products accounted for 57% of fiscal 2002 revenues;
processed meat products, 13%; processed dairy products, 13%; agricultural
processed products, 13% and culinary food product, 4%
- 1961 founded
- Business activities: manufacture and market processed food (frozen food,
chilled food, livestock products and bread); real estate rental and leasing
- Head quarter: Nagaoka, Niigata
- Number of employees: 612
- Net sales: 1,303 millions of Euro (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Processed foods accounted for 55% of fiscal 2002 revenues and baking,
45%
- 1916 founded
- Business activities: production and distribution of confectionery and other
food products including cooking products and health foods; the production
of antibiotics and additional pharmaceuticals, veterinary medicines and
agricultural chemicals
- Head quarter: Tokyo
- Number of employees: 3,948
- Net sales: 2,715 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (First section)
- Confectionery, beverages and other food products accounted for 65% of
Japan Analysen Prognosen Nr. 194 vom April 2005
19
Company
Dates and facts
-
Meito Sangyo
Co., Ltd.
-
Nakamuraya
Co., Ltd.
-
-
Ezaki
Glico
Co., Ltd.
-
-
Fujiya
Ltd.
Co.,
-
-
fiscal 2002 revenues; pharmaceutical products, 31%; health care, 2%; office
building rental and leasing, 1% and other, 1%
(Office Building Leasing Business)
Meiji Trading Co., Donan Shokuhin Co., Ltd., Zao Shokuhin Kaisha Ltd.,
Ronde Co., Meiji Sangyo Co., Ltd., Meiji Chewing Gum Co., Ltd.,
Okayamaken Shokuhin Co., Ltd., Shikoku Meiji Co., Ltd., Taiyo Shokuhin
Co., Ltd., Azteca Co., Ltd., Meiji Seika (Singapore) Pte. Ltd., D.F. Stauffer
Biscuit Co., Inc., Laguna Cookie Co., Inc., Fuji-Amide Chemical, Co., Ltd.
and Meiji Kaihatsu, Ltd. belong to Meiji Seika Kaisha, Ltd. Group
1945 founded
Business activities: manufacture chocolates, candies, ice cream, powdered
and canned soft drinks and chemical products including enzymes, rennet
and pharmaceuticals; mixed feed for poultry and livestock such as sugar
syrup, which is produced by fermentation process using sugar, and it has
favourable odour and taste for animals; real estate business including
leasing and rental of warehouses and golf course operations.
Head quarter: Nagoya, Aichi Prefecture
Net sales: 122 millions of Euro (2004)
Stock Exchange Listing: Tokyo Stock Exchange (first section)
Confectionery and soft drinks accounted for 84% of fiscal 2002 revenues;
chemical products, 13% and real estate operations, 3%
1901 founded
Business activities: manufacture and sale of confectioneries (Japanese
cakes and crackers) for the domestic market; prepared foods and meats;
operating restaurants including French, Chinese and Mediterranean
restaurants, family restaurants and cafes
Head quarter: Tokyo
Net sales: 305 millions of Euro (2004)
Stock Exchange Listing: Tokyo Stock Exchange (first section)
Confectionery accounted for 60% of fiscal 2002 revenues; prepared foods
and other food products, 20%; restaurants, 11%; real estate rental and
leasing, 2% and others including bread, sports club, insurance broker, 7 %
1919 founded
Business activities: manufacture and wholesale of confectionery, chilled
desserts, food and milk products
Head quarter: Osaka
Number of employees: 1,258
Net sales: 991 millions of Euro (2004)
Stock Exchange Listing: Tokyo Stock Exchange (first section)
Milk products accounted for 34% of fiscal 2002 revenues; confectionery,
30%; chilled desserts, 18%; food, 7% and other, 11%.
Part of Glico Group; furthermore Glico Dairy Products Co. (dairy products),
Ltd., Icreo Co., Ltd. (baby food) and Glico Foods Corporation (ham,
sausages) belong to that group
International subsidiaries Ezaki Glico USA Corporation, Shanghai Ezaki
Glico Foods Co., Ltd., Generale Biscuit Glico France S.A., Thai Glico Co.,
Ltd.
