Japan Poultry and Products Semi-Annual Overview - February 2006
By the USDA, Foreign Agricultural Service - This article provides the poultry industry data from the USDA FAS Poultry and Products Semi-Annual 2006 report for Japan. A link to the full report is also provided. The full report includes all the tabular data which we have ommited from this article.
Report Highlights:
High beginning stocks and stagnant demand are expected to slow imports and production in 2006 with total imports projected, down 4% and production down 1%. Imports from Thailand are not expected to increase despite the implementation of an FTA due to the relatively small tariff cut scheduled for the initial year. Ongoing concerns about AI will continue to limit imports from Asia to cooked product leaving Brazil as the predominant supplier of broiler meat. Japan had a series of domestic outbreaks and detections of AI bird flu in 2005 but quick GOJ responses limited the impact on domestic production and the market.
2006: Outlook: Weaker Market Outlook and High Stocks to Lower Imports in 2006
The prevalence of highly pathogenic avian influenza (HPAI), which is reportedly spreading
from Asia to other countries such as Russia and Turkey, could impact the world broiler trade
outlook in 2006. Post notes the major international efforts kicked off last year are well
underway to tackle the issues from both animal and human health aspects. Many countries,
including U.S., EU, Japan and international bodies such as WHO and FAO are taking a part to
provide financial and technical assistances to those countries having problems with relatively
weak infrastructures and institutions for disease surveillance, prevention and control.
In terms of the Japanese market specific, the situation in 2006 is expected to somewhat
stagnant following a weaker than anticipated market during the second half of last year.
Particularly, a weaker outlook for food service demand, coupled with high year beginning
stocks, somewhat clouds the import outlook this year (See 2005 Situation Update and
Summary).
In light of the above, Japan’s total broiler consumption in 2006 is projected to stay flat from
the level achieved last year at 1.88 million MT. Modestly lower total imports are projected,
down 4% to 720,000 MT (generic broiler meat: down by 9% to 380,000 MT and prepared
and processed products: up by 3% to 340,000 MT). The relatively large beginning stocks of
uncooked broiler meat, estimated to be 40% above last year’s beginning stocks (See Table
4), will affect import demand for broiler meat in 2006. Furthermore, Japan’s shift of import
demand from generic to cooked products may likely continue in 2006.
No Immediate Lifting of Broiler Meat Import Ban on China and Thailand Foreseen in 2006
Post does not foresee any tangible impacts of Japan’s EPA/FTA with Thailand on Japan’s imports of the cooked products in 2006, which was to start its implementation this spring (unclear yet as to when to start at present) due to the relatively small tariff cut scheduled for the initial year. Furthermore, under the prevailing bird flu situation in China and Thailand, where sporadic outbreaks are still being reported with some human infection and deaths, post also does not foresee that Japan will lift its import ban on generic broiler meat from above two countries during 2006. This means the current status of broiler meat from Brazil and the cooked products from China and Thailand will mostly likely remain unchanged in 2006.
Heavy Reliance on Single Supply Source Worries Japanese Meat Trade
One concern shared by the Japanese meat trade is Japan’s current reliance on Brazil for the majority of boneless broiler meat (Brazil’s share is 90% of the broiler meat imports) with no other viable suppliers (See Note 1). Unlike Thailand and China, Brazil’s base to produce the cooked products for Japanese market is reportedly limited. The U.S. can be a viable supplier of broiler meat, but is handicapped by its difficulty to constantly supply the bulk of “boneless cuts – leg meat” as Brazil does. An animal health protocol worked out last year between U.S. and Japan on heat-processed poultry meat and liquid heat-treated egg products should allow the U.S. to be able to ship the cooked products irrespective of AI status such as import ban on generic meat due to HPAI. However, to date, final implementation of the protocol is pending.
Japan’s Bird Flu Response Measures Effectively Controlling Domestic Concerns
Japan has had a series of domestic outbreaks and detections of bird flu (both HPAI and LPAI
(Low Pathogenic Avian Influenza) types in recent years (See note 2). The country has
quickly responded by putting in place strict quarantine and disease prevention measures to
prevent recurrences and the impacts on the domestic production and on actual market so far
have been minimal.
