Kenji Matsumoto

Executive Director of JONA

The Book titled as “The Japanese Market for Certified Agricultural Products from Central America” will be published by FAO in late September or in October this year. The study of this book was completed by IFOAM Japan with the collaboration of RUTA in Costa Rica according to the contract between FAO/WB and IFOAM Japan.
The main objectives of this study is to support the efforts of small-scale producers in Central America to export their products produced in socially and/or environmentally responsible manners to Japan. However, the study of the Japanese market is carried out on a wide range of issues, which will be briefly described in this paper.

1. Background of development of organic foods in Japan.

The systematic approach to agricultural products that are grown in socially and environmentally responsible manners was initiated by the Japan Organic Agricultural Association (JOAA) in the early 1970’s. But as it has been the long time cultural tradition for Japanese people to respect and live with the nature, there were lots of people who rejects and/or minimize chemical inputs in the agricultural farming and in processing foods, which are called natural foods. Mainly, those people were and still are members of Seishoku (which is known as Macrobiotique in E.U., and Canada) and some religious organizations. Although the Guideline was established in 1992 by MAFF to define organic agriculture and the specially grown agricultural products, the usage of “organic”, “natural” and” specially grown products” was confusing until 1999, when the JAS Law and the related regulations specified the definition of organic agricultural products.
During those thirty years, distribution of those products has been developed by Teikei of JOAA, natural food wholesalers and retail stores, consumer co-operatives and home-delivery service companies which may be named as the membership based distribution channel. Although quite recently super markets start to carry organic and natural foods, the membership based distribution channel still plays an important role in educating and promoting organic products and/or products produced in socially and/or environmentally responsible manners.

2. Certification System (Chapter 3)

a) JAS organic system, Guidelines for specially produced products and other certifications. The Government revised JAS Law in 1999, and accordingly, in 2000, the Ministry of Agriculture Forestry and Fishery (MAFF) implemented the regulations for organic agricultural products and agricultural processed food and its certification system, which follows CODEX Guidelines for organic foods.
b) The guideline for the specially grown agricultural products remained unchanged in 2000. The　production and sales of this category continued and even increased by attracting consumers’ interest by promoting products with decreased pesticide and fertilizer. However, this guideline was revised and put into effect to simplify labeling for consumers.
c)Certified operators in Japan and Foreign countries and registered certification organizations and how to export to Japan.
d) How to export organic products to Japan and related regulations.
f) Fair trade, Rainforest Alliance and others.

3. Japanese market analysis (Chapter 3 and 4)

1) Production records by volume in the fiscal year of 2001 and 2002.
a) The domestic organic production in the fiscal year 2002 was 46,623 tons and the imported organic products amounted to 117.589 tons, which exceeds the domestic production. It has to be considered that most vegetables and some fruits certified in foreign countries were not imported as fresh products to Japan, but were imported as frozen, canned or processed vegetable and were processed to fruit juice there.
b) The volume of foreign Organic JAS graded products in 2001 may be inflated, making the figures in 2002 significantly reduced in comparison. Until the 31st march 2002 (i.e. the end of the first fiscal year of Organic JAS grading), a grace period was set up for foreign organic products. Therefore, shortly before this grace period was over, such products rushed into the Japanese market in large quantities.
c) The domestic production of processed food was 96,234 exceeding certified processed food in foreign countries. It has to be considered that the recorded amount of domestic soy sauce production, 19,975 tons, in 2001 was a mistake. Disregarding the soy sauce figures from growth rate calculation, the total growth rate of domestic processed food would be 29%.
d) The production of organic agricultural products occupied only 0.1% of the total domestic production in 2001, and 0.15% in 2002, an extremely small quantity. Unless some drastic shifts in the organic policies are introduced and/or the understanding of the values of organic production is profoundly improved among Japanese general consumers, Japan’s organic production will grow steadily but only slowly, especially in comparison to the increase in Europe and the United States during the 1980’s and 1990’s. The current limitation of the domestic organic production implies that the organic market will probably mainly depend on imported organic foods.
e) As shown in the table above, the organic fresh products certified in foreign countries decreased by 24% and of organic processed foods by 59%. Although these numbers alone may lead to a conclusion that Japanese consumers prefer domestic organic products, the actual total amount of graded organic crops in foreign countries still largely exceeds that of domestic ones. Moreover, the majority of ingredients for domestically processed organic foods come from imported organic agricultural products.

