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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
Japan
As Japan is the largest net importer of agricultural, fishery and forestry products in the world, its export capability of such products is minimal. In the Japanese Fiscal Year 1997 (April 1997 - March 1998), it is estimated that the government of Japan will spend only $2 million to promote exports of agricultural, fishery, and forestry products. There are no export subsidies, credit programs, transportation subsidies, and tax and investment incentives in Japan. However, Japan’s rank as top importer also makes it the top market for agricultural promotions by a host of countries. Our competitors spent more than $48 million on market promotion in Japan during 1997.
Japanese Promotion Activities:
The government of Japan administers several relatively small projects with total expenditure level of just over $2 million to promote Japanese exports. The biggest project is the promotion of market development by sponsoring establishment of shops in foreign markets to conduct product exhibitions, sales and market analysis. Another major program, with a budget of over $400,000, is export promotion through participation in trade shows, in-store promotions and other public relations activities. Special programs exist for fruit and fish promotion funded at $29,000 each. These programs are generally conducted by local governments with financial support from the central government. A number of industry associations conduct domestic market promotion to encourage consumption of Japanese meat, milk, chicken, strawberries and plums. Finally, a major trend in is the movement offshore of Japanese food processors to take advantage of lower labor and input costs. This investment is encouraged by the host countries through special tax breaks and other incentives.
Competitor Activities:
The FAS Agricultural Trade Officer estimated that more than 20 countries other than the United States planned to spend more than $48 million to promote their agricultural, fisheries and forestry products in Japan in 1997. Almost one-half of all promotion expenditures are attributed to Australia, followed by much lesser expenditures by Canada, France, New Zealand, the Netherlands, Norway and many others. Meat and poultry account for more than one-half the estimated expenditures by competitors in Japan, followed by dairy products, wine and processed foods. Many of the promotion organizations mentioned in the Australia, Canada, New Zealand and EU summaries play large roles in making their countries’ products known to Japanese consumers.
By far, the biggest single competitor program in Japan is run by the Australian Meat and Livestock Corporation which maintains a staff of about 20 people with a budget estimated at $15-20 million. Its activities include advertising, sales promotion and consumer and trade education. The Canadian Beef Export Federation operates a three person office with a budget of $2-3 million. Their activities include participation in FOODEX, trade seminars in Japanese cities, distribution of point-of-sale material and sponsoring trade mission visits to Canada. The New Zealand Meat Producers Board maintains a two person office in Tokyo and has a budget of about $1.5 million to promote beef and lamb. Other significant competitors include Denmark, which spends about $2 million promoting its Pork products and China, Thailand, Brazil and France which promote poultry and eggs. These countries also provide additional aid in the form of export tax refunds in China and Thailand, and export subsidies from the EU. Brazil benefits from a preferential tariff rate for its eggs.
Another area with substantial competitor activity is the dairy sector. The New Zealand Dairy Board and the New Zealand Milk Products organization have staffs totaling more than 40 people in Japan with a budget of about $4 million. Their promotional activities include trade servicing, advertising, retail promotions, menu promotions for the food service sector, packaging development and production and trade incentives such as price discounts. The Australian Dairy Council has an office of six people with a budget of about $3 million. It carries out activities similar to the New Zealand organizations. European suppliers also promote their products in Japan, particularly cheese. Denmark, France and Germany spend about $2 million a year to fund seminars, retail promotions and menu promotions. The EU also spends about $50 million annually on export subsidies for dairy product exports to Japan.
A number of European countries promote wine in Japan as does Australia and Chile. France’s SOPEXA has an office of ten and spends over $4 million on advertisements, trade shows, wine tasting events, a retail display program, a major sommelier contest and educational seminars. Processed foods are promoted by many countries, including Canada, Australia, New Zealand, Italy, Chile, China and Korea. Together, these countries spend nearly $2.3 million a year on trade show participation and other promotional activities.
Both the Australian and Canadian Wheat Boards have offices in Japan and conduct a number of activities to encourage Japanese mills and processors to use their wheat. These countries also promote barley and malt, as do EU malt companies. China, Argentina and South Africa promote their corn in Japan.
Other major competitor activities include Canadian provincial and European promotion of their wood products, Norwegian salmon promotion, as well as programs for Israeli grapefruit, Canadian frozen potatoes and Chinese walnuts.
In addition to standard promotion activities and export subsidies mentioned above, some countries boost the competitiveness of their processed products by limiting or taxing the export of primary forms of those products. For example, Indonesia imposes a 50 percent tax on the exports of timber. This tax discourages the export of logs and reduces the cost of raw materials for processors, making Indonesian plywood very competitive in Japan and other markets.
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