However, weaker prospects on market prices suggest domestic producers may face
difficulties in 2006 in maintaining the same level of output achieved last year (2005), which
rose 4% over the preceding year (2004). Post projects this year’s domestic broiler
production to fall by 1% in 2006 at 1.15 million MT.
[Background Note: Massive outbreaks of bird flue (HPAI - highly pathogenic strain H5n1) hit
many parts of Asia in early 2004 literally shutdown imports of generic broiler meat supplies
from Thailand and China, who were then the two major suppliers of generic broiler meat and
the prepared products to Japan. These two countries now can only ship cooked products
(prepared and processed products) to Japan from MAFF designated plants under a bilateral
health protocol worked out in 2004. (Note: There are currently 49 plants in Thailand and 35
plants in China designated by MAFF for exports to Japan of cooked products.) Avian
Influenza problems in Asia appear far from contained as of today with sporadic outbreaks
and human contractions reported even causing human death cases.
As a result, Japan’s total broiler supply is divided with domestic and Brazilian broiler meat
catering to the market for generic meat (mainly for retail and food service), and Chinese and
Thai cooked products cater the market for prepared foods and processed products both sold
at the retail and the food service. Unfortunately, a series of bird flu outbreaks in the U.S.
triggered a series of import suspensions which pushed U.S. into a relatively a minor position
within the Japanese broiler market (Note U.S. and Mexico has animal health protocols with
Japan which recognize “regionality”, which restricts imports only from affected states).
Domestically, the latest detections of the low path strain are from layer farms in one
concentrate area of Japan and have reportedly caused by illegal use of unapproved vaccines
by producers (according to government’s interim investigation report). Also, the media has
reported that health checks conducted on workers at poultry farms show that approximately
70 workers contracted the low path version of the flue in the past. The local government and
MAFF have already taken necessary actions and put the situation under control.]
2005 Situation Update and Summary
Revised broiler PS&D figures (broiler meat and the prepared and processed products imports combined) for CY 2005 are constructed based on preliminary production, trade and stock data available to date.
Imports Rose Substantially, But Consumption Slow Down Caused Surplus Stock in 2005
As mentioned in the 2006 outlook section, the response to massive outbreaks of HPAI in Asia
in 2004 triggered Japan’s imposition of the broiler meat import ban on China and Thailand.
As a result, a large deficit of imported broiler meat developed. This vacuum was quickly
filled in the first half of 2005 with increased domestic production, projected up by 4% to
1.165 million MT, and amplified imports of both broiler meat and cooked products, surged
27% to 748,000 MT in 2005 [broiler meat, up 18% to 419,000 MT with 90% from Brazil and
7% from U.S., and the cooked products, up 44% to 329,000 MT with 98% from China and
Thailand] (See Table 5-a, 5-b and 5-c).
Reflecting the above situation, average wholesale prices of domestic broiler cuts in 2005
remained as high as the previous year at 580 yen per kg for boneless leg, up 2% and at 227
Yen per kg for breast meat, up 1% respectively from a year before (See Table 2). Similarly,
Japan’s import demand for broiler meat was concentrated mainly on Brazilian boneless leg
cuts in 2005, thus keeping the average wholesale prices in 2005 as high as the previous year
at 396 yens per kilo for Brazilian boneless leg (See table 3). Furthermore, China and
Thailand were also quick to boost their shipments of the cooked products for Japanese
market.
The market particularly picked up very well in the first half, but somewhat lost steam causing
an overall consumption slow down of broiler meat during the second half in 2005. The
annual increase of Japan’s total broiler consumption in 2005 is estimated up by 10% to
1.879 million MT (Broiler meat, up by 4% to 1.55 million MT and the imported cooked
products, up by 44% to 329,000 MT). This drop was due to a variety of causes including
overall lethargy in the food service sector, and relatively flat household consumption in the
second half (See Table 1). Also, the tremendous increase in imports of the cooked products
and increased domestic outputs are other factors, which could have slowed overall
consumption of broiler meat, particularly in the second half of 2005. However, monthly
imports of both broiler meat and the cooked products remained high causing some surplus
stocks of imported broiler meat, which has piled up leaving a relatively large year ending
stocks in 2005 (See Table 4).
Further Information
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List of Articles in this series
To view our complete list of 2006 Poultry and Products Semi-Annual reports, please click hereSource: USDA Foreign Agricultural Service - February 2006