Food scandal bedevilled Japan has revealed the seamier side of some of its business practices and revealed what has probably done most to bring them about – an inept and corrupt government, writes Michael Fitzpatrick.
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Once more famous for its exquisite cuisine, Japan is more rapidly gaining a reputation as a food industry leper thanks to food crisis after food crisis. The litany of food scandals traces a sad story of how reform has stalled in Japan, exposing a deeply entrenched quid pro quo business culture and served to underline all too well why the world’s second largest economy is moribund and depressed.
It started with a modest outbreak of mad cow disease just over a year ago and has escalated into a fully fledged industry crisis as government efforts to try and restore confidence and help producers only turned into a feeding frenzy for greedy food producers. Some have described Tokyo’s efforts as putting out a fire with gasoline.
Loss of consumer confidence devastating
When the first case of BSE was announced back in Sept. 2001, consumers’ trust in the safety of beef simply evaporated. To assist domestic cattle producers, who were hit hard by the slump in beef consumption, the farm industry initiated a programme to buy back unsold domestic beef. It was later revealed that some companies had relabeled imported beef as domestic and sold it to the government. Snow Brand Foods owned up to doing so in January 2002 to the tune of ¥196m (US$1.6m), while Nippon Meat Packers Inc. (Nippon Ham) followed Snow Brand to the same lucrative trough, it was discovered, before August 2002.
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By GlobalDataThen, in May 2002 it was revealed that unapproved additives produced by a chemical manufacturer were being used in various foods, and makers had to rush to remove the affected products from store shelves. Restoring consumer faith in food safety and regulation and helping hard hit producers therefore became an urgent issue, and a plan for financial aid was finalised.
Over ¥151bn later the government still hasn’t established a link between the five cases of mad cow but at least beef sales are getting back to the pre-scare levels. However, consumers in Japan are in the dark as ever.
Sharp practice the norm
But what these outrageous business practices by two very respected companies did reveal was the almost limitless taste for sharp practice many food companies regarded as normal. Mislabelling, it was found, was merely a ‘poorly kept secret’ which had been rife for at least the last ten years.
One industry insider who spoke to just-food.com on condition of anonymity said that US and Australian beef was favoured because it was similar in taste to the Japanese products, which command much higher prices in Japan than its imported rivals.
“You have to understand there is an enormous bias in Japan, which incidentally is encouraged by the government and the media, for buying domestically produced goods. Sometimes manufacturers couldn’t keep up with demand so the temptation to pass off similar, cheaper imported goods is just too great.” he said.
Too great and too easily condoned. Not long ago a grocer, whose name was withheld by investigators, admitted to disguising mini-tomatoes imported from South Korea as locally grown products. In his defence he cited the widespread practice of mislabelling in the Japanese food industry. “ promise that from now on, we’ll correctly label tomatoes. But I have to say not only tomatoes but also many other foods on the market are mislabelled,” he said. Of course falsely indicating the origin of agricultural products constitutes a violation of the Japan Agricultural Standards Law. So why has the government only now decided to act and, more significantly, act against the larger once holy-cow companies such as Snow Brand for the first time?
“The Government had to be seen to be strict with even the once untouchable big companies who had betrayed consumers and the government. This was in order to restore some kind of consumer confidence in the wake of the mad cow outbreak,” says food industry analyst Tomoko Takanoura.
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“Fines have been levied and prosecutions are impending but its probably not enough to change the present culture of corporate arrogance,” says Takanoura. “The bureaucrats and the food industry are just too cosy. Even if the government does attempt reform there are still officials who will turn a blind eye to irregularities.”
Food industry offers golden parachutes for retired mandarins
Not surprising then that top farm ministry bureaucrats often fall into cushy food industry jobs after retirement – the so called golden parachutes beloved of so many Japanese government mandarins. The Shukan Bunshun magazine recently printed a long list of names from the Farm Ministry whom it alleges all assumed second careers in the scandal-ridden meat industry. And though food producers have unanimously vowed they will change their ways, can there be that much incentive to do so when even the likes of Nippon Ham survive a major scandal relatively unscathed?
As a media tired of pork-barrel politics and enraged consumer groups have repeatedly pointed out, there can be no serious reform until Japan sees more accountability and transparency. But as the newish, once emboldened PM Junichi Koizumi sees all his reform plans scuttled, perhaps food policy too will go the same way, smothered by the same smoky backroom culture. It was the adoption of a new whistle blowing culture that exposed the wrongdoings in the first place – a bold departure from the meek employer that always kept stumm – so maybe, just maybe, Japan might see a sea change in the murky world of food production. The health of the food industry and of the nation counts on it.
By Michael Fitzpatrick, just-food.com correspondent
