United States 

Department 

of Agriculture 

www.ers.usda.gov 

 A Report from the Economic Research Service

Abstract

Japan imports large amounts of beef, primarily from Oceania and North America, 

and its consumers are willing to pay a premium for heavily marbled, grain-fed beef. 

As a result, Japan’s import of certain beef cuts and offal raise the value of U.S. cattle. 

Trade bans resulting from the discovery of bovine spongiform encephalopathy (BSE) 

in North America dramatically shifted beef supplies to imported beef from Australia 

and New Zealand. Beef consumption in Japan may increase from current levels in 

Japan’s market, particularly if prices fall or income rises, despite a declining population. Economic factors, demographic factors, import and domestic policies and regulations, as well as consumer tastes and preferences, will determine the outlook for beef 

consumption in Japan and the ability of U.S. beef to compete in that market. Japan’s 

domestic beef production relies upon imported feed, primarily from the United States, 

to feed specifi c breeds energy-intensive rations. Government support plays an important role in the market structure of the domestic beef industry, which has an impact on 

imported beef from other countries, including the United States. 

Keywords: Japan, beef, cattle, trade, beef markets, demand elasticity

About the Authors

Kakuyu Obara is an analyst with USDA’s Foreign Agricultural Service. Michael 

McConnell and John Dyck are economists with USDA’s Economic Research Service.

Kakuyu Obara

Michael McConnell, mmcconnell@ers.usda.gov

John Dyck, jdyck@ers.usda.gov

Japan’s Beef Market

LDP-M-194-01

August 2010

Contents

Approved by USDA’s 

World Agricultural 

Outlook Board

Summary . . . . . . . . . . . . 3

Introduction . . . . . . . . . . 5

Demand for Beef . . . . . . 7

Domestic Beef 

 Supply . . . . . . . . . . . . . 15

Government Policy

 Affecting the Beef 

 Sector . . . . . . . . . . . . . .21

Imported Beef . . . . . . . 27

Prices . . . . . . . . . . . . . . 37

Conclusions and 

 Projections . . . . . . . . . 39

References . . . . . . . . . . 42

Appendix 1 . . . . . . . . . . 46

Appendix 2 . . . . . . . . . . 50

Appendix 3 . . . . . . . . . . 52
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Japan’s Beef Market / LDP-M-194-01 

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Acknowledgments

The authors gratefully acknowledge the reviews of staff from USDA’s 

Economic Research Service (ERS): William Coyle, Fred Gale, Molly 

Garber, Kenneth Mathews, Mary Anne Normile, Greg Pompelli, and Richard 

Stillman; of staff from USDA’s Foreign Agricultural Service (FAS): Yong 

Keun Ban, Hisao Fukuda, and Claire Mezoughem; Shayle Shagam of USDA’s 

World Agricultural Outlook Board; Roxanne Clemens of Iowa State University; Erin Daley of the U.S. Meat Export Federation; John W. Longworth of 

the University of Queensland; Hiroshi Mori of Senshu University; Michael 

Reed of the University of Kentucky; James Robb of the Livestock Marketing 

Information Center; James R. Simpson of the University of Florida and 

Ryukoku University; and Wyatt Thompson of the University of Missouri.

Many industry experts in Japan generously provided information for this 

report in briefi ngs and interviews.The assistance provided by Thomas Aoki, 

Michael Conlon, Midori Iijima, Tamiko Narisawa, Masayuki Otsuka, and 

Paul Spencer of FAS/Tokyo, and Greg Hanes from Tokyo’s U.S. Meat Export 

Federation is gratefully acknowledged. Linda Atkinson (ERS) provided 

statistical expertise. Special thanks are extended to Angela Anderson for 

editorial assistance and Wynnice Pointer-Napper for layout design.

Use of commercial and trade names does not imply approval or constitute 

endorsement by USDA or ERS.
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Japan’s beef consumption is important to U.S. agriculture. Beef eaten in Japan 

is either produced from Japanese cattle that are fed U.S. feedstuffs or imported. 

A large share of imported beef historically has come from U.S. cattle.

What Is the Issue?

Japanese beef consumption has been buffeted by severe shocks for over 15 years. 

As both a competitor of U.S. imported beef and a purchaser of U.S. feedstuffs, 

Japanese beef production has also suffered setbacks. As a result of the discovery 

of bovine spongiform encephalopathy (BSE), U.S. beef was completely banned 

from Japan’s market in 2004 and has had only limited access since. In the aftermath of the BSE-related shocks that have affected consumption, production, and 

trade, a review of the entire Japanese beef market may provide insight into the 

potential for growth in Japanese beef consumption. It may also reveal the extent 

to which future Japanese beef production can satisfy a share of consumption and 

remain a market for U.S. feedstuffs and what the current and future role of U.S. 

beef might be in satisfying Japanese consumption.

What Did the Study Find?

Japanese beef consumption remains sensitive to income and price changes. 

Individual consumption of beef could rise signifi cantly if income levels 

rise or beef prices fall. The price of U.S. beef, relative to substitutes from 

Australia or Japan, is an important determinant of U.S. trade share. If the 

price of U.S. beef drops, imports from the United States are likely to expand, 

perhaps even to the level reached in 2003 (when Japan was the largest foreign 

market for U.S. beef). 

Domestic Japanese beef production has not fi lled the gap left by the restrictions on North American beef imports. High prices for feeder calves and 

high feed costs, together with a relatively small-scale feedlot industry, prevent 

Japanese production from increasing. Although strong Government subsidy 

support and a substantial import tariff continue to bolster the Japanese 

industry, beef production is unlikely to expand.

In recent years, Japan’s beef cattle industry has intensifi ed its feeding to 

increase certain beef attributes, such as marbling. This practice has helped 

support demand for U.S. corn and barley. The increase in feed per head of cattle 

may not continue because Japanese consumers may be less enthusiastic, for 

health reasons, about heavily marbled beef. Beef production in Japan, however, 

is likely to remain one of the key foreign markets for U.S. feed grain.

Certain lower priced cuts of U.S. beef, primarily “end cuts” and offal, are 

considered a good value in Japan. The Japanese market bids these U.S. cuts 

away from competing uses, adding to the cut-out value of U.S. cattle at 

slaughter. Current Japanese rules limit the supply of these cuts and raise their 

import prices. If these rules were changed, Japan’s purchases of these cuts 

could increase, most likely at the expense of Australian beef, which currently 

has the largest market share of imported beef in Japan.

Summary
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How Was the Study Conducted?

The report draws on several sources of information: 

• Livestock and grain and feed reports for Japan from the Foreign Agricultural Service (USDA); 

• Reports and data published by Japan’s Ministry of Agriculture, Forestry 

and Fisheries (MAFF); 

• Books and articles published about Japan’s beef industry; 

• Interviews with representatives of fi rms, Government offi cials, and 

academics involved in the beef industry in Japan (September 2008); 

• Econometric analysis by the authors.
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Japan is the world’s second leading beef importer by value, behind the United 

States, and once was the most important export market for U.S. beef. In 2009, 

Japan imported over $470 million in U.S. beef products (down from $1.6 

billion in 2003 prior to trade restrictions). Japan’s domestic production is a 

very important market for U.S. feedstuffs exports, with over $740 million 

imported to feed beef cattle in 2007 (the latest year with available data). 

Japan’s beef consumption, still relatively low by developed-country standards, 

grew substantially in the fi rst half of the 1990s after the liberalization of 

an import quota regime. Most of the new consumption was met by imports 

because domestic beef production in Japan is expensive. 

A series of disease outbreaks and food safety incidents beginning in 1996 

shook Japan’s beef market. Demand was affected repeatedly and, sometimes, 

substantially. Discovery of bovine spongiform encephalopathy (BSE), the 

neurological disease also known as mad cow disease, in Japan’s cattle herd in 

2001 severely stressed domestic supply and depressed consumer confi dence. 

Discovery of BSE in North America in 2003 initially halted beef imports into 

Japan from the United States and Canada and later was followed by restrictions on beef imports from North America. These actions cut off a large share 

of Japan’s beef supply, which has still not been replaced by other suppliers 

or restored from North American suppliers. Following 10 years of turbulence—1996 to the present—the future of Japan’s beef market is still unclear.

Through most of the 1990s and into the new century, Japan’s consumers and 

beef suppliers have operated in a stagnant economy. Income growth per person 

has been slight, although Japanese households remain among the wealthiest in 

the world. Population growth slowed over this period and became negative in 

2005, a trend that is expected to continue. Given this environment, Japan may 

never consume as much beef as it did at its peak in 2000. 

Japan’s consumers have proven to be price sensitive. Imported beef prices fell 

as Japan reduced import tariff levels during 1991-2000 and, in some years, 

as Japan’s currency strengthened. Before the removal of beef import quotas 

(1988-1991), experts speculated that Japan’s wealthy consumers would seek 

out the most expensive imported cuts, but some inexpensive cuts from North 

American and Oceania beef production, in fact, have become best sellers. 

Japan’s consumers are willing to pay more for these cuts (and some offal) 

than consumers in the exporting countries are, contributing to higher carcass 

prices for exporters. Despite the premium that they paid, Japanese customers 

regarded several popular imported cuts as good values in 2003 and before. 

Beef customers in Japan have a taste for specifi c cuts and qualities of meat 

that is different from that of consumers in the West. After trade bans were 

lifted in 2006, U.S. beef returned to Japan but at higher prices than in 2003, 

partly due to specifi c restrictions that limited supply. The higher prices indicate that demand for grain-fed beef products is still relatively high in Japan.

Japan sources beef both from both wagyu cattle—Japan’s traditional draught 

animal—and Holstein cattle from the dairy herd. Japan’s beef cattle farms, 

faced with a limited amount of land and feedstuffs, rely heavily on imported 

grains and roughage. In recent years, more grain has been used per pound of 

Introduction
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beef produced to increase the marbling of the meat. As a result, Japan’s beef 

production uses a signifi cant share of U.S. corn exports. Japan also imports 

a signifi cant amount of U.S. barley and other cereals, forages, and protein 

sources for feed rations. Thus, U.S. grain and forage supports both Japan’s 

domestic beef and beef imported from the United States.

The Japanese Government, feed companies, and cooperative organizations 

play an important role in support and risk management for domestic cattle 

and beef producers. Several Government programs provide subsidies for 

producers, and an industry program helps mitigate fl uctuating feed prices. 

This report reviews the recent history and current situation of the Japanese 

beef market to help answer important questions about its future. 
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Meat consumption in Japan is much lower than in many other countries 

(fi g. 1). Large volumes of fi sh and seafood characterize the Japanese diet. 

Fish consumption, however, has stagnated in Japan over the past few decades, 

providing opportunities for growth in meat consumption. Meat consumption 

levels may never reach the levels in other societies, but Japan is a valuable 

market due to the demand for high-quality meat products with specifi c attributes. These trends are particularly true for the beef market.

Beef products in Japan are highly segmented. Beef is prepared differently 

depending not only on the type of cut, but also on whether the beef is wagyu 

or dairy, domestic or imported, grain-fed or grass-fed. In addition, income, 

price, consumers’ ages, and preferences can change not only overall beef 

consumption, but also the type and way in which beef is consumed.

How Beef Is Eaten

Beef is eaten both at home and away from home. Japan’s household consumption accounts for approximately 34 percent of beef consumption, while 

catering and food service accounts for 57 percent of consumption. Processing 

use—for use in cooked or otherwise preserved products—accounts for the 

fi nal 9 percent (MAFF, 2007).1 Cooking styles often infl uence what type of 

beef is preferred. 

Traditional Japanese beef dishes are often prepared with short exposure to 

heat over an open fl ame or in boiling water. Because of this type of preparation, cuts are generally thinly cut and well marbled to attain the desired taste 

and texture. Examples of traditional beef dishes can be found at yakiniku and 

shabu-shabu restaurants. Yakiniku is a Korean-style grilled dish served with 

thin, raw strips of beef. The meat is cooked by the customer on an open-fl ame 

grill set up at the table. After cooking the meat for a few minutes, the meat is 

then eaten with other vegetables, rice, and soy items. Similarly, shabu-shabu 

1A different source, the Ministry 

of Agriculture, Forestry and Fisheries 

(MAFF) Meats for Processing survey, 

cited by the Agriculture and Livestock 

Industries Corporation (ALIC) in its 

Monthly Statistics (December 2009), 

attributes only 1.5 percent of beef consumption to processing.

Demand for Beef

Figure 1

Per capita annual meat consumption, 2008

Pounds

Source: USDA, Economic Research Service calculations based on USDA, Foreign 

Agricultural Service Production, Supply and Distribution Online database and population data.

Brazil Canada China European

Union-27

Japan Mexico United

States

0

50

100

150

200

250

300

Beef Broiler Pork
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restaurants also serve beef raw. The customer cooks the thinly sliced meat in 

boiling water or broth, and then eats it with different sauces. Other vegetables 

and noodles are also cooked in the boiling water. In both cases, thinly cut 

pieces of raw beef are used so that the meat is cooked evenly with a limited 

amount of heat. Heavily marbled beef is preferred as it provides a tender 

and fl avorful taste and texture. In most cases, these dishes are prepared with 

domestic meat.

Gyudon, or beef bowl, is also a popular dish. Gyudon contains onions and 

beef simmered in sweet soy sauce and served over rice. It can also be served 

with pickled ginger and miso soup. Gyudon is relatively inexpensive and 

typically served as a fast-food item. A beef bowl restaurant is a popular 

destination for lunch among business people seeking a quick and inexpensive meal. Yoshinoya and Sukiya are the two largest gyudon chains in Japan. 

Prior to the discovery of BSE in North America, these chains used imported 

U.S. beef, primarily short plate, and were hurt by the trade bans initiated in 

2003. While Sukiya switched to Australian beef, Yoshinoya stopped serving 

gyudon altogether. Instead, Yoshinoya introduced buta don, or pork bowl, 

which has grown in popularity. Yoshinoya resumed its gyudon in 2006, when 

U.S. beef was available in Japan again, but kept buta don on its menu. With 

limited supplies of U.S. short-plate due to age restrictions of cattle, brisket 

is now also used as a substitute. Even for this low-priced dish, the Japanese 

prefer grain-fed beef. In general, across the spectrum of the different beef 

dishes, an affi nity for well-marbled beef means that grain-fed beef is used 

more often than grass-fed beef.

