July 20, 2022

Global & Japanese Food Security

under the Protracted Crisis in Ukraine

Contact
Part 1
Part 2
Part 3Ruan Wei
Miwa Kobari
Kosei Hasegawa

wei@nochuri.co.jp
kobari@nochuri.co.jp
hasegawa@nochuri.co.jp

Part 1
Intensifying Situation of Global Food Supply-The Invasion of Ukraine is Not the Only Cause for Concern-two©2022 Norinchukin Research Institute

Key Takeaways for Part 1
1．Grain Prices to Remain High in 2022/2023 with Risk of Sharp Decline
2．The Biggest Food Crisis since World War II due to Human Factors

3．Background of Absence of Social Turmoil like the "Arab Spring"
4．African Agriculture in Decline due to Grain Exports from Developed Countries

Copyrights Ruan Wei

1 Grain Prices to Remain High with Risk of Sharp Fall in FY2022/2023

1

・Chicago futures prices for 7/15/2022 (cent/bu): wheat 781, corn 694 (7/14), soybeans 1470
Wheat -7.0%, corn 8.2%, soybeans -2.9% compared to 2/22 before war.
However, compared to 2021/7/15, wheat +16.2%, corn +23.4%, soybeans +1.6%, all still higher.
-Factoring in a significant decline in Ukraine's wheat exports in 2022/23.
・Projections for FY2022/23 (USDA 2022/7/12) - Grain in Ukraine in FY2022/23--Wheat: production 19.5 million tons (-40% YOY), exports 10 million tons (-46.8%, or less by 8.8 million tons)--Corn: production 25 million tons (-40%), exports 9 million tons (-60%, or less by 14 million tons)-Global wheat production -0.9%, exports +2.7%
・Lifting the Black Sea blockade would lead to a sharp recovery in Ukraine's exports.

Futures Closing Price (Continuous): CBOT Wheat
Futures Closing Price (Continuous): CBOT Corn
Futures Closing Price (Continuous): CBOT Soybean

Source USDA

Source CBOT

7/2/2022

2022/3/2
5/2/2022

2022/1/2

Nov. 2,2021

9/2/2021

7/2/2021

5/2/2021

2021/3/2

2021/1/2

2020/11/2

2020/9/2

Corn

2020/7/2

Wheat

2020/1/2

45000
40000
35000
30000
25000
20000
15000
10000
5000
0

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

2020/5/2

of tonChicago Grain and Soybean Futures (Close)

cent/bushel

2020/3/2

Thousands Forecast of Wheat and Corn Production in Ukraine

Russia May Increase Wheat Exports This Year

2

Russian Wheat Production and Exports USDA July 12, 2022
Marketing year 2021/22 (July-June)-Wheat production was 75.16 million tons, -11.9% YOY (or less by 10.19 million tons).

Damage due to winter dieback occurred from February to March 2021.
→Refreezing due to a drop in temperature after thawing due to a rise in temperature-Wheat exports totaled 33 million tons, less by 6.1 million tons, or -15.6% YOY.
Forecast for MY 2022/2023

Wheat production up 7.8%, or more by 5.84 million tons, exports up 21.2%, or more by 7.0 million tons
If sanctions are lifted, exports will increase → Prices will fall further

Forecasts for Russian Wheat Production and Exports

Source USDA

2021

2019

2017

2015

2013

2011

2009

2007

Export

2005

2001

1999

1995

1993

Production

2003

90000
80000
70000
60000
50000
40000
30000
20000
10000
0

1997

Thousands ton

Russia's Grain Exports Subject to Stable Domestic Supply
Unstable export system
・The basis of Russia's food policy is to ensure food security and stability of basic food supplies.
・The quota system, a control system for grain exports
Subject: Wheat, rye, barley and corn
Total export volume restrictions outside the Eurasian Economic Union（Armenia, Belarus, Belarus, Belarus, Belarus, Belarus Belarus. Kazakhstan. Kyrgyzstan, Russia)
7 million tons from April to June 2020, 17.5 million tons from February to June 2021
8 million tons of wheat from February to June 2022 (banned to former Soviet Union countries from March)・Introduction of "Variable Export Duty" on grain exports as a permanent measure, from June 2021.
-Variable Export Duty: The amount of duty fluctuates in accordance with the export price of grain.
-Objective: To prevent international price increases from spreading to the domestic market and topromote grain production.
-Variable export tariffs for wheat, barley and corn, calculated and published weekly.
For example, base price per ton and export tariffs for June 15-22, 2022
Wheat ($386.4, $131.6), Barley ($317.6, $84.0) Ref: Wheat tariff in last week of 2021: $94/t

3

India Grain Exports Also Subject to Domestic Food Security

4

Grain imports and exports are positioned as an adjustment of excesses and deficiencies in domestic supply and demand.
-Indian wheat wholesale market prices have risen from late 2021
-Once-in-a-century heatwave, drought in April 2022 may reduce wheat production
Wheat prices may rise further
India has 170 million people living below $1.9/day in 2015.
-According to the 2021 Global Hunger Index (GHI) Report,
India ranks 101 out of 116 countries, down from 2019.
Even lower than Bangladesh (76th) and Pakistan (92nd).
Export ban on May 14 to supply cheap wheat to the huge impoverished population

Indian Wheat Production,
Trade and Ending Stocks

million t

120

Wholesale Price Index for Indian Wheat and Rice2011-2012=100

200

100
150

80
60

100

40
20

Source USDA

ImportExportYear-end
Inventory

WPI:Rice

WPI:Wheat2022-042021-08

2020-122020-04

2019-082018-122018-04

2017-08

2016-12

2016-04

2015-08

2014-12

2014-04

2013-08

2012-12

2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

Production

2012-0450

0

WPI: Flour

Source: Ministry of Commerce and Industry of India

Feed Grain Barley Supplies at Risk of Decline

5World production: 145.01 million tons in 2021
- EU27 35.8% or 51.97 million tons, Russia 12.1% or 17.51 million tons, Ukraine 6.8% or 9.92 million tons
Export : 3.409 million tons (23.5% of production volume) in 2021
-EU27 22.0% or 7.5 million tons, Russia 11.7% or 4.0 million tons, and Ukraine 17% or 5.8 million tons.
Feed consumption: 70% of production
Food processing and industrial consumption: 30% of total production
USDA forecasts of exports in 2022/23
Ukrainian export : 1.8 million, down 69.0% YOY; Russia export : 6.0 million tons, up 50.0% YOY

World Barley Production

million t

Thousands t

World Barley Consumption

Thousands t
250

35,000200

30,00025,000150

20,00015,000100

10,00050

5,000

RussiaUkraineCanadaAustralia

Source USDA

China

Other

EU27
CanadaRussiaTurkeyUkraineArgentina

Source USDA

Australia
Other

2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

0

1990

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

0

2007
EU28

World Barley Exports

40,000

180
160
140
120
100
80
60
40
20
0

Feed Consumption FSI Consumption Year-end Inventory

Source USDA

Fertilizer Prices Remain High with Risk of Plunge

6

Nitrogen prices fell sharply, falling to October 2021 levels in early July 2022

Phosphorus and potash prices remain high; resources unevenly distributed around the world-Securing fertilizer is crucial for India and Brazil
Nitrogen production is not geographically constrained, and there are many new entrants such as India, limiting priceincreases
Risk of decline if sanctions are lifted-Of total exports of nitrogen, phosphate and potash in 2019, Russia exported 16%, the highest in the world, and Belarus 7%.

Chemical fertilizer prices are influenced by energy prices.
-Stagnant investment in oil and natural gas development due to the "decarbonization" trend = supply shortages-Russia's natural gas exports at risk of falling
World Chemical Fertilizer Prices

USD/mtTop 5 Countries in World Chemical Fertilizer Imports

1,400(Total import of the three elements of fertilizer:

1,200

Thousands t

1,000

nitrogen, phosphate, and potash)

16,000Thousands t

800

14,000600

12,000400

10,000200

8,000

BrazilUnited States

India

Source FAOSTAT

China

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

France2022-07-01

2022-05-01

2022-03-01

2022-01-01

2021-11-01

2021-09-01

2021-07-01

2021-05-01

2021-03-01

2021-01-01

2020-11-01

2020-09-01

0

2020-07-01

2,000

2020-05-01

2020-01-01

4,000

2020-03-01

0

6,000

Spot Price (Mid): Urea (Small Particles, Bulk): FOB Baltic Sea
Spot Price (Mid): Urea (Small Particles, Bulk): FOB China
Spot Price (Mid): DAP (64% Granules, Bulk): FOB Baltic/Black Sea
Spot Price (Mid): DAP (64% Granules, Bulk): FOB Morocco
Spot Price (Mid): Potassium Chloride, Bulk): FOB Vancouver

Source: www.oilchem.net

Implications of Chemical Fertilizers in World Food Production

7

Half a century to 2019.

•

World grain production has increased 2.5 times more, chemical fertilizer use 3.1 times, population 2.1 times•

The increased population is fed by increased grains thanks to the increased application of chemical fertilizers.

•

China and India's food production increase is outstanding.
-In the half-century to 2019, China's population grew by 72.4% and India's by 151.6%.

-Grain production in China and India increased 3.5 times and 3.1 times, respectively, during the same period.
-Grain planted area increased by 5.3% in China and only 1.7% in India-Chemical fertilizer use has led to a 14-fold increase in production in China and a staggering 20.9-fold increase in India
・India's yield is 56.3%, 59.8% and 48.4% of that of China for rice, wheat and corn, respectively.

-India’s chemical fertilizer use in the agriculture is 79.2% for nitrogen, 68.5% for phosphorus, and 25.8% for potash ofthat of China.
-May increase food production by increasing chemical fertilizers.
・Demand for chemical fertilizers in developing countries is high.
Comparison of Chemical Fertilizer Use in Agricultural
Sector between China and India (2019)

Comparison of Grain Yields between China
and India (2020)
kg/ha
China

7000

India

6000

China

India

20,0004000

10,000

1000

5,000

0

0
Wheat

Maize

Source FAOSTAT

Soybean

60000050000

500000

40000
30000

20000020000

100000

10000
0

1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018

2000

Rice
(husk)

60000

0

15,000

3000

Thousands t

70000030000030,00025,0005000

Comparison of Grain Production and Chemical
Fertilizer Use between China and India

400000Thousands t

8000

Thousands t

NitrogenPhosphoric
A cid

PotashSource: International Fertilizer Association

China Grain Production
Fertilizer use in China(right axis)

India Grain Production
Fertilizer use in India (right axis)

N o t e The total amount of nitrogen, phosphate and potash used in the agricultural sector.
Sources FAOSTAT, International Fertilizer Association

Consequences of Banning Chemical Fertilizers

8

Sri Lanka banned the use and import of chemical fertilizers, pesticides and herbicides across the country in April 2021.
-Concerns about groundwater contamination and health hazards due to excessive use of chemical fertilizers.
-Promotion for organic farming throughout the country.
As a result of the sudden ban on chemical fertilizers while organic farming was not established,rice harvest in FY2021 was 2.92 million tons, -13.7% YOY; yield: -14.5% YOY, imports: 700,000 tons, up 50-fold YOY.
-Tea harvest, the largest export, at a 13-year low in February 2022, quality also declined.
-Food prices soaring, farmers' incomes declining, protests frequent (and debt problems, etc.)-Bans on chemical fertilizers and pesticides use and imports were terminated in November 2021.
Rice Production in Sri Lanka
Thousands tCorn Production in Sri Lanka
kg/ha

kg/ha

Thousands t

4,000

4000

3,500

3500

500

5000

3,000

3000

400

4000

2,500

2500

2,000

2000

300

3000

1,500

1500

200

2000

1,000

1000

100

1000

500

500

0

0

Production

Source USDA

Imports

Yield (right axis)00Production

Source USDA

Imports

Yield (right axis)

Farmers May Use Less Chemical Fertilizers for Profitability

9・According to the Food Outlook published by FAO on June 9, 2022,-Agricultural production input cost indices, including chemical fertilizers, remain at record high.
-Chemical fertilizers cost averaged +6% MOM over the past year, well above the average food price of +2%.
・The current high food prices have led to a decline in farmers' real take-home pay, which has led to a reduction in
production expenditure.
-International Rice Research Institute (IRRI) Warning: Global Rice Harvest at Risk of 10% Decline in Next Rice Harvest
Season・Securing chemical fertilizers is important for India and Brazil.
-Brazil secured imports from Russia and other countries in March 2022 and April.

Brazil's monthly imports of chemical fertilizers(HS code 31)- Indianexpress, June 30:.
---India to import 350,000 tons of phosphoric acid from Russia at $920-925/t
including transportation costs

world
Russianfederation
CanadaChina
Egypt
IsraelMoroccoUnited Statesof America
Germany
Belarus
Saudi Arabia
Qatar
Nigeria
Spain
Chile
Netherlands

Cheaper than China, Saudi Arabia, Morocco, etc.
Prime Minister Modi at the G7 summit on June 27.
- The focus should be on the availability of fertilizers. “We are trying to increase theproduction of fertilizers in India and seek cooperation from G7-countries in this regard,”
Brazil, "National Fertilizer Plan 2022-2050" (March 11)
Import share of fertilizer from current 85% to 45% in 2050

Source ITC

Mar-21
2,916

Unit Thousandsof metric tons
Apr-21 Mar-22. Apr-22
1,885
2,700
3,249

604

502

686

660

214
413
58
66
184

190
117
22
32
193

228
476
37
71
102

377
289
255
249
203

178

119

120

198

107
195
97
189
53
16
25
105

50
187
16
95
20
10
39
31

37
230
45
64
159
33
54
46

159
131
111
108
85
65
58
49

2. Human Factors, War and Sanctions

10

International prices for wheat, corn and soybeans remain high due to "war and sanctions"-The blockade of the Black Sea, and international sanctions such as the exclusion of SWIFT from Russia-Inventory is ample and production is on track
FAO, WFP and 3 other organizations, "The State of World Food Security and Nutrition, 2022" (July 6, 2022).
-Prices rose from 2021 due to port congestion and transport delays caused by the pandemic-The starved population was about 828 million, or 9.8% of the world’s total in 2021, up 150 million from 2019
WFP: 276 million people face acute hunger in early 2022, up 126 million from 2019
WFP-supported 81 countries will see an increase of 47 million people in acute hunger if the conflict in Ukraine is not
resolved.
https://ja.wfp.org/stories/ukurainazhanzhengyiqiankaraguoquzuidanonisushiliaoweijiniguansurubaogaoshu
The international community, including developed countries, has been cold to the hunger crisis in developing countries.

