Heinz W. Kuhlmann
Representative of NürnbergMesse in Japan
For thousands of years nature has provided food and other necessities for mankind. Throughout history raw materials were refined and put to various uses in order to make life more comfortable. This has always caused some damage and changes to nature, but only during the past two centuries has the exploitation of nature become a serious problem.
The French philosopher had primarily civilization and education in mind when he made the above demand, however, it applies also to natural and organic products. The industrial revolution in the 19th century brought progress, wealth and social changes to many people in Western and other countries, such as Japan. Extensive use of agrochemicals increased agricultural productivity and provided more food for a growing population. Chemistry and technology were also used to preserve food and to develop artificial substitutes for natural food. This development was welcomed by most people and offered nations the opportunity to become largely self-sufficient for their food supply.
Towards the end of the 19th century in Germany and other European countries people from all walks of life became conscious and critical about the consequences of the industrialization for nature, health and society. They founded or joined various movements which offered and promoted alternatives for natural and healthy lifestyles. Among them were the nature cure movement, the vegetarian movement, the anti-alcohol movement, the Wandervogel movement and many others. These life reformers also looked for alternatives to conventional products: medicinal herbs, vegetables and plants as substitute for meat, tasty non-alcoholic beverages, natural and comfortable clothes and other daily necessities.
Since such products were not readily available on the market, this offered new business opportunities for people who were members or close to these movements. In 1887 a new type of shop for meeting such demands opened in Berlin under the promising name “Gesundheitszentrale” (Health Center). In 1900 the first Reformhaus which became a generic name for these kind of shops opened in Wuppertal (Germany) under the name “Reformhaus Jungbrunnen” (Fountain of Youth).
In the following years and decades Reformhaus shops and restaurants spread all over Germany and neighboring countries, and currently there are about 1500 in Germany and around 600 in Austria. All Reformhaus operators are independent entrepreneurs devoted to the concept, and they do not just sell products but also offer advice to their customers. In the beginning they offered mainly simple natural food and daily necessities, but with changing consumer tastes they also added modern and more sophisticated products. Reformhaus outlets are usually rather small, and nowadays they are facing a strong competition from organic supermarkets and chain stores with lower prices. Nevertheless, they can still count on faithful individualistic customers who appreciate the variety of products for wellness, enjoyment and health plus competent and valuable advice.
While the Reformhaus is still well known in Germany and Austria, the original idea and concept have faded, and only few people know that its name came from movements for life reform. In recent years LOHAS, a new, but in many ways similar movement which advocates a healthy and natural lifestyle has attracted many members, first in the United States, then also in Europe and Japan (see article on page 72).
Origin and Development of Organic Farming
Organic Farming is the outcome of theory and practice since the early years of the 20th century, involving a variety of alternative methods of agricultural production, mainly in Europe.
There have been three important movements:
● Biodynamic agriculture, which began in Germany under the inspiration of Rudolf Steiner;
● Organic farming, which originated in England on the basis of the theories developed by Albert Howard;
● Biological agriculture, which was developed in Switzerland by Hans-Peter Rusch and Hans Müller.
Even though there are some differences in thought and emphasis, the common feature of all these movements is to stress the link between farming and nature, and to promote respect for a natural balance. They distance themselves from the interventionist approach to farming, which maximizes yield through the use of various kinds of chemical products.
Despite the vitality of these movements, organic farming remained undeveloped in Europe for many years. Between the two world wars a number of farms and gardens were successfully operated with natural methods. During the 1930s in Germany the co-operative Demeter began marketing organic products with its own quality label, and over the years Demeter has grown into leading supplier of natural and organic products.
Throughout the 1950s the main goal of farming in Europe (as well as in Japan and many other countries) was to achieve a major improvement in productivity in order to satisfy immediate needs for food and to raise the rate of self-sufficiency. Under such circumstances organic farming was not viewed very favorably.
By the end of the 1960s, however, and especially in the 1970s organic farming came to the forefront in response to the emerging awareness of environmental conservation issues. New associations were founded and grew up, involving producers, consumers and others interested in ecology and a lifestyle more in tune with nature. These organizations drew up their own specifications and rules governing production methods.
It was in the 1980s, however, that organic farming really took off. The new production method continued to develop, along with consumer interest in organic products, not only in most European countries, but also in the United States, Canada, Australia and Japan. There was a major increase in the number of producers, and new initiatives got underway for processing and marketing organic products.
