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Japan's Beef Market: US Outlook

05 September 2010

USDA Economic Research Service

Japan’s beef consumption is important to US agriculture. Beef eaten in Japan is either produced from Japanese cattle that are fed US feedstuffs or imported. A large share of imported beef historically has come from US cattle, according to the USDA's Economic Research Service.

What Is the Issue?

Japanese beef consumption has been buffeted by severe shocks for over 15 years. As both a competitor of US imported beef and a purchaser of US feedstuffs, Japanese beef production has also suffered setbacks. As a result of the discovery of bovine spongiform encephalopathy (BSE), US beef was completely banned from Japan’s market in 2004 and has had only limited access since. In the aftermath of the BSE-related shocks that have affected consumption, production, and trade, a review of the entire Japanese beef market may provide insight into the potential for growth in Japanese beef consumption.

It may also reveal the extent to which future Japanese beef production can satisfy a share of consumption and remain a market for US feedstuffs and what the current and future role of US beef might be in satisfying Japanese consumption.

What Did the Study Find?

Japanese beef consumption remains sensitive to income and price changes. Individual consumption of beef could rise signifi cantly if income levels rise or beef prices fall. The price of US beef, relative to substitutes from Australia or Japan, is an important determinant of US trade share. If the price of US beef drops, imports from the United States are likely to expand, perhaps even to the level reached in 2003 (when Japan was the largest foreign market for US beef).

Domestic Japanese beef production has not filled the gap left by the restrictions on North American beef imports. High prices for feeder calves and high feed costs, together with a relatively small-scale feedlot industry, prevent Japanese production from increasing. Although strong Government subsidy support and a substantial import tariff continue to bolster the Japanese industry, beef production is unlikely to expand.

In recent years, Japan’s beef cattle industry has intensified its feeding to increase certain beef attributes, such as marbling. This practice has helped support demand for US corn and barley. The increase in feed per head of cattle may not continue because Japanese consumers may be less enthusiastic, for health reasons, about heavily marbled beef. Beef production in Japan, however, is likely to remain one of the key foreign markets for US feed grain. Certain lower priced cuts of US beef, primarily “end cuts” and offal, are considered a good value in Japan. The Japanese market bids these US cuts away from competing uses, adding to the cut-out value of US cattle at slaughter. Current Japanese rules limit the supply of these cuts and raise their import prices. If these rules were changed, Japan’s purchases of these cuts could increase, most likely at the expense of Australian beef, which currently has the largest market share of imported beef in Japan.

September 2010

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