600
400
200

Production

Data USDA

Exports

Ending Stocks

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

0

1996

Developing countries such as Africa and the Middle East are suffering fromman-made crises.

800

1994

-$1,763.5 million, or 80% of the amount needed for aid to Ukraine, wasraised, but only $472 million, or about 28% of the requested amount, wascontributed to support South Sudan (UN)World Wheat Production,The
response
to andtheEndingsituation
million t
Exports
Stocksis
1,000
excellent.
But to Africa.

1992-WFP at a June 15 press conference, "When we look to Ukraine, we don't
have enough money."

Worsening Food Insecurity in the Middle East and Africa

11

Grain exports share of Russia and Ukraine<Wheat> Both countries' wheat exports to account for 27.9% of world exports in 2020
Russia: 37.27 million tons, No. 1 globally (18.8% share); Ukraine: 18.06 million tons, No. 5 (9.1% share)＜Corn> Ukraine 27.95 million metric tons of corn, 4th in the world (14.5%)
About 1.5 billion people depend on grain and chemical fertilizers from both countries, UN・Russia and Ukraine export wheat to the Middle East, Africa and Asia.
Dependency for the both countries : Egypt: 70%, Lebanon: 60%, Tunisia 80 % (FAO）
・Some developing countries are facing a permanent, structural food crisis due toincome inequality, political corruption, civil war, and drought.

Top 10 Wheat Importers in 2020
Country

ImportVolume1Indonesia(million
tons)
1030

5.1

2

Turkey

966

4.8

3

Egypt

904

4.5

4

China

815

4.0

5

Italy

799

4.0

6

Algeria

705

3.5

7

Brazil

616

3.0

8

Philippines

615

3.0

9

Bangladesh

601

3.0

10

Nigeria

590

2.9

World

20235

100.0

Rank

・Russia's invasion of Ukraine was an additional blow.
10,000Russia's top 10 wheat exporters inmetric900
tons 2020
800
700
600
500
400
300
200
100
0

Source FAOSTAT

10,000
Ukraine's top 10 wheat exporters in 2020
metric tons

Share
(%)

Source FAOSTAT

3. Why Were There No Food Riots like the Arab Spring?
•

12

Starving population surged in Middle East and Africa as grain imports fall, but disruption is limited
There have been no riots like the Arab Spring of 2011.

•

Misperception of harvest and export timing as the backgroundUkrainian and Russian wheat exports in 2021/22 are on track -> almost shipped before invasion→Wheat harvest season in both countries is from July to August, while exports are from August to November.
-Ukraine's grain exports to May 2021/22 (USDA 10 June 2022 announcement)--All wheat and 90% of the expected corn has been exported.
- "Reuters, June 22, Kyiv" reports.
Ukraine's grain exports for 1-22 June 2022 totaled 907,000 t (-48% YOY), of which 803,000 t corn, 78,000 t wheat,and 21,000 t barley.

1.7 million tons of grain exported in May 2022
https://jp.reuters.com/article/ukraine-crisis-grain-export-idJPKBN2O30Q7
The import situation in Egypt, the world's largest importer of wheat, is stable.
-In March 2022, 479,000 t of wheat were imported from Russia (up 24% YOY).
https://europe.nna.jp/news/show/2320487-In May, Egypt plans to import 500,000 tons of wheat from India
https://www.newsweekjapan.jp/headlines/world/2022/05/387009.php

Ukraine's Grain Export Routes outside the Black Sea

Photo by Google map

Ukraine's grain export ports on the Black Sea were blockaded.
Alternative routes

・By truck or rail from the port cities in northern Poland to the Baltic Sea by cargo ship.
-Railways have different gauges and require transloading
・Train from Odessa to Port on the Danube in Romania → Romanian export port Constanta
by barge → Black Sea
・Europe and the U.S. set up grain warehouses along the border with Poland and others.
・Transport capacity to 3 million tons per month
In 2021, transport capacity via the Black Sea were average 5 million tons per month→Alternative routes are limited in quantity and high in cost

Photo byGoogle map

13

14

Acute Hunger Population at Record High, but Rice Prices not Rising
Asian rice supply and demand, unaffected by the Black Sea blockade, is stable, with no price fluctuations.
The historic price crossing between rice and wheat is noteworthy.

-In March 2022, wheat prices exceeded rice prices for the first time since 1960.
-Rice prices in June 2022 remained below the same month last year (-4.7%).
Wheat prices in 22/6 were 60.9% higher than in the same month last year
Rice rose shaper than wheat when commodities surged in 2008.

According to USDA, rice inventories at the end of FY2022 will be 2.1% lower than the previous year and remain high.
→Food management systems for rice production, distribution, and stockpiling established by Asian countries arefunctioning.

USD/mtWorld Rice and Wheat Prices

1,000
900
800
700
600
500
400
300
200
100
0

World Rice and Wheat Prices

USD/mt
600
500
400
300
200

World Bank: Commodity Price: Wheat, US Hrw World Bank:
Commodity Price: Rice, Thai 5% (US Hrw)

Source: World Bank

2022-042022-01

2021-102021-072021-042021-01

2020-102020-07

2020-04

2020-01

2019-10

2019-07

2019-04

2019-01

2020-012017-072015-01

2012-072010-01

2007-072005-01

2002-07

2000-01

1997-07

1995-01

1992-07

1990-01

1987-07

1985-01

1982-07

1980-01

1977-07

1975-01

1972-07

1970-01

1967-07

1965-01

1962-07

1960-01

100

World Bank: Commodity Price: Wheat, US Hrw World Bank:
Commodity Price: Rice, Thai 5% (US Hrw)

Source: World Bank

Moderate Expansion of World Rice Exports

15

Export prices in India, which accounts for about 40% of the world's exports, are stable at low levels (currency depreciation/ dollar appreciation are contributing somewhat)
Even with high U.S. rice export prices, many U.S. rice farmers are losing money.
-Texas A&M University study finds two-thirds of rice farmers will lose money this year---FINANCIAL TIMES "Outdated Rice Agriculture" July 1, 2022 on Nikkei
USDA estimated global rice exports in 2021 to have increased by 1.98 million tones to 52.91 million tons.
In 2022, +1.29 million tons YOY, to 54.2 million tons.
-Rice inventories at the end of FY2022 were 2.1% below the previous year's level but still remain high.

600
500

400
300

Import FOB Price: Rice: Thailand (5% Broken Rate)
Import FOB Price: Rice: Vietnam (5% Broken Rate)
Import FOB Price: Rice: India (5% Broken Rate) FOB
Price: Rice: Pakistan (5% Broken Rate)
Import FOB Price: Rice: US Gulf Coast (4-5 % Broken Rate)

Source: China National grain and Oil Information Center

2022-07-02

2022-05-02

2022-03-02

2022-01-02

2021-11-02

2021-09-02

2021-07-02

2021-05-02

2021-03-02

2021-01-02

2020-11-02

2020-09-02

2020-07-02

2020-05-02

2020-03-02

2020-01-02

2019-11-02

2019-09-02

200

2019-07-02--in 2022: Over 8 million tons

700

2019-05-02--in 2021: 6.11 million tons.

800

2019-03-02--in 2020: approx. 6 million tons

World Rice Import Prices

USD/mt2019-01-02

Example, Thailand increases rice exports:

Why Rice Prices Have not Risen?
Egypt imported 500,000 t of wheat from Russia in March 2022 and 500,000 t from India in May.
Egypt's domestic wheat harvest to began in mid-April, government tightened control→ Combined of imports and domestic production secured enough wheat for 9 months of domestic
consumption as of April
https://www.arabnews.jp/article/middle-east/article_62670/

The shift from wheat to rice is not going to happen quickly in the Middle East and Africa.
→Consumption structure is different between rice that needs to be cooked at home and bread that are
pre-cooked.
Government aid programs for wheat-consuming developing countries→The generous Egyptian bread subsidy system is typical.
For 100%-wheat flat hollow bread "Eish", government controls raw material
Photo from theprocurement, bread production and retail.
Egyptian Embassy*"Eish" means "life" in Arabic.
Available t about one-twentieth of production cost thanks to subsidies → huge fiscal burden on government<Egypt's regime experienced pain from pan>In 1977, Sadat’s regime cut subsidies for flour and other products. → Pressure from citizens and riots reversed theaction.
In 2010, at the end of the Mubarak administration, market-oriented reforms were once again stalled due to the ArabSpring.
The current Sisi administration is focused on domestic stability.
-- Excluded 500,000 middle- and upper-income earners from beneficiary, but forego fundamental "Eish" reforms.

16

4. African Agriculture in Decline due to Grain Exports from Developed Countries
The U.S. had the Agricultural Trade and Development Assistance Act of 1954, Public Law No. 480 (PL480).
-Changed the name to the Food for Peace Act in 1966.
-Converted from food aid of surplus agricultural products -> to low-cost wheat exports through subsidies
World Bank, IMF offered financial support to African countries on favorable terms→In return, they demanded lower tariff rates on grains and forced imports of wheat from developed countries.
Agricultural revival in Africa → Increased grain production especially since 2008
Average annual growth rate of grain and population (1961-2011)
Africa: Grains up 2.57% < Population up 2.64%, Asia: Grains up 2.75% > Population up 1.85%
Africa's grain production growth is the key to solving food problems caused by population growth
Grain Production and Population Growth in Africa
1961=10

1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019

500
450
400
350
300
250
200
150
100
50
0

Grain
Production
Source FAO

Grain Yield

Population

Grain Production and Population Growth in Asia

500
450
400
350
300
250
200
150
100
50
0

1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019

1961=1

Grain
Production
Source FAO

Grain Yield

Population

17

18

Africa's Challenge is its Dependence on Food Imports
Africa's net imports of wheat in 2020 was 47.4 million ton, equivalent to 187.9% of production.
Rice net imports was14.86 million tons, 58.8% of production→Combined imports of rice and wheat are 62.2 million tons... Import dependence is a serious problem.
-If the annual grain consumption per person is 100 kg, that equals to the staple food for 622 million people.
→ Enough to feed Africa's urban population of 550 million (2018)→ Insufficient for Africa's total population of about 1.4 billion people (in 2022)...potential hunger risk in rural areas → agricultural reform for self-sufficiency is essential

African Wheat Production and Imports

Production

Source FAO

2017

2013

2009

2005

2001

1997

1993

1989

1985

1981

1977

1973

1969

1965

1961

90000
80000
70000
60000
50000
40000
30000
20000
10000
0

Thousands t

45000
40000
35000
30000
25000
20000
15000
10000
5000
0
‐5000

African Rice Production and Imports

1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018

Thousands t

Net Imports

Production

Source FAOSTATNet Imports

Egypt Switches Wheat Imports from US to Russia•

19

Egypt became a destination of U.S. surplus wheat, and wheat imports increased→Agriculture in the fertile Nile Delta, which supported ancient Egypt, is in decline.
Since the 1970s, imports of wheat have consistently exceeded domestic production.

•

Egypt has been moving away from the U.S. since the 2010 Arab Spring•

The military-backed Sisi government closed distance to Russia ... and the Sisi-Putin honeymoon.
→Since 2014, Russia has replaced the U.S. as the largest wheat importer

Imports of wheat have been more than 10 million tons per year for the last 10 years.
-100 kg of wheat consumption per person per year feeds the entire population of Egypt, about 100 million people.

Egypt's Wheat Imports by Country

Egypt's Wheat Imports by Country

Thousands t

14000
12000
10000

RussiaUkraineFranceRomania
Australia
USA

8000
6000
4000
2000

Production

Source FAO

Net Imports

Source FAOSTAT

2020

2018

2016

2014

2011

2007

2005

2003

2001

1999

1996

1994

1992

Net Imports

1990

Production

1988

0

1986

Thousands t

Nigeria's Wheat Imports Surge, Mirroring Africa's Changes

20

Nigeria, Africa's most populous country, has surpassed 200 million people

Modernization has led to a decline in consumption of traditional foods such as millet, sorghum and other cereals, andyams and other potatoes.
→Wheat consumption, which was not part of the food culture, is increasing, and 5.9 million metric tons will be
imported in 2020.
Food imports made possible by increased oil and natural gas revenues, not by international aid
Nigeria started to increase rice production after experiencing high grain prices in 2008 and 2011.
-Foreigners to take concrete measures for food self-sufficiency.
Imports were effectively banned in June 2015 for rice, vegetables, meat and other products.
-Rice production to increase by 36.1% from 4.0 million t in 2015 to 5.45 million t in 2020
→Rice imports will plummet from a peak of 1.64 million metric tons in 2014 to 60,000 metric tons in 2020.
Thousands t

Nigeria's rice production and imports

Thousands t

7,000

7000

6,000

6000

5,000

5000

4,000

4000

3,000

3000

2,000

Nigeria's wheat production and imports

2000

1,000

1000

Production Volume
Source FAO

Net Import Volume

Production volume

Source FAO

Net imports

2018

2015

2012

2009

2006

2003

2000

1997

1994

1991

1988

1985

1982

1979

1976

1973

1970

1967

1964

0

1961

2018

2015

2012

2009

2006

2003

2000

1997

1994

1991

1988

1985

1982

1979

1976

1973

1970

1967

1964

1961

0

A Wide Variety of Staple Foods in Africa
Tanzania, Mozambique"Ugari."-Cassava Flour-Corn Flour

Rice
Cooking banana

Photo by the author
November and December 201021

No Fresh Cassava Products in the Supermarkets
A Supermarket in
Dar es Salaam

Photo by the author

22Dar es Salaam Suburbs and Street Market

Photo by the author

Suburbs only a few dozen kilometers away, roads undeveloped

23

How to Assure Food Security

24

Reinforcement of stockpiling-State stockpiles of rice, wheat and chemical fertilizers → 3-5 months of domestic demand--- Can the stockpiling system of Japan Oil, Gas and Metals National Corporation (JOGMEC) be a model?
→Replace regularly, and tap the reserve when the price rises

Food Pooling Systems in Asia and Africa-Strengthening the food version of the Chiang Mai Initiative in the financial sector→The state reserve of food and fertilizer is to be urgently transferred to other countries.
→Global food security is in Japan's interest.

