FOOD CONSUMPTION IN JAPAN A Review of Selected Japanese Data and Research Results.

Occasional Paper No. 32

BUREAU OF AGRICULTURAL ECONOMICS, CANBERRA

BUREAU OF AGRICULTURAL ECONOMICS, CANBERRA

FOOD CONSUMPTION IN JAPAN A Review of Selmcted Japanese Data - and Research Results

E.A. SAXON

Occasional Paper No. 32

AUSTRALIAN GOVERNMENT PUBLISHING SERVICE CANBERRA 1975

( i i i )

FOREWORD

This paper repor t s on f u r t h e r work i n t he continuing research program undertaken i n t h e Bureau of Agricul tural Economics r e l a t i n g t o Japan.

A r e s t r i c t i n g fac tor i n e a r l i e r s tud ies has been t h e l imited amount of relevant data and r e s u l t s of Japanese research ava i lab le i n t he English language. This paper draws heavily on material published i n Japanese but not t r ans l a t ed i n t o English. I t a l so approaches food and agr icul ture i n Japan i n a broad fashion, whereas most of t h e Bureau's e a r l i e r published research work was commodity oriented.

Further papers on other aspects of agr icu l ture and food supplies i n Japan a r e i n t he course of preparation.

N.D. HONAN Director

Bureau of Agricultural Economics, Canberra. December 1975.

' (v)

CONTENTS

Background and Aims

Data on Food Consumption

Data on Incomes

Data on Prices

Other Determinants of Food Consumption

Income and Price Elasticities

(a) Models

(bl Products

(cl Periods

(dl Data Sources

Cross-Elastici ties

Some Comments on the Elasticities

Saturation Levels

Elasticities and Probable Future Consumption Trends for Individual Commodities

( a ) Rice

(bl Other CereaZs and Cereal Products

(cl Meat

(dl MiZk and MiZk Products

(el Eggs

( f l F r u i t

(gl Gaishoku

(hl Other Products

Page

1

3

5

11

18

2 1

2 2

23

24

24

2 7

27

29

Limitations and Implications

Bibliography

Page

Tab1 es

No. 1

No. 2

No. 3

No. 4

No. 5

No. 6

No. 7

No. 8

No. 9

No.10

No.11

No.12

No. 13

No.14

Figures

ANNUAL FOOD CONSUMPTION PER PERSON DATA FROM FOOD BALANCE SHEETS

ANNUAL FOOD CONSUMPTION PER PERSON DATA FROM FAMILY INCOME AND EXPENDITURE SURVEY CITIES OF 50 000 AND OVER

ANNIJAL FOOD CONSUMPTION PER PERSON DATA FROM FAMILY INCOME AND EXPENDITURE SURVEY

ANNUAL FAMILY EXPENDITURE ON PRINCIPAL FOOD GROUPS

TRENDS IN INCOME AND EXPENDITURE NATIONAL ACCOUNTS DATA

TRENDS IN INCOME AND EXPENDITURE SURVEY DATA

RETAIL PRICE MOVEMENTS - PRINCIPAL FOOD GROUPS

RETAIL PRICE MOVEMENTS - SELECTED FOOD PRODUCTS

MOVEMENTS IN AVERAGE PRICES - SELECTED FOOD PRODUCTS

INCOME AND PRICE ELASTICITIES

CHANGES IN INCOME AND PRICE'ELASTICITIES THROUGH TIME

GROSS ELASTICITIES AND EFFECTS OF PRICES OF SUBSTITUTES ON OWN ELASTICITIES

QUALITY ELASTICITIES ESTIMATED FROM CROSS-SECTION DATA

COMPUTED 'SATURATION LEVELS' FOR SELECTED FOODS

TRENDS IN VOLUME AND ORIGIN OF TOTAL FOOD SUPPLIES

COMPOSITION AND MAGNITUDE OF EXPENDITURE ON FOOD

TRENDS IN INCOME AND EXPENDITURE PER FAMILY MEMBER

RELATIVE PRICES OF SELECTED FOODS

FOOD CONSUMPTION- I N JAPAN - A REVIEW OF SELECTED JAPAFIESE DATA AND RESEARCH RESULTS'

1 . Background and A i m s

In recent years, Japanese pol icy makers have shown a renewed concern with the problem of assuring adequate food supplies i n a s i t u a t i o n of r i s ing demand and l imited loca l resources. To provide a c l ea re r understanding of the nature of t h i s food problem, various research projects have been commissioned. One of these undertaken i n t he Ministry of Agriculture and Forestry concentrates on s t a t i s t i c a l analyses of the demand f o r food i n Japan, but i ts r e s u l t s have so f a r been published only i n Japanese.(l) The aim of t h i s paper is t o make avai lable i n English some of the pr incipal r e s u l t s of t h i s analysis .

