Bloomberg News

Abe’s Farmers Fighting Fat as Trade Talks Mean Tariff Cuts (1)

October 24, 2013

Soybeans

Soybeans are held for a photograph. Prime Minister Shinzo Abe has put 2 billion yen into the agriculture ministry’s coffers for a three-year project to develop new varieties of soybeans, rice, barley, onions and buckwheat. Photographer: Daniel Acker/Bloomberg

From rice for controlling blood glucose levels to soybeans that reduce fatty acids, Japan is seeking new ways to make money from agriculture as pressure mounts to cut the tariffs its farmers rely on to make a living.

Prime Minister Shinzo Abe’s government estimates there’s a potential 600 billion yen ($6.2 billion) market for so-called functional foods, strains of mostly fruits, vegetables and grains with provable health benefits beyond regular nutrition. He’s put 2 billion yen into the agriculture ministry’s coffers for a three-year project to develop new varieties of rice, soybeans, barley, onions and buckwheat.

Japan’s senior citizens, whose ranks are swelling at the fastest pace in the world, are a natural market for these products that must be embraced as tariffs of as much as 778 percent on rice come under threat, said Makoto Nakatani, the ministry’s research director. Abe is pursuing a place in the Trans-Pacific Partnership trade pact while OECD data shows the nation’s farmers depend on government handouts for more than half their income, versus 7 percent in the U.S.

“If we succeed in creating a market for functional foods in Japan, we’ll be able to expand the business to other Asian countries that sooner or later face the same aging problem as us,” Nakatani said in an interview yesterday. “Enhanced health benefits from these products should ultimately appeal to consumers worldwide.”

Heart Disease

The National Agriculture and Food Research Organization, an affiliate to the ministry, is working on a new strain of soybeans with elevated levels of beta-conglycinin, a soy storage protein that can reduce free fatty acids in the liver that contribute to risks for cardiovascular disease and diabetes, Nakatani said.

The first crops will be planted in Nagano prefecture in central Japan, a region renowned for miso soup stock made from soybeans. Japanese production of the oilseed rose 8 percent to 235,900 tons last year, while imports fell 3.7 percent to 2.73 million tons, according to data from the ministry.

Rice with a higher-than-normal amount of amylose, a component of starch with the potential to curb blood glucose levels, will appeal to people who want to reduce their weight, according to Nakatani. Planting may begin as early as 2016 in Niigata prefecture, the nation’s second-largest rice producer.

Japan’s population is declining after peaking at 127.79 million in 2004, according to the health ministry. It’s projected to touch 120.67 million in 2025, while the ratio of people aged 75 years or older rises to 18 percent from 11 percent in 2010.

‘Live Longer’

Increasing consumption of functional foods may ease pressure on the medical system while preserving an agricultural industry that can’t compete head on with producers like Brazil and the U.S.

“We’d like to meet the growing needs of elderly people to stay healthy and live longer,” Vice Agriculture Minister Yoshitsugu Minagawa said at a food industry conference Oct. 15.

Tetsuhide Mikamo, a director at the Marubeni Research Institute in Tokyo, said turning to niche markets and premium produce alone wouldn’t be enough for agriculture to thrive.

“To increase exports, it’s more important to make Japanese products affordable through cost cutting, rather than just make the quality even better,” he said.

The new varieties cited by Nakatani are being developed without using genetic modification technology.

GMO Labels

The ministry dropped a plan to commercialize Japan’s first GMO rice after health authorities refused to approve it as food and consumer groups said it could harm people and the environment. The grain contained a cedar pollen gene and was designed to alleviate hay fever.

Japan’s consumer affairs agency requires labeling of GMO foods and the health ministry has approved 283 modified varieties for human consumption, including corn, soybeans, potatoes, sugar beet, rapeseed and papaya.

Monsanto Co. (MON:US) obtained approval this month from the ministry for GMO soybeans with higher oleic acid that may help reduce LDL cholesterol, said Yukie Sasaki, a Tokyo-based spokeswoman for the U.S. company. DuPont Co. (DD:US) also received permission for a GMO soybean that may yield oil used by food processors and restaurants in Japan, said Mieko Kasai, who handles regulatory affairs in Japan for the Delaware-based company.

The combined annual income of Japanese farmers has halved over the past two decades as domestic output shrank and food prices fell, according to the Norinchukin Research Institute, a Tokyo-based affiliate of the bank that serves the nation’s agricultural, fishing and forestry cooperatives.

Abe has set a goal of doubling farm income and food exports within the next decade.

To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net


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