Support for increased food production in Africa-Towards cash-generating agriculture for small-scale farmers in Africa-Establishment of post-harvest systems, including harvesting, warehousing, processing, and distribution
World to reduce dependence on chemical fertilizers as a target of the SDGs
-How to make low-cost and highly effective compost and how to spread its use-Establishment of a locally-recycled fertilizer supply system through collaboration between crop farming and livestock・・・・・・-------------------------------------------------------------------------------------------------------------------------------------Disclaimer
The information in this document is provided for informational purposes only and is not intended to guarantee theaccuracy or appropriateness of such information. All rights pertaining to this material belong to the Company. Please do
not disclose, reproduce, or distribute this material to any third party without permission.

Part 2The Impact of Ukrainian Crisis on Japanese Agriculture(Crop Farming)• The fall in rice prices has worsened the profitability of rice farming operations,and the high cost of fertilizers has further increased the burden on rice farmers.
• Measures to reduce the burden of price hikes are necessary on the premise that
farmers are making efforts to reduce fertilizer use.
• In the medium term, it is desirable to reduce dependence on imported fertilizers
25
by establishing a domestic resource recycling system.

(1) Fertilizer Situation
Demand for Fertilizers is Declining. The Majority is Used in Paddy Farming.

26◼ Domestic demand for chemical fertilizers is 903,000 tons in terms of ingredient volume (2016 fertilizer year) Fertilizer demand continues to decline as cultivated area and input per unit of land decrease◼ Fertilizer demand fell sharply, especially for phosphate and potash, when fertilizer prices soared in 2008 (promotion of low PK)◼ Rice cultivation (paddy field cultivation) accounts for more than half of fertilizer use by application.

(Thousands ton)
1,500

Domestic Demand for Chemical Fertilizers (Net Component Equivalent)

1,371

1,337

1,296

1,274

1,317

Nitrogen

1,103

369
863

1,000

923

1,027

1,087

1,046

1,037

Phosphoric acid

921

Potassium

903
229

508

300

500
494

375

0
2003

04

05

06

07

08

09

10

11

12

13

14

15

2016 (Fertilizer year)
Source: "Pocket Fertilizer
Handbook" (in Japanese)27Japan Relies on Imports for Raw Materials for Chemical Fertilizers◼ As raw materials for fertilizers are unevenly distributed in certain regions, Japan, with no natural resources, have to importthem.
◼ Among the major importing countries in 2020, Malaysia accounted for the largest share of 48.8% of urea imports, followed by
China with 38.4%.
◼ 90% of ammonium phosphate is imported from China◼ Canada accounted for 60% of potassium chloride. Russia and Belarus accounted for 15.4% and 10.3% of imports respectively,
and 1/4 collectively
Main Fertilizer Raw Material Procuring Countries (2020 Fertilizer Year)
Potassium Chloride (K)Ammonium Phosphate (N,P)

Urea (N)OthersUnitedStates

12.8%

9.9%

Others15.1%

Belarus

China
38.4%

Total
335
thousand t

Malaysia
48.8%

Total
512
thousand t

10.3%

RussiaTotal
412
thousand t

Canada
59.2%

15.4%
China
90.0%

Source: Trade Statistics, Ministry of Foreign Affairs of Japan

Fertilizer Raw Material Prices are on an Upward Trend from 2021,
Rising Sharply from the Second Half of 2021

28

◼ From mid-2021, international prices of fertilizer raw materials had soared due to increased demand for grains and rising prices
of crude oil and natural gas.
◼ Prices at levels not seen since 2008 when fertilizer prices soared last time.
 Urea and potassium chloride prices exceeded the price levels of 2008 and reached record highs
 Ammonium phosphate is also approaching 2008 levels.
◼ The rapid depreciation of the yen since 2022 has also been a factor in higher import prices.
(Thousands of yen/ton)
200.0

Import Prices of Fertilizer Raw Materials (Monthly Changes)

Urea

Ammonium phosphate

Potassium chloride

15

19

150.0

100.0

50.0

0.0
2000
20

01

02

03

04

05

06

07

08

09

10

11

12

13

14

16

17

18

20

21

Source: Trade Statistics, Ministry of Foreign Affairs of Japan
Note: Import prices are calculated as import value/import volume.

2022

Urea Has been Significantly Affected by Substantial Export Restrictions by China

29◼ The Chinese government has decided to launch a China Inspection Quarantine (CIQ) on fertilizers including urea on October 15,
2021. Effectively restricting exports.
◼ Import volume from China dropped sharply in November and December 2021. It has recovered somewhat since then, but has not
returned to previous volumes.
◼ Imports from Malaysia increased to compensate for the decline in imports from China◼ Import prices had been on an upward trend since the beginning of 2021, and prices rose sharply in October and remained highthereafter.
 May 2022: 113,000 yen/ton, 3.3 times the 20-year average (34,000 yen/ton)Import volume

Import priceUrea Import Volume and Import Price(Thousands of yen/ton)150(Tons)
50,000113

20-year average:
34 thousand yen/ton

40,000120

30,00090

20,00060

10,000

30

0

0
1

2

3

4

5

6

7

8

9

10 11 12

1

2

3

2020
Malaysia (import volume, left axis)

4

5

6

7

8

9

10 11 122021
China (import volume, left axis)

Others (import volume, left axis)

1

2

3

4

5

2022
Price (right axis)

Source: Trade Statistics, Ministry of Foreign Affairs of Japan
Note: Import prices are calculated as import value/import volume.

30

Ammonium Phosphate, like Urea, is Also Heavily Affected by China’s Export Restrictions◼ Like urea, imports of ammonium phosphate also fell sharply in November 2021 due to China’s virtual export restrictions◼ Imports from Morocco increased in 2022
 Logistics costs are higher than from China◼ Import prices have been on an upward trend since November 2021
 May 2022: 147,000 yen/ton, 3.6 times the 20-year average (40,000 yen/ton)Import price
Import volume

Import Volume and Import Price of Ammonium Phosphate

125,000(Thousands ofyen/ton)200

100,000

147(TONS)

20-year average:
4,000 yen/ton

75,000

150
100

50,00050

25,000
0

0
1

2

3

4

5

6

7

8

9

10 11 122020

China (import volume:
left axis)

U.S.A. (import volume: left
axis)

1

2

3

4

5

6

7

8

9

10 11 12

1

2

2021

Morocco (import volume:
left axis)

3

4

5

2022

Others (Import volume: left axis)

Price (right axis)

Source: Trade Statistics, Ministry of Foreign Affairs of Japan
Note: Import prices are calculated as import value/import volume.

Potassium Chloride Imports from Russia and Belarus Decreased in 2022,
While Imports from Canada Increased

31◼ In the 2020 fertilizer year, imports from Russia and Belarus accounted for about 1/4 of the total◼ Imports from Russia and Belarus almost stopped in 2022. Increased sourcing from Canada.
◼ Import prices have been on an upward trend since 2021
 May 2022: 91,000 yen/ton, 2.5 times the 20-year average (36,000 yen/ton)Import price

ImportvolumeImport Quantity and Import Price of Potassium Chloride(Thousands ofyen/ton)(TONS)

91

100,000

20-year average:
36 thousand yen/ton

75,000100
80
60

50,00040
25,000
0

20

1

2

3

4

5

6

7

8

9

10 11 12

1

2

3

4

5

2020

Russia/Beralus(import volume, left axis)

Canada(import volume, left axis)

6

7

8

9

10 11 122021
Others(import volume, left axis)

1

2

3

4

5

0

2022
Price (right axis)

Source: Trade Statistics, Ministry of Foreign Affairs of Japan
Note: Import prices are calculated as import value/import volume.

32

In 2022 ("Autumn Fertilizer"), Domestic Fertilizer Prices Rose 60% YOY.

◼ More than 60% of the production cost of chemical fertilizers is the cost of raw materials. Therefore, a rise in the price of imported raw materials
directly leads to a rise in domestic fertilizer prices.
◼ In 2022 (autumn fertilizer), prices of urea (imported, large granule) rose 94% and fertilizer prices overall rose 60% from the previous year.
◼ Rising fertilizer prices will have a negative impact on all crop farming Fertilizer costs as a percentage of production costs vary by product, but are generally around 10%.
 The impact is greater for crops that demand more fertilizer (such as strong wheat with high protein content, which accounts for morethan 20% of production costs).
(%)
100.0

75.0

Cost Structure of Advanced
Chemical Fertilizers
Others20.2%
Processing cost

(Spring fertilizer for
FY 2015=100)

Trends in the Zen-Noh Fertilizer Price (Single
Fertilizer) Index

Percentage Change in the Price of Autumn Fertilizer (JuneOctober) in the 2022 Fertilizer Year

250

200

16.1%

Classification/Item

Superphosphateof LimeUrea(imported)
Potassium
Chloride

Nitrogen150
50.0
Simple100
Raw Material Cost
63.7%

50

Fall

Spring21

Fall

Spring20

Fall

Spring19

Fall

Spring18

Fall

Spring17

Fall

Spring

16

Fall

2015

SpringSource: Ministry of Economy, Trade and Industry,"Fiscal 2012 Medium-Scale Business Support Fact-Finding
Survey on Chemical Fertilizer Production in Japan" (inJapanese)

Fall

0.0

Spring Fertilizer

25.0

Phosphate

Potash2022
CompoundIngredients (%)

Change fromprevious period(vs. Spring
fertilizer )Urea (imported, large
granule)46

94%

Urea (domestic, finegranule)46

73%

Ammonium sulfate(powder)

21

45%Superphosphate of
lime

17

25%

Multi Phosphate

35

25%

Potassium chloride

60

80%

Potassium silicate

20

36%

Advanced Chemical(Standard)

15-15-15

55%

Source : Zen-Noh Press Release(2) Impact on Rice Farmers

33

Business Confidence of Crop Farmers, Especially of Rice, Deteriorated even before the Situation in Ukraine Became Tense.
◼ Business confidence of crop farmers generally worsened Rice crop turned negative in 2020, and even deeper thereafter.
◼ Rice prices have been on a downward trend since the 2008 crop, and dropped sharply in the 2021 crop
 The decline was particularly large for brands for B2B, due in part to the Corona disaster.
Business Confidence of Crop Farmers(DI for Business Conditions)2017
Agriculture
as a whole
Rice

2018

2019

(Yen/60kg)
2020

2021

21.2 ▲ 11.1

6.0 ▲ 24.9 ▲ 29.6

39.7 ▲ 51.8

26.5

▲ 3.6 ▲ 55.2

(Hokkaido)
Rice10.3 ▲ 10.7

11.4 ▲ 33.4 ▲ 55.9

OTC Trade Prices of Rice by Variety

27,50025,00022,500National average

20,000Tochigi Asahi no Yume

Aomori Tsugaru Roman

Chiba Fusa Kogane(Non Hokkaido)

Upland34.8 ▲ 22.7
7.5

OutdoorVegetables
IndoorVegetables
Tea

15.0

Fruit Tree

21.8

▲ 3.4

31.6 ▲ 32.3

0.2

▲ 9.3 ▲ 32.8 ▲ 21.4

▲ 1.4 ▲ 22.4 ▲ 28.1 ▲ 32.3

26.5 ▲ 14.5 ▲ 53.1 ▲ 78.0
20.6

7.5 ▲ 16.8

▲ 0.9
11.9

17,500Akita Akita Komachi
Niigata Koshi (general)

15,000

Hokkaido Yumepirika
Yamagata Tsuyahime

12,500Niigata Koshi (Uonuma)

10,0007,500

Source: Japan Finance Corporation, Survey of AgriculturalBusiness Conditions (January 2022)(Note) The DI for business conditions is the percentage of
respondents who answered that agricultural management"has improved or will improve" minus the percentage who
answered that it "has worsened or will worsen.

2006

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21 （Year）

Source: Ministry of Agriculture, Forestry and Fisheries website, “OTC trade prices and volumes, contracts and sales, andprivate-sector inventories of rice.”(Note) Consumption tax is 5% until March 2002 and at 8% from April 2002 onwards.

In 2023, even 3 to 5 ha Rice Farmers may Fall Deficit.
◼ The average farm income of rice farmers is estimated to have turned into a deficit in 2021 due to fall in rice price. The deficit will widen in
2022 and 2023 due to higher fertilizer prices.
◼ By size, even 3 to 5 ha farmers will be in the red in 2023 and 5 to 10 ha farmers will have almost no farm income left.