Problems associated with food supplies a r e by no means new i n Japan. They influenced pre-war colonial po l i c i e s and became most acute a f t e r the war when the loss of overseas supply sources and the deter iorat ion of domestic agr icu l ture led t o widespread food def ic iencies . Early postwar pol icy necessar i ly concentrated on overcoming these def ic iencies , but within a few years the reconstruction of Japanese agr icul ture , together with ass i s tance from the occupation au tho r i t i e s , had removed the t h r e a t of undernourishment, and pol icy emphasis moved towards securing a grea te r var ie ty i n food supplies t o meet the changing nature of demand.

Domestic ag r i cu l tu ra l production i n the period 1955 t o 1973 rose by 41% i n t o t a l . Livestock production increased 320% and crops lo%, re f lec t ing the marked swing i n demand towards meat, eggs and milk products. Changing demand pa t te rns a l so caused the composition of crop production t o change grea t ly . I n pa r t i cu l a r , production of wheat, coarse grains, pulses and sweet potatoes f e l l considerably, while t h a t of f r u i t increased by 250% and of vegetables by 67%.

Although Japanese agr icu l ture demonstrated a considerable capacity t o adapt t o changing demand pa t te rns , it could not keep pace with t o t a l demand so tha t an increasing proportion of t o t a l food supplies (and more pa r t i cu l a r ly of l ivestock feedstuffs) had t o be imported. The r i s i n g tempo of economic development from about 1960 and the accompanying expansion of exports made possible progressive reductions i n import r e s t r i c t i o n s and these i n tu rn f a c i l i t a t e d food imports t o the extent t h a t food supplies became more assured than ever before and food problems receded in to t he background as major pol icy issues . Figure I gives an overal l view of the way i n which t o t a l supplies were augmented by imports and the growing contribution of domestic l ivestock indus t r ies .

By 1973, the se l f - suf f ic iency ra t io (2) f o r food products i n aggregate had f a l l e n t o 71% as compared with 90% i n 1960. I f the

(1) The pr incipal publications which present t he r e s u l t s of t he analysis comprise t he s e r i e s numbered 1 i n t he Bibliography appended t o t h i s paper.

(2) The se l f - suf f ic iency r a t i o i s the percentage contribution of domestic production t o t o t a l supplies ava i lab le f o r consumption.

FIGURE I

(Total supplies in 1965 = 100)

TRENDS IN VOLUME AND ORIGIN OF TOTAL FOOD SUPPLIES

/ IMPORTS

100 - ///-- - .

/ -- -_

/ I. ' 4

/ All domestic production / /. 1

80 - ,/ -- ---/

60 - CROPS

PRODUCTS

feedstuffs needed f o r the rap id ly expanding l ivestock indus t r ies a r e included i n the calculat ion, t he r a t i o i s l i t t l e more than 50%. Many Japanese were concerned by t h i s decl ine i n sel f -suff ic iency which they viewed as a growing dependence on overseas suppl iers who might not always be able or wi l l ing t o maintain suppl ies . Several developments i n 1973 combined t o heighten the concern about dependence on imports and t o reverse t he t rend towards complacency on the question of food suppl ies . These included the 'soybean c r i s i s ' when the U.S. temporarily banned t h e export of soybeans, a s e r i e s of major increases i n pr ices of ce rea l s , meats, sugar and some other foods and the ' o i l c r i s i s ' of l a t e 1973 when o i l supplies were temporarily i n doubt and pr ices approximately quadrupled. These events caused the Japanese t o rethink some of t h e i r food pol ic ies , leading t o a rewri t ing of o f f i c i a l agr icu l ture po l i c i e s i n a way which aims t o encourage increased domestic production of several basic foods and t o safeguard i n a s many ways as possible t he supply of foods and feedstuffs which cannot be produced i n su f f i c i en t quan t i t i e s i n Japan. Incentives t o increase production include both higher support p r ices (e.g. f o r r i c e and wheat) and import quotas (e.g. f o r meats). Measures t o secure adequate imports a t acceptable pr ices include b i l a t e r a l (or mul t i l a te ra l ) agreements as i l l u s t r a t e d by the sugar agreement with Australia and 'develop and importt arrangements whereby Japan a s s i s t s i n the development of indus t r ies i n overseas countries t o supply t h e Japanese market (e.g. maize i n Thailand).

