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Japan Annual Wheat Report
USDA, March, 2004
The total planted area for wheat increased 2.6 percent to 212,200 hectares in 2003, largely as a result of the rice diversion program. As a result of the higher acreage and good weather, production volume also increased 3.3 percent to 855,200 MT. Under the new rice policy, Beginning in JFY 2004, MAFF will be encouraging a permanent switch to the production of wheat through the use of subsidies while it phases out its program to divert land from paddy rice by JFY 2008. While MAFF’s goal is to continue the upward trend in wheat production, it is difficult to forecast at this point whether the new program will be successful or not. Domestic flour millers would rather not use the rather low quality domestic wheat unless the price is kept low with government subsidies. Therefore, an expansion of domestic wheat production will ultimately depend on whether or not Japanese producers will be able to produce wheat that is acceptable to end-users in price and quality. An increased scale of farming in the areas suited for wheat production like Hokkaido will be necessary, and introduction of de-coupled payments to producers may hold the key to achieving such objectives, instead of spreading subsidies thin in order to include small producers. As the politically influential agricultural co-op’s oppose such trends, the overall rice policy reform is expected to face a rough road ahead as it moves toward completion in 2008. In the interim, Post projects that the current level of production is near the ceiling that the market can absorb with the current level of price support (see the following section on Government Purchase and Resale Prices.) In 2004, Post forecasts that the planted acreage will further increase but production will decline slightly as the yield returns to normal.

Wheat consumption had been gradually increasing as consumers shifted from rice to processed wheat products such as bread and pasta. However, consumption has been flat since 2000, stemming from Japan’s depressed economy where Japanese consumers eat out less and cook more simply at home. In 2003/04, Post estimates wheat consumption will be flat or may increase slightly as the overall downward trend is temporarily offset due to this year’s higher price of rice. In the long term, however, considering the growing size of the elderly population, who tend to eat more traditional foods, it is expected that consumption will continue to decline slowly.

MAFF controls both producer and resale prices for both domestic and imported wheat. MAFF buys imported wheat at international prices and sells it to domestic flour millers at higher prices. As shown in table 13 below, the ratio in recent years has been around 2.0, which means MAFF sells imported wheat at twice the purchase price. On the other hand, MAFF buys domestic wheat at a high price and sells it to domestic flour millers at a significantly lower price, lower than imported wheat so that the lower quality domestic wheat will be accepted. Revenues from transactions for imported wheat are used to help cover the cost difference between the purchase and resale of domestic wheat. This is referred to as the “Cost Pool System”. In recent years, flour millers have been vocal in demanding lower resale prices for both domestic and imported wheat because of the increasing competition from surging imports of flour preparations, semi-processed and frozen dough products. In response MAFF finally agreed to lower the resale price by 0.5 percent for JFY 2004.
MGR Archive 18.3.2004
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Region Type Price  
Russia Rapan $ 700
USA Jupiter Rice $630
USA Calrose #1 $830
USA Calrose #1 Paddy $480
EU Prices Baldo €660
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