Estimated Change in Farm Income of Rice Farmers

200(1,000 Yen)

Estimate

2020
126.0

Estimate

Average

100

Less than 0.5 ha

By Acreage size

0
▲54.8

▲ 100

▲90.7

▲ 200
▲256.1

▲ 300
2020

2021

2022

Source: Ministry of Agriculture, Forestry and Fisheries,"Management Statistics by Farming Type," "Report on Rice Trade".

2023

126.0

2021f

2022f

▲ 54.8▲ 90.7 ▲ 256.1▲ 357.0 ▲ 384.6 ▲ 393.0

2023f▲ 431.6

0.5 to 1.0▲210 .0 ▲270 .1 ▲284 .0 ▲348 .0

1.0 to 3.0▲ 46.0 ▲ 231.7 ▲ 267.7▲ 433.7

3.0 to 5.0

537.0

148.0

80.3

▲231 .0

5.0-10.0

1,597.0

863.5

733.4

134.7

10.0-15.0

3857.02685.02460.21426.315.0 to 20.0

6,669.0

5,090.0

4,810.0

3,522.1

20.0 to 30.0

8768.06812.96411.74566.530.0 to 50.0

12,265.0

9,705.6

9,088.9

6,251.7

18811.0 14429.2 13474.1

9080.350.0 ha or more

Source: Ministry of Agriculture, Forestry and Fisheries,"Management Statistics by Farming Type," "Report on Rice Trade".

(1,000 Yen)

Rice Farming Companies' Ordinary Income Fell Sharply, and will Post a Loss in 2023. 36◼ The average size of rice farming companies in 2020 is as below, paddy rice acreage is 36.3 ha, sales are 67.35 million yen, andordinary income is 6.57 million yen.
◼ In 2021, ordinary income is estimated to have fallen sharply by 80% due to the decline in rice prices◼ Ordinary income in 2023 will be in the red due to the price surge of fertilizer.

Estimated Change in Ordinary Income of Rice Farming Companies(Thousands of yen)
8,000
Estimate
6,000

Decline in
Rice Prices

4,000
6,567
2,000

▲5,286

Increase in
Fertilizer costs

Decrease in
Fertilizer Costs

▲457

+106
1,418

0

960

■

Ordinary Income(Thousands of yen)■

Increase Factors(Thousands of yen)■

Decrease Factors(Thousands of yen)

Increase in
Fertilizer costs▲2,103▲1,143-2,0002020

2021 F

Ordinary Income

Ordinary Income

Source: Japan Finance Corporation, "Results of Analysis of Agricultural
Management Trends," various years

2022 F
Ordinary Income

2023 F
Ordinary Income(Note) Sales include direct payment subsidies (volume portion) for field crops such as wheat
and soybeans.

(3) Countermeasures Required
Policy Support is also Needed for Cost Increases that cannot be Avoided

38◼ Short-term measures to prevent the rising price of fertilizer on a producer basis include reducing the amount of fertilizer applied through farm management innovations.
■ Avoiding excessive fertilizer application based on soil diagnosis ■ Switching to inexpensive fertilizer brands■ Switching from region-specific fertilizers to general-purpose fertilizers ■ Changing from high-fertilizer-intensive crops to low-fertilizer-intensive crops◼ Policy support is needed for cost increases that cannot be avoided
 Revenue insurance and management stability measures related to cultivated crops, such as “Narashi”, cannot handle the cost increases due to soaring input material
prices, etc.
 In the case of rice cultivation, the sharp rise in fertilizer prices will have a significant impact when procuring fertilizer for the 2023 crop. Actions need to be taken inaccordance with the timing of planting season.
 Each region is required to review the fertilizer line up for next Spring in a way to encourage the reduction of chemical fertilizers, etc.
◼ MAFF announced the creation of a new support scheme to subsidies 70% of the increased cost of fertilizer if farmers reduce the use of chemical fertilizers by 20%.

 Supporting farmers who are taking the lead in reducing fertilizer costs due to the recent sharp price rise and are contributing to hit the 2030 target of chemical fertilizer
reduction by 20%.

New Scheme to Handle Fertilizer Price Hikes (Illustrative)

Depreciation

Establishment of newof Agricultural

financial support for

Machinery,

fertilizers purchased in June

Pesticide2022 and onwards

Costs, Labor
Costs, etc.
Fertilizer Cost
Production Cost
(Previous year)

Approx. 1.7
times

Fertilizer
Cost

Efforts to reduce
chemical fertilizer
application by 20%

Production Cost
(From June 2022)

Subsidies for
70% of fertilizer
cost increase

Fertilizer
Cost
Production Cost
(After Subsidies)

Reduction of fertilizer use = A support forgreener agriculture and an alleviation forcost increases
Source: Ministry of Agriculture, Forestry and Fisheries, "NewPayments to be Established to Reduce Agricultural Production
Costs by 10%

In the Medium- to Long-Term, It is Essential to Reduce Dependence on Imports of
Fertilizer Raw Materials and Strengthen the Recycling of Domestic Resources.

39◼ The recent surge in fertilizer prices has once again highlighted the challenges of fertilizers that Japan’s crop farming is facing.
◼ Global demand for fertilizers will increase as food supplies rise in response to population growth.
 Currently, Japan is securing fertilizer raw materials in sufficient quantities, but procurement of fertilizer raw materials itself may
become even more difficult in the future.
◼ It is essential to reduce dependence on imports and strengthen domestic resource recycling
 Improvement and dissemination of technology to increase soil fertility (the inherent power of the soil)
 Utilization of unused resources as raw materials for fertilizers
 Reinforcement of arable-livestock cooperation
Background to the Revision of the Fertilizer Control Law
Issue 1: Unstable procurement of imported fertilizer raw materials
Increase in global demand for
fertilizers plus decline in Japan’sinternational

Issue 2: Livestock Production Environmental Issues
Reinforcement of Livestock
Environmental Measures
Cooperation between
farmers and rancherscompetitiveness

Safe use of compost andfertilizers derived from industrial
by-products

215

Production of fertilizers that meetthe needs of farmers
Compost use in ricepaddies has decreased by a51 quartercompared to 30 years
ago, and soil fertility has
declined due to dependence on
chemical fertilizers.

Issue 3: Decrease in the amount of compost used anddecline in soil fertility

Yrs

10 K

AverageAge (right)
Famers(left)
1995 2000 2005 2010 2015 2017
Issue 4
Decrease, aging and consolidations of farmers

Source: Ministry of Agriculture, Forestry and Fisheries of Japan "Outline of the Amendment to the Fertilizer Control Law:", and Norinchukin Research Institute.

(4) Summary

40◼ Ukrainian Crisis’ Impact on Japanese Crop Farming Imports of fertilizer raw materials from China have been significantly decreasing since autumn 2021 due to virtual export
restrictions imposed by China. Although we have been able to secure fertilizer raw materials by switching to alternative
countries, the domestic fertilizer cost is directly affected by the sharp rise in the global market.
 In terms of the impact on rice farming operations, there are concerns that the sharp rise in fertilizer prices will further hit

farmers financially, which already have been deteriorating due to the the decline in rice prices.

 Even if the Ukranian situation settles down, fertilizer prices are likely to remain at a higher level. In addition, geopolitical risks

and wild swings in prices due to inflows of speculative money are expected to pose an even greater risk to the stable supplyof fertilizer raw materials.

 In the short term, measures should be taken to alleviate the cost burden of unavoidable price hikes, along with measures andsupport for farmers to reduce fertilizer use.

 In the medium- to long-term, it will be essential to reduce dependence on imported fertilizer materials and strengthen domestic

resource recycling. Efforts to establish circular agriculture must be accelerated by improving and disseminating technologies toenhance the soil's natural soil fertility, utilizing unused resources as raw materials for fertilizers, and strengthening cooperation
between arable and livestock farming.

Part 3The Impact of Ukrainian Crisis on Japanese Agriculture(Livestock Production)• The impact of high feed prices on farm profitability is apparent in dairy farming.
• Concerns over deteriorating profitability of cattle and pigs from the second halfof the fiscal year
• In the medium to long term, effective measures to improve feed self-sufficiency
are required.
41

(1) Pre-Crisis Situation
The Incorporated Entities’ Production Share on the Rise. Majority of Layers, Pigs, and Beef Cattle (Fattening) with Corporations.

41◼ The incorporated farmers’ production share of animals was 94.2% for layers and 87.7% for pigs as of 2020, which tends to be higher
for smaller animals.
◼ The number of corporations managing beef cattle, both breeding and fattening, increased from 2015 to 2020. The share of beef
cattle fattened by corporations rose significantly to just under 70%.
◼ Overall, the corporations’ share of production is increasing, but those of dairy farming (36.9%) and beef cattle (breeding) (24.8%)
are low, with family-run farms accounting for the majority of production.

Number of Agricultural Enterprises in the Livestock Sector for Marketing
Purposes, Number of Heads/Feathers and the Shares of Corporations (2020)

Change in Number of Incorporated Livestock Entities for Marketing Purpose,and Change in Corporate Share of Animals Kept (2015, 2020)(1,000 management units, 1,000 head and 1,000 feathers)
Number of Enterprises

Number of Animals

Total

Total
Corporations

[1]

[2]

[3]

Corporations[4]

Number of Number ofEnterprises Animals[3]/[1]

13.3

1.7

1,283

474

13.0

36.9

Beef Cattle

36.7

2.2

1,784

961

6.1

53.9

Breeding

32.5

1.4

571

142

4.2

24.8

Fattening

9.6

2.0

1,213

820

20.6

67.6

2.7

1.4

7,658

6,714

50.2

87.7

3.0

1.1

174,165

163,991

35.0

94.2

Pig
Farming
Layers2015[1][4]/[3]

Dairy (Farm)

Corporate Share of Animals Kept(%, points)

Number of Incorporated Entities(Thousands of entities, %)Corporate Share

2020
[2]

% Change([2]-[1])
/[1]

2015
[3]

2020
[4]

Share
Chang
e[4]-[3]Dairy (Farm)

1.4

1.7

25.7

24.7

36.9

12.3

Beef Cattle

1.6

2.2

36.0

43.3

53.9

10.6

Breeding

0.9

1.4

54.1

16.3

24.8

8.5

Fattening

1.6

2.0

23.5

54.4

67.6

13.2

Pig Farming

1.4

1.4

0.8

80.3

87.7

7.4

Layers

1.1

1.1

△ 2.1

90.0

94.2

4.1

Source: Census of Agriculture and Forestry, Ministry of Agriculture, Forestry and Fisheries(Note 1) In this table, beef cattle "female cattle for calving" are labeled as "breeding".
(Note 2) The sum of breeding and fattening enterprises is not equal to the total because some beef cattle enterprises are breeding and fattening integrally.

Livestock Farming Business has Deteriorated since 2020 due to the Corona Disaster and 42
the Rising Feed Prices from 2021.
◼ Business confidence of livestock producers has deteriorated since around 2020 due to changes in demand in the corona disaster andother factors.
◼ The business environment surrounding them has further worsened as gasoline and formula feed prices have been on an upward trend
since 2021 due to increased demand associated with the global economic recovery from the Corona disaster.
◼ The DI for livestock business confidence in 2021 was negative outside layers, and the DI for the full year outlook for 2022 was
negative for all species.

Change in DI for Agricultural Business Conditions

20.0
57.6

21.2
44.8

52.2

12.6

50.3
26.2
40.8
27.4

17.5
59.4
32.7
55.3

2018
▲ 11.1
25.0

2019

2020

6.0 ▲ 24.9
30.3 ▲ 19.3

2021
▲ 29.6▲ 32.82022
Outlook▲ 28.7▲ 54.7▲ 16.4▲ 39.5▲ 47.14.7 ▲ 0.2 ▲ 43.9
▲ 27.2 ▲ 4.1
44.3▲ 61.2 ▲ 38.9 ▲ 43.8
15.9
14.7
6.4

▲ 3.1
▲ 36.422.6▲ 2.1▲ 12.0▲ 43.0▲ 58.3▲ 20.42.5

8.4(Non Hokkaido)

Beef Cattle
Pig Farming
LayersBroilers

150.0

130
125

Chicken (adult)

140.0

Gasoline

Kerosene

Diesel

Heavy

130.0

120

Pig (growing)

115

Dairy (breeding)

120.0

110

Beef Cattle (fattening)

110.0

105

100.0

100

90.0

95

80.0

90

70.0

20/1
20/2
20/3
20/4
20/5
20/6
20/7
20/8
20/9
20/10
20/11
20/12
21/1
21/2
21/3
21/4
21/5
21/6
21/7
21/8
21/9
21/10
21/11
21/12
22/1
22/2
22/3
22/4
22/5

All Agriculture
Dairy Farming(Hokkaido)
Dairy Farming

2017

20/1
20/2
20/3
20/4
20/5
20/6
20/7
20/8
20/9
20/10
20/11
20/12
21/1
21/2
21/3
21/4
21/5
21/6
21/7
21/8
21/9
21/10
21/11
21/12
22/1
22/2
22/3
22/4
22/5

2016

Gasoline and other Price Indices(2015 = 100)

Price Index for Formula Feed(2015 = 100)

Source: Survey of Agricultural Prices, Ministry of Agriculture, Forestry and Fisheries
Source: Japan Finance Corporation, Survey of Agricultural Business Conditions (January 2022)(Note) The DI (diffusion index) for business conditions is the percentage of respondents who
answered that agricultural management "has improved or will improve" minus the percentage who
answered that it "has worsened or will worsen.