This situation conductive to the development of organic farming was largely due to consumers’ strong concern to be supplied with wholesome, environmental-friendly products. At the same time the public authorities were gradually recognizing organic farming, including it among their research topics and adopting specific legislation. In Germany, the Green Party played in important role in drafting laws and regulations for environmental protection and organic farming and products.
However, despite all these efforts, organic farming was (and to some extent still is) hampered by lack of clarity. Consumers were not always sure about what was really covered by organic farming, natural and organic products, and the restrictions it implied. The reasons for the confusion lay, among other things, in the existence of a number of different schools or philosophies, the lack of uniform terminology, the non-standard presentation of products and the tendency to blur the distinctions between concepts, such as organic, natural, wholesome and so on. Furthermore, there were frequent cases of fraudulent use of labeling referring to organic methods.
With the growing demand for organic products and continuously increasing number of producers, distributors and retailers, a proper certification system became a necessity. In the early days, consumers bought organic products directly from farmers and/or shops whose owners they trusted and knew personally. Such systems, as for example the teikei system in Japan, still exist and are quite successful. However, they have both advantages and disadvantages.
In spite of certification, international standards and national labels, such as the Bio-Siegel in Germany and Organic JAS in Japan, these problems still exist to some extent in a number of countries where the organic movement is rather young and consumers can find a variety of “healthy products”, sold as natural, green, chemical-free/reduced and organic, but without clear explanations about the respective differences. Furthermore, existing regulations and standards are not uniform and differ between countries and organizations. In Germany, for example, the standards of organizations for organic agriculture and products (Ökoverbände), such as Bioland, Demeter, Naturland and others, are stricter than national or EU standards.
The Bio-Siegel which was introduced in September 2001 by the German government in order to promote clarity and trust for certified organic products is now used by 1,352 companies and on 28,672 products (as of June 2005). Thus, the Bio-Siegel became the leading and most widely recognized label for organic products in Germany.
In view of the described circumstances, adopting formal rules was the best way to give organic farming credibility in the quality products niche market. The European Community adopted a legal framework in the early 1990s. The movement towards official recognition of organic farming later spread to several other countries and was followed by international initiatives. Other countries, such as Argentina, Australia, Canada, the United States, China, Japan and Korea, have also adopted their own specific organic farming legislation.
Organic agriculture is practiced in almost all countries of the world, and its share of agricultural land and farms is growing (see tables). The total organically managed area, including land in conversion, is almost 30 million hectares world-wide. In some countries with very large areas, such as Australia and Argentina, a substantial portion is used as pastures.
In addition, the area of certified “wild harvested plants” and other products, such as honey, covers at least another 10 million hectares, according to various certification bodies. Furthermore, there are huge areas of non-certified organic agriculture in developing countries which do not have a certification system because it is too costly and/or does not make much economic sense. In order to promote organic farming in these countries, some international organizations offer a new kind of development aid by conducting training programs for organic farming and certification.
Frequent scandals in agriculture and the food industries have resulted in stricter food laws and more efficient procedures for certification and traceability. Early standards for production, inspection and certification were developed by private organizations, followed by governmental regulations. The major importing and consuming markets, such as Europe and the USA, are leading, but countries like Argentina, Brazil, China, India, Japan and Korea are following their path. Today over 60 countries have already implemented their system or are on the way of doing so. The Codex Alimentarius, with its organic chapter, defines the common international ground for governments. Nevertheless, there are substantial differences in the quality and reliability of certification, and it is still necessary to achieve a minimum of world-wide equivalency guaranteed throughout the system.
Organic products are mainly associated with food and beverages. However, there are many other natural products, such as cosmetics and body care products, supplements, detergents and cleaning agents, textiles, building materials, furniture, paper and toys, which all contribute to a natural and healthy life style. Such products cannot be certified in the same way as food, but they must meet strict criteria to be admitted to BioFach.
Ethical consuming is a growing trend among affluent consumers, such as LOHAS members, who want natural and healthy products which are also environment-friendly. These buyers are willing to pay more for quality, and also for products from developing countries which are offered by Fair Trade organizations. Some of these products, for example organic cotton, are well accepted in the market and also exhibited at BioFach. Furthermore, these consumers are also interested in related services, such as eco/green tourism and visits to organic farms.
FLO is the worldwide Fairtrade Standard setting and Certification organization. It permits more than 800,000 producers, workers and their dependants in 50 countries to benefit from labeled Fairtrade.