Hamburgers are another major preparation of beef in Japan and an exception to the preference for grain-fed beef. McDonald’s has a strong franchise 

presence throughout Japan. Hamburgers are seen as a Western food and 

are especially popular among younger Japanese. In addition to hamburger 

consumption in restaurants, Japanese also eat a hamburg dish or a hamburg 

steak at home (a grilled ground beef patty, similar to a hamburger without 

the bun). These beef products are produced from domestic culled dairy cows 

and imported frozen beef. Grass-fed frozen beef for use in hamburger patties 

accounts for a signifi cant portion of the beef imported from Australia (see 

box, “Ground Beef and Hamburgers”).

Beef is also in demand from the cosmopolitan restaurant industry. Like 

most major cities around the globe, ethnic and foreign restaurants are quite 

common in Tokyo. One can fi nd menus ranging from Chinese to Italian to 

American-style steakhouse. Restaurants with European or American-style 

menus have created increased demand for meat, dairy, and bakery products. 

Particularly in urban areas, establishments demand more beef and meat products as they seek to create authentic dishes and dining experiences for foreign 

and native Japanese customers.

Offal2 has a developed market in Japan as well. These cuts, such as tongue, 

liver, stomach, and intestine, are used in a variety of dishes for both at-home 

and away-from-home consumption, such as barbecue, hot pot dishes, stews, 

and soups. Particularly attractive for exporters, these products can be sold at 

higher prices in Japan than in their respective domestic markets. The United 

States supplied most of the imported beef offal to Japan prior to 2004. With 

other major exporters unable to make up for the lost supply of U.S. product, 

2Offal are products from the animal 

that are not skeletal muscle. Offal 

includes inedible products, such as 

the hide, but also edible organs and 

muscles not included on a dressed carcass. Edible offal can also be referred 

to as variety meat.
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Japan’s consumers buy ground meat at stores to take home 

and cook, often in the form of a hamburg steak. They also 

consume ground meat in the form of hamburgers sold by 

fast-food restaurants or in hamburg steaks served at family 

restaurants. Since the mid-1990s, hamburger production 

for fast food has exceeded production for grocery-store 

ground beef (box fi g. 1). Both hamburger and ground beef 

production fell in 2001-03. BSE was discovered in Japan’s 

cattle in 2000 and in North American cattle in 2003, and 

food safety concerns may have prompted the reduction in 

ground meat production and consumption. 

Japanese hamburgers are similar in appearance to U.S. 

hamburgers, but often incorporate features unique to Japan, 

such as rice buns and teriyaki fl avor. Typically, they use frozen 

beef trimmings from Australia and New Zealand and beef 

from Japanese culled cows. Pork, chicken, and fi sh may also be 

ground up for manufacture into “hamburgers.” For example, in 

2007, the Mos Burger chain began selling hamburgers made 

from both ground pork and beef (Mos Burger). 

Hamburger chains in Japan began to grow rapidly in the 

early 1970s. The largest chains, McDonald’s (with over 

3,700 outlets), Mos Burger (with over 1,400 outlets), and 

Lotteria (over 500 outlets), provide menus for breakfast, 

lunch, and supper and sell a variety of food and beverages 

(Otsuka et al., 2009). After 2003, hamburger production 

rose quickly, regaining the previous peak (in 2000) of over 

130,000 tons. At-home use of ground beef, however, has 

been stable at about 50,000 tons/year.1

How Much Imported Beef Is Used 

for Ground Beef in Japan? 

Data on total beef use for the ground beef/hamburger market 

are not available. In 2007, about 177,000 tons of ground 

beef and hamburger were produced (Nihon Hamburg and 

Hamburger Association).2 The beef portion must be less 

than this total, because data for hamburgers include some 

mixed pork and beef, as well as chicken and fi sh products, 

and even the weight of buns. Trade data provide another 

view of use of ground meat. Most of the beef imported 

for hamburgers comes from Australia. Australian data on 

manufacturing beef, which is often used for hamburger, 

show exports to Japan of 120,000 tons in 2008. New 

Zealand data show exports of 17,000 tons of processing 

beef to Japan—also often used for hamburger. Thus, about 

137,000 tons of meat imported by Japan probably was used 

mostly for ground meat. The Japanese import category 

“other meat of bovine animals, frozen” (see fi g. 13) is for 

unspecifi ed boneless cuts and is chiefl y imported from 

Australia and New Zealand. This import category also has 

the lowest value per unit of the four categories of boneless 

frozen beef, which suggests that this is low-cost meat from 

grassfed cattle—the kind of meat widely used around the 

world for hamburgers (box fi g. 2). 

However, the “other” category could also contain cuts not 

accounted for in the remaining three categories (i.e., loins; 

briskets and plates; chuck, clod, and round) and full sets 

(the boneless meat from an entire carcass often exported 

from Australia). After the ban on North American beef in 

2003, the quantity and unit value of the “other” category 

rose, likely because cuts and full sets in this category were 

replacing some of the meat in the brisket/plate and chuck/

clod/round categories that could no longer be sourced from 

North America. Before 2003, the quantity of frozen beef 

imported in the “other” category ranged between 80,000 

and 100,000 metric tons, which may have been the upper 

limit on beef imported for hamburger. The 80,000-ton 

level represents about 11-12 percent of the pre-2001 beef 

imports (frozen and chilled) and about 16-17 percent of 

post-2003 beef imports.

Ground Beef and Hamburgers

Box figure 1

Ground beef and hamburger production in Japan

1,000 metric tons

Notes: Hamburger includes beef, mixtures of beef and pork, chicken, 

and fish products, as well as buns. Ground meat that is exclusively pork 

is not included.

Source: Nihon Hamburg and Hamburger Association.

1989 91 93 95 97 99 2001 03 05 07 09

0

20

40

60

80

100

120

140

160

Hamburger

Ground beef, retail

1Data are not available on ground beef used for hamburg steaks 

in restaurants.

2Excluding all-pork products. 

Box figure 2

Unit value of Japan's frozen beef imports

Yen/kilograms

Source: USDA, Economic Research Service calculations based 

on Japan trade data.

1994 96 98 2000 02 04 06 08

0

200

400

600

800

1,000

Other

Brisket

Chuck

Loin
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Japanese beef offal consumption has decreased since the BSE-related trade 

restrictions on U.S. beef.

Where Beef Is Purchased

The Japanese retail grocery sector is highly developed and segmented for 

specifi c consumer markets: 

• Grocery stores range from high-end or specialty markets to more valueoriented stores. All stores, however, provide beef in their meat or butcher 

sections; 

• Large, multi-level mass merchandising stores, such as Ito-Yokado and 

Jusco, sell meat and produce, as well as clothing, electronics, packaged 

goods, and other household goods; and 

• Higher end department stores sell beef in basement-level grocery 

sections.

Beef is sold either as thinly sliced cuts or as larger steak-sized cuts. Stores 

typically display several different cuts of beef, as well as both imported and 

domestic beef, in small trays and clear plastic. Japanese law requires that 

all meat have a country-of-origin label, so customers can identify whether 

beef is domestic or imported. In addition, a national animal identifi cation 

system allows stores to provide information about domestic beef, some even 

as detailed as a picture of the farmer or farm that raised the animal. While 

customers do not always use these traceability features, Japanese retailers 

insist that their presence assures customers of the safety and integrity of their 

products (Clemens, 2003).

Japan’s numerous convenience stores have become more prominent suppliers 

in the retail beef market (Matsumoto et al., 2008).3 Prepared meals are 

commonly sold in stores, such as 7-Eleven. Bento boxes—prepared lunches 

with an assortment of meat, fi sh, rice, and vegetables—are sold in street 

shops and railway stations, as well as in convenience stores. Prepared meals 

and prepared meat are popular because of their convenience and availability 

in larger grocery stores, in addition to the smaller shops, stands, and convenience stores.

Historical Consumption Patterns

Beef consumption in Japan rose dramatically in 1990 after quantitative 

import restrictions on beef were removed. From 1990 to 1995, beef consumption per person increased annually by an average of 6 percent, including 

a 12-percent increase in 1993 (MAFF, 2005). A combination of modest 

economic growth, greater availability of imported beef, and a developing 

taste for imported grain-fed beef led to strong increases in consumption 

during this period.

Growth in beef consumption has repeatedly faltered since the mid 1990s 

(fi g. 2). Consumption had fallen 25 percent by 2007 to 5.7 kilograms (kg) per 

person, compared with its peak of 7.6 kg per person in 2000 (MAFF, 2005). 

This decline can be attributed to a series of events that infl uenced demand for 

beef and beef products.

3In 2007, over 68,000 convenience 

stores were operating in Japan. 
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Weak economic growth was one reason for the decrease in demand. From 

1997 to 2002, gross domestic product (GDP) per person increased only 

1 percent; in several years, GDP contracted. With income levels stagnant, 

consumers became more value conscious, preferring processed products 

and lower priced cuts for barbequing, as opposed to higher grade loins 

and other table cuts (Obara, 2000). Household beef consumption fell most 

steeply over this period (fi g. 3). Growth in demand from the restaurant 

and hotel industries kept consumption from falling even more dramatically prior to the 2001 discovery of BSE in the Japanese herd (Obara, 

1999). After the BSE outbreak in Japan, beef demand fell across the board, 

leading to increased inventories, lower prices, and increased consumption 

of competing proteins, pork in particular.

Demographic changes also affect beef demand in Japan, although, on a yearto-year basis, they do not have a large effect on beef consumption. Looking 

over a decade or more, however, the decline in population and the aging of 

the population structure are likely to affect consumption signifi cantly.

Figure 2

Beef consumption In Japan has decreased since 2000

Kilograms per person

Source: Japan’s Ministry of Agriculture, Forestry and Fisheries, Food Balance Sheet.

1990 92 94 96 98 2000 02 04 06 08

0

2

4

6

8

10

12

14

Beef

Pork

Chicken

Figure 3

At-home beef consumption in Japan has declined since 1995

Kilograms per person

Sources: Japan’s Ministry of Agriculture, Forestry and Fisheries, Food Balance Sheet and 

Statistical Yearbook of the Ministry of Agriculture, Forestry and Fisheries.

1990 92 94 96 98 2000 02 04 06 08

0

1

2

3

4

5

6

7

8

Total beef consumption

At-home beef consumption
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Japan’s population growth slowed until 2005 when growth reached zero. 

Since then, population change has been negative. Birth rates in Japan have 

been very low, as women choose to have fewer children or no children. 

Japan’s population is expected to drop by nearly 2.4 million by 2015 and by 

over 9 million by 2025, compared with the 2008 level of 127 million (U.S. 

Census Bureau, 2009). By itself, this decline will reduce consumption of 

all goods and services, including beef. The population decline has been 

pronounced throughout rural areas and smaller metropolitan areas, though 

the larger metropolitan areas of Tokyo and Osaka continue to grow at a very 

low rate. Consumption will be increasingly concentrated in these urban areas 

if current population trends continue.

Because of Japan’s low birth rate and the increasing lifespan of its citizens, 

the average age of the population has been increasing. Mori et al. (2006) used 

an age/period/cohort analysis of urban household expenditure survey data 

to examine beef consumption per person. Mori et al. found that the cohort 

eating the largest amount of beef (at home) was born between 1946 and 1950, 

followed by the group born between 1951 and 1955. All the cohorts born 

after 1940 had at-home beef consumption above the national average, except 

the youngest (born between 1976 and 1980). The cohorts born between 

1906 and 1940 had below-average consumption. In the coming decade, the 

number of people in the older (pre-1940) birth cohorts (with below-average 

beef consumption) will decrease, and Japan’s population will be increasingly 

dominated by the cohorts born after 1940. These post-1940 cohorts represent a solid base for beef consumption. If younger cohorts (born in 1976 or 

after) eat as much beef as middle-aged cohorts do now, beef consumption 

per person could rise from current levels. Consumption could fall if younger 

cohorts continue to eat less beef than their parents. 

The 1996 Escherichia coli (E. coli) outbreaks in Japan and BSE in Europe 

increased consumers’ awareness of safety issues for beef (Obara, 2000). 

Even as economic conditions improved at the turn of the century, the 

2001 discovery of BSE in the domestic herd and the possibility of infected 

animals’ entering the food supply damaged beef’s reputation. Consumer 

confi dence was further eroded by labeling scandals, in which foreign beef 

was labeled as domestic product (Obara, 2002). These domestic issues had 

a more severe impact on consumption than did the foreign outbreaks of livestock diseases.

After the discovery of BSE in the North American cattle herd in late 2003, 

Japan banned imports from the United States and Canada. With no other 

country able to produce as much grain-fed beef for the Japanese markets as 

the United States, availability of beef declined, and beef became signifi cantly 

more expensive. Even though Australia developed its grain-feeding capacity 

and the United States regained limited access to the Japanese market, 

consumption of imported beef is lower than it was in the mid-1990s. As a 

result, supplies of specifi c cuts remain tight and prices are still well above 

their 2003 levels (Obara, 2005).

The declining availability of beef resulted in consumers’ substituting other 

meats, such as pork and poultry. Pork is especially responsive to changes in 

beef prices. In 2004, when U.S. beef was no longer available, beef consumption per person fell by 9 percent, while pork consumption per person 
13

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increased by 7 percent (see fi g. 2). Conversely, in the early part of the 1990s, 

when beef consumption per person increased, pork consumption per person 

increased only modestly or decreased. Chicken consumption per person also 

increased 16 percent after 2004. This increase is partially infl ated, however, 

because of lower consumption in 2003 and 2004 due to avian infl uenza. 

Chicken consumption increased 5 percent from 2002 to 2007 (MAFF). 

Chicken has been less of a substitute than pork for beef. Pork and chicken 

prices remain well below beef, and price-conscious consumers continue to 

buy those meats at retail grocery stores in high volumes. These purchasing 

trends have been particularly evident in the large growth of pork imports into 

Japan (Obara, 2008).

Recent econometric work using Japanese data supports a positive relationship between beef consumption and income. Elasticity estimates, however, do 

not settle neatly in a narrow range.4 The lowest recent estimate for a crosssection of households in 1999 is 0.14 and applies only to beef consumed at 

home (Mori et al., 2006). The highest estimate (also for at-home consumption) comes from a single equation method and is about 1 (Mori et al., 2006). 

Recent estimates that account for pork and poultry consumption, as well as 

beef consumption, provide income elasticity estimates of 0.36 and 0.76 for all 

beef consumption away from and at home (see box, “Econometric Estimation 

of Elasticities”).5 The income elasticity of total beef consumption appears 

to be less than 1. A study that disaggregated beef into one imported and two 

domestic components found signifi cant differences in demand elasticities for 

the three segments. All had positive income elasticities, however (Mori and 

Lin, 1994). 