1910 founded
Business activities: manufacture confectioneries and beverages; operation
of cake shops, ice cream shops and restaurant chains under franchised
management; retail, wholesale, real estate and other
Head quarter: Tokyo
Number of employees: 1,254
Net sales: 652 millions of Euro (2004)
Stock Exchange Listing: Tokyo Stock Exchange (first section)
Retail accounted for 50% of fiscal 2002 revenues; wholesale, 50% and real
Japan Analysen Prognosen Nr. 194 vom April 2005
20
Company
Kagome Co.,
Ltd.
Kenko
Mayonnaise
Co., Ltd.
Nagatanien
Co., Ltd.
Yamazaki
Baking
Co.,
Ltd.
Itoham Foods
Inc.
Nippon Meat
Packers
Inc.
(Nippon-ham)
Dates and facts
estate and other, nominal
- 1949 founded
- Business activities: Manufacturing and selling food and beverage products
based on tomatoes and other various vegetables; Warehousing, trucking,
automobile services and real estate
- Head quarter: Nagoya, Aichi
- Number of employees: 1,327
- Net sales: 1,079 millions of Euro (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Food accounted for 97% of fiscal 2002 revenues and other, 3%
- Overseas subsidiaries
- 1933 founded
- Business activities: manufacture and sale of food products
(prepared/processed foods, mayonnaise, dressings and egg processed
products)
- Head quarter: Tokyo
- Number of employees: 480
- Net sales: 361 millions of Euro (2004)
- Prepared and processed foods accounted for 40% of fiscal 2002 revenues;
mayonnaise and dressing, 32%; egg processed products, 20% other: 8%
- 1953 founded
- Business activities: manufacture and sell instant food; operates through two
segments namely: foodstuffs and restaurants and others
- Head quarter: Tokyo
- Number of employees: 1,324
- Net sales: 442 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Foodstuffs accounted for 92% of fiscal 2002 revenues and restaurants and
others: 8%
- 1948 founded
- Business activities: manufacture and sale of bread, sweet buns, Japaneseand Western-style confectionery, processed bread and prepared rice and
side dishes; sale of other products procured from other companies
- Head quarter: Tokyo
- Number of employees: 16,589
- Net sales: 30.5 millions of Euro (non consolidated) (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- 1928 founded
- Business activities: produce of ham, sausages, processed foods and the
preparation of red meat; management of restaurants.
- Head quarter: Nishinomiya, Hyogo Prefecture
- Number of employees: 2,435
- Net sales: 2,949 millions of Euro (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Fresh meat accounted for 54% of fiscal 2002 revenues; ham and sausages,
26%; processed foods and other, 20%
- 1949 founded
- Business activities: the production, marketing and distribution of fresh meat
products, processed foods and delicatessen products.