Definition and International Recognition of Organic Farming
Organic farming involves holistic production management systems for crops and livestock, emphasizing the use of management practices in preference to the use of agrochemicals and off-farm inputs. This is accomplished by using, wherever possible, cultural, biological and mechanical methods instead of chemicals.
Organic livestock farming is based on the principle of a close link between the animals and the soil. The need for a link with the soil requires animals to have free access to outside areas for exercise, and also implies that their feed should not only be organic, but preferably produced on the farm. However, since it is difficult for large livestock farms to produce all feed on-site, the guidelines differ between organizations and countries. This sector of organic farming is also very strictly regulated by provisions for animal welfare and veterinary care.
The objectives of organic farming are identical for crop and animal products. They comprise the application of production methods which do not damage the environment, a more respectful use of the countryside, concern for animal welfare and the achievement of high-quality and healthy agricultural products.
Since these objectives are not easily quantifiable, the best way of pursuing them in practice in order to draw a clear distinction between organic and conventional farming was to codify acceptable procedures. This was first done through private specifications, then through official rules or guidelines at national or international level.
In November 1998 IFOAM (International Federation of Organic Agriculture Movements) adopted basic standards for organic farming and food processing. The Federation, which was established in 1972, brings together organizations from all over the world which are engaged in organic production, the certification of products, education, research and the promotion of organic farming.
In June 1999 the Codex Alimentarius Commission adopted Guidelines for the Production, Processing, Labeling and Marketing of Organically Produced Foods. These guidelines set forth the principles of organic production from the farming stage through the preparation, storage, transport, labeling and marketing of crop products. They are intended to enable member countries to draw up their own rules on the basis of the principles, while taking into consideration specific national features. Later such guidelines were also adopted for the organic production of animal products.The Codex guidelines specify that an organic production system is designed to: ● enhance biological diversity within the whole system; ● increase soil biological activity; maintain long-term soil fertility; ● recycle wastes of plant and animal origin in order to return nutrients to the land, thus minimizing the use of non-renewable resources; ● rely on renewable resources in locally organized agricultural systems; ● promote the healthy use of soil, water and air as well as minimize all forms of pollution thereto that may result from agricultural practices; ● handle agricultural products with emphasis on careful processing methods in order to maintain the organic integrity and vital qualities of the product at all stages;
● become established on any existing farm through a period of conversion, the appropriate length of which is determined by site-specific factors such as the history of the land, and the type of crops and livestock to be produced.
History of BioFach
A forerunner of natural products exhibitions, the first Müsli Fair (Frankfurter Körner- Kongress) took place in 1983 in Frankfurt, with 55 exhibitors and 2000 visitors.
The first Organic Products Trade Fair was held in Ludwigshafen (Germany) in 1990. After stops in Mannheim (1991/1992), Wiesbaden (1993/1994) and Frankfurt (1995-1998), BioFach found its way to Nünberg in 1999. Here the annual World Organic Trade Fair has been organized under the management of NünbergMesse every February since 2000.
The trade fair was a success story right from the beginning. The number of exhibitors rose from 197 in 1990 to 2045 in 2005. Whereas only two exhibitors came from abroad at the first event, this figure rose to an impressive 1367 exhibitors (67%) from 69 nations at BioFach 2005. The number of trade visitors has increased from only 2500 in the first year to over 33.000 this year. Likewise the rented space has risen from 3,000 to 33,340 m2.
NürnbergMesse and its subsidiary company Nürnberg Global Fairs have developed a global strategy for bringing this event and its concepts to other continents. Along these lines BioFach America and BioFach Japan were established in 2001 to reach the major consumer markets. BioFach Japan is also intended as a platform for producers from the Asian-Pacific region. For many countries in this area Japan is already a major export market for conventional food, and organic producers are also eager to enter the Japanese market.
Philosophy of the Global Organic Trade Show Concept● Promotion of the organic movement in key consumer markets. ● Promotion of international certification systems in a global market. ● Creation of market transparency for organic products and trade shows. ● Establishment of regular information platforms for suppliers and trade audience based on common standards and principles. Same Principles for Organic Trade Shows Overseas ● based on the world-wide acknowledged BioFach concept ● clearly defines product groups ● strict admission criteria/rules for exhibitors ● on-site controls to assure quality of displayed products
● qualified international seminar or conference program
BioFach America Latina, held since 2003 in Rio de Janeiro, is the meeting place for producers, processors and traders from all over the world. Especially the accompanying conference with many presentations, seminars and panel discussions provides firsthand knowledge and background information about the organic market. South America is a major producer of organic raw materials, which are exported to Europe, the USA and Japan. The domestic markets for organic products in these countries are still underdeveloped, but are gradually growing, and especially Brazil and Argentina offer a good potential.