Currently, consumer demand for beef is primarily driven by price. As beef 

prices remain relatively high, beef sales remain limited, while relatively 

cheaper pork sales have continued to grow. Estimates of own-price elasticities 

for beef range between -0.4 and -1.32. While econometric estimates indicate 

that the effects of prices of other animal proteins (pork, poultry, and sometimes fi sh) on beef consumption are weak, there is evidence that the price of 

beef strongly impacts pork consumption. 

Consumer attitudes and concerns have been important in shaping meat 

demand, including that for beef. Consumers are very aware of disease 

outbreaks and food scandals that can compromise the integrity of a supplier’s 

product. Because of the multiple domestic food safety issues and trade policy 

debates, Japanese consumers are also aware of the sources of their food. In 

addition, healthy eating is emphasized. Increasingly, consumers are encouraged to avoid overeating and obesity, referred to as “metabolic syndrome.” 

Although the Japanese prefer the taste of marbled cuts of meat, they are also 

aware of the nutritional attributes of their diet. Consumers have altered their 

eating habits by moderating or eliminating foods that could potentially make 

them overweight.

4Elasticities are a common way of 

characterizing the effects of income and 

prices on the consumption of a good. A 

food demand elasticity is the percentage change in consumption of a food 

given a percentage change in income 

or price.

5Thompson (2004) estimated 0.36. 

Obara, McConnell, and Dyck’s estimate of 0.76 (this report) shows weak 

statistical signifi cance.
14

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Many studies have measured the elasticities of meat demand 

in Japan, but most dealt with the time between 1970 and 

1990 (Dyck, 1988; Mues et al., 1991). A study by Thompson 

(2004) measured elasticities over the period 1981-2000. For 

this study, methods similar to Thompson’s were used on 

data for 1981-2007 (box table 1).1 

Thompson’s estimates and the updated estimates used 

in this report indicate that beef consumption is the most 

income sensitive of the meats. The estimated beef income 

elasticity in this study (statistically, weakly signifi cant)2 is 

higher than Thompson’s result of 0.36.3

In this study, the own-price elasticity of demand suggests 

that beef consumption is quite sensitive to the price of beef, 

with an elasticity of -1.32 (box table 2). A rise in the price of 

beef also affects pork consumption, as shown by the crossprice elasticity of 0.51 (pork consumption rises 0.51 percent 

given a 1-percent rise in the beef price). In contrast, a rise 

in the price of pork (or poultry) has no signifi cant effect 

on beef consumption. These results are similar to those 

observed by Thompson for the earlier period. Relative to 

Thompson’s results, pork and poultry appear less sensitive 

to changes in the price of beef. Beef demand in Japan is 

highly segmented, and the price used in the econometric 

estimation for this study was only for one cut of one type 

of beef (wagyu); therefore, the results should be used 

cautiously.4

Econometric Estimation of Elasticities

Box table 1

Estimates of income elasticity of demand for beef

Income 

elasticity

1981-2007

Obara, McConnell, 

Dyck

1981-2000 

Thompson

Beef 0.76 0.36

Poultry 0.02 0.05

Pork 0.38 0.06

1The estimates made for the current study look at relationships over a period that includes the shocks of BSE outbreaks in both 

Japan and North America. The estimation uses price and quantity data provided by MAFF and the Agriculture and Livestock 

Industries Corporation (ALIC) from 1981 to 2007 in an Almost Ideal Demand System (AIDS) with meat expenditure treated as 

an endogenous variable (Thompson, 2004). For further explanation regarding the data and model specifi cations, see “Appendix 1: 

Econometric Estimation of Income and Substitution Elasticities.”

2See Appendix 1. The regression estimate of the parameter relating national income to meat expenditures parameter is statistically 

different from zero with 88 percent confi dence—less than the generally accepted levels of 90 and 95 percent. Hence, we defi ne it as 

weakly signifi cant. 

3Income elasticity measures the responsiveness of consumers’ purchases of specifi c goods to changes in income. Spending for an 

income-elastic good (elasticity greater than 1) is likely to change proportionately more than the change in income, while spending for 

an income-inelastic good (elasticity less than 1) is likely to change proportionately less than the change in income.

4Mori and Lin (1994) probed various segments of the beef market and found large differences in the characteristics of demand for

wagyu, dairy, and imported beef.

Box table 2

Estimates of price elasticity of demand for beef

1981-2007 (Obara, McConnell, Dyck)

Price

Quantity Beef Poultry Pork

Beef -1.32 -0.04 -0.01

Poultry 0.29 -0.61 0.91

Pork 0.51 0.33 -0.33

1981-2000 (Thompson)

Price

Quantity Beef Poultry Pork

Beef -1.28 0.04 0.28

Poultry 0.60 -0.73 0.01

Pork 0.75 -0.01 -0.91
15

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Japanese farms produce a large share of the country’s beef supply. The beef 

herd numbers 2.89 million head, comparable with the number of cattle in 

Colorado (USDA/National Agricultural Statistics Service). Beef production 

relies on signifi cant Government subsidies and on consumers’ willingness 

to pay higher prices for domestic beef. Farmers have generally not received 

high net returns on cattle operations in recent years and revenues have fallen 

below costs. A fundamental reason for the relative lack of economic success 

in raising beef cattle has been Japan’s lack of pasture. The land base consists 

of forested mountains and intensively cropped lowlands. Imported grains and 

both domestic and imported roughage have replaced the grass that pastures 

normally provide to cattle. Virtually all of the grain that is fed must be 

imported across the Pacifi c, adding to the cost of the feed. 

During a critical phase of cattle rearing—breeding and nurturing calves—

reliance on feeds in the absence of pasture adds an expense that farmers in 

much of the rest of the world do not bear. In North America and Oceania—

beef exporters to Japan—calves are typically bred and raised on pasture, 

which is less costly than feeding in confi nement. The high price of calves in 

Japan is a key constraint on the Japanese farmers’ ability to supply beef. Calf 

prices are high because breeding cows have little access to pasture. Cows are 

confi ned in and around sheds, and feeds are brought to them. After weaning, 

calves are usually raised in confi nement by farmers who specialize in raising 

calves, before being sold to feedlots. For Japan, all three aspects of raising 

beef stock involve feeding, rather than grazing. 

Japan’s intensive use of feed ingredients, such as corn, includes a transport 

cost component that is much higher than that paid by U.S. grain-fed beef 

producers. The feeds include harvested forage, soilage,6 and concentrated 

grain-based feeds. About a fi fth of the roughage, and virtually all of the 

grains and meals, is imported. Total transportation costs to Japan (truck, 

barge, rail, or ocean shipping) are frequently as high as or higher than the 

cost of corn at the U.S. farmer’s delivery point. Additional costs are incurred 

as corn is trucked from the port in Japan to the feed mill and as compound 

feed7 is transported from feed mills to farms. 

In recent years, the cost of production for fed cattle has ranged from $3,000 

to $8,000 per steer, depending on breed (table 1), compared with the cost in 

the United States of $1,000 to $1,500 per steer. The largest cost to a Japanese 

feedlot is the feeder calf (fi g. 4 illustrates this for wagyu steers), with recent 

costs ranging from $900 to $4,400 per calf, depending on breed. Feed, mostly 

concentrates, is the second most important production cost, at about $2,000 

per wagyu feeder calf. In a U.S. feedlot, feed costs are typically much lower.

To build a domestic beef industry in the face of scarce land resources for 

pasture, Japan’s farmers developed a differentiated cattle herd based on the 

wagyu-breed animals that were used originally as draught animals for agriculture but, from the 1960s on, became solely meat animals (Longworth, 

1983).8 When fed a diet of primarily grains over a relatively long period, beef 

from wagyu animals becomes tender and highly marbled with intramuscular 

fat. The meat looks and tastes different from grass-fed beef and from grain6Soilage is crops cut while green 

and brought to the cattle without being 

ensiled. For example, rice, including 

the grain head, is sometimes cut before 

grain has ripened and fed to cattle.

7Compound feed is a pre-mixed 

ration for animal feed. Feed mills take 

component ingredients, such as corn, 

soybean meal, or byproducts from other 

milling processes, and produce feed, 

taking into account certain nutritional 

requirements and preferences.

8“The four modern Japanese breeds 

are the result of a substantial infusion 

of European blood during the Meiji 

Era, together with a Governmentsponsored selection program initiated 

in 1919” (Longworth).

Domestic Beef Supply
16

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

fed beef using other breeds and feeding regimes. In recent years, 60,000-

70,000 cow-calf operations kept about 700,000 wagyu breeding cows. 

Japanese consumers have been steady purchasers of relatively stable amounts 

of wagyu beef. To gain a wider market for larger amounts of domestic beef, 

however, Japan’s farmers need to provide beef at lower prices. The fi rst effort 

to do this was to use the male calves from the Holstein dairy herd,9 as well 

as heifers not kept for milking purposes.10 Holstein calves have relatively low 

value when sold as veal calves. Like wagyu calves, they are raised on specialized farms that buy weaned calves and feed them until they are sold to feedlots. 

As feeder calves, Holstein steers cost feedlots $929 per steer in 2006, compared 

9Holstein cows are used primarily 

for milking purposes in the United 

States and other countries. Their genetic characteristics are well suited for 

milk production, but often not ideal for 

intensive feeding for beef production.

10By using Holsteins for beef and 

developing a market for calves not 

needed for milk production, Japan’s 

beef industry signifi cantly added to the 

profi tability of dairy operations.

Table 1

Comparisons for feedlots in Japan and the United States, 2006

Calf, feedlot entrance Feed 

costs

Time in 

feedlot

Total 

expenses

Cattle, at shipment 

from feedlot Carcass 

price Price Weight Age Price Weight

Yen/

animal

(U.S.$1)

Kilograms

(pounds) Months

Yen/

animal

(U.S.$1)

Months

Yen/

animal

(U.S.$1)

Yen/

animal

(U.S.$1)

Kilograms

(pounds)

Yen/kg

(U.S.$/lb)

Wagyu 

steer

507,593

(4,365)

283.7

(625) 9.4 232,738(2,001) 19.8 879,078(7,559)

934,191

(8,033)

716

(1,578)

2,190

(19)

Holstein 

steer

108,012

(929)

282.3

(622) 7.7 196,135(1,686) 14.2 366,218(3,149)

381,826

(3,283)

751.2

(1,656)

969

(8)

F-1 steer2 257,565

(2,215)

266.8

(588) 8.4 240,535(2,068) 19.2 586,135(5,040)

604,195

(5,195)

750

(1,653)

1,439

(12)

U.S. steer $821.05 317.1

(697)

3 $292.28 5.6 4 $1,078.21 568.8

(1,251) $3.23

1116.3 Yen/US$, 2006.

2F-1 is a common designation for a cross or hybrid between two species or breeds.

3There are no comparable surveys provided by Hoelscher or the USDA to indicate average ages of incoming or outgoing cattle in feedlots. 4There are no comparable fi gures regarding total expenses in comparison to the Japanese published statistics. Differing fi xed and labor cost 

structures among feedlots add complexity when calculating a cost representative of the entire U.S. industry. 

Sources: Japan’s Ministry of Agriculture, Forestry and Fisheries, Statistical Yearbook of the Ministry of Agriculture, Forestry and Fisheries, 

2007-08; and Hoelscher, 2006.

Figure 4

Feedlot costs in Japan, fattening wagyu steers

1,000 Yen/head

Source: USDA, Economic Research Service calculations based on data from Japan’s Ministry 

of Agriculture, Forestry and Fisheries, Statistical Yearbook of the Ministry of Agriculture, 

Forestry and Fisheries.

Feeder calf Feed Other

2003 2004 2005 2006 2007

0

200

400

600

800

1,000

1,200
17

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

with $4,365 per wagyu steer. Raising Holsteins compared with wagyu considerably reduces the cost of a fed steer. As a result, the sales price for fed steers 

is lower for Holstein animals because of the lower cost of calves and feed and 

because its value to consumers is lower. Wagyu fed steers sold for $8,033 in 

2006, compared with $3,283 for a Holstein steer (see table 1). 

Japan uses a fi ve-level quality grading system, where fi ve is the highest 

score. Meat yields (the usable meat on a carcass) range from A (the highest) 

to C (the lowest). Wagyu carcasses often are given a grade of A-4 or A-5. 

Carcasses from Holstein fed cattle, however, are usually B-2 or B-3. Thus, 

Holstein beef is regarded as lower in quality and is priced accordingly in the 

retail market. Also, yields are lower, reducing the value of the carcass. 

In order to improve the value of beef from Holstein calves, Japan’s industry 

developed a cross breed, the F-1 type.11 Holstein milk cows are artifi cially 

inseminated with semen from wagyu bulls.12 As with wagyu and Holstein 

calves, the offspring are sold at weaning to specialized calf raisers. Because 

no F-1 calves are kept for breeding, the number of steers and heifers being 

raised for feeding are about equal. Calf prices at feedlot entry are between 

those for pure Holstein and wagyu calves: F-1 steer prices in 2006 averaged $2,215 (twice that for Holstein steers and just over half the price for 

wagyu steers). These reduced prices provide signifi cant savings for feedlots. 

Although F-1 beef most often grades above the Holstein level, grades of B-3 

and B-2 still predominate. Despite this, F-1 beef commands a premium over 

Holstein beef from consumers, and fed F-1 cattle sell for 50 percent or more 

than Holstein cattle do (MAFF).13 The relative contribution of different herds 

to slaughter is shown in fi gure 5.

Another strategy pursued by the Japanese beef industry is embryo transfer. 

An embryo is transferred from a wagyu cow to a Holstein cow, producing 

a wagyu calf. The wagyu cow can then be re-inseminated. Splitting wagyu 

embryos and then implanting them in two Holstein cows or generating 

twins in one cow further exploits the wagyu genetic stock. Embryo transfer 

has proved to be expensive and not always successful. As a result, embryo 

transfer has not become widespread. In the absence of a technological break11F-1 is a common designation for a 

cross or hybrid between two species or 

breeds.

12Artifi cial insemination is almost 

universal in Japan’s cattle industry.

13In 2006, the price for Holsteins was 

$3,283 versus $5,195 for F-1.

1990 92 94 96 98 2000 02 04 06 08

0

200

400

600

800

1,000

1,200

1,400

1,600

Figure 5

Cattle slaughter in Japan

1,000 head

F-1 = Offspring of Holstein cows inseminated with wagyu semen.

Source: Agriculture and Livestock Industries Corporation. 

Wagyu female

Wagyu steers

Dairy female

Dairy steers

F-1 female

F-1 steers
18

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

through like embryo transfer or embryo splitting and twinning, the number of 

calves that Japan can produce is limited. The Holstein milking herd is gradually shrinking. Milk demand is static, and greater milk yields per cow mean 

that fewer cows are needed each year.

