Outline of opportunities in Japan
An overview of the world's third-largest economy
With a population of 127 million and merchandise imports of over Can$954 billion, Japan is the world's third-largest economy in 2018 with a GDP of US$4.9 trillion (or Can$6.5 trillion) after the United States and China. Japan is the fourth-largest importer of agri-food and seafood products in the world (Can$96.7 billion), and is Canada's third-largest market for agri-food and seafood, with exports of Can$4.6 billion going to the country in 2018, making Japan one of Canada's most important economic and commercial partners. With the coming into force of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canadian exporters will benefit from reduced or eliminated tariffs on many agriculture and agri-food products into the Japan market.
Japan is a trend setter in many areas and can be a gateway to other markets in Asia. Japanese consumers are renowned for placing enormous importance on consuming food that is safe and of high quality, and they perceive Canada as a country that produces food with these characteristics. The Japanese also put a high value on long-term business relationships, which need to be built and understood, given that there are major cultural differences between North America and Japan when it comes to doing business.
Major sector opportunities in Japan
Discover more information, strengths, opportunities and considerations for Canadian agri-food and seafood by reading our Asian agri-food market intelligence reports.
How do we select priority sectors?
Priority sectors were selected through a quantitative analysis of the data available in the Global Trade Tracker database for 2019. The first phase was to identify the top 100 products, amongst all agri-food and seafood products, ruling out the products that Canada does not have a capacity to produce. Each product was evaluated based on a series of quantitative criteria (that is, size of market, market growth, Canada's trade intensity, and tariff reductions), all of which were ranked over ten years of historical trade data. The top 100 products identified through this method, represented 58% of Japan's total imports from the world, and 96% of Canada's exports to Japan in 2018.
Our analysis focused on assessing opportunities from a strengths and challenges perspective:
- Strengths were defined by those commodities that demonstrated both high performance and growth in large Japanese import sectors
- Challenges were defined by the issues that industry might face while trying to take advantage of market opportunities
In phase two, products are further categorized into 30 high performing sectors. These have been assessed by Agriculture and Agri-Food Canada (AAFC), Global Affairs Canada (GAC), and ten provincial experts, through a survey to further determine the opportunities and challenges associated with those product categories, in the Japanese context.
All priority agri-food and seafood products are both imported by Japan and within Canada's capacity to produce and supply internationally.
Growth through processing
While Japan is one of Canada's top trading partners, the exports of the processed food and beverages category is expanding quickly. Japan's processed food and beverage imports increased at a compound annual growth rate (CAGR) of 7.2% between 2014 and 2018. As of 2018, Canada supplied over Can$2.6 billion in processed food and beverages to the Japanese market, which represents Canada's third-largest market for this category (high-performing commodities include pork, frozen crab, malt and forage products).
In 2018, processed food and beverages represented 47.8% of all Canadian agri-food and seafood products shipped to Japan.
Description of above image
|Fresh or chilled pork||43.2%|
Source: Global Trade Tracker, 2019
Canada has a significant comparative advantage in the production of many high-quality commodities in the grains and oilseed sectors as well as other areas, such as pulses. While the Japanese market has been very responsive to those Canadian products often sold in bulk, opportunities exist to extend the value in other quality commodities. Japan has one of the oldest populations in the world, and the dietary requirements of Japanese consumers are changing, requiring the introduction of more innovative products, such as easy-to-use packaging or products in smaller portions. Health-related products, such as fortified and functional foods, are also of very high importance. Furthermore, with a growing number of small and single-person households, increase in the number of professional females, and consumers' busy lifestyles, products offering a high level of convenience, such as ready meals and frozen processed foods, are increasing in demand.
As of 2018, Canada was ranked fifth among the supplying countries to the Japanese food market, which is equivalent to 5.5% of the total Can$96.4 billion agri-food and seafood market. The Japanese processed food and beverage imports from the world were valued at Can$65.6 billion in 2018, with Canada representing 4.0% of that total. The United States, China, Thailand, Australia, and Canada were the largest suppliers of processed food and beverages to Japan in 2018, providing 59.9% of this segment category.
|Country||Share of Japan's imports from the world (%)||Top three processed food and beverages, imported by Japan (commodity share %)|
|United States||18.1||Fresh boneless meat of bovine (15.8), fresh meat of swine, bone-in (3.5), forage products (1.4)|
|China||14.9||Prepared or preserved meat or offal of fowls (12.0), prepared or preserved fish (5.1), frozen vegetables (4.7)|
|Thailand||8.9||Prepared or preserved meat or offal of fowls (33.2), frozen cuts and edible offal of fowls (8.7), shrimps and prawns, prepared or preserved (6.6)|
|Australia||7.0||Fresh beef, boneless (27.1), frozen beef, boneless (21.4), raw cane sugar (6.7)|
|Canada||4.0||Fresh meat of swine, bone-in (43.2), frozen meat of swine, bone-in (8.5), frozen crabs (5.5)|
|Source: Global Trade Tracker, 2019|
Opportunities for Canada
The benefits of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP will give Canadian agriculture and agri-food products preferential market access to all CPTPP countries. As the CPTPP is implemented, tariffs will be eliminated or reduced on a wide range of Canadian exports for the agricultural sector, including meat, grains, pulses, maple syrup, wines and spirits, seafood, and other agri-food products.
Japan has eliminated tariffs on close to 32% of tariff lines on agriculture and agri-food products upon entry into force. A further 9% of tariff lines will provide preferential tariff treatment through permanent quotas and country-specific quotas for Canada. The remaining tariff lines will provide tariff elimination or reductions over a period of up to 20 years, or reductions of the in-quota or out-of-quota tariffs.
Read the Global Affairs Canada overview of the CPTPP and Canada's agriculture and agri-food sector for more information.
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The complete library of Global Analysis reports can be accessed through the International agri-food market intelligence page.
Japan has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their Japan importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is also available to assist in providing export-related information and support. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets.
If you have questions about exporting your agriculture or food products, or are looking for support, please contact the Market Access Secretariat at firstname.lastname@example.org.
To find trade events, in-market Trade Commissioners, marketing tools and more to help you achieve your international business goals, please see Agri-Food Trade Services for Exporters.
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