Sustainable products and services are popular. Nürnberg Global Fairs has recognized this trend and growing demand for products with added benefit through a new initiative, the Expo Sustentat. This event, held in conjunction with BioFach America Latina in November 2005, is a presentation platform and contact market for companies, organizations and initiatives committed to the idea of sustainability. The themes will include certification, fair trade, sustainable forestry and fishing as well as renewable energy and bio-diversity.
The private public partnership project “BioFach China” aims to support the development of the domestic market for organic food in China. This is to be achieved mainly through know-how transfer, seminars and training events. As part of a Misereor project in Yunnan province, a special seminar was held in August 2005 for small farmers and producers who are interested in improving their marketing and income situation through organic certification.
From 16-19 February 2006, the Trade Fair for Natural Personal Care Products takes place for the first time as an independent event parallel to BioFach at the Nürnberg exhibition venue. Around 200 suppliers of high-quality natural personal care and body care products, remedies, drugstore articles and accessories will exhibit in a separate hall.
Like the natural personal care market itself, the Nürnberg show of products from the world’s market leaders has grown continuously: Both the number of exhibitors and the rented space have doubled since 2000. This encouraging tendency is taken into account by the joint decision of the fair management and major manufacturers of natural personal care products to present natural personal care as a separate event in the future. The manufacturers are pleased that the position of natural personal care is highlighted, as this does much more justice to the special importance of this segment as part of BioFach. Some 30% of BioFach visitors already come for information about natural personal care and another 20% for natural remedies. This interest will probably grow strongly in future when new groups of visitors come from Germany and abroad.
In contrast to food and beverages, for which an EU regulation has clearly defined what “gorganic” means since 1992, there are no such national regulations for natural care products. So, who guarantees that the products exhibited at BioFach are entitled to bear the quality distinction “natural cosmetics and personal care”? A set of rules developed especially for this purpose has determined what is admitted as natural personal care at BioFach since 1997. These rules state that the product must not contain any substances such as EDTA complexing agents, formaldehyde or formaldehyde separators. Also banned are synthetically produced fats, aromatic amines, musk compounds, petroleum derivatives and halogen organic compounds. A limit applies to the use of PEG’s or synthetic preservatives. This admission system has meanwhile taken on the nature of a quality seal, and manufacturers use the admission of their products to BioFach for promotional purposes.
In addition, the results of the guidelines issued by the “Natural Cosmetics Working Group” of the BDHI (Association of German Industrial and Trading Companies) in 1999 are also incorporated in the admission criteria. The “Certified Natural Cosmetics” quality seal introduced by the BDHI in 2001 means that the consumer can rely on a high quality standard, regular control and safe ingredients. Around 50 companies currently use this label for more than 2000 certified products. The manufacturers of certified natural personal care products impose the highest standards on the product development of innovative, natural products that are especially kind to the skin. The focus is on the origin and selection of the raw materials used, as far as possible from certified organic cultivation or certified wild organic sources, careful processing, consistent compliance with the ban on animal tests, and environment-friendly packaging. France, Italy, the USA and other countries have developed similar strict standards for natural care products.
Within the framework of the global concept of BioFach, the first BioFach Japan was held in December 2001. This was also the year when Organic JAS was introduced in Japan. Since at that time only few Japanese products were certified according to Organic JAS, other agricultural products — from farms in conversion and farming with reduced agrichemical (so-called tokusai) were admitted and indicated respectively.
In the following years the certification of organic farms, processing and products made good progress, and currently there are about 5000 products, processes and producers certified according to Organic JAS. In addition, there are many imported organic products carrying the JAS label on the market.
These figures prove that enough certified organic producers and products are in Japan, and that the initial exceptions and concessions to Japanese organic farmers are no longer necessary. Therefore, the same strict admission criteria which are in force globally and make BioFach a unique trade fair are also applicable for BioFach Japan.
Farms and processors in conversion from conventional to organic products can still exhibit their products for a limited period of time, until the conversion process and certification have been completed. However, farms which only reduce the amount of agrichemicals — without ever aiming for 100% organic farming — do not meet the strict criteria of BioFach and cannot be admitted.