Intensive feeding remains central to the success of Japanese beef production. Wagyu cattle are usually fed longer and go to slaughter at a signifi cantly 

older age than grain-fed cattle in North America or Oceania. Offi cial estimates show that wagyu cattle average 19.8 months (for 2006) in a feedlot. 

In contrast, Holstein fed cattle spend 14.2 months in feedlots and are slaughtered at 21.9 months of age—only slightly older than fed cattle slaughtered 

in the United States. F-1 cattle are fed almost as long as wagyu: 19.2 months 

(fi g. 6). The 5 additional months of feeding for wagyu and F-1 cattle adds to 

production costs. 

Because net returns to farmers increase if fewer or cheaper inputs can be used 

to produce output of the same value, increasing feed effi ciency is often a goal 

of livestock feeders. A feed conversion rate shows the quantity of feed used to 

produce a given amount of meat. In 1966, the quantity of feed concentrate fed 

to cattle in Japan was 1.65 times that of beef production in that year (other 

Figure 6

Lifecycle of a steer in Japan

Sources: Japan’s Ministry of Agriculture, Forestry and Fisheries, Pocketbook Statistics on Livestock, 2007; Stillman et al, 2009; 

USDA, National Agricultural Statistics Service, Cattle on Feed and Livestock Slaughter Reports, 2007.

Months 0 8 16 24 32

Wagyu steer

Dairy steer

Calf is castrated at 2

months and weaned

at 3 months 

Calf is sold for

fattening at 

about 6-6.5

months

Steer is fattened for

19-20 months on

grains

Calf is sold for 

fattening at about 

9 months

Steer is fattened 

for about 14

months on grains

Steer is

slaughtered

at 28-30

months 

625

pounds 

F-1 steer

Calf is sold for

fattening at about 

7-8 months

Steer is fattened for

about 19 months on

grains

Steer is

slaughtered at 

about 27

months 

1,571

pounds

3-3.5 13.5-14

4-5 19-19.5

3-4 6-6.5 19-20

U.S. beef steer

Calf is weaned 

after 6-7 months

Steer is

slaughtered at

about 17-21

 months

6-7 6-8 5-6

598

pounds

1,624

pounds 

Calf grazes on

forage for 6-8

months 

612

pounds

600-800

pounds

1,360

pounds

Calf is fed a

mostly forage

and grain mix 

Calf is castrated at 

2 months and 

weaned at 3

Calf is castrated at

2 months and

weaned at 3

3-4

3-4

1,654

pounds Steer is

slaughtered at

about 20-21

months

Steer is fattened for about

 5-6 months on grains
19

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

feeds, not concentrates purchased from feed mills, may have been fed in 

larger quantities than they are today). In 1986-88, just before the beef import 

quota began to be phased out, the ratio was 5.28.14 Some analysts expected 

the concentrated feed-use ratio to decline, as farmers tried to be more effi -

cient in the face of rising competition from imported beef. The amount 

of concentrate fed (mostly imported) per unit of meat output has grown, 

however, reaching a record level in 2008 of 8.96.15

The use of compound feed for beef production increased by 27 percent from 

the average for 1990-92 compared with the average for 2005-07. The additional feed did not signifi cantly increase the amount of meat produced, possibly 

because Japanese beef fatteners sought to increase the marbling and tenderness 

of their beef, differentiating it further from imported beef. Evidently, these beef 

producers felt the extra cost for increasing the feed-to-meat conversion ratio 

was offset by greater consumer demand for domestic beef.

Grain dominates the compound feed ration (fi g. 7). In recent years, corn 

has accounted for almost 40 percent of the ration and barley another 16 

percent. All the grains, including sorghum, wheat, etc., constitute 61 percent 

of the compound feed ration. Oilseed meals accounted for 9 percent of the 

compound feed in 2007, about two-thirds of which was soymeal. Some parts 

of the feed ration are produced from Japanese-grown materials: rice bran 

and rice bran meal, wheat bran, beet pulp, and molasses. Others are products of milling or refi ning imported basic materials: wheat bran, molasses, 

and oilseed meal. Most feed ingredients are imported: grains, oilseed meal, 

alfalfa, corn gluten feed, dairy powders, etc.16

In recent years, Japan’s beef industry has used over 4 million tons per year 

of compound feed, and feed use for beef has been growing since 2000 (fi g. 

8). Most of the feed is imported from the United States, especially corn. 

The beef industry in Japan, using 1.8 million tons of U.S. corn, would 

rank as the eighth largest U.S. corn market, if it were compared with other 

14This ratio is affected by both the 

number of animals fed and the duration 

of the feeding period. The shrinking wagyu herd and increase of dairy 

animals being fattened in feedlots 

would decrease the total number of 

feeding days, and lower the ratio. This 

effect has been at least partially offset, 

however, by the addition of the F-1 

cross-bred animal to the herd.

15Data on compound feed production for beef came from Japan’s 

Statistical Yearbook of the Ministry of 

Agriculture, Forestry and Fisheries, 

various editions. Data on beef production came from USDA’s Production, 

Supply, and Disappearance database 

from 2008. The ratios are a rough 

estimate of compound feed conversion 

into meat in Japan’s beef industry. Feed 

for dairy cows that subsequently bear 

calves (whether the embryo is Holstein, 

F-1, or wagyu) is not included in this 

published series from the Japanese 

Government.

16Data on feed composition are 

provided by Fukuda (USDA, Foreign 

Agricultural Service/Tokyo) in the 

annual Grain and Feed Report from 

2002 onward and are derived from the 

Monthly Feed Statistics of Japan’s Feed 

Supply Stabilization Organization.

Figure 7

Compound feed for beef cattle in Japan, 2007

1

Other ingredients include rice bran, alfalfa, molasses, skim milk powder, whey, beet pulp, 

and several feed additives. 

Sources: USDA, Economic Research Service and Foreign Agricultural Service 

calculations based on data from the Monthly Feed Statistics of Japan’s Feed Supply 

Stabilization Organization.

Corn

Barley Other grains

Wheat bran

Corn byproducts

Soymeal

Other oilseed meals–2%

Other ingredients1

40%

10%

6%

6%

15%

5% 16%
20

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

country destinations for U.S. corn exports. Corn is also a growing market; 

by 2007, beef fatteners had increased their annual use of U.S. corn by 

over 300,000 metric tons compared with 1993. Japan’s beef industry is the 

leading user of feed barley and purchases most of the United States’ barley 

exports.17 In 2008, the value of feedstuffs exported from the United States 

to supply Japan’s beef production was nearly $750 million.18

Given the high cost of calves and feed, Japan’s domestic beef supply cannot 

compete with imported beef on price. Two pillars support current supply levels: 

• The willingness of Japanese consumers to pay a high price for domestic 

beef, which can be attributed to a preference for the differentiated, 

highly marbled beef or a preference for domestic beef over imports, 

regardless of quality. 

• The support for the beef industry by the Government. 

17For example, in 2008, Japan 

reported imports of 413,662 metric tons 

of U.S. barley for feed use, which represented 70 percent of U.S. barley exports.

18The value of Japan’s imports from 

the United States, including insurance 

and freight, is calculated by: (1) obtaining Japan’s complete data on compound 

feeds used for raising cattle for beef, 

published in Monthy Feed Statistics; 

(2) determining the share of imports 

in Japan’s supply for each of those 

feeds; (3) determining the U.S. share 

of Japan’s imports of each feed and the 

import unit value of imports of each 

feed from the United States; and (4) 

multiplying the U.S. share of imports 

of each feed for beef by the import unit 

value and summing.

Figure 8

Compound feed production in Japan

1,000 metric tons

1

Other uses are for pork, broiler meat, milk, egg, and aquaculture production. 

Source: Japan’s Ministry of Agriculture, Forestry and Fisheries, Statistical Yearbook 

of the Ministry of Agriculture, Forestry and Fisheries.

1990 92 94 96 98 2000 02 04 06 08

0

5

10

15

20

25 For other uses1 For beef
21

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Japan’s Government explicitly targets greater self-suffi ciency in agricultural 

production. Policymakers interpret this to mean that the beef sector, which 

currently contributes about 6 percent of the value of total agricultural output, 

should receive Government support and encouragement through domestic 

programs and a 38.5-percent import duty (MAFF, 2008). Japan is burdened 

by high Government debt. Government debt, as a percentage of GDP, has 

been rising since 1992, and exceeded 100 percent in 2009 (International 

Monetary Fund, 2010). Intense efforts to contain Government spending and 

reduce the debt burden confl ict with a desire to increase support to agriculture, including the beef sector.

Japan’s beef sector in 2008 was valued at farmgate at 455 billion yen 

($4.4 billion) (Organisation for Economic Cooperation and Development, 

2009). Government programs help support the value of beef through direct 

payments, grants, and loan/insurance subsidies that are fi nanced by taxes 

and the proceeds of the beef tariff. A full accounting of such support is 

not available, but a partial sum based on 2008 budgets exceeds 62 billion 

yen ($600 million). In addition to receiving support from budgetary 

expenditures, Japanese beef production also receives support from the 

38.5-percent import tariff on chilled and frozen beef, which acts as a fl oor 

under domestic prices. Japan’s Government estimated the value of this 

market price support at 72 billion yen in 2005 ($662 million) (World Trade 

Organization, 2009). The Organisation for Economic Cooperation and 

Development estimated policy-induced transfers to beef producers at 132 

billion yen in 2008 ($1.28 billion), based overwhelmingly on market price 

support from the tariff.19 Market price support is basically a transfer from 

consumers to beef producers, when consumers pay higher prices for beef 

as a result of Government actions that affect prices (i.e., the import tariff). 

In addition to Government support, the animal feed industry operates a 

feed price stabilization program (see box, “High Feed Prices in 2008 Shock 

Japan’s Beef Sector”).

Major measures taken by the Japanese Government with the 2008 budgetary 

outlay included the following:20

• A defi ciency payment for feeder calf operations and other support for 

raising feeder calves—$236 million; 

• A stabilization measure (called MARUKIN) for beef-cattle-fattening 

operations that provides a safety net when costs exceed incomes—

$202 million; 

• Payment of more than half the cost of insurance against cattle health 

risks—$94 million; 

• Payment that covers farm and industry BSE-related costs—$98 million; 

• Intervention by the government-owned ALIC to stabilize meat prices; 

19This translates to a producer singlecommodity transfer equal to 28.75 

percent of the value of beef to producers. Both the total support in yen and 

the percentage of value have remained 

relatively stable since 1997. 

20Information about expenditures 

is incomplete, and amounts cited are 

often budget allocations, rather than 

actual expenditures. USDA Foreign 

Agricultural Service data were collected from several sources.

Government Policy Affecting 

 the Beef Sector
22

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

• Loans to farms and loans to prop up the industry feed price stabilization 

fund—$996 million in subsidized loans; and

• Payment assistance for cattle production and marketing—$130 million.

Support for Calf-Raising Farms: 

$236 Million Budgeted for JFY200821

A portion of the revenue earned from tariffs on beef imports is channeled to 

Japan’s domestic beef subsidy program—the Defi ciency Payment Scheme for 

Feeder Calves. In JFY2008, 17.6 billion yen ($170 million) was earmarked for 

defi ciency payments. This program is designed to protect domestic feeder calf 

producers and to secure feeder calf supplies for beef cattle fattening operations. The ALIC,22 a company owned by MAFF, implements the program and 

disburses the Government subsidy payments to the feeder calf growers. 

21JFY means Japan Fiscal Year, 

which begins April 1 and ends 

March 31. Thus, JFY2008 is April 1, 

2008-March 31, 2009.

22Formerly called the Livestock 

Industry Promotion Corporation 

(LIPC).

To protect farmers against price surges, Japan’s feed industry has long operated 

the Feed Price Stabilization Program. Under this program, farmers pay 500 

yen per metric ton of concentrated feed into a fund operated by feed millers. 

Farmers’ payments are not subject to Government taxes, such as the income tax. 

The fund can then be used to reduce feed prices if prices surge. To supplement 

the farmer-paid fund, an ‘umbrella’ fund exists with payments supplied 50 

percent by the Government and 50 percent by the feed companies. Companies 

receive payments from the umbrella fund with a 6-month lag (Zennoh, 2008). 

Prices of concentrated feeds in Japan soared in 2008, peaking in November 

2008 at 73,550 yen per metric ton ($735/metric ton), 50 percent higher than 

in 2005 and 2006 (MAFF, 2009). This unprecedented increase was caused 

by higher global grain and oilseed prices, which affected livestock producers 

worldwide, and the sharp increase in transportation costs due to oil prices. 

Higher oil prices particularly hurt Japanese livestock producers, who rely upon 

imported feedstuffs. 

Simultaneously, raising the retail price of beef proved impossible. With the 

economic downturn in 2008, consumers became more cautious about spending, 

especially for luxury products, such as domestic beef. Japan’s producers were 

squeezed between rising costs and fl at or lower output prices.

The Feed Price Stabilization Program had accumulated funds over many years 

of stable or low world prices for feed ingredients, but the funds were completely 

used up by April 2008, as agricultural prices surged. Subsidies from the program 

reduced compound feed prices (for all animal feeds, not only beef feed) by as 

much as 10,500 yen per metric ton in 2008 (about $97 per metric ton, or 14 

percent of the peak price). The Government provided a 35-billion-yen ($338 

million) loan to the industry to maintain the fund through JFY2008 (beginning 

April 1) (Fukuda, 2008).1 Repaying this loan and rebuilding of the program’s 

funds are expected to be diffi cult.

High Feed Prices in 2008 Shock Japan’s Beef Sector

1The Government provided the loan at zero interest, and it must be repaid within 

3 years. 
23

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Registered feeder calf producers are eligible for defi ciency payments when 

quarterly average auction prices for feeder calves fall below the “guaranteed 

price” determined by MAFF. The guaranteed price is set for different beef 

breeds (table 2). The difference between the actual average price and the 

guaranteed price is paid to the producers (fi g. 9), unless prices go below the 

minimum fl oor price, or target rationalization price.

When prices fall below the minimum fl oor price, the Prefectural Feeder Calf 

Producer Fund provides subsidies. Producers receive 90 percent of the difference between the target rationalization price and quarterly average auction 

prices of feeder calves in each locality from the Prefectural Fund, in addition 

to a MAFF defi ciency payment that accounts for the difference between the 

guaranteed price and the target rationalization price. 

Feeder calf producers registered in the defi ciency payment scheme (table 2) 

are automatically enrolled in the Prefectural Fund and pay their contribution 

to the prefectural beef calf producer associations, which operate the fund. 