This paper aims t o summarise selected r e s u l t s of t h e demand analysis recent ly undertaken i n t he Japanese Ministry of Agriculture and Forestry (hereaf ter re fe r red t o a s t h e 'MAF study') and t o o f f e r some in te rpre ta t ion of these r e s u l t s i n the l i g h t of the background out l ined above.

The s t a t ed aim of t he MAF study i s to f a c i l i t a t e an examination of the influence of changes i n income and p r i ce on f i n a l consumption of foodstuffs . I t presents the r e s u l t s of ca lcu la t ions of income and pr ice e l a s t i c i t i e s based on data up t o 1973, together with ce r t a in o ther material which i s designed t o a s s i s t t h e user i n grasping the s ignif icance of trends i n demand and i n estimating fu tu re food requirements. Before examining the r e s u l t s of the MAF study, t h i s paper presents a summarised version of the pr incipal ava i lab le data on food consumption, income and pr ice , and then looks b r i e f l y and qua l i t a t i ve ly a t other f ac to r s which influence consumption. I t concludes with a consideration of some of t he l imi ta t ions and implications of the analysis .

2 . Data on Food Consumption

S t a t i s t i c s of food consumption i n Japan a r e ava i lab le from two pr incipal sources, the Food Balance Sheets and the Family Income and Expenditure Survey.(3)

(3) A t h i r d source i s the Farm Household Living Expenses Survey (Noka Seikeihi ~h i j sa ) conducted annually by the Ministry of Agriculture and Forestry i n conjunction with t h e Farm Household Economic Survey. This survey resembles t he FIES i n t ha t it focuses on the consumers' end of the d i s t r i bu t ive chain. To avoid introducing addi t iona l complexities, only non-fano households have been considered i n t h i s paper.

The Food Balance Sheets (FBS) a re published annually by the Ministry of Agriculture and Forestry.(4) They a re prepared according t o guidel ines l a i d down by the Food and Agriculture Organisation of the United Nations (FAO) and are made ava i l ab l e t o a s s i s t FA0 i n preparing in t e rna t iona l ly comparable t ab l e s . Annual consumption of p r inc ipa l food products and groups of products i s estimated on the bas i s of domestic disappearance o r a v a i l a b i l i t y f o r human consumption (apparent consumption). The general procedure i s t o add production and imports, ad jus t f o r stock changes, then deduct exports, non-food usage, seed, usage i n manufacture and a ra ther a r b i t r a r y es t imate of wastage. The ne t f i gu re f o r apparent consumption i s then dividcd by t o t a l population to provide an es t imate of consumption per person.(5)

The Family Income and Expenditure Survey (FIES) is conducted on a monthly bas i s by the Bureau of S t a t i s t i c s . ( 6 ) I t now covers a sample of more than 8000 households i n 176 c i t i e s , towns and v i l l ages . It excludes s ing le person households and some other a typ ica l consumption un i t s . I t a l s o excludes farm households which a r e surveyed separately by the MAF.(7)

The sample is divided in to a number of sub-samples. For the purposes of t h i s a r t i c l e , the most important d iv i s ions a re :

(a) Worker's households and other households;

(b) C i t i e s of .50 000 and over and o ther towns and vi l lages . (8)

P r i o r t o 1963, t he survey used a much smaller sample and was r e s t r i c t e d t o urban areas so tha t data f o r e a r l i e r years are comparable only with more recent data r e l a t i n g t o c i t i e s of 50 000 and over.

More than 500 items of consumption expenditure a r e included i n the survey, about 40% being food items. For each item t h e survey repor t s show expenditure per household, quan t i t i e s purchased and average un i t cos t ( i . e . expenditure divided by quant i ty) . Average consumption per person a s shown i n Tables No. 2 and No. 3 was ca lcu la ted by dividing quan t i t i e s purchased by the number of household members.

(4) See item 2 i n the Bibliography.

(5) A s imi l a r procedure i s adopted by the Austral ian Bureau of S t a t i s t i c s , i n preparing i ts annual b u l l e t i n Apparent Conswrrption of Foodstuffs and Nutrients.

(6) See items 3a and 3b i n the Bibliography.

(7) See footnote (3).

