New Japanese regulations for organic food production have caused a large reduction in market revenues.
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The organic food market size has shrunk from over US$3bn in 2000 to US$250m in 2001 as a result of the new ruling, according to a study by Organic Monitor. Revenues in the Japanese markets for organic fresh fruit & vegetables and organic beverages have shrunk from about US$2bn in 2000 to US$167.1m in 2001.
The Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) introduced new guidelines for organic food production and marketing in 2000. Since April 2001 all organic foods marketed in Japan must meet Japanese Agricultural Standards (JAS). The high standards have caused the majority of organic foods that were sold in Japan prior to April 2001 to lose their organic status.
The Japanese are one of the world’s largest tea drinkers and this is a major reason behind the organic tea segment dominating the organic beverages category. The bulk of organic tea sold in Japan is domestically grown green tea. The organic milk market is the smallest segment and this is due to the absence of formal regulations for organic livestock production. The new JAS ruling does not cover organic meat & dairy products.
The new regulations have meanwhile hit the organic fresh produce sector particularly hard with the Japanese market suffering from an acute shortage of JAS certified organic fruit & vegetables. Most organic fresh produce grown by Japanese farmers does not meet JAS regulations and few exporters have organic fruit & vegetables that are certified by a JAS accredited body. The supply shortage is exacerbated by high phytosanitary requirements that limit the amount of imported volumes of organic fresh produce coming into Japan.
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By GlobalDataThese factors have resulted in organic fruit & vegetable volumes to shrink by a factor of twenty in 2001 from 2000.
Nevertheless, consumer demand for organic foods is booming in Japan. The country has suffered from a spate of food scares since 1999, which have elevated consumer interest in organic foods. Japanese consumers have been alarmed by food poisoning outbreaks, GM corn entering the food chain, the BSE crisis and food labelling fraud. Concern for food safety is to be a major driver of market growth along with the marketing efforts of the Japanese retailers.
With this in mind, there to be many opportunities in the Japanese market for exporters of organic foods. Certification, distribution and product quality are some of the key success factors for companies looking to make a successful foray into the Japanese market. The price premium of organic foods is not a major barrier to Japanese consumers however products must be of very high quality.
To find out more about Organic Monitor’s reports, click here.