- Head quarter: Osaka
- Number of employees: 2,926
- Net sales: 6,795 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Fresh meat accounted for 64% of fiscal 2002 revenues; processed foods &
other, 21% & Ham and sausages, 15%
Japan Analysen Prognosen Nr. 194 vom April 2005
21
Company
Dates and facts
Marudai Food
- 1958 founded
- Business activities: manufacture and sell food products (processed foods,
Ham and sausage products and fresh meat and other products)
- Head quarter: Takatsuki, Osaka
- Number of employees: 1,760
- Net sales: 1,343 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Processed foods accounted for 36% of fiscal 2002 revenues; fresh meat &
other, 32% and ham and sausage products, 32%
- 1963 founded
- Business activities: manufacture and distribute snacks and delicatessen
(prepared foods, cooked rice, delicatessen goods, Japanese-style side
dishes, salads and sandwiches), operation of bakeries and restaurants
- Head quarter: Funabashi, Chiba
- Number of employees: 494
- Net sales: 455 millions of Euro (2004)
- Food business accounted for 99% of fiscal 2002 revenues and distributions,
1%
- 1953 founded
- Business activities: processed food (instant noodles, instant food, fish
sausage, fish ham and frozen food); seafood (fresh seafood and frozen
seafood); cold- storage warehousing and others include cosmetics and real
estate
- Head quarter: Tokyo
- Number of employees: 1,640
- Net sales: 2,344 millions of Euro (2003)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Processed food accounted for 73% of fiscal 2002 revenues; seafood, 20%;
cold-storage warehousing, 4% and others, 3%
- 1964 founded
- Business activities: manufacture prepared and cooked foods such as box
lunches, rice balls, sushi, sandwiches, fries and salad
- Head quarter: Tokyo
- Number of employees: 3,322 (including 2,682 part time worker)
- Net sales: 877 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Foods accounted for 79% of fiscal 2002 revenues; food materials, 15% and
other, 6%
- 1966 founded
- Business activities: Manufacture, processing and sale of natural
seasonings; production, processing, export & import, and sale of agricultural
and livestock products; processing, export & import, and sale of marine
products; manufacture, export & import, and sale of quasi-drugs;
management of restaurants; services in technical guidance related to the
preceding items
- Head quarter: Tokyo
- Number of employees: 392
- Net sales: 143 millions of Euro (2004)
- Stock Exchange Listing: Tokyo Stock Exchange (first section)
- Subsidiary in USA, China and France
- 1917 founded as Noda Shoyu Co., Ltd.
- Business activities: Production and marketing of soy sauces, sauces,
tomato ketchup, related food seasonings, flavorings, sake, juices and other
beverages; pharmaceutical products to oriental foodstuffs; management of
restaurants
- Head quarter: Tokyo
Co., Ltd.
Fuji
Foods
Inc.
Toyo Suisan
Kaisha Ltd.
Warabeya
Nichiyo CO.,
Ltd.
Ariake Japan
Co., Ltd.
Kikkoman
Corporation
Japan Analysen Prognosen Nr. 194 vom April 2005
22
Company
Dates and facts
-
Nissin
Food
Products Co.,
Ltd.
-
Number of employees: 2,330
Net sales: 2,513 millions of Euro (2004)
Stock Exchange Listing: Tokyo Stock Exchange (first section)
Production also in United States, Europe, Singapore and Taiwan
The Kikkoman Group includes affiliations with Del Monte, Manns Wine Co.,
Ltd., JFC International Inc. JFC International Inc.
Stock listing: Tokyo and Osaka
Subsidiaries in America, Europe, Asia and Oceania
1948 founded
Business activities: instant noodle, long-life fresh noodle products, chilled
foods, frozen foods
Head quarter: Osaka; Tokyo
Number of employees: 6,176 (consolidated basis); 1,466 (parent company)
Net sales: 2,348 millions of Euro (2004)
Stock Exchange Listing: Tokyo Stock Exchange (first section)
NITEC bases in North America, Europe and Asia tailor products to the
needs and tastes of consumers in particular regions and countries
Source: DJW-analysis.
Note: For further listed companies of food industry please refer to Tokyo Stock Exchange Inc.
www.tse.or.jp/english/index.shtml#
Japan Analysen Prognosen Nr. 194 vom April 2005
23
About the authors:
Michele Graßal: Michele Graßal has studied Political Economics in Bonn, Kyoto and
Berlin and has graduated from Humboldt University in Berlin in March 2003. After that he
became a member of the post-graduate “Sprache und Praxis” program of the German
DAAD scholarship organization. This program consists of a nine-months language
training at a Japanese language institute in Tokyo, followed by an nine-months internship
at a company in Japan. After finishing taking classes in May 2004, he joined the
Corporate Communications Department of DaimlerChrysler Japan Co., Ltd., where he
stayed until January 2005 as a trainee.
Angelika Stahl: Angelika Stahl has studied Japanese Studies, Political Science and
Business Studies and has graduated from Trier University in March 2005.
Japan Analysen Prognosen Nr. 194 vom April 2005