(8) The d i s t r i b u t i o n of the sample according t o these categories i n December 1974 was:

Workers H'holds Other H'holds A l l H'holds

no. % no. % no. %

C i t i e s of 50 000 and over 4690 58.3 2126 26.4 6816 84.7 Other towns e tc . 776 9.7 450 5.6 1226 15.3

A l l Japan

There a r e important differences i n concept and treatment between the two s e t s of data. The EBS f igu res generally r e f e r t o products a s they leave the farm, the port of import o r a processing p lan t (e.g. a b a t t o i r or dairy fac tory) ; the FIES f i ~ j e s r e f e r t o products a s they a r e sold a t r e t a i l . Thus what enters the d i s t r i b u t i v e system a s wheat is purchased by the housewife a s bread, noodles, f lour , cakes e tc . Further, some categories of products a r e not e n t i r e l y consis tent between these two sources, e.g. some products such as melons and strawberries a r e t r ea t ed a s vegetables i n the FBS and as f r u i t s i n t he FIES. An important source of quant i ta t ive difference l i e s i n the large and increasing amount of food eaten outside the household and hence not included i n the s t a t i s t i c s of family purchases.

Tables No. 1 t o No. 3 show average consumption per head as derived from these two s e t s of data . While t h e actual levels may d i f f e r somewhat according t o the data c i t ed , both s e t s show very s imi la r t rends through time.

Table No. 4 summarises changes i n t he magnitude and composition of expenditure on food. I t brings out c l ea r ly t he declining importance of cereals and the increasing expenditure, both r e l a t i v e and absolute, on l ivestock products, f r u i t , vegetables, beverages and meals away from home. Figure I1 presents some of these changes i n g r a p h i c form.

In calculat ing e l a s t i c i t i e s , t he MAE study generally uses quanti ty data f o r individual products and expenditure da ta f o r groups of products which cannot reasonably be aggregated i n terms of quan t i t i e s . However, i t i s possible t o ca lcu la te e l a s t i c i t i e s f o r individual products e i t h e r from quant i t i es purchased o r consumed o r from expenditure on those products. As explained l a t e r i n t h i s paper, demand analysts have sought t o i n t e rp re t differences between the r e s u l t s obtained i n terms of qua l i ty .

3 . Data on Incomes

One of the most spectacular aspects of the Japanese post-war developments has been the rapid r i s e i n incomes, i n r e a l a s well a s i n money terms.

A s i n the case of food consumption, there a r e two major sources from which trends i n average income per person may be ascertained. One of these sources uses aggregate data f o r t he whole economy, while the other uses a sample survey. The aggregate data a r e provided by t h e na t iona l accounts(9), while the FIES provides data on incomes (workers' households only) i n the la rger c i t i e s and i n Japan as a whole, farm households being excluded as mentioned e a r l i e r .

The concepts of income i n t he two s e t s of data a r e somewhat dif ferent . Personal income a s defined for nat ional account purposes includes income from some sources not covered by the FIES e .g . income of pr iva te non-profit i n s t i t u t i o n s , c e r t a i n imputed income and 'income i n kind' . The FIES publishes income da ta f o r workers' households only, s ince it has not been pract icable t o co l l ec t comparable data on a monthly bas i s from other households. As a r e s u l t of such differences i n coverage, average income per person a s ascer ta ined by the nat ional accounts calculat ions i s cons is ten t ly higher than average income per household member.

(9) See item 4 i n the Bibliography.

FIGURE II

FV : Fruit and vegetables

ME : Milk and eggs

B : Beverages

G : Food eaten away from home

COMPOSITION AND MAGNITUDE OF EXPENDITURE ON FOOD

1965 Prices

Table No. 1

ANNUAL FOOD CONSUMPTION PER PERSON

DATA FROM FOOD BALANCE SHEETS

Fisca l Years(a) (Kilograms)

Item 1955 1960 1965 1970 1972 1973

A. Principal Product

Cereals Potatoes Vegetables Fru i t Meat Eggs and milk Fish and s h e l l f i s h O i l s and f a t s

Groups

B. IndividuaZ Products

Rice 110.7 114.9 111.7 95.1 91.7 91.1 Wheat 25.1 25.8 29.0 30.8 30.9 31.0 Barley and naked barley 17.6 8.1 3.6 1.5 1.3 1.3 Soybeans (b) 4.5 5.6 4.7 5.6 5.7 5.8 Beef 1.1 1.1 1.4 2.0 2.4 2.3 Pork 0.8 1.1 2.7 4.7 5.6 6.4 Chicken 0.3 0.8 1.9 3.7 4.7 5.1 Other meats 1.1 2.0 2.8 3.3 2.7 2.4 Eggs 3.4 6.3 11.6 14.8 14.6 14.5 Milk f o r drinking 5.5 10.7 18.4 25.3 26.3 26.9 Other milk 6.6 11.6 19.0 24.8 25.5 26.0 Butter 0.1 0.1 0.3 0.4 0.5 0.6 Cheese 0.0 0.1 0.2 0.4 0.4 0.5 Sugar 12.3 15.1 18.7 26.9 28.0 28.4 Mikan(c) 3.1 5.9 7.4 14.0 19.2 17.9 Apples 3 . 3 7.0 8.3 7.1 6.6 6.5