These producer contributions constitute a fourth of the fund, prefectural 

governments contribute another fourth, and MAFF provides funding from its 

national farm budget through ALIC for the remainder. 

Figure 9

Payment systems for beef calf producers in Japan

Source: Agriculture and Livestock Industries Corporation.

Revenue from grants provided 

by ALIC (the Government)

1. ALIC (the Government) = 50%

Payment percentages 2. Prefectural governments = 25%

3. Revenue from producer contributions = 25%

Deficiency

payments to

producers 

Maximum deficiency

payments to

producers

Guaranteed standard price

Market price of beef calves

Target rationalization price
24

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

During 2000-06, prices paid by feedlots for male dairy calves were below 

the guaranteed standard price every year and below the target rationalization price in 2003 and 2004 (see table 2). In 2004, a farmer selling a calf at 

the market price of 68,648 yen would have received 49,000 yen (guaranteed 

price of 129,000 yen less the target rationalization price of 80,000 yen) from 

the Defi ciency Payment Scheme and 10,217 yen (target rationalization price 

of 80,000 yen less the market price of 68,648 yen, times 0.9) from the Prefectural Feeder Calf Producer Plan. The 59,217 yen in subsidies would have 

represented 46 percent of what the farmer received. Clearly, in some years, 

the Government calf subsidies are critical to maintain the supply of dairy 

steers for fattening.23

The guaranteed standard price for F-1 calves sold to a feedlot is 175,000 yen. 

During 2003-07, actual market price averages always exceeded the guaranteed price, and no subsidies were awarded. In 2008, however, 4.33 billion 

yen ($42 million) in subsidies went to F-1 calf raisers, as prices for some F-1 

feeder calves fell below the guaranteed standard price (ALIC). Defi ciency 

payments for wagyu calves are uncommon.

In addition to defi ciency payments, MAFF administers a subsidy program 

for cow-calf operators who are willing to increase or maintain the number of 

breeding cows in their herd during a time of declining calf prices. Payments 

are made quarterly when the average price per beef calf falls below the 

trigger levels set per beef breed (i.e., wagyu breeds, such as black wagyu, 

brown wagyu, etc.) In JFY2008, 6.84 billion yen ($66 million) were allocated 

to this project.

Support for Beef Farm Operations: 

$202 Million in JFY2008

In addition to the subsidy for feeder calves, the beef cattle fattening operation stabilization measure (MARUKIN) provides signifi cant support to 

fattening farms. The Japan Livestock Industry Association administers the 

program. Farmers must qualify for participation; the Government is trying to 

limit participation to farmers who specialize in fattening larger numbers of 

23The calf defi ciency payment also 

ensures that there is a market for dairy 

steers and heifers not put into milk 

production that can still provide value 

for the producer, boosting dairy farm 

income.

Table 2

Prices for the defi ciency payment scheme for feeder calves in Japan

Item 2000 2001 2002 2003 2004 2005 2006 2007 2008

Yen per head

Guaranteed price:

Black wagyu 304,000 304,000 304,000 304,000 304,000 304,000 304,000 304,000 305,000

Dairy breeds (for beef) 131,000 131,000 131,000 131,000 129,000 110,000 110,000 110,000 113,000

Cross breeds 175,000 175,000 175,000 175,000 175,000 175,000 175,000 NA 178,000

Target rationalization price:

Dairy breeds (for beef) 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000

Market price:

Holstein feeder calf 110,710 84,522 100,621 71,674 68,648 81,334 108,012 127,313 NA

NA = Not available.

Sources: Guaranteed and target rationalization prices are based on USDA, Foreign Agricultural Service GAIN reports JA1002 and JA7058. 

The Holstein feeder calf price is based on Japan’s Ministry of Agriculture, Forestry and Fisheries Statistical Yearbook of the Ministry of 

Agriculture, Forestry and Fisheries, various issues. 
25

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

cattle. If labor costs exceed net income from the operation, or if the total cost 

exceeds gross income, the MARUKIN program covers part of the loss. In 

2008, the program provided 20.88 billion yen to farmers ($202 million). 

The MARUKIN subsidy is calculated in two ways:

1. If the estimated family labor cost is more than estimated net income, 

80 percent of the difference is provided from a fund that is contributed by the Government (75 percent) and farmers (25 percent); or

2. If the operational cost (excluding family labor cost) exceeds gross 

income, 60 percent of the difference is provided from Government 

funds.

Hazard Insurance: Over $94 million in JFY2007

Japan’s Government pays half the premiums and much of the administrative 

costs for the insurance program for beef cattle, as well as supplying reinsurance. Insurance is provided to cover death of farm stock, disease, and injuries. In 2007, the Government payment for premiums was 11 billion yen 

($94 million) (National Agriculture Insurance Association, 2009). 

BSE-Related Measures: $98 million in JFY2008

The Ministry of Health, Labor, and Welfare (MHLW) paid the costs for BSE 

testing on all slaughtered cattle through JFY2008, amounting to about 2 

billion yen per year (about $19 million). Beginning in JFY2009, the MHLW 

paid for testing only on animals 20 months and older. Prefectural governments have voluntarily paid the costs for testing animals 20 months or 

younger. Because most of the slaughtered animals are older than 20 months, 

the amount subsidized is likely to remain near 2 billion yen annually.

In reaction to BSE outbreaks, feed use of meat and bone meal was banned. 

MAFF spent 8.09 billion yen ($78 million) in JFY2008 to subsidize disposal 

or alternative uses for the byproducts used in the meal. MAFF also spent 90 

million yen (about $900,000) in 2008 on fi nancial support for farms with 

reported cases of BSE in their cattle. 

Beef Price Stabilization

MAFF determines a price band for domestic beef and charges the ALIC 

with taking market actions when prices fall below or rise above this band 

(fi g. 10).24 When prices are below the lower bound, ALIC can purchase beef 

and put it into stocks or ask the industry to stockpile beef with storage costs 

borne by ALIC. This process reduces market supply and helps raise prices 

above the lower bound. When prices are above the upper bound, ALIC can 

release stocks or purchase beef in foreign markets. Such actions raise market 

supply, which puts downward pressure on prices. In several recent years, 

however, market prices have remained well above the upper bound. ALIC 

was evidently unable or unwilling to bring these prices down by releasing 

additional stocks.

24This is authorized by the Law 

Concerning the Stabilization of 

Livestock Prices.
26

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Other Subsidies ($130 Million in JFY2008) 

and Subsidized Loan Programs 

Japan’s livestock farmers (both cattle and hog farmers) can tap substantial 

subsidies for a variety of purposes to contribute to greater effi ciency, to 

satisfy changing environmental regulations, or to retire old debt (table 3). 

Some measures are multi-year initiatives, while others are for 1 year on an 

emergency basis. Some measures are designed to assist dairy and hog farms, 

as well as beef operations.

Figure 10

Stabilization program for beef, B-2 and B-3 steer carcasses in Japan

Yen/kilogram

Sources: USDA, Economic Research Service calculations based on Livestock Division 

of MAFF and Japan Meat Conference joint publication, The Meat Statistics in Japan, 

and ALIC Monthly Statistics.

1995 97 99 2001 03 05 07 09

0

200

400

600

800

1,000

1,200

1,400

Lower price

Upper price

Tokyo price

Table 3

Selected subsidy and loan programs for beef production in Japan

Project JFY2008 budget

Billion 

yen

Million 

U.S. $

Emergency measures to improve beef cattle farm productivity1 1.19 12

Comprehensive measures to rationalize meat distribution 2.42 23

Measures to improve demand structure for domestic meat1, 2 1.3 13

Measures to stabilize demand and supply of livestock 

 byproducts 1.54 15

Individual cattle identifi cation system 0.5 5

Emergency measures to stabilize livestock animal distribution3 0.6 6

Comprehensive measures to use new livestock technologies

 effectively 0.15 1.45

Create mutual-aid fund for animal disease prevention and 

 control 1.88 18

Maintenance fund to compensate management diffi culties 

 caused by livestock disease 0.21 2

Promote effective utilization of livestock animal waste 3 29

Leasing to improve livestock management productivity 

 (loan program) 684 658

Special loan fi nance for large-size animal farms (cattle) 404 387

Note: Exchange rate of 103.4 yen/U.S.$ used.

1Also applies to pork. 

2Also applies to poultry meat. 

3Shared with dairy and hog farms. 

4Maximum amount of lending.

Source: Japan’s Ministry of Agriculture, Forestry and Fisheries, various web pages.
27

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Role in Japan’s Market

Over half of the Japanese beef supply comes from imports. Imports primarily 

come from Australia and the United States, each with specifi c market niches 

and constraints. From 1998 until the fi rst cases of North American BSE were 

discovered in 2003, imports from Australia and the United States accounted 

for 90-95 percent of total imports. Canada and New Zealand were secondary 

suppliers. These four countries accounted for about 99 percent of the beef 

imported into Japan (fi g. 11) (Japan Tariff Association, 2008).

Japanese and Western consumers generally do not compete for the same 

beef products on the international market. The demand is strong in Japan 

for imported cuts of chuck, clod, round, plate, and brisket, which can sell 

at a premium, compared with the U.S. market (fi g. 12). These end meats 

have more intramuscular fat and are considered more fl avorful, which is a 

preferred characteristic in Japan. In contrast, Westerners have a stronger preference for middle cuts, such as loin and rib, used for such items as high-value 

steaks. The Japanese also consume middle cuts for steaks and sliced beef 

dishes, and prices for middle cuts from wagyu beef are very high. Because of 

a higher demand from other consumers (e.g., the United States) for imported 

middle-meat cuts, these cuts are relatively more expensive than imported 

end cuts, which are perceived as a good value by Japanese buyers. Japanese 

markets also have a higher demand for offal and organ meats, such as tongue, 

intestine, liver, and tripe. Consequently, foreign meatpackers rely on Japanese preferences to market otherwise low-valued end cuts and offal, which 

increases the overall cut-out value and profi tability of a carcass (Reed and 

Saghaian, 2004).

Imported beef is used in a variety of ways. Since imported beef is signifi -

cantly cheaper than domestic beef (fi g. 13), it is eaten more frequently than 

domestic beef, which is generally saved for special occasions or holidays. 

Well-marbled domestic beef is reserved for more expensive dishes, such as 

shabu-shabu, at sukiyaki restaurants and also high-end yakiniku restaurants. 

Imported Beef

Figure 11

Beef imports in Japan

1,000 metric tons

Source: USDA, Economic Research Service calculations based on Japan trade data. 

1996 98 2000 02 04 06 08

0

200

400

600

800

Australia

United States

New Zealand

Other
28

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Figure 12

Cuts marketed for the Japanese market

16 167A Knuckle, peeled

10 185B Bottom Sirloin Butt Ball-Tip

11 185D Bottom Sirloin Butt Tri-Tip

9 185A Bottom Sirloin Butt Flap Meat

8 193 Flank Steak

7 121D Inside Skirt

Short Plate (Karubi Plate)

Bone-in Short Rib

Bone-less Short Rib

Rib Finger Meat

Chuck Rib

1 Brisket 2-piece

(120A Brisket Flat Cut / 120B Brisket Point Cut)

2 Pectoral Meat

3 114 Shoulder Clod

17 171B Outside Round (Flat)

14 169A Top (Inside) Round Cap-Off

15 169B Top (Inside) Cap

12 184B Top Sirloin

13 184D Top Sirloin Cap (Culotte)

6 109B Rib Blade Meat (Liffer Meat)

Strip Loin (Steak Ready)

112A Rib Eye Roll Lip-on

189A Tender Loin

5 116B Chuck Tender

4 1014D Top Blade (Flat Iron)

116D Chuck Eye Roll

Chuck Flap Tail

Copyright: U.S. Meat Export Federation. Used with permission.

Figure 13

Retail beef prices in Japan: Imports and domestic

Yen per 100 grams

Source: Agriculture and Livestock Industries Corporation.

Australian sirloin U.S. sirloin Domestic wagyu sirloin Domestic dairy and F-1 sirloin

1996 98 2000 02 04 06 08

0

200

400

600

800

1,000

1,200

1,400
29

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Imported beef is more commonly eaten day-to-day, such as in hamburgers 

or at popular beef bowl restaurant chains. Imported beef is also available at 

retail grocery stores for meals at home. 

Prior to 2003, most imported beef from Australia and New Zealand was 

grass-fed. Oceania primarily produced grass-fed beef due to relatively 

higher grain costs and lower land costs. Australia did export grain-fed beef, 

which was available at prices competitive with prices for U.S. grain-fed beef. 

Australian grain-fed cattle were usually on feed for shorter periods than were 

U.S. grain-fed cattle, which affected the marbling of the beef. Grain-fed beef 

is more heavily marbled than grass-fed beef, and grain-fed animals produce 

a white fat generally considered tastier than the yellow fat produced by grassfed animals. Australia’s increased investment in the beef cattle industry and 

its expanded feedlot capacity has provided more Australian exports of grainfed beef, although Australia’s cattle are still typically not fed for as long as 

North American cattle are. The United States and Canada export mainly 

grain-fed beef from cattle that have been fed over 100 days, primarily due to 

differences in production systems between the United States and Australia. 

Because of the relatively high availability of feedgrains, North American 

production is better suited for fi nishing cattle with high rations of corn, 

soybean meal, or other grains. 

Geographic factors also infl uence the type of meat products that the United 

States and Australia export to Japan. Relatively closer to Asian markets, 

Australia has an advantage in distance over North America in providing 

chilled meat cuts (fi g. 14). Prior to 2003, about 60 percent of Australian 

imported muscle cuts were chilled. Conversely, the United States sent mostly 

frozen product to Japan, with slightly less than 60 percent of American 

muscle cuts being frozen (fi g. 15).

Japanese imports of beef increased steadily until 2000. In 2001 and 2002, the 

discovery of BSE in the Japanese herd and food safety scandals within Japan 

hurt overall demand for beef, which caused imports to decline 33 percent 

from their apex. Beef imports increased again in 2003 before Japan banned 

U.S. and Canadian imports once BSE had been identifi ed in North America. 

Imports in 2004 were nearly 40 percent below 2000 levels. 

1996 98 2000 02 04 06 08

0

50

100

150

200

250

300

350

400

Figure 14

Chilled beef imports to Japan mostly come from Australia

1,000 metric tons

Source: USDA, Economic Research Service calculations based on Japan trade data. 

Other

Canada

United States

Australia
30

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

The ban on U.S. beef in the Japanese market drastically changed the composition of the import market. Prior to the 2003 discovery of BSE, the United 

States was the second largest foreign supplier of beef behind Australia. 