Aggressive Investments Associated with the "Livestock Cluster" Projects and the
FY2020 "Safety Net Fund" Borrowing Lead to a Heavy Burden of Reimbursement

43◼ To improve the profitability of livestock management in each region, investment by livestock management companies has become
more active in line with the government's Livestock Production Cluster Project, which supports the development of facilities forlivestock management companies who play a central role in the Livestock Production Cluster Plan. The amount of JFC "Super L"
loans increased significantly from FY2013 to FY2018.
◼ Given the sudden change in demand for food services, including inbound demand, etc., in the early stages of the Corona disaster,
there was a sharp increase in borrowing from JFC's Agriculture, Forestry and Fisheries "Safety Net Fund" (with a grace period of
three years or less) to secure funding in FY2020.
◼ With feed prices recently soaring, there is concern that the burden of reimbursement on livestock producers will increase.
(Billions ofyen)

Trends in the Amount of JFC "Super L" Loan in the Livestock Sector

2,500
2,000

OthersLayers

1,500

Beef
CattleDairy(farm)

Trends in the Amount of JFC Agriculture, Forestry and Fisheries "Safety
Net Funds” (Agriculture)(Billions of
yen)

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

Pig
Farming

1,000

500

2020

2019

2018

2017

2016

2015

2014

2013

2012

Source: Japan Finance Corporation, Annual Report of Business Statistics

2011

2010

2009

2008

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2007

0

On the Demand Side, there is a Shift from Beef to Chicken and Pork, and a Partial
Shift to Domestic Meat due to Soaring Import Prices.

44◼ Estimated beef supply declined in both 2020 and 2021 due to sluggish demand for imported beef caused by the slowdown ineating out in the Corona disaster, and the same trend continues in the January-April 2022 period. On the other hand, pork andchicken meat supplies continue to increase.
◼ As to household consumption, there was a large increase in overall meat consumption in 2020 due to eating-at-home demand,followed by a reactionary fall in 2021. In 2022, while only beef consumption declined, pork and chicken consumption continued toincrease. With import prices expected to remain at high levels, the shift to inexpensive chicken and pork is accelerating, and there
is a possibility that the slump in beef demand will become the norm.
◼ The market price of imported meat used for restaurant and ready-to-eat meals is on the rise due to soaring global feed prices.
According to interviews and newspaper reports, some consumers are switching to domestically produced meat.
Estimated Meat Supply
2020

January – April 2022

2021

Supply%ChangeYOY

Supply%ChangeYOY

Supply%Change
YOY

92.4

△ 2.9

90.2

△ 2.4

28.8

△ 2.0

Domestic

33.0

2.2

32.5

△ 1.4

10.8

4.6

Import

59.4

△ 4.0

57.7

△ 3.0

18.0

△ 5.6

181.8

0.4

184.3

1.4

62.4

0.9

Domestic

91.3

2.3

91.9

0.6

31.3

0.6

Import

90.5

△ 1.4

92.5

2.2

31.1

1.1

219.9

0.3

227.1

3.3

75.1

2.4

Domestic

165.4

1.5

166.5

0.6

56.1

4.1

Import

54.4

△ 3.2

60.6

11.3

19.0

△ 2.3

Beef

Pork

ChickenChange in the Quantity of Beef Purchased by Households(million tons, %)Source: Website of the Japan Agriculture and Livestock Industries Corporation (Japanese only)(Note) Estimated Supply is the estimated by the Japan Agriculture and Livestock Industries Corporation. It is theestimated quantity circulated for domestic consumption by adding production and imports to the estimated beginninginventory, and subtracting exports and estimated ending inventory.

% Change against Pre-Covid% Change YOY
2020

2021

Jan-Apr2022

2020

Jan-Apr
2022

2021

Beef

9.9

△ 6.2

△ 8.0

Beef

8.7

1.9

△ 3.2

Pork

8.6

△ 1.9

0.4

Pork

8.6

6.6

7.3

Chicken

11.0

△ 2.6

0.2

Chicken

12.4

9.6

11.1

Source: Ministry of Internal Affairs and Communications, Household Survey(Note: Households of two or more persons. Pre-Covid is average for 2017-2019
before the Corona disaster.

(2) Feed Situation
Feed Self-Sufficiency Rate is 25%. Mainly Corns Imported from the U.S. and Brazil.

45

Self-Sufficiency Rate of Feed
Japan's overall feed self-sufficiency rate is 25%.
(2020 Estimate)
The self-sufficiency rate of concentrate feed is 12% and that of roughage is 76%.
100%
24%
Most imported feed is corn
Corn accounts for 47% of the ingredients in compounded and mixed feeds and 87.6% 75%
75%
Domestic
88%
of feed grain imports.
50%
Import76%◼ Most of Japan's corn imports come from the United States and South America.
25%• 69% from the U.S.; 18% from Brazil; 9% from Argentina.
25%
12%
0%
• 10,000 tons or 0.09% from Russia, and 0.03 million tons or about 0.003% from
Total
Concentrate Roughage
Ukraine.
Source: Ministry of Agriculture, Forestry and Fisheries, "The Situation

◼
•
◼
•

Concerning Feed

Feed Grain Imports(million tons, %)Ingredients for Compound and Mixed Feeds (2021)

Crops
Corn

Others28.2%

Barley
Corn
Wheat

47.0%

1.9%

Sorghum

Rapeseed Meal
4.8%
Rice
5.3%

Wheat

OthersSoymeal
12.8%

Source: Ministry of Agriculture, Forestry and Fisheries, "Regional Briefing on
Agriculture, Forestry and Fisheries Policy under the Rising Prices of Production
Materials and Raw Materials

Total

2020

2021

Confirmed

Preliminary

Feed Corn Imports (2021)

1,155

1,136

(87.9)(87.6)

95

102

(7.3)

(7.9)

34

38

(2.6)

(2.9)

25

16

(1.9)

(1.2)

5

5

(0.4)

(0.4)

1,314

1,297

（Note: Numbers in brackets are share to the total)

Russia1(0.09%)

Ukraine0.03(0.003%)

Others41(3.6%)

Argentina
106(9.3%)
Brazil211(18.4%)

US
786(68.6%)
Note:
Country Name
Imports (Ten K tons)(% Share)80% of the Domestic Supply is Concentrate Feed. Feed Costs’ Shares are Higher in
Poultry and Pig Farming◼ 80% of Japan's feed supply is concentrate feed, 20% is roughage◼ Concentrate and roughage utilization ratios vary by livestock species
・Poultry, pigs and fattening cattle eat more concentrate feed, while dairy cows and breeding cattle consume more roughage.
◼ Feed costs as a percentage of management costs are higher in fattening pigs, broilers, dairy farms, layers, breeding cattle, andfattening cattle, in this order.
・The impact on management costs is likely to be greater in pig and broiler operations with a higher usage of concentrate feed
and a higher feed share to all costs.
Percentage of Feed Supplied
Concentrate

0%.

20%

Roughage

19,984

4,991

(80%)

(20%)

40%

80%

60%

(Thousands of
TDN tons)

Feed Costs as a Percentage of Management Costs
100%

100%
75%

Feed Composition by Type
Dairy (Farm)

Hokkaido
Non Hokkaido

Beef Cattle

Pigs &
Chickens

Breeding

50%

47.7
61.2

25%

89.0

Dairy Fattening

92.0

Crossbreed Fattening

88.8

0%

56

44.4

Meat Only Fattening

Pigs and Poultry

60

48

41

47

Dairy

Layers3930

0%.
Fattening
Pigs

Broiler

Dairy

(Non
(Hokkaido)
Hokkaido)

Breeding
Cow

Fattening
Cattle

100.0
50%

100%

Source: Ministry of Agriculture, Forestry and Fisheries, "The Situation Concerning Feed"

Source: Ministry of Agriculture, Forestry and Fisheries, "The Situation Concerning Feed"

46

47

Domestic Formula Feed Prices Rise above 2008 Surge◼ Domestic compound feed price trends relatively stable from 2016-2020, but increased from 2021.
◼ The price hike since 2021 is due to increased feed demand from China, where pig herds were rebuilding.
◼ The Ukrainian crisis has further pushed up prices in 2022, approaching 1.5 times the level of 2020.
 A combination of factors are driving up feed prices, including soaring raw material prices (corn and soybeans), risingtransportation costs, and the ongoing depreciation of the Japanese yen.
Ex-factory Price of Formula Feed
Yen / ton(Feb.2022)(Jan.2015)(Nov.2008)(Jul.2006)

Apr.2006 Apr.2007 Apr.2008 Apr.2009 Apr.2010 Apr.2011 Apr.2012 Apr.2013 Apr.2014 Apr.2015 Apr.2016 Apr.2017 Apr.2018 Apr.2019 Apr.2020 Apr.2021 Apr.2022

Source: Formula Feed Stable Supply Mechanism “Feed Monthly”
Note: Formula feed price is an weighted average for all animals (Apr 2022 is preliminary)Governments has Promoted Domestic Feed, but Planting Remains Flat

48

◼ The government aims to produce 34% of feed domestically by 2030, 100% of roughage and 15% of concentrate.
 Promote the planting of feed crops (seed corn, green corn, rice WCS, feed rice), the spread of external support organizations(contractors, TMR centers), and the use of unused resources (domestic rice straw, eco-feed).
◼ Main forage crop is grass. The planted acreage has almost unchanged.
 Hokkaido accounts for 60% of domestic feed crop plantings by region. By crop, grass accounts for just under 90%.
 Planting has expanded since 2006 due to soaring compound feed prices and enhanced management income stabilization
measures, but has leveled off in recent years.
Area of Forage Crops (by Region)(million ha)

Current Feed Self Sufficiency and Target(2020)

150.0
104.6 98.0

(2030 Target)

100.0

All Feed93.5 90.6 91.1 97.5 98.9 98.5 97.0 96.2 95.6 100.1
40.5

Roughage
Hay
Silage・Grass・Green Corn・Rice WCS
PastureRice Straw
Wild Plants(2020)(2030 Target)

50.0
59.6

Imports
24%
Domestic

0.01990 1995 2000 2005 2010 2015 2016 2017 2018 2019 2020 2021
Hokkaido
Non Hokkaido

Domestic(million ha)
Concentrate
Grains(Seed Corn, Feed Rice)
Eco Feed(Bred Crumble, Tofu
Cake
Bran, Meals(2020)(2030 Target)

104.6 98.0
100

Imports
88%

Imports
85%

Domestic 12%

Domestic 15%

50(Bran, Beet pulp, Soymeal,
Rapeseed Meal)

Others(Animal Source Feed,
Oils)

Area of Forage Crops (by Crop)

150

0

Source: Ministry of Agriculture, Forestry and Fisheries, "The Situation Concerning Feed"one

94.5 90.6 91.1 97.5 98.8 98.5 97.0 96.2 95.6 100.1
8.0 9.1 9.1 7.9 7.3 7.1 11.6
1.5
89.6 89.5 89.7 89.4 89.1 88.9 88.5 88.5

1990 1995 2000 2005 2010 2015 2016 2017 2018 2019 2020 2021
Feed Rice
Grass, etc.
Source: Ministry of Agriculture, Forestry and Fisheries, "The Situation Concerning Feed"

49

Feed Self-Sufficiency is a Challenge and Requires Long-Term Efforts◼ If all imported corn (concentrate feed) were to be supplied domestically, 1.87 million hectares would be required.
 More than 1,000 times the area currently under fodder crops in the country.
 Not just corn, but a wide range of concentrate feed ingredients, such as barley and ecofeed, need to be expanded.
◼ Some livestock producers are cautious about using domestic feed
 In terms of cost reduction, labor reduction is a high priority.
 Feed ingredients affect the quality of products, so livestock farmers are reluctant to use those grown on converted-frompaddy upland.
 It is important to have a long-term and stable cooperation mechanism between crop and animal farmers.
Farmer’s Voices on Domestically Produced Feed

Feed Corn Imports in Terms of Farmland Area

(million ha)

300➢

I am afraid that the feed from food residues may not containingredients as desired.

➢

Feed affects meat quality. It is not something that can be changed without
careful consideration.
We have been reducing labor by introducing automatic feeders and othermeasures. Changing compound feed is a last resort.

241

250

201

187

200

➢

150
100

➢
50
0.1
0
Domestic Feed
Planting Area

Farmland Area Needed
to Produce the SameAmount of Imported Corn

Domestic Farmland
Area (Rice)

Farmers currently working on fodder crops are those who have shifted
crops with attractive subsidies. It is not sure if they can produce goodquality feed. We need farmers who continue to produce fodder crops
willingly.

Domestic Farmland
Area (Upland)(Note) The conversion of imported corn into farmland area is calculated using the amount of corn imported for feed use in FY2021 and domestic seed corn unit yields.
Source: MAFF "Risk Assessment on Stable Food Supply (2022)" and Norinchukin Research InstituteSource: Speakers’ Hearing

(3) Impact of the Prolonged Ukraine Crisisa. Impact Estimates / Dairy Farmers’ Profitability are Estimated to be Significantly Affected.

50◼ Based on the results of JFC's analysis of agricultural business trends (actual results for 2020), the impact of high feed prices and high crude oil prices on
profitability is estimated, taking into account changes in prices of livestock products. (Note: This study was only for "Super L" loan borrowers, who are relatively wellmanaged, large corporations) Estimation method: Changes in "fuel and power costs" and "feed costs" are estimated by multiplying the actual "fuel and power costs" in 2020 by the rate ofchange of 29.0% and 26.7% between May 2020 and May 2022 in the Survey of Agricultural Prices, MAFF, and “sales” by the rate of change of each livestock
produce prices in the same survey for the same period. As this survey covers only "material costs", feed costs were estimated by multiplying the feed costs as apercentage of agricultural management costs in the Survey of Agricultural Business Statistics of the Ministry of Agriculture, Forestry and Fisheries (MAFF) by the rateof increase or decrease in agricultural commodity prices. The change in ordinary income is estimated based on these figures.
 Changes in other items (various subsidies such as MARUKIN, and calves costs for beef cattle fattening, etc.) are not taken into account.