2) Total Size of the Japanese Organic Market 2002 (Retail Value in Japanese Yen)
The MAFF data on organic grading, which was presented in the previous section, is the only statistics available for this topic. The market size is estimated on the assumption that all foods were eventually purchased by consumers in Japan, and thus the retail price was applied to the quantity of each of the products reported in the data. While retail prices used in calculation are based on our investigation of supermarket prices, they are crosschecked with those in a household budget survey issued by the Prime Minister’s Office. Due to the insufficiency of resource data, it must be emphasized that the estimation is not as statistically reliable as it could be otherwise.
(a) Organic agricultural products:
22.5 billion yen (Domestic) + 5.9 billion yen (Imported) = Total of 28.4 billion yen
(b) Organic processed foods:
71.4 billion yen (Domestic) + 14.2 billion yen (Imported) = Total of 85.6 billion yen
Total size of the organic market in Japan, approximately (a) + (b), is therefore estimated to be 110 to 120 billion Japanese yen

4. Key constraints to promote organic

1) The most important reason for the current stagnation of the organic market in Japan is the general lack of awareness about organic products among Japanese consumers. According to MAFF’s monitor survey in 2002, 50% of the surveyed consumers in their 20’s and 30% in their 30’s did not recognize the Organic JAS mark. Another study (2002) also indicates that more than 60% of the surveyed consumers believe that no-pesticide vegetables were safer than organic vegetables. While the term ‘organic’ is becoming better recognized, consumers who are aware of the Organic JAS system or of the fact that organic agriculture is environmentally sustainable are still very few.
2) Regarding to the consumer survey results that the interest in food safety and reliability continues to be strong among Japanese consumers. The ‘potential’ consumer demand for organic foods is therefore quite high, implying that the demand for such products by retailers (e.g. supermarket, consumer coop) will continue to increase. However, the demand is not yet real, but rather remains to be potential, since the purchasing power of Japanese consumers is currently low due to Japan’s economic depression. Should the economy recover, consumers would hopefully become able to afford rather expensive organic products, thus turning the potential demand to reality.
3) On the other hand, the consumers’ interest in food safety, which has intensified through the series of food-related incidents is ironically driving consumers to focus more on non-organic foods, which are either conventional or non-conventional, rather than on organic ones. This owes to the fact that the government’s efforts have not fully connected the importance of environmental preservation and ecological diversity of organic production with the concept of food safety. In order to bring consumer’s attention toward organic foods, it would be necessary to help them realize that organic products are socially and environmentally more responsible than their conventional counterparts.
4) Regarding the type of products, organic foods are limited in variety, although they are expanding primarily from those closely associated products with traditional Japanese foods. Since today’s Japanese diet includes a much wider variety of cuisines, such as Chinese, other Asian, and Western kitchen, this market is therefore expected to expand when more varieties of organic products are developed and their sales are effectively promoted.
5) Due to the lack of JAS organic live-stock regulations, processors do not make processed food which contain more than 5% of live-stock ingredients even though other ingredients are certified JAS organic. For example, milk chocolate cannot be organic if it contains more than 5% of milk. After the JAS organic live-stock regulations are implemented, new products of live-stock and processing food with organic live-stock ingredients will be developed, adding more varieties of organic foods.

Additionally to the main part of the study, the following article should be useful to the non-Japanese readers.

The Characteristics of the JAS Organic System

1) Currently JAS organic products are limited to crop production and its processed food. It applies to organic grain, vegetable, fruits, herbs, beans (coffee and cocoa) and wild crop. It does not apply to mushrooms which are usually cultivated on trees or logs but not on soil. Also alcoholic beverages are excluded even though ingredients and processing is in compliance with JAS organic standards.

2) Organic live-stock is not regulated now but within the fiscal year of 2004, the standards and certification system for organic live stock and organic feed will be implemented. An introduction of organic aquaculture JAS is not yet under consideration.

3) In order to sell agricultural products and/or processed food as organic, all operators involved in production, processing, sub-dividing and importation must be certified by RCO or RFCO. However, in case of importers, they do not have to be certified when imported products are produced and attached with JAS organic mark by the operators who are already certified by RCO or RFCO.

4) Organic operators must fulfill the basic conditions required by the technical criteria of organic operators. During an application process, a RCO or RFOC inspects and certifies that the applicant prossesses all of the documents which satisfy these technical criteria and that their organic operation is carried out in compliance with the submitted documents.
The key elements of these criteria are that the organic operator must have a set of internal regulations on operation and a set of grading regulations (to ensure that the internal regulations are properly implemented, and to manage the use of the Organic JAS mark), and the operation must be run in accordance with these regulations.

5) The definition of Production Process Management Director (PPMD) has to be clearly understood, since this can be especially beneficial for small-scale producers. PPMD refers to either an individual or an organization (e.g. an agricultural cooperative, an agricultural corporation) that manages a farming system. This categorization allows a group of individual producers to be certified as a collective unit, which should help small-scale producers not only in Japan but in the developing countries. When a PPMD is a group or a company with staffs and employees, it has to nominate an individual as the production process manager and another individual as the grading manager.

6) Grading is an official term used by MAFF to refer to a procedure for internal verification, to ensure that the operation was carried out in accordance with the internal regulation and that a specific lot of a certain product meets the Organic JAS standards. Subdivider is a term used in the Organic JAS standards to refer to a category of distributors that participate in selection, cleaning, processing, and packaging of Organic JAS graded products.

JONA (Japan Organic & Natural Food Association) is a third party certification body to certify organic products not only in Japan but also all over the world with the aim to promote organic agriculture through certification of organic foods at all stages from production to consumers

Tel: +81-3-3538-1851 Fax: +81-3-3538-1852
E-mail: inquiry@jona-japan.org
http//jona-japan.org
Certification programs of JONA are available upon request.