Australian and New Zealand producers attempted to fi ll some of the market 

void created by the loss of U.S. product. Investment in feedlots and North 

American-style feeding regimens in both countries tried to capture the grainfed market segment in Japan. 

Total imports, however, never fully recovered and imported beef prices 

remained above pre-ban levels. Higher feed prices, limited feedlot capacity, 

and drought hindered the expansion of grain-fed production in Australia. 

Australian beef was more expensive because of increased demand and often 

was marketed as full-sets (multiple cuts bundled together in a single order) 

instead of individual cuts. Thus, Japanese buyers were forced to purchase 

cuts that were in lower demand, in addition to the cuts that provided better 

value, which hurt profi tability. Trade data show that the sharpest reduction 

in imports was in the brisket and plate category, where U.S. end meats had 

dominated (fi g. 16). Ultimately, many Japanese consumers reduced their beef 

consumption, substituting other protein sources, particularly pork, for beef.

Figure 15

Frozen beef imports in Japan

1,000 metric tons

Source: USDA, Economic Research Service calculations based on Japan trade data. 

Canada Mexico Other

Australia United States New Zealand

1996 98 2000 02 04 06 08

0

50

100

150

200

250

300

350

400

Figure 16

Frozen beef imports by Japan, by cut

1,000 metric tons

Source: USDA, Economic Research Service calculations based on Japan trade data.

1994 96 98 2000 02 04 06 08

0

50

100

150

200

Other

Brisket and plate

Chuck, clod, and round

Loin
31

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Offal Imports

Japan imports tongues, livers, and other meat that is not considered part of 

a dressed carcass, such as diaphragm, cheek, or face meat. Before 2004, the 

United States provided over 75 percent of Japan’s sizable imports of bovine 

offal (fi g. 17). During 1994-2000, offal import values ranged from $415 

million-$816 million, reaching their peak in 2000. Imports fell precipitously 

in 2004, after U.S. supply was cut off following the fi rst case of BSE in the 

United States in 2003. In 2008, the volume imported (35,000 metric tons) 

was a third of the typical volume imported in 1994-2000 and only 36 percent 

of the volume imported in 2003, the last year in which U.S. offal was freely 

imported. As with imported muscle cuts, imported offal from Australia and 

New Zealand increased after 2004. The volume, however, was not suffi cient 

to fi ll the void created by the loss of U.S. offal products. 

Over the past 5 years, most offal imports have been frozen tongues. From 

1995 to 1998, such cuts as cheek and diaphragm meat were the most common 

offal imports. Diaphragm meat, in particular, was a popular imported cut 

because of lower tariffs and the ability to substitute it for muscle cuts from 

a dressed carcass, which carried a higher tariff. Chilled offal cuts have been 

increasing as a percentage of total offal imports. Although Australia has a 

geographical advantage in supplying chilled offal, the United States was the 

primary supplier prior to 2004, and once again became the top supplier in 

2008. The United States has yet to recapture its spot as the top supplier of 

frozen offal.

Reintroduction of U.S. Beef 

Into the Japanese Market

Since U.S. beef was reintroduced into the Japanese market in 2005, total 

beef imports have increased slightly. U.S. beef has primarily recaptured 

market share at the expense of Australian beef. The Export Verifi cation (EV) 

program calls for all U.S. beef to be from cattle younger than 21 months. 

All products, including offal, must come from plants operating under the 

EV program, which ensures that all U.S. products exported to Japan are in 

compliance with the agreement (Clemens, 2007).25 25The United States International 

Trade Commission, 2008, also provides 

further discussion on import restrictions 

and estimates on loss of trade due to 

BSE-related measures. Details on the 

export verifi cation program for Japan, 

administered by USDA’s Agricultural 

Marketing Service can be found at 

http://www.ams.usda.gov/AMSv1.0/get

fi le?dDocName=STELDEV3103526.

Figure 17

Bovine offal imports by Japan

1,000 metric tons

Source: USDA, Economic Research Service calculations based on Japan trade data.

United States Rest of world

1995 97 99 2001 03 05 07 09

0

25

50

75

100

125

150
32

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Japan’s Beef Import Policies

Japan administers two sets of Government policies that directly affect beef 

imports. 

1. The import tariff, or tax, system; and 

2. Sanitary rules. 

Japan’s basic import tariff on fresh, chilled, and frozen meat of cattle is 38.5 

percent of the value of an import shipment, which applies to all countries, 

even those holding preferential trading pacts with Japan, and has been in 

force since 2000 (fi g. 18). Two World Trade Organization (WTO) safeguard 

mechanisms apply to beef import tariffs in the case of rapid rises in import 

volumes. 

• The Uruguay Round Agreement on Safeguards,26 which Japan has not 

used for beef. 

• A 1995 bilateral agreement between the United States and Japan, which 

became part of the overall Uruguay Round Agreement, and applies 

equally to all WTO members exporting beef to Japan. 

The bilateral agreement allows Japan to raise the tariff on chilled or frozen 

beef if imports from the beginning of Japan’s fi scal year up to the end of the 

relevant quarter exceed 117 percent of the quantity of imports during the 

corresponding period of the preceding year. The increase is then in place 

until the end of the fi scal year, when it expires. If the situation as described 

occurs at the end of the fourth quarter of a JFY, Japan can apply a higher 

tariff during the fi rst quarter of the following JFY. Beef offal is not affected 

by the safeguard, and the most important offal categories face a 12.8-percent 

tariff (see “Appendix 2, Japan’s Beef Tariffs”). 

The safeguard gives Japan the option to not raise the tariff, to raise it to 

a level between 38.5 and 50 percent, or to raise the tariff to 50 percent. 

26The Agreement on Safeguards 

is available at the WTO website: 

http://www.wto.org/english/docs_e/

legal_e/25-safeg.pdf.

Figure 18

Japan's tariffs for chilled and frozen beef

Percent

Notes: A 1988 agreement allowed Japan to raise its tariff after the import quota on beef 

was phased out, and then required it to be reduced in steps to 50 percent. In the Uruguay 

Round, Japan agreed to lower the tariff to 38.5 percent. 

Source: USDA, Economic Research Service.

1990 92 94 96 98 2000 02 04 06 08

0

10

20

30

40

50

60

70

80
33

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Bound tariffs allow a country to raise its tariff (from whatever level is 

currently applied) at any time, without foreign consultation. In the case 

of chilled and frozen beef in Japan, however, the tariff is actually bound 

at 38.5 percent; only a 17-percent or greater surge in import volume (as 

described earlier) allows it to apply the 50-percent rate listed as “bound” in 

international documents.

Raising the tariff to 50 percent when import quantities surge increases the 

landed cost of a shipment of beef by about 8.3 percent (150/138.5 -1 = .083). 

This cost increase can represent a serious impediment to trade. The safeguard mechanism also introduces uncertainty into trade. Contracts made 

when no safeguard is in place can become unprofi table when a safeguard is 

imposed, but it can be too late to stop the fl ow of beef and companies suffer 

losses. Japan fi rst used the beef safeguard in JFY1996, when it imposed the 

50-percent tariff for frozen beef from August 1, 1996, to March 31, 1997 

(Obara, 1996). In 2003, Japan applied this safeguard to fresh and chilled beef 

imports, raising the tariff from 38.5 to 50.0 percent from August 1, 2003, 

through March 31, 2004 (USDA/ERS, 2009; Obara, 2005).27

Tariff increases became more likely after 2004, since the ban on North 

American beef, imposed because of BSE, resulted in drastic reductions in 

trade volumes after December 2003. Any major resumption of beef trade 

in later years would be compared with an artifi cially low import volume in 

2004 and after.28 Recognizing this, Japan’s Government devised a temporary method of choosing a historical import volume with which to compare 

current import levels. The trigger for a safeguard was set at: 1) 117 percent 

of the import volume in the corresponding period 1 year earlier; or 2) 

117 percent of the average import volume in the corresponding periods in 

JFY2002 and 2003 (refl ecting a period when North American beef imports 

were quite large) (Obara, 2006).29 This temporary method, begun in 

JFY2006, has been extended annually, preventing imposition of the safeguard 

through JFY2010. 

Sanitary rules that have affected beef trade with Japan primarily relate to 

foot-and-mouth disease (FMD) and bovine spongiform encephalopathy 

(BSE). Japan refuses to accept uncooked beef from any area not recognized 

as “free from FMD” or in which cattle have been vaccinated against FMD. 

For decades, this practice has limited Japan’s imports of chilled and frozen 

beef to supplies from the United States, Canada, Australia, and New Zealand. 

Minor amounts of chilled and frozen beef have come from a few other 

suppliers (imports from FMD-free zones in Mexico are the most noteworthy). 

Imports from South America, a major beef-exporting region, however, have 

been blocked due to numerous outbreaks of FMD. Japan accepts cooked 

(thermally treated) beef products from countries known to have FMD. 

Japan does not accept beef products, even cooked products, from countries 

that have uncontrolled risk of BSE outbreaks. In December 2003, Japan 

ended all imports from the United States because of BSE. Trade was partially 

resumed 2 years later. 

In 2005, Japan reopened beef imports from the United States only for beef 

from animals 20 months of age or younger at slaughter. Parts designated 

as Specifi ed Risk Materials (SRMs), such as the brain and spinal column, 

27In JFY1996, the tariff on frozen 

beef imports was 46.2 percent. The 

tariff was reduced in increments until it 

reached 38.5 percent on April 1, 2000. 

Thus, the impact of raising the tariff to 

50 percent was greater in 2003 than it 

was in 1996. See http://www.ers.usda.

gov/Briefi ng/Japan/issuesandanalysis.

htm#safeguard for more information.

28The JFY2005 fi rst-quarter beef 

safeguard (April–June) was avoided 

because meat importers voluntarily 

delayed customs clearance of shipments that arrived in June until July. As 

a result, April–June quarterly imports 

of chilled beef and frozen beef did not 

exceed the trigger level.

29As in the pre-2006 safeguard 

regime, trade volumes are assessed 

quarterly, and the cumulative imports 

through each quarter are compared with 

comparable periods in the reference 

year. Thus, imports are compared for 

April-June (after the fi rst quarter), 

April-September (after the second 

quarter), and so forth.
34

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

are excluded from import into Japan. Japan has a similar export verifi cation arrangement with Canada (Canadian Food Inspection Agency, 2008). 

In practice, the age restriction has been a limiting factor for beef trade with 

Japan. Age verifi cation entails added costs, and the conservative rules about 

verifying age from carcass condition likely exclude some animals that are 

actually 20 months of age or younger. The United States has urged Japan to 

apply the guidelines recommended by the World Organisation for Animal 

Health (OIE), which allow trade in beef from carcasses of any age. 

Transportation Costs

Most imported beef is brought to Japan by ship. The two most signifi cant 

ports in Japan are Tokyo and Osaka. American beef is shipped from West 

Coast ports, particularly from Los Angeles, Oakland, and Seattle (USDA, 

Agricultural Marketing Service, 2008). Australian beef is shipped primarily 

from the ports of Brisbane, Sydney, and Melbourne on the eastern and 

southern coasts of Australia (Teal et al., 1987).

Shipping from the West Coast of the United States to Tokyo generally takes 

10-13 days. According to industry sources, once in Japan, chilled U.S. 

product generally has a shelf-life of 62 days, compared with 77 days for 

chilled Australian beef. In 2008, the average container rate was $3,947 for 

frozen primal beef on a 40-foot-equivalent-unit basis. Rates have remained 

lower than before the BSE-related trade bans. The container price of frozen 

primal beef decreased 30 percent from the price in 2003, when the average 

rate was $4,944 (USDA, Agricultural Marketing Service, 2008). 

Shipping costs have increased over the past 3 years. The 2008 fi nancial crisis 

and dramatic drop in worldwide trade created temporary relief from higher 

shipping costs, but container rates have steadily increased since U.S. beef 

was allowed back into the Japanese market. Chilled and frozen beef products 

must be transported in refrigerated containers to maintain the quality of the 

product. Because of the limited number of containers for shipping, countries must bid their beef products against poultry and pork exports to Japan, 

which have greatly increased since 2003. Global competition, especially 

from Brazil, has also increased the demand and price for shipping containers. 

Global exports of meat and poultry products increased 32 percent between 

2003 and 2008 (USDA, Foreign Agricultural Service, 2009). Companies 

also must bid for ships to carry their containers. As the volume of worldwide 

trade increased and the number of ocean vessels remained relatively fi xed, 

container rates also increased, accounting for part of the increase in container 

rates from 2006 to 2008. As trade volumes and demand for containers 

declined in the last quarter of 2008, container rates subsequently fell (fi g. 19).

Exchange Rates

The strength of the Japanese yen relative to the currencies of major trading 

partners affects the price of imported beef.30 The yen has historically been 

weaker against the U.S. dollar since the late 1990s, compared with the 

Australian, New Zealand, and Canadian dollars. The exchange rate between 

the U.S. dollar and the yen, however, is more stable among the major beef 

exporters (fi g. 20).

30Miljkovic et al. found that the U.S. 

export unit value of beef destined for 

Japan dropped by 0.3 percent for a 

reduction of 10 percent in the value of 

the yen versus the U.S. dollar, based on 

data for 1989-96.
35

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

After reaching a peak in 2000, the yen steadily depreciated against the Canadian, Australian, and New Zealand dollars until the fi nancial crisis in 2008 

caused rapid appreciation (University of British Columbia). The exchange 

rate for the U.S. dollar traded within a much tighter range until the fi nancial 

crisis in the second half of 2008, when the yen appreciated against it as well. 

Exchange rates explain some of the fl uctuations in imported beef prices, 

particularly for Australian beef (ALIC).

At the beginning of 2004, when trade bans against U.S. beef had just begun, 

the yen had become weaker against the Australian dollar, while staying relatively steady against the U.S. dollar (University of British Columbia). This 

would have made U.S. beef relatively less expensive than Australian beef, 

all things being equal. BSE-based bans, however, prevented U.S. beef from 

benefi ting from the expected price advantage. Conversely, while trade bans 

resulted in limited supplies and increased prices in Japan’s beef market, the 

Figure 19

Transportation costs from the United States to Japan

Days in transit

Note: Container data not available during period of trade restrictions.

Source: USDA, Agricultural Marketing Service.