◼ According to the results of the above estimation, comparing May 2020 to May 2022, given the prices of livestock products were -4.1% for dairy farming,+10.4% for beef cattle fattening and +10.1% for pig farming, the impact of higher feed prices on beef cattle and pig farming was mitigated by higher sales
due to higher market prices in the Corona disaster. However, as we will see later (Sheet 59 - ), there are concerns about the future impact on both beef
cattle and swine. Dairy farms posted negative recurring profit, indicating that its impact is more significant among livestock operations.
Impact of High Crude Oil Prices, High Formula Feed Prices, and Sales Price Changes on the Management of Agricultural Corporations (Estimates Based on 2020 Results)
Hokkaido Dairy

Sales
Cost of Goods Sold
Materials
Fuel and PowerGross Profit
Selling, General and
Administrative Expenses
Operating Profit
Non-operating Income
Ordinary Income

Non Hokkaido Dairy
Estimated
after
ImpactBeef Cattle Fattening

Pig Farming

LayersBroiler
Estimated
after
Impact2020(Actual)Estimated
after
impact

267
210
103
3
57
56

256
222
114
3
34
56

-11
12
11
1
-23
0

262
211
113
2
51
52

251
224
125
3
27
52

-11
13
12
1
-24
0

672
616
437
4
56
66

741
653
473
5
88
66

70
37
36
1
32
0

681
512
275
7
168
110

749
550
311
9
199
110

68
38
36
2
31
0

1,259
986
694
6
274
273

1,634
1,080
787
8
554
273

375
94
92
2
281
0

349
316
228
3
32
29

357
353
263
4
4
29

8
36
35
1
-28
0

1
14

-22
14

-23
0

-1
8

-25
8

-24
0

-10
17

23
17

32
0

58
3

89
3

31
0

1
5

281
5

281
0

3
3

-25
3

-28
0

15

-8

-23

7

-16

-24

8

40

32

61

92

31

6

286

281

6

-22

-28

Change2020(Actual)ChangeEstimated
after
Impact2020(Actual)Change2020(Actual)

Source: Estimated based on "Analysis of Agricultural Management Trends in 2020," Japan Finance Corporation

Estimated
after
ImpactChangeEstimated
after
Impact(Millions of yen)

2020
(Actual)Change2020(Actual)Changeb. Support Measures by the Government
Support Measures to Cope with Soaring Feed Prices (National)

51◼ Emergency measures to cope with soaring formula feed prices
 There are two funds for compensation: "normal supplementation," which is accumulated by producers and feed manufacturers, and "abnormal supplementation,"
which is accumulated by the government and feed manufacturers.
 The total of 66.5 billion yen will be added by the supplementary budget for FY2021 and by the comprehensive emergency measures for crude oil price and pricehikes.
 As a special measure for Q1-Q2 FY2022, the triggering threshold was lowered from 115% to 112.5%.

◼ Expansion of feed grain stockpiling and distribution rationalization projects
 Expand subsidies for the wide-area distribution of roughage beyond prefectural boundaries.
◼ In addition to the above, the government is also working to help farmers secure working capital, support calves and piglets, and assist in reducing feed costs.
◼ If the impact is prolonged, support by management stabilization measures such as "Cattle Marukin” and "Pig Marukin”.
 Neither large corporations (with capital of 300 million yen or more or with 300 or more full-time employees) nor management entities in which large corporations
hold the majority of voting rights, is eligible.

Outline of the Formula Feed Price Stabilization System

Trends in Imported Feed Material Prices and the Status of Supplementation under the Formula Feed Stabilization System
Yen / ton

½ Contribution

Government

Yen / ton

Abnormal Supplementation Funds

Import Feed Ingredients Price (left)

Deployed when import prices exceed recent 1-year average by 15%
Feed
Feed
Manufacturers
Manufacturers½ Contribution

Quarterly Average Import Feed Price

Administered by

Formula Feed Stable Supply Mechanism
Contribution :800 yen /tonContribution :400 yen /tonAbnormal
Supplementation

Supplemented Amount (right)
Reference Import Feed Price(Average of Most Recent 12
Months)Abnormal
NormalNormal Supplementation Funds
Deployed when import prices exceed recent 1-year average

Livestock
Farmers

Administered byAbnormal
Suppleme
ntationNational Foundation for Stable Supply of Formula Feed
National Foundation for Formula Feed Price Stabilization
All Japan Livestock Foundation for Formula Feed Price Stabilization
2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Hirata, Ikuhito (2022), "The situation surrounding the formula feed price stabilization system," Norinchukin Research Institute.

2016

2017

2018

2019

2020

2021

52

Support Measures to Cope with Soaring Feed Prices (Prefectures)◼ From May to June, prefectures formulated supplementary budgets for fiscal 2022. Many included measures to cope with soaring
feed prices utilizing the national government’s grants for "Comprehensive Emergency Measures to Cope with Soaring Crude Oil
Prices and Prices in the Corona Disaster".
◼ Many were to supplement the national government measures or to subsidize the farmers’ contribution to the Formula Feed Price
Stabilization System.
◼ Support for the production of self-sufficient, locally-sourced feed, encouragement to bring in livestock consultants, and measures tostimulate demand for livestock products from their own prefectures have also been announced.
◼ Some municipalities are also providing their own support to further supplement the national and prefectural systems.

List of Measures Taken by Prefectures to Cope with Feed Price Hikes
Financial Support
Compensate for the Cost of Purchasing Feed
(20 Prefectures)
Subsidizing the Farmers’ Contribution to the Fund for the Feed
Price Stabilization Scheme(21 Prefectures)

New Initiatives

Demand Stimulation

Promotion of Grazing and Eco-feeding

Support for Promotion Events in
Metropolitan Areas

Support for Expansion of Domestic Feed Production(11 Prefectures)

Business Improvement Support
Source: Websites of Prefectures

Lump-sum Payment◼ Opinions from farms (based on interviews with speakers)◼ The prefectural government has also launched a support program, but it is far from enough to cover the steep rise in feed
prices.
◼ There is a concern that the number of operators with little cash on hand and need some form of financing due toskyrocketing feed price payments will increase rapidly.
◼ I would like to see more support for passing on higher feed prices to sales prices.

53

c Dairy Farming
Scale up and Higher Concentrate Level with Capital Investment◼ The number of dairy cows has decreased over the past 20 years, however the average herds size has increased.
◼ The policy target for FY2018 to FY2030 is the increase of raw milk production from 7.28 million tons to 7.8 million tons.
◼ The Livestock Cluster projects increased the number of dairy cows by 54,396 since FY2018. Large-scale firms made capital investments.
 In Hokkaido, the number of milking parlors units installed or renewed increased from FY 2017 onward.

Milking Robot The number of farms installed milking robots increased in order to cover labor shortage and to expand theirbusiness.
◼ To increase production, the level of concentrate feed has been getting higher. Average roughage feeding rate was
49.1% in FY2000, but it went down to 47.0% by FY2020. Also average feed self-sufficiency ratio went down from
33.9% to 31.9% over the same period.
Number of Milking Parlors Installed and Renewed in Hokkaido(Milking Robots and Others)

Number of Dairy Cows over 2 Years Old and Average Number of Cows per a farm
(thousand units)

Total(head)

35

Hokkaido 145.2
Non Hokkaido

Non Hokkaido
Hokkaido30

160

FY2005

62

9

2010

44

4

15

46

31

16

42

32

17

95

68

18

89

72

19

88

65

20

58

51

140

140.6
9.3

120

25

118.6

8.5
107.5
20

100

97.1
88.6

80

7.4

15

60
10 38.7

64.5
40

9.9
5

21.9

18.3

13.8

Source: Hokkaido Agricultural Policy Department, Livestock Production Promotion
Division, "The state of diffusion of the new milking system".

5.7

42.4

9.4
8.9

20

8.5
8.2

0

0
01
03
05
07
09
11
13
15
17
19 2021
02
04
06
08
10
12
14
16
18
2020

Source: Ministry of Agriculture, Forestry and Fisheries Web site

Milking Robot

Photos by Norinchukin Research Institute（Mione, GEA)

Trends in Roughage Feeding Rate and Percentage of Dairy Farmers Feeding Self-Supplied Feed (on TDN basis) (%)
Roughage
Feeding
Rate
SelfSufficiency

2000
49.1
58.1

2005
46.6
55.5

2010
47.4
55.6

2016
47.5
56.1

2017
47.5
52.9

2018
46.6
52.2

2019
47.2
53.3

2020
47.0
52.3

Non Hokkaido

41.7

38.1

38.5

37.7

39.5

38.8

37.8

38.8

National
Hokkaido
Non Hokkaido

33.9
54.4
17.2

33.4
52.6
15.4

33.8
50.1
16.3

30.2
45.1
13.2

31.0
47.8
14.2

31.7
49.6
13.8

32.9
51.1
14.1

31.9
49.9
13.1

National
Hokkaido

Source: Ministry of Agriculture, Forestry and Fisheries Web siteMega-Farms and Giga-Farms, who Depend on Purchased Roughage, may be Hit More 54
Seriously than those do not.
◼ In Japan, the roughage (hay) and the compound feed account for a large proportion of production costs per milking cow.
Japanese farmers except Hokkaido are highly dependent on the purchased hay. Only in Hokkaido hay’s self-sufficient is high.
Ca.70% of hay in value is imported from the U.S. According to UN Comtrade data, the CIF price of grass (HS1214) went from37.1 yen/kg in January 2021 to 49.9 yen/kg in March 2022.
◼ The average production cost per milking cow is 440,000 yen(except Hokkaido) and 260,000 yen in Hokkaido. The larger inscale, the higher in cost. Many dairy farms in Hokkaido are self-sufficient in hay, who can keep production costs low.
◼ However, with the estimation of farm area per milking cow, even in Hokkaido, the pasture area per cow is smaller in the large
scale layer, and in this layer, the feed self-sufficiency is afraid to be significantly low.
Production Cost per Milking Cow(10,000yen/head)
60
50

44

43
38

40

Management Area and Pasture per Milking Cow
0
1
2
3
4
5
6

41

44

45

30

54

1-9 Heads
10-19

Others20-29

Compound
Feed

20

26
20

19

23

24

29

28

50-99
100-299

Hay

10

In Hokkaido 30-49

Over 300 Heads

Source: Livestock Production Cost Statistics, Ministry of Agriculture, Forestry and Fisheries

More than 200 Heads

in Hokkaido

100 - 200

50 - 100

30 - 50

20 - 30

Less than 20 Heads

Average

More than 200 Heads

outside Hokkaido

100-200

50 - 100

30 - 50

20 - 30

Less than 20 Heads

Average0

1-9 Heads
10-19
ExceptHokkaido

20-29

Estimation Method
The per head area was calculatedby dividing the area by the heads
number defined below;
1-9 heads layer = 5 heads
10-19 heads tier = 15 heads
20-29 heads tier = 25 heads
30-49 heads tier = 40 heads
50-99 heads tier = 75 heads
100-299 heads tier = 150 heads
Over 300 heads tier = 300 heads

30-49
50-99

100-299

PastureManagement Area

Over 300 Heads
Source: Census of Agriculture and Forestry, Ministry of Agriculture, Forestry and Fisheries

7 (ha)

55

Current Dairy Cows Population Suggests Continued Increase in Production◼ According to J Milk, since FY2019 the ratio of 2-4 year old in the number of dairy herds has increased, which is with the highest
production capacity, and the number of successor cows under 2 years old is also expected to increase, so the momentum of
production expansion is not expected to stop.
◼ In FY 2022, the Japan Dairy Council has newly introduced the measures for the balancing supply and demand, while improving farmmanagement as well as. As dairy farmers are struggling severe economic condition due to the prolonged sluggish demand by Covid19 and the soaring feed and fuel prices, it aims to preserve farmers by the measures to reduce inventories and to stimulate dairy
consumption.
◼ The average price of heifer has been declining since FY2021. The number of cows traded was on a down trend in FY2021, but turned
positive in FY2022 compared to the previous year.
◼ Breeding Holstein females to Wagyu bull is on an upward trend in FY2021 due to the easing of supply and demand of milk.
(Thousands of yen/head)(%)

Average Price and Number of First Lactation Cows

900

40

FY202030

FY2021
600

Crossbreeding of Black Wagyu and Sex-Discriminant Semen to Dairy Cows
Non Hokkaido

20

FY2022

10

National Average

FY2022300

0

Hokkaido△ 10

National Average(Sex Discriminant )Solid line : Average Price (left),
Dotted line : Number of Animals Traded

FY2021(right, YOY change, %)

△ 20

0
Apr.

May

Jun.

Jul.

Aug. Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

2015

2016

2017

2018

2019

2020

2021

Source: Hokuren Federation of Agricultural Cooperatives "Hokuren Livestock Market Information".
Source: Japan Livestock Artificial Insemination Specialists Association Web site

56

Milk Price collective negotiation is taking place at unusual timing◼ From the end of May 2022, the Designated dairy farmers' organizations (Hereafter "designated organizations")started collective
negotiations for raw milk prices for drinking milk in 2022. Negotiations on milk prices are being conducted between thedesignated organizations and larger dairy processors for each bloc excluding Hokkaido area. At the end of June, Hokuren, thedesignated organization of Hokkaido, started negotiations on milk prices for dairy products(Non-drinking). Although the amountdemanded differs among the designated organizations, requested increase in drinking milk price is ca. 15 yen/kg.
◼ It is problematic when milk price increase, it will bring the impact on raw milk supply and demand. If the price is transferred,consumption should fall, then the supply and the demand might further ease, at the end dairy processors should build up
inventories.
◼ The institutional reform of the designated organizations in 2018 brought the situation where dairy farmers can free-ride of thesystem, and at the same time it becomes the hurdle of the collective action of farmers◼ The change in operating profit of the three larger dairy processors in March 2022 was +0.9 billion yen for Morinaga, △1.7 billion
yen for Megmilk Snow Brand, and △4.1 billion yen for Meiji HD (food division). All of them were greatly affected by the rising costof raw materials, and it is not easy for them to accept further price hikes.
Raw Milk Distribution and Milk Price Negotiations
Measures to curb production increaseamid easing supply and demandFederations

Cooperatives“DesignatedOrganizations” who
do not refuse tocollect

Milk Price Negotiation

Article.1 Operators

Farmers

Change in Operating Income of Major Dairy Companies

Article.1 Operators : Collect from farms and sell to dairy cos.