The most important factor for the success of BioFach is the variety and high quality of the exhibited organic products. The organizers of BioFach guarantee this with strict admissions criteria and controls, and in this effort they are fully supported by IFOAM, the International Federation of Organic Agriculture Movements.
BioFach Japan 2005: Focus on non-food Increasing interest in natural personal care and textiles● Official organic label now also applies to animal products ● Restaurants and caterers back organic ingredients.
● Parliamentary committee supports organic movement
Good news from Japan for organic market players: The interest in organic and natural products is growing continuously. Especially young Japanese women and families with children as well as elderly people are increasingly choosing organic food and natural products. This time, the focus at the 5th BioFach Japan in Tokyo from 21-23 September 2005 is on non-food products.
People with allergies and senior citizens have been looking for healthy food, natural body care products and natural clothes for a long time. The growing demand in the non-food segment is reflected in the list of exhibitors at the 5th BioFach Japan. At this event in Tokyo from 21-23 September, there are more German manufacturers exhibiting than last year and the German pavilion will be larger. A positive trend is also emerging in the food segment: Supermarket chains are expanding their organic ranges and restaurants and caterers are turning more to high-quality organic ingredients. The restricted range of certified organic food available is still the limiting factor. However, market insiders expect constructive effects from the official JAS organic label, which now also controls the handling of animal products, and from a parliamentary committee that supports the organic movement. The great interest of the media and the open-minded association representatives keep organic present in the minds of society. BioFach Japan with its international range of certified products will help to close the gap in the products available.
Last year, over 170 exhibitors presented their products to more than 13,000 people with a high level of media interest. The trade public (70%) plus consumers on the last day received a representative overview of the international range of organic products. At BioFach Japan this autumn, the exhibitors will concentrate on satisfying the increased demand for natural body care and cosmetic products and natural textiles. Sales in the non-food segments of the Japanese market are rising encouragingly, so that manufacturers are offered a real opportunity for market entry here.
The range of organic food available is not yet sufficient. Although there are hundreds of specialist shops and restaurants — mainly in the Tokyo region — that stock or serve organic and health food products, particularly supermarkets and trading chains are looking for suppliers. The Japan Self-Service Association co-operates with BioFach Japan as partner and supports extending the range of products. The Association of Japanese Cooks is also very interested in serving more organic ingredients on the plates in restaurants, works canteens and schools. To make people even more aware of organic, regular events at which press representatives can report on products and the organic market from an organic food restaurant are certainly also helpful.
The initiative of Marutei Tsurunen (a native of Finland with Japanese citizenship) should also have a favourable effect: The parliamentary committee he chairs has grown to over 100 members and is very active. “The main aim is to achieve practical support for Japanese organic farmers,” says Tsurunen. The official standard for organic products, the Japanese Agricultural Standard (JAS), has formed the basis for certification since 2001, but there is still a lack of government help for organic farming. The JAS standards are currently being updated and regulations for animal products have been added recently.
Japan is a country with a fascinating tension between Far East exotic, tradition, state-of-the-art technology and a lifestyle marked by Western characteristics. This also includes the health and wellness trend. Japan is the third largest market for natural and certified organic products after the USA and Europe. The Japanese consumers, who after a number of scandals would like safe and healthy food, are attributed the highest spending power in the Asian region. BioFach Japan is the hub for certified organic products and an international meeting-place for all players interested in the Asian organic markets.
New in 2006: Health Life Japan● Exhibitions for natural products, organic food, health products and functional food under one roof Co-operation between BioFach Japan, New Hope ● Natural Media, Health Business Magazine and the association Zenkenkyo
● Everything about organic food, natural products, health and wellness
Japan gets a new leading event for the booming organic, health and wellness market starting in 2006: Health Life Japan. Four competent partners joined forces for this purpose in mid May. The world’s leading exhibition specialists for organic and natural products, Nürnberg Global Fairs and New Hope Natural Media, plus Japan’s publisher of the Health Business Magazine, the number one trade journal for the health market, and Zenkenkyo, the oldest Japanese association for health and natural foods.