Jan.-2001 Jan-.02 Jan.-03 Jan-.04 Jan-.05 Jan-.06 Jan-.07 Jan-.08 Jan-.09

0

5

10

15

20

25

0

2

4

6

8

10

12

Mean transit time Weighted mean container rate

1,000 dollars per container

Figure 20

Strength of U.S. dollar has made U.S. beef relatively more expensive in Japan

Dollars/yen

Source: University of British Columbia, PACIFIC Exchange Rate Service. Jan.-95 Jan.-96 Jan.-97 Jan.-98 Jan.-99 Jan.-2000 Jan.-01 Jan.-02

Jan.-03Jan.-04Jan.-05Jan.-06Jan.-07Jan.-08Jan.-09

0

0.005

0.010

0.015

0.020

0.025

United States

Canada

Australia

New Zealand
36

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

appreciating Australian dollar further compounded the price increase by 

making available Australian beef more expensive in terms of yen.

When trade of U.S. beef resumed in 2006 under the EV Program, the yen 

continued to appreciate against the U.S. dollar and depreciate against the 

Australian dollar. This combination meant that U.S. beef products were 

relatively cheaper in terms of yen. This pattern changed, however, after the 

summer of 2008’s fi nancial crisis. As a result, the yen appreciated rapidly 

against nearly all major currencies, except for the U.S. dollar, against which 

it appreciated much more modestly in percentage terms. The pattern of 

convergence between the U.S. and Australian dollar that had taken place over 

the previous 6 years was temporarily reversed, making Australian products 

relatively cheaper than U.S. products (University of British Columbia, 2009). 

In 2009, the Australian and U.S. dollar moved closer in value, with U.S. beef 

expected to be more competitive. After initial concerns due to the fi nancial 

crisis were moderated, the Japanese yen was stronger overall, facilitating 

more Japanese imports of all goods, including beef.
37

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Domestic

Japan’s highly segmented beef market is differentiated by price. Even within 

the same yield and quality grade, carcasses of different breed and sex receive 

signifi cantly different prices.31 A top grade wagyu steer has a wholesale price 

almost twice as high as an F-1 cross-bred steer and nearly three times as high 

as for a dairy steer. Meat from wagyu cows and heifers carries a premium 

price over steers in each grade. For dairy and cross-bred breeds, however, 

meat from heifers is lower priced than that from steers. Breed and place of 

origin are given on retail labels, while carcass grades are not. 

Domestic beef is considerably more costly than imported beef because of the 

high feed costs and longer feeding periods, but also because consumers are 

willing to pay prices that cover these costs. Prices for domestic beef dropped 

in 2001 after discovery of BSE in the Japanese herd and the realization that 

cattle infected with the disease had entered the food supply. Domestic beef 

prices gradually recovered in 2002 and 2003, before the discovery of BSE in 

the U.S. herd in late 2003.

The loss of U.S. beef in the Japanese market created a void in grain-fed beef, 

particularly affecting lower grades of Japanese beef, which are closer substitutes for U.S. beef. Domestic wholesale beef prices increased 11 percent on 

average between 2003 and 2007. Grade B beef prices increased more than 

high-quality wagyu beef. Wagyu beef prices increased during this period but 

only 5 percent, compared with the 12-percent increase in dairy and crossbred beef prices. Beef from dairy cows increased 24 percent for C-2 and 34 

percent for C-1 cows (ALIC). 

Retail beef prices rose even more than wholesale prices did. As with wholesale prices, retail prices for nonwagyu beef increased more than retail 

prices for wagyu beef. Prices for brisket and chuck seemed particularly 

sensitive; the normal selling price of nonwagyu brisket increased 48 percent 

between 2003 and 2007, compared with only 13 percent for sirloin (ALIC). 

In general, the average discount price rose more than the normal selling 

price, providing fewer savings opportunities for Japanese consumers. These 

increases are magnifi ed given that overall consumer price levels have 

declined since 1998 (Euromonitor).

Imports

Prices for imported U.S. beef have been considerably higher in Japan than 

domestic U.S. beef prices, even before the ban on U.S. beef. From 1996 to 

2003, a U.S. sirloin cut cost nearly twice as much in Japan as a choice-grade 

sirloin steak in the United States, when the price was converted from yen into 

dollars per pound. Similarly, a U.S. cut of chuck was about 50 percent higher 

at retail for Japanese customers than for U.S. customers (ALIC and University of British Columbia). The import tariff and transport costs account for 

some of the increased margins. Consumer preferences, as well as the unique 

marketing structure in Japan, also raise prices for Japanese consumers.

31Mori and Lin (1994), chapter 5 and 

appendix A, provide additional discussion that remains pertinent to current 

conditions. 

Prices
38

Japan’s Beef Market / LDP-M-194-01 

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Australian beef was generally less expensive in Japan than U.S. beef. 

Australian brisket was particularly less expensive at retail, priced about 60 

percent cheaper per kilogram than U.S. brisket, on average, from 1996 to 

2003 (ALIC). U.S. cuts of chuck roll and sirloin had smaller premiums over 

Australian products, averaging 15 and 11 percent, respectively (ALIC). 

Compared with domestic beef prices, however, both Australian and U.S. 

imported beef were much less expensive. Australian beef was about 65 

percent cheaper than wagyu beef and 45-50 percent cheaper than beef from 

dairy and cross-bred animals. U.S. end cuts, such as brisket and rounds, 

were priced 60-65 percent less than wagyu beef and 35-40 percent less than 

dairy or cross-bred beef from 1996 until 2003. Higher priced sirloin from the 

United States was about 45-55 percent less expensive than wagyu and about 

10 percent cheaper than dairy and cross-bred beef (ALIC). 

The price of Australian cuts increased after U.S. beef was banned from the 

Japanese market. Australian chuck roll was nearly 29 percent higher from 

2004 to 2007 compared with the price from 4 years prior. Brisket prices also 

increased by nearly 47 percent as the supply of end meats declined. Prices for 

Australian end meats have remained high as the Australian industry worked 

to expand their grain-feeding feedlot system (ALIC). However, Australian 

imports were never able to completely fi ll the void left by the United States. 

Limited feedlot capacity and limited Australian domestic demand, as well as 

drought, made supplying the Japanese market with suffi cient individual cuts 

diffi cult for Australian producers, unlike the larger American industry. As a 

result, some Australian beef exported to Japan was marketed as full sets. Full 

sets included high-demand cuts, such as end meats, as well as cuts that were 

of lower demand in Japan, primarily middle meats. Including these cuts in 

full sets affected marketing strategies and the profi tability of wholesalers.

Beef prices have remained higher than they were before 2004 as U.S. beef 

regained access to the market. The current EV program requirements 

increase the cost and availability of imported beef from the United States. 

Since U.S. beef has returned to the market, U.S. beef prices have been much 

higher than Japanese customers are accustomed to, partially dampening 

demand. Overall, total beef supplies have not recovered to their 2003 levels, 

and beef prices have remained relatively high.
39

Japan’s Beef Market / LDP-M-194-01 

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Japan’s market for imported beef depends on demand and supply within Japan. 

Demand is below historic levels. However, evidence indicates that the Japanese 

consume more beef when their incomes rise and when beef prices fall. On 

the supply side, farm returns have been weak and have prevented substantial 

herd expansion, even in the absence of North American beef from the market. 

If future conditions are favorable for higher beef demand, much of the extra 

consumption will be supplied by imports.

There is no guarantee that Japanese incomes will grow or that beef prices will 

fall in the coming years. If we imagine a scenario where incomes, prices, and 

other factors do not change, and we disregard changes in age cohorts, consumption per person will not change. Because Japan’s population is declining, total 

consumption will drop by almost 50,000 metric tons per year by 2020 (fi g. 21). 

Rising beef prices, or a continuation of the economic slump seen in 2008 and 

2009, could exacerbate this underlying decline dictated by Japan’s demographic 

conditions. Current projections, however, point to a return to economic growth, 

and easier access to U.S. beef could lead to lower average prices in Japan (see 

“Appendix 3: Thinking about the Future of Japan’s Beef Market”). 

For our income projections for Japan, we used those published by the USDA 

Agricultural Projections to 2019 (USDA/ERS, 2010), and assumed no changes 

in price or other factors that would affect consumption. We found that beef 

consumption per person would rise because positive economic growth is 

Conclusions and Projections

Figure 21

Consumption scenarios in Japan

1,000 metric tons

Source: USDA, Economic Research Service.

Case 1: Population constant, prices fixed, 

per capita consumption fixed

Case 2: Population follows U.S. Census 

projections, prices fixed, per capita consumption 

fixed

Case 4a: Income elasticity is .2, prices fixed

Case 4b: Income elasticity is .76, prices fixed

Case 6a: Price elasticity is -.2, income fixed

Case 6b: Price elasticity is -1.32, income fixed

1999 01 03 05 07 09 11 13 15 17 19

1,000

1,100

1,200

1,300

1,400

1,500

1,600
40

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

projected for 2010 and beyond. The degree to which beef consumption 

responds to income change is uncertain. An arbitrary choice of a low income 

elasticity of 0.2 would raise consumption per person, but not by enough to 

overcome population decline; total consumption would be 13,000 metric tons 

lower in 2020 than in 2008. Using a higher income elasticity (0.76, estimated 

for 1981-2007), consumption would rise 86,000 metric tons above current 

levels by 2020. 

The possible effects of changes in beef prices, assuming that all other variables are constant, except for the population decline, can also be examined 

by making simple assumptions. If we arbitrarily assume that the average 

beef price declines by 2 percent per year to demonstrate how the elasticity 

would affect consumption (i.e., more than a 20-percent decline over a 10-year 

period), and that the own-price elasticity is a low estimate of -0.2 (i.e., for 

each 1-percent decline in price, consumption per person rises by 0.2 percent), 

then consumption per person would rise by over 4 percent over a decade. In 

this case, total consumption would remain near 2008 levels; a population 

decline would balance price-driven growth in consumption per person. If 

we assume instead that the own-price elasticity is -1.32 (estimated for 1981-

2007), consumption per person rises much more, and total consumption 

would be 320,000 metric tons higher in 2020 than in 2008.

Consumption change in these simple scenarios ranges from a 50,000-metricton drop in annual consumption to a 320,000-metric ton rise in 2020, compared 

with 2008. Much, or even all, of the consumption change would be refl ected 

in import levels. If domestic production were static at 2008 levels, then all 

the consumption change in 2020 would be refl ected in imports (assuming no 

changes in stocks) that are as much as 50,000 metric tons below 2008 levels 

or as much as 320,000 metric tons above 2008 levels. If, however, we assume 

that the proportion of supply coming from domestic production and imports 

remains the same, then the change is shared between production and trade. 

Imports could fall by 30,000 metric tons in 2020 or rise by 180,000 metric tons.

Other possible scenarios include a decline in the proportion of supply contributed by domestic production. It is unlikely, however, that only one variable 

would change. A combination of modestly higher income and modestly lower 

prices could push domestic consumption above the record high of 1,563,000 

metric tons in 2000. Imports could also rise above previous record levels, if 

domestic production is constant or declines.

If the price of imported beef falls in Japan, import quantities could grow 

because of the additional demand for beef in response to lower prices and 

because of potential substitutions away from domestic beef and other meats. 

Global markets are important in determining imported beef prices, but some 

price-related factors are specifi c to Japan’s market: 

• Imported beef prices could fall if the import tariff on beef were reduced; 

or

• A change in Japan’s policies allows beef from more carcasses to be 

imported from the United States. The current limitation on beef from 

animals verifi ed as less than 21 months old is restrictive and could be the 

cause of higher prices.
41

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

While growth in Japan’s domestic beef production is not likely and decline 

is possible, Japan’s domestic herds supply a large and distinct portion of beef 

demand and may continue to do so. Domestic beef production relies heavily 

on U.S. feedstuffs. Although further intensifi cation of feed use per animal—

a trend seen in recent years—is likely to be discouraged by consumers’ aversion to foods with a higher fat content (as well as costly for producers to carry 

out), beef cattle feeding in Japan will remain an important market for U.S. 

grains, fodder, and oilseed meals.

Japan’s beef trade is tied to specifi c cuts. Restoring former levels will be 

important to retailers and restaurants that relied on those cuts and want to 

sell them again. The conditions prevailing in 2003 and before, where U.S. 

exporters were able to capture over 50 percent of a larger Japanese import 

market, may not be fully realized in the future. The potential Japanese market 

for U.S. beef, however, could be signifi cantly larger than in 2008.
42

Japan’s Beef Market / LDP-M-194-01 

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Agriculture and Livestock Industries Corporation (ALIC). Monthly Statistics, 

various issues.

Canadian Food Inspection Agency. “Additional Requirements for Establishments Eligible to Export Beef Products to Japan,” Meat and Poultry 

Manual of Procedures, annex F to chapter 11, 2008, http://www.inspection.gc.ca/english/fssa/meavia/man/ch11/coupay/jap/annexfe.shtml.

Clemens, Roxanne. Meat Traceability and Consumer Assurance in Japan, 

MATRIC Briefi ng Paper 03-MBP 5, September 2003, http://www.card.

iastate.edu/publications/DBS/PDFFiles/03mbp5.pdf.

Clemens, Roxanne. After the Ban: The Japanese Market for U.S. Beef, 

MATRIC Briefi ng Paper 07-MBP 12, April 2007, http://www.card.iastate.

edu/publications/DBS/PDFFiles/07mbp12.pdf.

Dyck, John H. Demand for Meats in Japan; A Review and an Update of 

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Agriculture, Economic Research Service, August 1988. 

Euromonitor International. 2009, http://www.euromonitor.com/.

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Japan Meat Grading Association. Beef Carcass Grading Standard, January 

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43

Japan’s Beef Market / LDP-M-194-01 

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Miljkovic, Dragan, Gary W. Brester, and John M. Marsh. “Exchange rate 

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Appendix 1

Econometric Estimation 

of Income and Substitution Elasticities

Estimates for the demand elasticities of meats in Japan were calculated using 

an Almost Ideal Demand System (AIDS), primarily following the method 

provided by Thompson (2004). What follows is an explanation of the data 

and methodology used to calculate the estimates reported in the text.

Data

Price and quantity data were used to calculate meat expenditures and a 

budget share for each good for the AIDS model. The disappearance data 

series of the Food Balance Sheet (FBS) provided quantities per person for 

pork, beef, and poultry from 1981 to 2007. Prices were obtained from the 

Japan Retail Price Survey series, also from 1981 to 2007. For both beef and 

pork, shoulder prices were used in the AIDS model. For chicken meat, the 

broiler leg price was used.

Macroeconomic variables were used in an equation relating meat expenditures to total expenditures. The Japanese Gross Domestic Product (GDP) 

per person, Consumer Price Index (CPI), and a price index for fresh fi sh and 

shellfi sh were taken from the website of the Ministry of Internal Affairs and 

Communications, Statistics Bureau. 

Model

The model was primarily derived from Thompson (2004), who estimated a 

nonlinear AIDS model with an added equation that both related meat expenditures to total income and provided an instrument for meat expenditures, 

which were calculated from prices and quantities, and thus endogenous. 

