Last year, a full 44 per cent of the beef consumed in Japan was Australian. The Americans were Australia’s nearest competitor with only six per cent of the market, and Canadians were not even on the radar, despite massive demand for the high-quality grain-fed Canada and the U.S. produce.
The discovery of BSE in North America and Japan’s resulting import policy that limits North American beef to 20 months of age or younger explains in part how this playing field has become so uneven. The U.S. and Canada want this limit removed, or at the very least expanded to 30 months of age, saying their beef meets all the safety criteria set by the world organization for animal health. So far, they’ve been unsuccessful.
How can this be? To unravel that question you need to understand that the Canadian beef is competing against not only Australia and the U.S. Its most formidable competitor in this market is the Japanese beef industry itself.
It is an industry that has always been under threat. While the beef industry has been a symbol of Japanese decadence, the industry could not have begun under poorer circumstances. Some beef was eaten in Japan from the Meiji Period (1868-1912) when Japan opened itself to the West, but the Japanese only really began to eat beef regularly in the early 1960s. Until the 1960s, the Wagyu, source of the famous Japanese marbled beef, worked in the field, and there was an outright distaste for eating draught animals. The Japanese beef industry finally took off not because the Japanese loved beef so much, but because in 1961 the tractors rolled onto the rice fields and replaced the cows, while the demand for rice dropped.
Apart from that, conditions for ranching in Japan are grim. Japan has no farms, at least in the sense of a farmer accumulating an area of land and efficiently operating the business from a dwelling on the farm property. And not only does Japan have little arable land, most of the arable land is in the form of rice paddies designed to take advantage of the monsoon rains, making it unsuitable for livestock. There is virtually no pasture, and cities have further encroached on agricultural land in the last decades. Feed self-sufficiency is only 25 per cent.
A series of books on the beef industry geared for the Japanese public appeared in the 1980s in Japan. On the surface, the books were responding to public fury about the high cost of Japanese beef. But there was another underlying anxiety there too: Was imported beef going to force cows out of Japan after a thriving local beef industry had just been established? It was not surprising, then, that the U.S.-Japan Beef and Citrus Agreement signed on July 5, 1988 whereby the Americans forced the Japanese to open their markets to imported beef, angered and deeply disturbed not only the industry, but also the larger Japanese society. Were these foreigners hoping for the disappearance of Japan’s beef industry? It sure seemed that way.
The second thing Canadians need to understand about the Japanese beef industry is the manner in which it is tightly controlled. In 1947, an organization was born called the Japan Agricultural Cooperatives (JA). In some respects the JA acts as a regular co-operative which sells products and buys supplies on behalf of its members. But the JA is also a massive feed distributor, marketing board, bank, and supermarket. While the organization is known best as fierce protector of the rice industry, the JA has also kept a stranglehold on the beef industry. And JA philosophy underlies the deep suspicions toward meat imports harbored by regular Japanese today.
The role the JA has played in the beef industry is too complex for even farmers themselves to understand. Nonetheless, we can offer the following likely scenario. A farmer uses JA financing to buy calves to feed for two and a half years. He buys feed at a relatively high price, feed which has been imported, processed, and distributed by the JA. After his feeders are finished, the JA grades them. The entire feeding process has been geared toward these grades, as these grades will largely determine the farmer’s salary for the current year and the next one, too, as grading is tied in with complex quota systems. He is thrilled when his beef grades high, as he knows the feeders will be sold for a decent price at the auction the JA operates. The JA finally provides our farmer with a computerized analysis of the complete feeding cycle which includes factors such as breeding, feeding, and grading. At the end of the entire process our farmer might think, “Gee, the JA sure is charging me a lot for processing feed when they have only added a little rice bran and fish flakes.” But the farmer is unlikely to be able to pencil out the rest of the process, and the perils of going it alone are great, so he is likely to buy JA feed the next year, too.
JA control over the beef industry has led directly to two recent points of contention, “food safety,” and “traceability.” For example, in a system like this, how could you not know if beef is safe or not? Retired housewife and patron of the Japanese beef industry Michiko Wada, 68, says, “The Americans say there is no way they can check every head. That is strange. What does that say about the way they handle other foods?”
Traceability is also built into the JA system. In his 1984 book about the JA, investigative journalist Tachibana Takashi recalls being intrigued when he visits an auction where a cow named Umekatsu Number 4 is being sold for 1,500,000 yen (C$17,000). The cow’s mother, Umeyuki Number 4, the grandfather on the mother’s side, Natsuyama, and great-grandfather, Akaishi Number 2, all trace their lineage back to a famous breeding house in Okayama Prefecture. Kikunami, the sire, traces his lineage back to Tajima in Hyogo Prefecture. The whole pedigree system is not far off that of racehorses, Tachibana observes.
The final thing Canadians need to understand is the Japanese beef industry’s obsession with “quality.” In the Japanese agriculture sector, the emphasis has always been on quality over efficiency, and this phenomenon is particularly obvious in the Japanese beef industry. As a result, there has always been an uneasy relationship between operation scale and product quality in the unbelievably work intensive Japanese beef industry. In a system that protects the rights of producers of all grades of beef to make a living but at the same time generously rewards quality, producers are in a position to make exorbitant profits while making no efforts to either expand or streamline their operations. Nowadays beef operations still only have 30 or 40 cows.
Japanese consumers know all about beef quality. The two top ranks in the traditional Japanese ranking system, tokusen and gokujou (A4/A5 Wagyu), are familiar to consumers after decades of marketing. Japanese consumers know exactly how shiny, white fat is finely distributed in tokusen meat, and know that you are going to have to pay C$30 per 100-gram quantity in a specialty shop if you want to buy some. Japanese consumers also know that only established and recognized Japanese producers have been able to command the very high prices for Japanese beef, though it may not occur to them how extensively the high-end beef market has been culturally protected. Likewise, Japanese consumers are well aware that the tokusen rank is achieved through bloodlines and careful breeding, and only partly through the carefully managed feeding regimen. It is very easy to believe that beef producers in other countries haven’t figured it all out yet.
Ideas of quality then get projected onto buying behaviour in the imported beef market. “The Australians are really learning how to produce good beef,” has been a common refrain as “Aussie Beef” has flooded into the supermarkets in Japan. Australia’s competitors know the intricacies of feeding periods, feed rations, and climate well, and know exactly how their products can be tailored to meet the needs of Japanese consumers. However, the obsession with quality in the Japanese beef industry over the decades prevents Japanese consumers from seeing meat production in these terms.
In conclusion, it is the Japanese beef industry, not foreign competition, which remains the most frustrating obstacle for foreign importers who wish to enter the Japanese beef market. Over the last 40 years, the Japanese beef industry has flourished in a strange atmosphere of fear, snobbishness, and determination, and the industry shows no sign of disappearing soon.
Paul Sinclair Is A Saskatchewan Farm Boy With A PhD From The Osaka University Of Foreign Studies In Osaka, Japan. He Currently Lives And Works In Taipei, Taiwan.