The existing trade fairs BioFach Japan, Natural Products Expo Japan and Natural Expo will be organized jointly under the umbrella name of Health Life Japan from 2006 onwards. The date of the première at the Tokyo Big Sight exhibition centre is already fixed: 21-23 September 2006. The organizers of BioFach Japan and Natural Products Expo Japan, the publisher and the association contribute their exhibition experience and their extensive networks to the co-operation:
● BioFach, the World Organic Trade Fair, takes place for the seventeenth year, annually in Nürnberg since 1999. BioFach America in Washington, BioFach America Latina in Rio de Janeiro and BioFach Japan in Tokyo have been
established under the direction of Nürrnberg Global Fairs as part of the concept of “BioFach globally present”.
● New Hope Natural Media has organized North America’s largest exhibitions for natural and organic products for years — the Expo West in Anaheim (California) and Expo East in Washington — and the Natural Products Expo Japan.
● Health Business Magazine is a leading Japanese publisher of publications on functional and dietary food. The trade magazine Health Life Business reaches 33,000 retailers and decision-makers throughout Japan twice a month. The publisher has organized the leading exhibition for functional food in Tokyo since 1997; the exhibition took place together with the Natural Products Expo Japan for the first time in 2005.
● Zenkenkyo (Japan Health and Natural Foods Association) was set up in 1980, is the oldest non-profit-making association for health and natural products in Japan and has almost 500 members. The association has organized the Natural Expo since 1997.
Trade buyers will find everything they are looking for under one roof at Health Life Japan. The event starting in 2006 is unique in Japan and covers all health themes: organic and natural raw materials, finished products, natural personal care products and natural textiles in the exhibition halls and marketing ideas and specialized knowledge at the accompanying congress and seminar program.
The Organic Food Market in Japan
The organic food market in Japan Japan accounts for the bulk of organic food sales in Asia. The country is the economic powerhouse in Asia and its consumers are the most affluent in the region. There has been high demand for organic foods in Japan since the 1990s and the market is expected to dominate Asian revenues in the future.
The Japanese market for organic foods was valued at $3 billion in 2000, however the definition of organic foods included many uncertified organic products, like those with low amounts of chemical inputs. The tightening of the definition of organic foods by the Japanese Ministry of Agriculture led to the market size to shrink to $250 million in 2001. Much of the expansion in the Japanese organic food market is due to more organic products receiving official recognition rather than consumer demand rising.
The revenue share of Japan is expected to decrease slightly over the forecast period. More organic food sales are expected to occur in countries like China, India and Thailand as organic food production steps up in these countries and consumer affluence increases. It is projected that Japan will account for about 80 percent of Asian market revenues by 2009.
The Japanese organic food industry used to be the second largest in the world after the United States, however, as stated above, new government definitions and regulations for organic food caused the market to shrink considerably.
The new JAS regulations have provided uniform standards for organic foods and they have allowed organic foods to be clearly distinguishable in the marketplace. A common logo, the Organic JAS Mark, is put on organic foods that meet JAS requirements (see label below on the right side). Only foods that have been certified by a registered organisation can be sold as organic foods in Japan.
JAS stands for Japan Agricultural Standards and can be found on many products (see label above on the left side), while the Organic JAS label can only be used for certified approved organic agricultural products. Currently 67 domestic (RCO) and 20 foreign certification organisations (RFCO) are approved by MAFF and can certify and inspect organic foods. Some Japanese RCOs also work and certify products abroad, mainly in Asia and Central and South America.
There are about 3,200 organic farms in Japan managing 5,300 hectares of organic farmland and most are in Okayama and Kumamoto prefectures. It is expected that the amount of organic farmland in Japan will increase and eventually double. The official estimates are based on those organic farmers that have registered and about the same number that have not registered with MAFF. Organically managed land accounts for about 0.11 percent (or slightly more according to IFOAM Japan and other sources) of total agricultural land in Japan.
Organic farming is difficult in Japan due to the lack of arable land and high cost of inputs. The warm, humid summers also make crops vulnerable to pests and plant diseases. Japanese farmers typically use a high level of pesticides. Agrochemical usage levels are some of the highest in the world, estimated to be over seven times as much as for North American farms. The small farm sizes and close proximity between them is responsible for contamination of organic farms by chemical fertilizers and pesticides from conventional farms.
The average Japanese farmer in Japan is tied into a nokyo, or local farmers’ union, which markets their produce, sells seeds, fertilizers and pesticides and decides what is grown and how it is farmed by its members. The individual farmer has little autonomy, and to move outside the nokyo is business suicide, as well as socially difficult because of the constraints in rural communities.
