Required Report - public distribution

**Date:** 2/3/2006

**GAIN Report Number:** JA6008

JA6008

**Japan**

**Sugar**

**Annual Report**

**2006**

**Approved by:**

![](media/image1.wmf)Deanna Ayala

U. S. Embassy

**Prepared by:**

Tetsuo Hamamoto

**Report Highlights:**

Domestic sugar production is forecast at 905,000 tons in 2005/2006, up
from 896,000 tons the year before. Imports are expected to remain
relatively unchanged. Total demand for sugar in 2005/2006 is forecast to
be 2.238 million tons. Sugar demand remains almost at the same level in
the last several years (2.300 million tons in 1999). Retail sugar prices
have increased around 8 % during the past year because of world sugar
price hike.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Tokyo \[JA1\]

\[JA\]

Table of Contents

[Summary of Situation 3](#summary-of-situation)

[Statistical Tables 4](#statistical-tables)

[PSD Table -- Centrifugal Sugar 4](#psd-table-centrifugal-sugar)

[PSD Table -- Sugar Beets 5](#psd-table-sugar-beets)

[PSD Table -- Sugar Cane for Centrifugal
6](#psd-table-sugar-cane-for-centrifugal)

[Import Trade Matrix -- Centrifugal Sugar
7](#import-trade-matrix-centrifugal-sugar)

[Prices Table -- Centrifugal Sugar 8](#prices-table-centrifugal-sugar)

# Summary of Situation

The Ministry of Agriculture, Forestry and Fisheries (MAFF) estimates
centrifugal sugar production for the October-September Marketing Year
(MY) 2005/2006 at 834,000 tons, around 8% lower than the year before.
The production of beet sugar is expected to be lower due to smaller
planting area and high temperatures in the summer. Cane sugar production
is expected to increase slightly to 131,000 tons, due to favorable
weather in the producing area. Japan's sugar consumption is forecast to
increase slightly in 2005/2006 to 2.238 million tons, compared to the
previous year's level (2.229 million tons).

Sugar demand declined almost 10 % between 1991 and 1999 (2.611 million
tons and 2.300 in 1991 and 1999, respectively), partly due to consumers'
preference for "non-sugar" or "less sugar" products as well as the
increasing availability of sugar substitutes such as sorbitol. That
decline slowed down starting in 2000 and has been roughly the same ever
since. Meanwhile, sorbitol preparation imports increased significantly
during the same period (13,651 tons and 128,387 tons in 1991 and 1999,
respectively), which mirrors the decrease in sugar demand for the same
period. Since 2000, sugar demand has remained steady at 2.300 to 2.263
million tons. During the same period, total sorbitol preparation
(HS2106.510) and other preparation (HS2106.590) have remained around
125,000 tons.

The Japanese Government has no tariff on raw sugar since April 2000. To
protect domestic sugar producers, MAFF, through the Agriculture and
Livestock Industries Promotion Corporation (ALIC), subsidizes domestic
production through a generous price support system. Each year, ALIC sets
a guaranteed price for domestic beet and cane producers. ALIC then sets
a price at which it will buy raw sugar from refiners that will allow the
refiners to pay the guaranteed price for beets and cane. MAFF purchases
sugar at the set price, then resells the sugar to the refiners at a
lower price, which is roughly equivalent to the import price.

In 2004, MAFF increased the sugar refinery industry contribution to the
guaranteed price support system by 10 yen per kilogram of imported raw
sugar. The industry's total increase in contribution amounted to 220
billion yen (2 billion USD at a rate of 110 yen per 1 USD). Combined
with this increase in contribution, high international sugar prices
force the sugar refinery industry to raise the refined sugar price, in
spite of the consolidation and restructuring of the sugar refinery
industry and closure of a number of plants in the past couple of years,
from 122 yen/kg in September 2003 to 142 yen/kg in December 2005.

In late 2005, MAFF introduced a reform plan to move their agricultural
support program from commodity-specific support to direct payments.
Sugar beets are among the commodities targeted for this new system set
to commence in April 2007. (Please see JA5068-Japan Embarks on Drastic
Change In Its Farm Subsidy Scheme.)

# Statistical Tables

## PSD Table -- Centrifugal Sugar

  ----------------- --------------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Country**       **Japan**                                                                                   

  **Commodity**     **Sugar,                                                       (1000 MT)                    
                    Centrifugal**                                                                               

                    2005            Revised           2006       Estimate          2007       Forecast          UOM

                    USDA Official   Post              USDA       Post              USDA       Post              
                    \[Old\]         Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                                                      \[Old\]                      \[Old\]                      

  **Market Year                     10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                       

  Beginning Stocks  354             387               433        372               465        372               (1000 MT)

  Beet Sugar        787             784               750        750               0          750               (1000 MT)
  Production                                                                                                    

  Cane Sugar        134             121               140        130               0          130               (1000 MT)
  Production                                                                                                    

  TOTAL Sugar       921             905               890        880               0          880               (1000 MT)
  Production                                                                                                    

  Raw Imports       1429            1326              1400       1348              0          1348              (1000 MT)

  Refined Imp.(Raw  2               2                 2          2                 0          2                 (1000 MT)
  Val)                                                                                                          

