Mainland China was top importer of Japanese food in 2021, surpassing Hong Kong and the US, with sake, scallops and whisky in demand

Japan hit its target of 1 trillion yen (US$8.67 billion) in annual food exports in 2021, a 25.6 per cent increase on the previous year, thanks in large part to big-spending Chinese consumers snapping up high-end products ranging from whisky and sake to scallops, beef, fruit and vegetables.

Mainland China resumed top spot in Japan's export list for the first time in seven years, surpassing Hong Kong and with the United States remaining in third place. Exports of food, farm, forestry and marine products to mainland China soared 35.2 per cent during the year, to a value of 222.4 billion yen (US$1.93 billion), according to data released by the Japanese government.

Exports to Hong Kong also increased, albeit by a more moderate 6 per cent to a value of 219 billion yen (US$1.9 billion). Sales to the US were up 41.2 per cent to 168 billion yen (US$1.46 billion), with Taiwan in fourth place on the list, with exports up 27 per cent, and followed by sales to Vietnam, South Korea, Thailand, Singapore, Australia, the Philippines and the European Union.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

All of the top 10 export destinations saw significant increases, with the smallest increase the still respectable 9.4 per cent rise in shipments of foodstuffs to Vietnam.

Statistics from the ministry of agriculture indicate that soaring demand in mainland China was driven by "economic activities on a recovery trend" as concern about the coronavirus pandemic begins to wane. Demand for eating out at restaurants has recovered, the report stated, with demand driving prices higher.

Of all the products listed in the report, exports of scallops saw the greatest increase, climbing 104 per cent on the previous year thanks to demand for high-end Hokkaido shellfish in mainland China and the US. Demand for Japanese whisky was up 70 per cent and sake exports climbed 66 per cent, with the majority in both categories going to mainland China.

The Lunar New Year fell slightly later than usual in 2021, which had the effect of extending the traditional gift-giving season for pricey fruit, particularly apples and strawberries. A similar situation was reported in Taiwan.

In contrast, mainland China imported 34 per cent fewer saplings for transplanting, with the ministry report indicating that quarantine regulations caused problems.

Exports to Hong Kong were up across the board, with the most notable increase in pearls, which are classified as an agricultural product. Shipments were up 125 per cent to a value of 9.5 billion yen (US$82.35 million) as importers shifted to direct transactions with Japanese producers after a number of specialist jewellery exhibitions and events were cancelled due to the pandemic.

On the other hand, declining sales at Hong Kong restaurants hit shipments of marine produce. Exports of sea cucumber fell 14 per cent to 2.6 billion yen (US$22.54 million), while sales of scallop adductor muscle - which opens and closes the shell - contracted 17 per cent to 1.2 billion yen (US$10.4 million), primarily due to falling restaurant demand combined with large shipments in 2020 that left restaurants with large inventories.

The target of 1 trillion yen in agriculture-sector exports was first announced by the Japanese government in 2006, with 2013 the original target year. That target may have been missed by a few years, but Japan is sticking to its plans to raise the value of exports to 2 trillion yen in 2025 and 5 trillion yen by 2030.

Successive Japanese governments have placed increased importance on exports of agricultural products for a number of reasons, but the single biggest factor is a shrinking population at home that inevitably means falling consumption. The long-ruling Liberal Democratic Party is also keen to assist farmers and conservative rural communities as they account for a large proportion of their politicians' electoral support.

"Japan has effectively rolled out the nation's agriculture sector as the latest addition to the 'Cool Japan' campaign, and it seems to be resonating with countries that looked to Japan for manga (graphic novels), anime and those other exports," said Noriko Hama, an economist at Doshisha University in Kyoto.

"But it can also be interpreted as an act of desperation as the demise of the domestic market is picking up steam," she said. "Wages are stagnating and people do not have as much money as they did in the past to go out to eat and they are also no longer buying the more expensive brand-name food products, while the declining population is going to be a worsening problem going forward."

The increase in sales will nevertheless be welcome news for the government, which has lost the tax revenue from tens of millions of foreign tourists over the last two years due to the pandemic, Hama added.

Kevin Short, a professor who specialises in environmental education at the Tokyo University of Information Sciences, said the domestic agricultural sector needs to increase exports "simply to survive".

"Overall, Japan is a large net importer of agricultural products, primarily grains, meat and poultry from the US, Canada and Australia, but when those governments push Japan to lower tariffs, that hurts domestic farmers," he said. "They have to look to existing and new export markets simply to survive."

As counter-intuitive as it sounds, Shorts says that one of the major selling points for Japanese agricultural products in foreign markets are the prices, which are seen as an indicator of quality as well as a symbol of wealth among consumers.

"For these people, quality is extremely important and that is why individual pieces of fruits are carefully wrapped and every item has to be flawless," he said. "I have farmer friends and anything with the slightest defect is simply tossed in a ditch as it has no value."

Yet there is a cloud on the agricultural sector's horizon, in the shape of the Fukushima Daiichi nuclear plant and the Japanese government's decision to dump around 1.23 million tonnes of radioactive water from the site into the Pacific Ocean.

Three of the six nuclear reactors at the plant suffered meltdowns after they were damaged in the March 2011 magnitude nine earthquake that struck off the northeast coast of Japan, triggering a devastating tsunami. Water that has been used to cool the reactor chambers has been building up in tanks at the plant, with the government deciding last year that the best way to dispose of it is to release it into the ocean.

Taiwan's Food and Drug Administration announced this week that Japanese food carries a "negligible" risk of radiation and recommended that the government lift its ban on imports of agricultural products from the prefectures of Fukushima, Ibaraki, Gunma, Tochigi and Chiba.

Taiwan is to lift its ban on most food imports from Fukushima from February 18 but restrictions will remain on certain food items that carry a greater risk of nuclear radiation, such as mushrooms and the meat of wild animals.

A team from the International Atomic Energy Agency is due to visit the plant next week to review the plan to release the tainted water and determine the likely impact on fisheries and the broader environment.

"The local agriculture sector has taken a severe hit from the nuclear accident and my sense is that no matter what the experts say about the safety of releasing the water or crops from the region, this is going to be back in the headlines again when the water does start to be released and that will once again depress sales," said Professor Short.

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.