To become an organic farmer outside the nokyo system is a big leap and challenge, and until now there is little, if any financial or practical support offered by the government. For those who take the risk, produce distribution is handled to a large extent by one of the intermediaries within the teikei system. Some of the leading players are Daichi Mamorukai and Radish Boya. Since the teikei system is based on trust between producers, distributors and consumers, some (but not all) teikei organizations set their own standards and do not see a need for officially recognized certification or may even reject it. Due to high demand and limited supply, each of these companies wishes to protect its supply lines, and they are rather secretive about their farmers, suppliers and customers. Thus, in a sense, an alternative nokyo system has developed which promotes diversion and a closed system rather than cooperation and free market access. Nevertheless, the teikei system still plays an important role in the distribution of natural and organic products in Japan.
The amount of certified organic farmland in Japan is projected to increase in the coming years. The new JAS regulations are causing many farmers to register their organic farms with MAFF, which is mandatory if they want to have the JAS mark on their products. This year the government will introduce standards for organic livestock production in Japan. Organic meat and dairy products will soon be controlled by JAS, and this also applies to foreign products which until now could be imported and sold as organic foods without the JAS logo. Once the new JAS standards for organic livestock products and organic animal feed are in force, this will widen the scope and variety of organic products and offer business opportunities to domestic and foreign producers. A larger variety of organic products will also increase the interest and demand among consumers.
Processed Food and Distribution
There is a high level of imports in the Japanese market. Apart from some varieties of organic vegetables, organic rice and organic green tea that are domestically grown, most organic foods are imported. The production of primary organic products has not increased much since the mid 1990s and Japanese companies are moving towards producing value added products like organic noodles, organic juices and organic processed foods. Noteworthy is the large market share of organic soybeans and traditional foods made of soybeans.
A large portion of Japanese grown organic fruit and vegetables is sold through the teikei system in which growers via intermediary organizations supply directly to consumers. More than half of the organic fresh products grown in Japan is sold via direct marketing whereas most imported volumes go to the retail trade.
Most organic food sales have traditionally been from specialist retailers like macrobiotic, health and organic food shops. A pioneer in retailing natural food and other products is Natural House, based on the concept of the German Reformhaus with a number of outlets in Tokyo. The number of natural and organic food shops in Japan has mushroomed since the early 1990s, especially in the Tokyo metropolitan area. A leading retailer is Mother’s, a chain of a dozen natural and organic foods stores. Like other specialized shops they offer a mix of healthy, natural and certified organic products.
Supermarkets are showing greater interest in organic foods with large retail chains offering organic products since 2000. The leading supermarkets are JUSCO and Daiei. Convenience stores are also playing an important role in the organic food industry with Lawson and 7-Eleven increasing the range of organic products in their stores. Lawson is the second largest chain of convenience food stores in Japan, and it opened a new store, Natural Lawson, in July 2001 that specializes in marketing natural foods and organic products. Since then the Natural Lawson chain has expanded, and currently there are 26 outlets with more to come. Kinokuniya, an upscale supermarket known for high-quality imported products, offers a wide range of natural and organic products and also publishes a newsletter with detailed information in Japanese and English. So does Alishan, a major importer and retailer of organic products which also operates an organic restaurant. In September 2003 KANESUE (www.kanesue.co.jp), a large supermarket (about 800 m2 floor space, including a natural food restaurant) dedicated to natural and organic food, opened in Ichinomiya near Nagoya. Although there are hundreds of retailers selling organic products, none of them are “organic only” (like in European and other countries). In addition to conventional items they offer a wide range of healthy, green, natural and certified organic products. Until now most large trading companies have shown little interest in organic products, leaving this business niche to smaller and specialized companies.
On the other hand, major retailers are frequently dispatching managers and staff members to the USA and EU to gather information about traceability and organic products. The large supermarket chain AEON/JUSCO has introduced its own unique quality management system A-Q drawing upon the EUREPGAP mechanism in Europe and has developed private-brand products. Due to various problems and scandals in the food industry and consumer demands for safe food, the government has established clearer definitions and laws concerning ambiguous labels, such as “chemical-free and reduced-chemical” agricultural products. However, the government has not yet defined the terms “natural food” and “additive-free food”. Concerning the food safety the government is also providing assistance for traceablity-related programs and tools (about Yen 2.5 billion in FY 2003). Traceability is one trend in the food industry. However, since it is not able to make direct appeals to quality improvements, the level of recognition among consumers is low. Even business people and consumers who understand the purpose of traceability often do not know that all organic products are traceable!