20
Dairy Cos

Consignment can be split by specifying at the
beginning of the year.
Article.2 Operators : Farmers selling direct to dairy cos

Consumers

9

0
△ 20
△ 40

△ 17 △ 17
△ 29
△ 41

△ 60
△ 80
△ 100
△ 120

Operating Income Increase/Decrease(Mar.31, 2021 →Mar.31, 2022)
Raw Material Costs△115△ 140 (100 Millions of yen)
Article.3 Operators : Farmers processing milk

Source: Ministry of Agriculture, Forestry and Fisheries Web site

Morinaga

Megmilk Snow Brand

Meiji HD (Foods)

Source: Websites of Major Dairy Companies

EU reforms institutions to Overcome Previous Feed Price Spikes, and Japan.....

57◼ Compared to Europe and the US, the uniqueness of Japanese dairy farming is the low self sufficiency of feed. The EU is reducing imports of soybeans
for feed, considering US-EU trade friction and environmental measures. Milk quota system was abolished at the end of March 2015 and production is
on the increase, but soybean imports remained flat in the 2010s.
◼ While the globalization of the food manufacturing industry, the dairy crisis in 2008-09 became the trigger of the widespreading the discussion about
the asymmetric bargaining power between farmers and processors/retailors which makes it difficult for farmers to transmit the feed price to raw
milk prices.
◼ Fruit and vegetables and dairy farmers have become more organized to form Producer Organizations.
◼ In January 2016, the European Commission set up an advisory body, the Task Force on Agricultural Markets, which led to the EU D i r e c t i v eRegulating Unfair Trade Practices in Agriculture and the Food Supply Chain (April 2019). This led to the EU Directive Regulating Unfair Trading
Practices in Agriculture and Food Supply Chains (April 2019). At the same time, it started to make price formation more transparent (e.g. by
upgrading statistics).
◼ The Regulation protects small and medium-sized businesses with an annual turnover of less than 350 million euros, including farmers. Under the
Regulation, businesses (or associations of businesses) will be divided into the following six tiers by annual turnover: (1) less than EUR 2 million, (2)between EUR 2 and 10 million, (3) between EUR 10 and 50 million, (4) between EUR 50 and 150 million, (5) between EUR 150 and 350 millionand (6) over EUR 350 million. Unfair trading practices, such as sudden cancellations by large businesses, are now regulated.
Six Tiers of Annual Turnover to be Used in the Regulation of
Unfair Trade Practices

EU27 Soybean Imports(Billions of tons)

1.4

1.35

1.35

1.30
1.28

1.27

1.3

Encouraged to form as Producer Organizations.
Exempted from Competition Law

1.22

1.25
1.2

Various Dairy Brands were
Consolidated by Globalized Giants

1.19

1.15
1.1

2000
2005
Sources EUROSTAT

2010

2015

2020

Note: Seed soybeans are excluded. Assumes 80% are for feed.

2021

Source: European Commission Web site

Source: Lactalis Web sited Beef Cattle / Profitability per Cow may Deteriorate in the 2nd Half of the Year as the
Shipment Progress of Cattle Introduced when Calves Prices were High58

◼ The Beef Cattle Fattening Management Stabilization Grant (Beef Marukin) provides beef cattle producers with 90% of the difference between the standard sales
price and the standard production cost, and the standard sales price (gross profit) and standard production cost (production cost) per cow are announced on amonthly basis.
◼ The time around April 2022 was when calves introduced at the time when calf prices plummeted at the beginning of the Corona disaster were being shipped
out. In the future, calves introduced at a time when calf prices recovered to a higher price range will be shipped, and the margin is expected to decreasesignificantly or become negative.
 Estimation method: Livestock costs in April 2022 are based on the beef calf prices 21 months earlier (July 2020), and from May 2022 onwards,
applying the increase rate of the average calf prices on the right of the next page after August 2020. Assuming that the increase rate for April - June
2022 to July - September 2022 will continue, formula feed costs are estimated by multiplying JA Zen-Noh's formula feed supply prices by the rate.
Changes in sales prices and other production costs are not taken into account here.
(10000 yen)(10000 yen)

Estimation for Kagoshima (Meat Only Species)

140

17

100

12

64

63

66

65

76

72

75

74

78

76

(10000 yen)

Estimation for Hokkaido (Meat Only Species)

140

120

80

(10000 yen)

74

71

7

60

17

120
100

12

80
64

65

67

65

77

72

75

75

78

77

75

72

7

60
2

40
24

24

24

27

27

27

27

27

27

27

27

27

0

24
-3

20

Apr.2022

Mar.2022

Jun.2022

Jul.2022

Aug.2022 Sep.2022 Oct.2022

Nov.2022 Dec.2022 Jan.2023

Cost of Calves

Formula Feed Cost

Standard Production
Cost (2)Difference ((1)-(2), right)

Feb.2023

Mar.20232
40-8Standard Sales Price (1)Source: Estimated based on the Japan Agricultural and Livestock Industries Corporation (ALIC).

24

24

27

27

27

27

27

27

27

27

27
-3

20
0

Apr.2022

Mar.2022

Jun.2022

Jul.2022

Aug.2022 Sep.2022 Oct.2022

Nov.2022 Dec.2022 Jan.2023

Cost of Calves

Formula Feed Cost

Standard Production
Cost (2)Difference ((1)-(2), right)

Feb.2023

Mar.2023-8Standard Sales Price (1)Feed Price Hike are not Passed on Wagyu Meat Prices, rather Make Calf Prices Plunge

59◼ Formula feed prices have continued to rise since 2020. On the other hand, Wagyu cattle prices have been mostly flat since May
2021 and have been soft since 2022. While domestic demand is weak, Wagyu market prices are barely supported by exports andgovernment support for frozen inventories,, so prices have not been able to be passed on.
◼ Against this backdrop, calf prices have plummeted since May 2022. It can be interpreted that fattening enterprises are trying to
mitigate the effects of the steep rise in feed prices by reducing their costs of producing cattle. However, there are concerns that if thiscontinues for a prolonged period, it will discourage breeders to produce calves, and this in turn will have an impact on the future calf
supply.
Price Indices for Beef Cattle Calves, Wagyu Beef, and Formula Feed(2015 = 100)130

Nationwide Average Transaction Price of Beef Cattle Calves(Japanese Black)(Yen)
850,000

120
800,000

110
750,000
100
700,000

70

Calf

Wagyu
Beef

Formula Feed

2020/1
20/2
20/3
20/4
20/5
20/6
20/7
20/8
20/9
20/10
20/11
20/12
2021/1
21/2
21/3
21/4
21/5
21/6
21/7
21/8
21/9
21/10
21/11
21/12
2022/1
22/2
22/3
22/4
2022/580

Source: Survey of Agricultural Prices, Ministry of Agriculture, Forestry and Fisheries(Note) Calf prices are for beef cattle calves (castrated), Wagyu cattle prices are forbeef cattle (castrated fattened Wagyu), and formula feed prices are for beef cattle(fattened).

650,000

600,000

20/3
20/4
20/5
20/6
20/7
20/8
20/9
20/10
20/11
20/12
2021/1
21/2
21/3
21/4
21/5
21/6
21/7
21/8
21/9
21/10
21/11
21/12
2022/1
22/2
22/3
22/4
22/5
2022/690

Source: Japan Agriculture and Livestock Industry Corporations, "Beef Calf
Transaction Information".
(Note) Average transaction price of the total of male and female of Black Japanese
breed. Consumption tax included.

Voices from Farms on Beef Cattle (Wagyu) Production (1)60◼ A JA in prefecture X
 Financial constraints have limited support for cooperative members. Support measures of the prefectural government are far from enoughto cover the steep rise in feed prices.
 So far, in Prefecture X, they have been working with arable farmers to promote self-sufficiency in roughage, and their self-sufficiency rate ishigh.
 When the price of formula feed rose sharply in 2008, we implemented the consolidation of formula feed brands after several years ofdemonstration trials, while taking into consideration the impact on meat quality and increase in body size, etc. Further consolidation is notpossible. Feed design cannot be changed immediately because of a rise in formula feed prices.
 Under these circumstances, we believe it is necessary to strengthen sales (especially exports).
◼ The Livestock Public Corporation of prefecture X
 Producers may have felt that the impact of high feed prices was less severe than it actually was because they had been shipping calves forthe past several months that were introduced during the early days of the Corona disaster when the calf market was in a steep decline.
From now on, calves introduced when the calf market was recovering will be shipped and the loss will be clear. There is concern that the
number of operations that have little cash on hand and need some form of financing due to high feed price payments will increase rapidly.
◼ A Wagyu fattening corporation in prefecture X
 The farm has 850 heads of cattle and is financially within the top 10% of the JA fattening division. The average carcass weight is among thehighest in the prefecture. They are almost self-sufficient in roughage.
 Since the beginning of FY2022, the business has been barely breaking even due to high feed prices. Up until now, the "Marukin” subsidy
has been used to pay for the rising feed prices. If feed prices rise further, it will become even tougher to break even. However, the recent
decline in the market price of calves has eased the impact.
 Feed design cannot be changed considering the current buyers. In order to improve the unit sales price, the JA Fattening Department start
to ship to new consumer markets 2022 (planned before the Corona disaster and finally implemented). Expectations are high for exports.
 Judging from the business performance of their own corporations, nearly half of the members of the Fattening Dept.are finding it difficult tomake a profit and some mambers may give up farming. The Fattening Dept. is requesting JA to establish a low-interest fund.
 They are willing to expand the herd but are waiting to see how it goes due to high feed prices. If cash flow is secured, they would like toincrease the number of cows because calf prices are declining.

Voices from Farms on Beef Cattle (Wagyu) Production (2)61◼ Efforts to improve carcass market prices in small-scale production areas Before the Corona disaster, demand was mainly from tourists, but after the Corona disaster, the company developed sales
channels to large consumption areas outside the island.
 Focusing on carcass market prices as a countermeasure against rising feed prices. The local government regularly holds eventsfor local residents to sell carcasses at low prices to stimulate consumption. Thanks to so created demand, the local carcass
auction results (carcass market price) are about 30% higher than in the Tokyo market.
 JA also considers that some countermeasures are necessary and is currently studying options.
◼ As mid- to long-term initiatives, they have started to reduce costs by shortening the rearing period and to produce more reasonably
priced Wagyu cattle.
 In order to meet the needs of consumers for beef that is moderately fat-crossbred and reasonably priced, prefecture Y
government is "promoting improvements that focus not only on fat-crossbreeding but also on traits related to meat quantity,
such as increase in body mass and yield, as well as the content of monounsaturated fatty acids, such as oleic acid, related toeating quality, such as fat melt in the mouth, while taking into consideration the genetic diversity of Wagyu cattle."
 The JA system in prefecture Y started demonstration trials several years ago for the stable production of affordable grade 4 beef.
The aim is to establish a production system that shortens the fattening period and reduces production costs, but the challenge is
how to secure carcass weight to keep profitable. We plan to develop a formula feed that can increase body weight over the next
few years and demonstrate the optimal feeding method.

e Pig Farming
Small-Scale Farms Keep 10% of Pigs, and are Mostly in Kanto and Kyushu.

62◼ In the small-scale operations with less than 1,000 head (generally less than 100 sows), the share of head has declined
from 40% to over 10% over the past 20 years. On the other hand, in the group with 200 or more pigs (generally 200 or
more sows), the share of the number of pigs kept has increased to nearly 80%, and a small number of producers areproducing the majority of the pigs.
◼ The main pig production areas are Kyushu/Okinawa and Kanto/Tosan, and there are also many small-scale operations withless than 1,000 pigs in these two regions.