  TOTAL Imports     1431            1328              1402       1350              0          1350              (1000 MT)

  TOTAL SUPPLY      2706            2620              2725       2602              465        2602              (1000 MT)

  Raw Exports       0               0                 0          0                 0          0                 (1000 MT)

  Refined Exp.(Raw  10              10                10         10                0          10                (1000 MT)
  Val)                                                                                                          

  TOTAL EXPORTS     10              10                10         10                0          10                (1000 MT)

  Human Dom.        2263            2238              2250       2220              0          2220              (1000 MT)
  Consumption                                                                                                   

  Other             0               0                 0          0                 0          0                 (1000 MT)
  Disappearance                                                                                                 

  Total             2263            2238              2250       2220              0          2220              (1000 MT)
  Disappearance                                                                                                 

  Ending Stocks     433             372               465        372               0          372               (1000 MT)

  TOTAL             2706            2620              2725       2602              0          2602              (1000 MT)
  DISTRIBUTION                                                                                                  
  ----------------- --------------- ----------------- ---------- ----------------- ---------- ----------------- ---------

##  PSD Table -- Sugar Beets

  ----------------- ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Country**       **Japan**                                                                               

  **Commodity**     **Sugar                                                    (1000                        
                    Beets**                                                    HA)(1000                     
                                                                               MT)                          

                    2005        Revised           2006       Estimate          2007       Forecast          UOM

                    USDA        Post              USDA       Post              USDA       Post              
                    Official    Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                    \[Old\]                       \[Old\]                      \[Old\]                      

  **Market Year                 10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                   

  Area Planted      68          68                68         68                0          68                (1000 HA)

  Area Harvested    68          68                68         68                0          68                (1000 HA)

  Production        4656        4656              4200       4081              0          4100              (1000 MT)

  TOTAL SUPPLY      4656        4656              4200       4081              0          4100              (1000 MT)

  Utilization for   4656        4656              4200       4081              0          4100              (1000 MT)
  Sugar                                                                                                     

  Utilizatn for     0           0                 0          0                 0          0                 (1000 MT)
  Alcohol                                                                                                   

  TOTAL UTILIZATION 4656        4656              4200       4081              0          4100              (1000 MT)
  ----------------- ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------

##  PSD Table -- Sugar Cane for Centrifugal

  ----------------- --------------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Country**       **Japan**                                                                                   

  **Commodity**     **Sugar Cane                                                   (1000                        
                    for                                                            HA)(1000                     
                    Centrifugal**                                                  MT)                          

                    2005            Revised           2006       Estimate          2007       Forecast          UOM

                    USDA Official   Post              USDA       Post              USDA       Post              
                    \[Old\]         Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                                                      \[Old\]                      \[Old\]                      

  **Market Year                     10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                       

  Area Planted      0               32                0          32                0          32                (1000 HA)

  Area Harvested    0               23                0          22                0          23                (1000 HA)

  Production        0               1186              1350       1254              0          1250              (1000 MT)

  TOTAL SUPPLY      0               1186              1350       1254              0          1250              (1000 MT)

  Utilization for   0               1186              1350       1254              0          1250              (1000 MT)
  Sugar                                                                                                         

  Utilizatn for     0               0                 0          0                 0          0                 (1000 MT)
  Alcohol                                                                                                       

  TOTAL UTILIZATION 0               1186              1350       1254              0          1250              (1000 MT)
  ----------------- --------------- ----------------- ---------- ----------------- ---------- ----------------- ---------

##  Import Trade Matrix -- Centrifugal Sugar

  -------------------- -------------- -------------------- --------------
  **Country**          Japan                               

  **Commodity**        Sugar,                              
                       Centrifugal                         

  Time Period          MY             Units:               1000MT

  Imports for:         2003                                **2004**

  U.S.                 0              U.S.                 0

  Others                              Others               

  Thailand             703            Thailand             629

  Australia            496            Australia            389

  South Africa         168            South Africa         187

  Fiji                 34             Fiji                 88

  Philippines          13             Philippines          20

  China                7              China                9

  Bolivia              1              Bolivia              2

                                      Vietam               1

  Total for Others     1422                                1325

  Others not Listed    2                                   1

  Grand Total          1424                                1326
  -------------------- -------------- -------------------- --------------

##  Prices Table -- Centrifugal Sugar

  ------------------------ --------------- --------------- ---------------
  **Country**              Japan                           

  **Commodity**            Sugar,                          
                           Centrifugal                     

  Prices in                yen             per uom         kg

                                                           

  Year                     2004            2005            \% Change

  Jan                      127             134             6%

  Feb                      127             134             6%

  Mar                      127             135             6%

  Apr                      128             135             5%

  May                      130             136             5%

  Jun                      130             136             5%

  Jul                      130             136             5%

  Aug                      132             136             3%

  Sep                      132             136             3%

  Oct                      133             142             7%

  Nov                      133             142             7%

  Dec                      134             142             6%

                                                           

  Exchange Rate            9/30/2005       Local           
                                           Currency/US \$  

  Date of Quote            113             MM/DD/YYYY      
  ------------------------ --------------- --------------- ---------------