Other Distribution Channels
In addition to the distribution channels described above, two more channels are gaining in importance and should be mentioned: Catering & Restaurant industry and Internet sales.
In addition to quality-conscious high-class restaurants many family-type restaurants have developed menus using organic vegetables and other ingredients. The demand, especially for imported products, will probably increase after the introduction of JAS regulations for organic livestock products. Restaurant expenditures in Japan are estimated to be in the range of Yen 25-30 trillion. Even though the growth rate was not high during the slump in the economy (which is now gradually recovering), the volume of restaurant-use raw materials is very large and offers a good potential for domestic and foreign producers.
There are numerous web sites that sell food products via the Internet, among them also many that handle organic foods. Producers, food manufacturers, distributors and various other companies are using this sales channel, and there are thousands of items available, often at lower prices than in retail shops.
Conclusions and Outlook
Japanese people have a strong interest and long tradition in consuming healthy, natural and recently also “safe” food, and consequently there is a huge market for such products. However, as stated in this article, so far this applies only to a limited extend to certified organic products. There are various reasons why the market for organic products is developing and growing at a rather slow pace.
● The recognition of organic by consumers is still at a rather low level. Suppliers and retailers offer a combination of organic foods together with natural and other foods which are good for health as well as conventional products. Currently, the market for so-called functional food and supplements is booming. Therefore, the present environment in Japan is one in which the organic market is difficult to foster.
● Under the current JAS law only a limited number of agricultural products can be certified as organic. Therefore, there is a lack of variety, and with the exception of some imported items, consumers can only find fresh products and organic food made of soybeans, grain, vegetables, fruits and other plants.
● Most organic products, with the exception of products made of soybeans, are considerably more expensive than conventional products. Even though growing and processing organic products is more expensive, the main reason for the high prices is probably the low volume in production and turnover.
● The introduction of Organic JAS certification for animal and dairy products will probably give an impetus for the growth of the organic market. A larger variety and many new organic products will increase the consumer demand and business volume, and as a result this will lead to price reductions. It can also be expected that the Japanese food processing industry, including big and well-known companies, will join the organic business.
● A wider recognition of the Organic JAS label combined with a better understanding what certified organic really means will stimulate the demand for organic products.
● Support by the government and other initiatives, such as by the parliamentary committee for the promotion and support of organic farmers and products, will improve the situation for domestic organic products.
● Major consumer segments, such as a growing number of people who buy high-quality, healthy and environment-friendly products (see LOHAS article) and senior citizens will ensure an excellent market potential for natural and organic products.
● An increasing number of retail companies will enter business partnerships with local organic farmers and food processors. This will offer better market access to organic farmers outside the teikei system and will bring more certified local products into supermarkets and chain stores. Large retailers will also offer more imported organic products, and with increasing volume and turnover the prices will be reduced.
● More natural and organic products will be offered on the internet, making shopping easier and less time-consuming, especially for working women.
● Catering businesses and restaurants will buy and sell more natural and organic food to meet the growing demand for safe and healthy dishes. Fast food will shift to fast and good food. Supplying organic food and natural products for schools, company lunchrooms and facilities for senior citizens has already started and may turn into a big business.
● Japan’s organic production will grow, but probably at a slower pace than in Europe, the United States and other countries, unless several of the improvements mentioned in the article are implemented. The current limitations of domestic organic production imply that the organic market will to a large extent depend on imported organic foods. However, even though foreign products may be cheaper, Japanese organic farmers and food processors can still compete if they offer added value and appeal to consumer preferences for high-quality local and unique regional products with Geographical Indication (as promoted in the EU under a GI label).
● For foreign producers and exporters the prospects are promising. In conjunction with the recovery of the Japanese economy the demand for organic products, raw materials and processed foods will gradually increase. Also the already substantial demand for natural (non-food) products will continue to grow.
A combination of the above trends will generate synergetic effects for organic food, natural products and related services. The improved economic situation in Japan will also encourage consumer spending. With a growing number of affluent and socially responsible consumers who want high-quality, healthy and environment-friendly products and services, the future prospects look very promising. BioFach can expect a continuous growth with strategic alliances and partnerships for an integrated Natural and Organic Lifestyle.
Acknowledgements: The information for this article was drawn from various sources, among them publications and websites of the European Commission, IFOAM, Codex Alimentarius, Organic Monitor, BioFach Newsletter and other media and organizations covering this topic.