Three-stage least squares (IT3SLS in SAS) estimation was used to iterate 

the added equation and the AIDS budget share equations until parameters 

converged. Homogeneity in prices and income was imposed on the entire 

model, and symmetry and adding-up constraints were imposed on the AIDS 

budget-share equations. 

These equations were estimated (variables are in capitals and parameters in 

lower-case):

( )

( ( ) ( )

() () ( ) ( ) )

Ex

B a aa B ab C a

C b ab B bb C b

a B b c c P aa B ab B C ac B P

ab C B bb C bc C P ac P B bc

o y a c fA

PC P

t z

c

l

c

W P P (Ex P)

W P P Ex P

P P P P P P *P P *P

P *P P P

d d GD

*P P *P P

P d P d CPI d P d Ex

P

E

*

d S

P

B

,

−

=α +γ +γ + β −

=α +γ +γ + β −

=α +α +α +α + γ +γ +γ +

γ +γ +γ +γ

=+ +

+γ +

+ ++ +

γ ⋅

2

0

2

1

2

1

2

where Ex is endogenous, and the instruments used to address simultaneity are 

CPI, GDP, Ext–1, PB, PC, and PA.
47

Japan’s Beef Market / LDP-M-194-01 

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Results for the beef and chicken equations were used to calculate the pork 

parameters and the demand elasticities. Variable defi nitions and parameter 

estimates are presented in appendix table 1, and the data used in the regression are found in appendix table 2. 

The meat expenditure term is regressed against GDP, CPI, the price index 

of fi sh, meat expenditure lagged 1 year, the calculated meat price index (as 

specifi ed by the AIDS model), and a dummy variable to capture the effects 

of BSE in Japan. The dummy variable in the expenditure equation is 1 for all 

years after 2001, when the fi rst case of BSE was found in Japan. This event, 

as well as the discovery of BSE in North America in 2003, had a noticeable 

impact on beef consumption in Japan. The effect is captured in the expenditure equation in this model. The meat expenditure variable is endogenous 

(Thompson, LaFrance). An instrument for meat expenditure is calculated and 

then used in the budget share equations, which produce the coeffi cients used 

in the elasticity calculations. The parameter estimates are provided below, 

while the elasticity calculations are included in the main text of the report.

Appendix table 1

Variable Label

Ex Log form of total meat expenditure

GDP Log form of per capita Gross Domestic Product (GDP)

CPI Log form of Consumer Price Index (CPI)

PA Log form of fi sh price index

Ex(t-1) Log form of total meat expenditure lagged 1 year

BSE BSE dummy variable

PB Log form for price of beef

PC Log form for price of chicken

PP Log form for price of pork

WB Budget share for beef

WC Budget share for chicken

P Log form of nonlinear price index
48

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Appendix table 2: Model results

Nonlinear IT3SLS summary of residual errors 

Equation DF model DF error SSE MSE Root MSE R-Square Adjusted RSquare

WB 2.667 24.33 0.00214 0.000088 0.00938 0.9750 0.9733

WC 2.667 24.33 0.000366 0.000015 0.00388 0.9682 0.9661

Ex 7.667 19.33 0.0322 0.00166 0.0408 0.9726 0.9632

Nonlinear IT3SLS parameter estimates

Parameter Estimate Approximate standard error t value Approximate

Pr > |t| Label

dy 0.432779 0.2677 1.62 0.1224 

da 0.303702 0.2991 1.02 0.3227 

dc -0.50671 0.9271 -0.55 0.5910 

df -0.22977 0.7378 -0.31 0.7589 

aa -0.16773 0.0200 -8.39 <.0001 

ab 0.032043 0.0176 1.82 0.0819 

ac 0.135691 0.0112 12.11 <.0001 

bb -0.0055 0.0214 -0.26 0.7992 

bc -0.02654 0.0128 -2.08 0.0488 

cc -0.10915 0.0122 -8.98 <.0001

a 0.30947 0.0682 4.54 0.0001

b 0.399472 0.0859 4.65 0.0001

_c 0.291058 0.0888 3.28 0.0033

d0 -1.14257 2.0452 -0.56 0.5829

dl 0.882031 0.0969 9.10 <.0001

dz -0.07957 0.0482 -1.65 0.1150 

a 0.417973 0.0236 17.67 <.0001 

b -0.1389 0.0102 -13.59 <.0001 

Restrict 0 -3.43648 1.3737 -2.50 0.0081 dy + da + dc + df = 0

Restrict 1 -79.8212 47.6526 -1.68 0.0943 g1aa+g1ab+g1ac = 0

Restrict 2 -96.8746 60.3651 -1.60 0.1100 g1ab+g1bb+g1bc = 0

Restrict 3 -71.2183 46.5937 -1.53 0.1291 g1ac+g1bc+g1cc = 0

Restrict 4 -5.03926 2.5778 -1.95 0.0479 aa + ab + ac = 1
49

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Appendix table 3: Data set

QB QP QC PB PP PC CPI GDP PA

1981 3.7 9.6 7.9 5750 2010 1200 79.52987 2648.689 87.9

1982 3.9 9.5 8.3 5710 2060 1180 81.58668 2699.875 93.4

1983 4.2 9.6 8.6 5800 2150 1190 83.15377 2727.916 93.6

1984 4.3 9.7 8.9 5940 2110 1170 85.01469 2816.721 93.6

1985 3.9 9.3 8.4 6230 2100 1150 86.58178 2926.749 95.9

1986 4.2 9.6 9 6360 2040 1120 86.58178 2994.529 97

1987 4.5 10.1 9.3 6380 1990 1060 87.0715 3129.233 95.5

1988 4.9 10.3 9.6 6430 1990 1050 87.7571 3323.787 94.7

1989 5 10.4 9.6 6620 2020 1050 90.20568 3453.953 96.3

1990 5.5 10.3 9.4 6800 2090 1080 93.04603 3647.63 99.8

1991 5.6 10.4 9.6 6900 2150 1090 95.59256 3711.821 103.8

1992 6 10.4 9.8 7050 2190 1120 97.15965 3737.754 105.5

1993 6.7 10.3 9.5 7200 2200 1120 98.43291 3689.357 104.9

1994 7.2 10.4 9.8 7110 2170 1090 98.72674 3759.135 103.1

1995 7.5 10.3 10.1 6890 2190 1080 98.53085 3844.465 101.8

1996 6.9 10.5 10.3 6730 2220 1080 98.92262 3948.099 103.7

1997 7.2 10.2 10.1 7080 2340 1130 100.9794 3938.562 106.1

1998 7.3 10.4 9.9 7280 2370 1150 101.1753 3869.932 107.5

1999 7.3 10.6 10.2 7310 2340 1160 100.6856 3892.479 107.2

2000 7.6 10.6 10.2 7340 2300 1160 100 3983.596 104.9

2001 6.3 10.8 10.4 7690 2300 1170 99.02057 3940.436 104.3

2002 6.4 11.4 10.4 7970 2350 1250 98.43291 3976.587 103.9

2003 6.2 11.6 10.1 8390 2350 1250 98.23702 4054.547 101.9

2004 5.6 12 9.8 8340 2400 1230 98.13908 4132.077 100.6

2005 5.6 12.1 10.5 8440 2390 1230 97.94319 4226.604 100

2006 5.5 11.5 10.6 8550 2390 1230 98.13908 4322.4 102.2

2007 5.665 11.546 10.6636 8840 2420 1250 98.53085 4404.838 103.1
50

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

HS tariff 

lines Product 

Tariff

Note Trade value, 

2008

WTO

Leastdeveloped 

countries

Mexico Chile

ad 

valorem specifi c ad valorem

Percent Yen/

kilogram Percent Million U.S. dollars

0201 Meat of bovine animals, fresh 

or chilled 38.5 0 30.81 38.5 1,249.687

0202 Meat of bovine animals, frozen 38.5 0 30.82 34.6 895.801

Offal of bovine animals, fresh or chilled: 

0206.10.011 Tongues 12.8 0 7.6 12.8 76.087

0206.10.020 Cheek and head meat 50 0 50 50 0.292

0206.10.019 Internal organs 12.8 0 7.6 12.8 75.747

0206.10.090 Other fresh or chilled edible offal 21.3 0 21.3 21.3 0

Offal of bovine animals, frozen:

0206.21.000 Tongues 12.8 0 7.6 11.5 156.296

0206.22.000 Livers 12.8 0 11.5 11.5 2.03

0206.29.020 Cheek and head meat 50 0 30 50 1.886

0206.29.010 Other internal organs 12.8 0 7.6 11.5 43.722

0206.29.090 Other frozen edible offal 21.3 0 19.1 19.1 4.033

0210.20.000

Meat and edible meat offal of bovine animals, salted, in brine, dried 

or smoked; edible fl ours and meals 

of bovine meat or meat offal

161.5 0 3 3 0

1601.00 Sausages 10 0 10 10 NA

Other prepared or preserved bovine meat, meat offal, or blood:

1602.10 Homogenized preparations 21.3 0 21.3 21.3 19.9 percent 

for Thailand 0

1602.20.010 Livers 21.3 0 21.3 21.3 17.8 percent 

for Thailand

NA

1602.50.100

Guts, bladders, and stomachs, whole 

and pieces thereof, simply boiled in 

water

0 000 6.314

1602.50.291, 

810, 910

Beef or beef offal, simply boiled in 

water

50 0 50 50 2.836

1602.50.410

Dried after being boiled in water, 

in airtight containers, not chilled or 

frozen

38.3 0 38.3 38.3 0

1602.50.420 Dried after being boiled in water, in 

airtight containers, chilled or frozen 50 0 50 50 0

1602.50.510 Beef jerky, in airtight containers, not 

chilled or frozen 38.3 0 9 38.3 0

1602.50.520 Beef jerky, in airtight containers, 

chilled or frozen 50 0 9 50 0

1602.50.590 Beef jerky, other 10 0 9 10 16.051

—continued

Appendix 2

Japan’s Beef Tariffs, 2009
51

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

HS tariff 

lines Product 

Tariff

Note Trade value, 

2008

WTO

Leastdeveloped 

countries

Mexico Chile

ad 

valorem specifi c ad valorem

Percent Yen/

kilogram Percent Million U.S. dollars

1602.50.890

In airtight containers, otherwise 

containing vegetables, not chilled 

or frozen, not boiled in water

38.3 0 38.3 38.3 0.017

1602.50, 210, 

292, 299, 310, 

320, 331, 339, 

391, 399, 490, 

600, 700

Other preparations 21.3 0 21.34 21.3

14.9 percent 

for Thailand, 

1602.50.600

32.258

1602.90.210

Other preparations, including preparations of blood of any animal, 

containing bovine meat or offal

21.3 0 21.3 21.3 NA

1603.00.010 Extracts and juices of bovine meat 12 0 6 6

6 percent for 

developing 

countries

NA

Note: Least-developed countries include 10 countries in Asia, 33 countries in Sub-Saharan Africa and Haiti.

NA = A value for beef imports cannot be separated because categories report the aggregate of beef- and pork-based imports.

1Tariff is 30.8 percent for all boneless cuts; 34.6 percent for bone-in cuts; and 38.5 percent for carcasses.

2Tariff is 30.8 percent for bone-in cuts and for boneless loin, chuck, clod, round, brisket, and plate; 34.6 percent for other boneless cuts; and 

38.5 percent for carcasses.

3Imports are assessed a tariff of 161.5 yen/kg.

4Tariff is 19.1 percent for 1602.50.600 and 1602.50.700.

Sources: Japan Tariff Association, Customs Tariff Schedules of Japan, 2008. World Trade Atlas trade values.
52

Japan’s Beef Market / LDP-M-194-01 

Economic Research Service/USDA

Reference 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1,000 metric tons

Historical consumption (1,000 mt) 1,502 1,563 1,399 1,304 1,348 1,169 1,188 1,159 1182 1174 1189 1195

Historical imports (1,000 mt) 986 1,045 982 697 833 634 686 678 686 659 672 678

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1,000 metric tons

I. Assessing: Population change, with income and prices fi xed

Consumption, if relative prices, real income, and other effects are constant, but population size changes:

Case 1: No change in population 1,189 1,189 1,189 1,189 1,189 1,189 1,189 1,189 1,189 1,189

Case 2: Population change follows 

U.S. Census projections 1,183 1,180 1,176 1172 1,167 1,162 1,156 1,151 1,144 1,138

Imports, assuming domestic production fi xed:

Case 1: No change in population 664 664 664 664 664 664 664 664 664 664

Case 2: Population change follows 

U.S. Census projections 658 655 651 647 642 637 631 626 619 613

II. Assessing: Income change, with prices fi xed, and population declining

Consumption, if real income changes, while prices remain fi xed:

Case 3: No changes in income 1,183 1,180 1,176 1,172 1,167 1,162 1,156 1,151 1,144 1,138

Case 4a: USDA baseline projection incomes, elasticity is .2 1,171 1,172 1,173 1,173 1,173 1,173 1,172 1,171 1,169 1,167

Case 4b: Income elasticity is .76 1,183 1,197 1,211 1,225 1,239 1,252 1,265 1,278 1,290 1,303

Imports, assuming domestic production fi xed:

Case 3: No changes in income 658 655 651 647 642 637 631 626 619 613

Case 4a: USDA baseline projection incomes, elasticity is .2 646 647 648 648 648 648 647 646 644 642

Case 4b: USDA baseline projection incomes, elasticity is .76 658 672 686 700 714 727 740 753 765 778

III. Assessing: Price change, with income fi xed and population declining

Consumption, if the real price of beef changes, but income does not change:

Case 5: No beef price change 1,183 1,180 1,176 1,172 1,167 1,162 1,156 1,151 1,144 1,138

Case 6a: Beef price drops by 2 

percent per year, elasticity is -.2 1,176 1,177 1,178 1,178 1,178 1,178 1,177 1,176 1,174 1,172

Case 6b: Beef price drops by 2 

percent per year, elasticity is -1.32 1,229 1,258 1,287 1,316 1,345 1,374 1,404 1,434 1,464 1,494

Imports, assuming domestic production fi xed:

Case 5: No beef price change 658 655 651 647 642 637 631 626 619 613

Case 6a: Beef price drops by 2 

percent per year, elasticity is -.2 651 652 653 653 653 653 652 651 649 647

Case 6b: Beef price drops by 2 

percent per year, elasticity is -1.32 704 733 762 791 820 849 879 909 939 969

Source: USDA, Economic Research Service calculations.

Appendix 3

Thinking About the Future of Japan’s Beef Market