Number of Hogs by Scale, and Share of Heads in the "2,000 or More Hogs" Group(Thousandsof pigs(%)
75.6 77.8

12,00068.6
62.4

10,000

68.0

65.4

70.3

70.7 70.0

71.9

801-99 Heads

60
8,000
54.8
40

6,000

2010

2011

2012

2013

2014

2016

2018

2019 2021

More than 2,000
Heads

More than 2,000 Heads

1,000-1,999 Heads

500-999 Heads

1-499 Heads(Source: Statistics on Livestock Production, Ministry ofAgriculture, Forestry and Fisheries

Kyushu/Okinawa

2008

1,000-1,999
Heads

Share of over
2,000 Pigs

Shikoku

2003

0

Chugoku

1993

500-999
Heads

Kinki

0

0

500

Tokai

3,883

300-499
Heads

Hokuriku

20

5,054

1,000

Kanto /Tosan

5,788 6,219 6,492 6,3 9 46,583 6,528 6,309 6,479 6,664 6,880

100-299
Heads

Tohoku4,000(Units)1,500

Hokkaido

38.5

2,000

Number of Pig Farmers by Herd Size
(by Region)

Source: Statistics on Livestock Production,
Ministry of Agriculture, Forestry and FisheriesCurrent Carcass Prices are Covering Production Costs, but there are Concerns
about the Weaker Market Conditions in the Fall and Beyond

63◼ According to “Livestock Production Cost” stats, for pig farmers with less than 1,000 heads, feed costs are 20-30% higher thanfor those with 2,000 heads or more, making small-scale farmers’ bottom line more susceptible to the impact of higher costs.
◼ In particular, for regional brand-name pigs and "Kurobuta" pigs, the reproductive performance of sows is low and in some cases
the rearing period is long, which means that sales prices must be raised to compensate for the increased costs.
◼ According to interviews with related parties, farm production costs in April and May 2022, on operating income basis, including
compensation from the Feed Price Stabilization Fund, have risen to around 500 yen per kilogram of carcass meat.
◼ Wholesale pork carcass prices in June and July hovered above 600 yen due to the seasonally high market prices, and theincrease in costs is believed to have been covered. In most years, the market tends to decline from October onwards, so thebusiness conditions will be closely followed from autumn onwards
Basis for Calculation of the Grant for Stabilization of Meat and Swine Management(“Pig Marukin”)(Unit: Yen/head)2020 Fattening Pig Production Costs (per Fattening Pig)

Financial Year

National Average

Standard Sales Price (A)

2018

2019

2020

2021

Apr-Jun 2022

35,80436,28439,19537,55840,812Average Carcass Price (yen/kg)

458

463

502

480

521

Average Carcass Weight (kg)

76.4

76.6

76.3

76.5

76.6

By-Product Value

813

818

892

838

903

33,51133,90732,91034,92538,724

Feed Costs

19,552

19,76918,701

20,08522,865300 to 500

Labor Costs

4,280

4,265

4,610

4,767

4,761

100 to 300

Slaughter Expenses

2,153

2,143

2,143

2,154

2,162

Other Expenses

7,526

7,730

7,456

7,919

8,936

Difference（A-B)

2,293

2,377

6,285

2,633

2,088

428

432

420

446

494

More than
2,000 Heads
1,000 to 2,000

Standard Production Cost (B)500 to 1,000

1 to 99
Heads
0

10,000Feed

20,000Labour

30,000
Others

40,00050,00060,000Equilibrium Carcass Price (yen/kg)(Note)

Yen（Note: Equilibrium Carcass Price = (Standard Production Cost - By-Product Value) / Average Carcass WeightSource: "Livestock Production Cost Statistics", Ministry of Agriculture, Forestry and
Fisheries

Source: Japan Agriculture and Livestock Industries Corporations

64

Higher Feed Costs have Reduced Appetite for Capital Investment◼ Despite the price difference with imported pork, domestic pork has been supported by consumers as table meat during the Corona
Disaster.
◼ There seems to be emerging two directions for pig farming now: one is a high-quality type that aims to produce delicious pork, suchas brand-name pigs that meet Japanese tastes. And the other is a type that seeks to increase the volume of meat and to expand thescale of operations.
◼ In the face of rising costs, consumers' desire for lower prices, and competition from cheaper sources of protein such as chicken andeggs, management put more importance on efficiency improvement.
◼ Farms are becoming more expensive to invest in equipment, including disease control and environmental measures, and there areconcerns that higher feed costs will reduce their willingness to invest.
◼ Slaughterhouses, which are the vital link in the meat supply chain, have faced with the labor shortages. If the shipment of pigs
declines, slaughterhouse receive fewer slaughter fees, so the consolidation of slaughterhouses may emerge as an issue.
Retail Pork Price(Yen/100g)

350Japanese Pork (Loin)

Japanese Pork (Thigh)Imported Pork (Loin)

300

270

250

242

246

250

253

249

246

250 244245 258

162 160

162 159

167

159

160

266

266

266

235

224

225

230

229

171

166 171

170

168

168

171

169

168

163

161

163 162

162

166

166

167

166

200

150

268 269 271

157

146

159

147

157

176 178

158

153

180

180

146

153 151

175 176 177

144

144

100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Japan Agriculture and Livestock Industries Corporation(Note 1) Including Consumption Tax.
(Note 2) Some of the Stores Surveyed were Changed in April 2012.

f Layers
The Current Egg Prices are Not High Enough to Cover the Rising Feed Costs

65◼ In 2020, the Corona disaster destroyed demand from the food service sector and other commercial users, and egg prices slumped.
◼ In 2021, egg prices rose due to a decrease in birds kept due to avian influenza, which gave the business a breathing room.
◼ In 2022, production is in the process of recovering from the avian influenza outbreak, but according to the related parties, the egg
price to break even was 220-230 yen per kilogram at farmgate (before supplementation from the Fund for Formula Feed Price
Stabilization) given feed prices during April to June 2022. Considering the increase in feed costs from July onward, the current
market situation will make it difficult for layer farmers to break even.

Wholesale Price of Eggs (ZEN-NOH Tokyo M Standard Price, Monthly Average)(Yen / kg)

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Source : JA Zen-Noh Egg Corporation, "Monthly Egg Quotations"g Broilers / Consumption and Production Continue to Increase, with Some Shifts from
Imports to Domestic Products

66◼ In recent years, the consumption of chicken meat has been on the rise due to its lower price than other meats and increasing healthconsciousness, and domestic production, which is largely destined for household consumption, has also been increasing year-on-year.
◼ Demand for imported chicken meat, which is mostly procured for restaurants and ready-to-eat meal use, has been increasing mainly for
Brazilian chicken meat due to the global rise in feed prices, soaring pork prices, and the spread of avian influenza in Europe and the UnitedStates, and the market price is also on the rise (see next page). For this reason, there is a move among some restaurant and home-meal
service providers to switch to domestically produced chicken meat or to use both imported and domestically produced chicken meat, asseen in Seven-Eleven's switch from Thai to domestic chicken meat for some of its items such as boxed lunches from April 2022.
Chicken Meat Supply-Demand Table (April 2021 - April 2022)(Thousands
ton)

Trends in Chicken Meat Supply and Demand

(%)
100
2,516
90

3,000
Import Volume

2,500

Production
YearMonth859

Domestic Production

70
60

1,500

Consumption

1,000

Self-Sufficiency
Rate (right)

1,656

500

Source: Ministry of Agriculture, Forestry and Fisheries, "Food Supply and Demand Chart"(Note 1) Bone-in meat base.
(Note 2) Import Volume Includes processed chicken meat.

2020

17

14

11

08

05

2002

99

96

93

90

87

84

81

78

75

72

69

66

63

1960

0

YOY
Thousands
(%)
ton
107.4
192

Domestic
Imports
YOY
YOY
YOY
Thousands
Thousands
(%)
(%)
(%)
ton
ton
103.7
55
133.4
137
95.1

2021-4140

YOY
Thousands
(%)
ton
99.8
50

5

138

101.9

46

128.0

183

105.6

47

144.0

137

96.7

Thousands
ton

80
2,000

C on sum pt io n (Estimated Amount in Circulation)

Import

6

138

100.5

43

84.5

187

100.3

50

108.2

137

97.7

50

7

137

100.0

45

86.8

189

100.1

53

83.5

137

108.4

40

8

131

103.2

47

116.4

180

105.6

49

117.8

131

101.7

30

9

137

104.4

45

109.0

187

107.8

49

116.3

138

105.1

20

10

146

99.9

51

106.9

195

98.2

51

96.9

145

98.6

10

11

147

105.4

58

127.5

199

106.0

51

106.5

148

105.9

0

12

157

103.1

61

142.1

216

107.1

61

122.5

155

102.1

2022-1

137

103.7

54

109.9

183

103.6

45

103.0

138

103.7

2

135

103.2

50

108.9

180

102.6

44

96.0

137

104.9

3

143

101.9

45

81.1

194

102.3

49

97.9

145

103.8

4

141

100.9

44

86.9

195

101.2

52

94.6

142

103.8

(Fiscal year)

Sources: Ministry of Agriculture, Forestry and Fisheries, "Poultry Distribution Statistics" and "Food Supply and Demand Chart"; Ministry of
Finance, "Trade Statistics"; Japan Agricultural and Livestock Industries Corporation.
（Note: Production figures are on a bone-in basis. Including adult chicken meat. Imports do not include poultry meat other than chicken meat.

67

Domestic Chicken Prices are Expected to be Steady, but Some are Shipping Early◼ The chicken meat market has weakened year-on-year since the second half of 2021 as the demand for home cooking created by
the Corona disaster has calmed down a bit. The market for chicken meat remained steady due to a sharp rise in the price ofimported chicken meat. With all kinds of food prices being raised, people are becoming more budget-minded and demand foraffordable chicken meat is expected to increase, and regular chicken meat prices are also expected to turn positive YoY from June.
◼ While domestic chicken production is on an upward trend, the number of birds processed in May and June 2022 is expected to behigher than the previous year, but the weight processed is expected to be lower than the previous year. The poor growth caused by
E. coli might be one of reasons, and it is also said that the farmers are shipping lightweight birds on earlier dates in order to savethe use of expensive feeds.
Survey on Trends in Poultry Production and Processing (Japan Poultry Meat Association )January 2022 (Estimated)
Volume
YOY
6,396
100.5

Introductionof Chicks
Processed
Birds
Processing
W eight

Feb (Estimated )VolumeYOY
59,044
99.9

March (Estimated)
VolumeYOY
63,886
98.7

April (Estimated)
VolumeYOY
65,470101.8

Unit: thousands of birds, thousands of tons, %.

May (Plan)
VolumeYOY
62,663100.6

June (Plan)
VolumeYOY
61,035
101.1

July (Plan)
VolumeYOY
63,33799.2

59,686102.4

57,360100.1

65,348101.6

62,296100.5

61,290100.6

60,573

100.7

58,773

98.0

180.2

102.7

177.1

101.9

196.7

101.4

188.0

100.0

183.6

98.7

180.6

99.0

173.6

96.6

(Source: Zen-Noh Chicken Foods, "Chicken Meat Information")

Trends in the Chicken Meat Market（Yen/Kg)

Chicken Market (Nikkei Weighted Average: Tokyo)

750

Product

650
550

January 2022
Feb.
Mar.
Apr.
May
June (Forecast)
July (Forecast)

Wholesale Price of Domestic Thigh (Tokyo)
Wholesale Price of Domestic Breast (Tokyo)

450

Import Price of Chicken Meat (CIF)
350
250

BreastYen/kg
YOY
330
105.1
323
105.9
316
103.9
315
103.3
321
105.9
330
111.5
340
113.0

RegularYen/kg
YOY
979
95.5
969
96.3
947
95.2
937
95.3
946
98.2
945
101.9
945
104.9

Source: Zen-Noh Chicken Foods Co.
2022/42022/22021/122021/8Source: Ministry of Agriculture, Forestry and Fisheries, "Market Information on Poultry”

2021/102021/62021/42021/2

2020/122020/102020/62020/82020/42020/2

2019/122019/10

2019/6

2019/8

2019/4

2019/2

2018/122018/8

2018/10

2018/62018/.2

2018/4150

Thigh
Yen/kg
YOY
649
91.3
646
92.2
631
91.3
622
91.7
624
94.7
615
97.5
605
100.8

(4) Summary

68◼ Dairy Because the dependency on feed purchased is high not only in non- Hokkaido prefectures but also in the large scale farmersof Hokkaido, the impact of rising feed costs is becoming more serious.
◼ Beef Cattle and Pigs
 As to beef cattle business, with the arrival of the shipment of calves introduced during the period of high prices, the future
profitability of the fattening business is expected to deteriorate. Changes in feed design will not be easy because of the longterm fattening trials required, and there is a growing awareness of the need to maintain and improve unit sales prices. A
recognition is spreading that exports are more important than domestic market in terms of price and meat quality.
 As to pig farming management of small-scale operations that fatten brand-name pigs in various regions is concerned.
 There are concerns that small-scale hog and beef cattle farmers may quit, and a decline in shipment may spill over into
lower utilization rates and management problems at slaughterhouses in the production areas.
◼ Egg-laying hens, Broilers
 The current egg prices are not covering the high feed costs, and some broilers are cutting down on feeding days.
◼ Upstream operations alone cannot absorb the cost increase limitlessly, so it is necessary to pass the cost increase on to agricultural
product prices. In this case, it is important to adjust the entire food value chain without destroying demand.
◼ Challenges
 The government and JA are taking various measures to cope with high feed prices. In the short term, it is necessary to
prevent farmers from giving up farming because of deteriorating business environment and to avoid production decline due
to lowered willingness to build herds.
 Feed prices are expected to remain high in response to changes in the global feed demand structure and the yen's
depreciation. In addition, in livestock farming operations, capital investment associated with disease control andenvironmental measures will become more expensive, and if investment declines in large-scale operations, it may not be able
to make up for small-scale farmers exiting. The switch by some food processing companies to domestically produced
livestock products is a tailwind for domestic agriculture, and the maintenance of the domestic production base throughmeasures such as securing farmers will continue to be a challenge.
 Increasing feed self-sufficiency is essential for reducing food security risks. With the momentum building due to the
protracted crisis in Ukraine, concrete measures are required this time.

◼ Authors
Part 1 Intensifying Situation of Global Food Supply
Part 2 The Impact of Ukrainian Crisis on Japanese Agriculture(Crop Farming)
Part 3(Livestock Production)(1) Pre-Crisis Situation(2) Feed Situation(3) Impact of the Prolonged Ukraine crisis
a Impact Estimationb Support Measures by Governmentc Dairy Farmingd Beef Cattles
e Pig Farmingf Layers
g Broilers(4) Summary

69
Ruan Wei
Miwa Kobari, Ryuta Noba

Kosei Hasegawa
Yu Nagatani
Kosei Hasegawa
Yu Nagatani
Shiho Oda
Kosei Hasegawa
Katsuhiko Kitahara
Katsuhiko Kitahara
Yoshihiko Horiuchi
Kosei Hasegawa

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