(a) The Japanese f i s c a l year extends from April of the year indicated t o March of t he following year. (b) Excludes manufactured products such such a s soy sauce and bean curd, consumption of which has tended t o decline s ince 1975. About 80% of soybean supplies a r e used i n manufacture. (c) Mandarin oranges. See Footnote (12) i n t e x t .

Source: See item 2 i n Bibliography,

Table No. 2

ANNUAL FOOD CONSUMPTION PER PERSON DATA FROM FAMILY INCOME AND EXPENDITURE SURVEY

CITIES OF 50 000 AND OVER Calendar Years

(Kilograms)

Item 1951 1955 1960 1965 1970 1972

A. Product Groups Fresh f i s h and s h e l l f i s h 17.5 17.6 16.8 15.2 14.6 14.1 Dried and s a l t e d f i s h 3.9 4.2 4.5 3.7 4 . 3 4.5 Fresh vege tab les n a n a na 69.6 66.4 71; 2 Meat 2.7 3.7 5.5 8.2 10.7 12.0

, Fresh f ru i t 14.5 17.8 24.9 31.8 41.0 50.3

B. IndividuaZ Products Rice 81.8 91.0 98.9 80.4 62.8 57.8 Bread 12.7 11.0 8 .5 9.9 10.3 9.5 Beef 1.31 1.61 2.11 2.27 1.90 2.12 Pork 0.50 0.64 0.99 2.32 3.73 4.20 Chicken 0.15 0.23 0.44 1.22 2.29 2.51 Other meats 0.77(e) 1.24(e) 2.00(e) 2.39 2.79 3.13 Fresh-mi lk 2.9 6.0 10.8 18.2 23.5 21.6 Powdered milk 0.08 0.09 0.16 0.32 0.53 0.54 B u t t e r 0.05 0.08 0.16 0.27 0.26 0.22 Cheese na n a na 0.15 0.30 0.27 Eggs 2.1 3.9 6.4 10.4 11.6 11.5 Mikan 4.1 4.8 6.5 10.5 14.1 19.4 Apples 3.5 3.6 3.8 6 .1 5.7 5.5 White sugar 2.0 3.2 3.8 4.0 4.3 4.1

(e) P a r t l y e s t ima ted by w r i t e r . na, not a v a i l a b l e .

Source: See i t e m 3 i n Bibliography.

Table No. 3

ANNUAL FOOD CONSUMPTION PER PERSON

DATA FROM FAMILY INCOME AND EXPENDITURE SURVEY

ALL JAPAN Calendar Years

(Kilograms)

Item 1965 1970 1972 1973 1974

A. Product Groups

Fresh f i s h and s h e l l f i s h

Dried and sa l t ed f i s h

Fresh vegetables

Meat

Fresh f r u i t

B. IndividuaZ Products

Rice

Bread

Beef

Pork

Chicken

Other meats

Fresh milk

Powdered milk

Butter

Cheese

Eggs Mikan

Apples

White sugar

Source: See item 3 i n Bibliography.

Table No. 4

ANNUAL FAMILY EXPENDITURE ON PRINCIPAL FOOD GROUPS(a)

Calendar Years

Item 1951 1955 1960 1965 1970 1973 1974

Cereals (b)

Fresh f i s h and s h e l l f i s h

Dried and s a l t e d f i s h

Meat

Milk and eggs

Fresh vegetables

Fresh f r u i t

Alcoholic beverages

Other beverages

Gaishoku (c)

Processed foods

Other (d)

Total

Actual amomt spent C i t i e s of 50 000 and over 93.9 137.3 163.4 248.5 361.5 477.8

A 1 1 Japan na na na 232.3 346.1 459.2 570.1

Real amount spent (e)

C i t i e s of 50 000 and over 162.5 205.8 231.8 248.5 269.2 286.8

A l l Japan na na na 232.3 258.3 275.6 267.9

(a) Data f o r c i t i e s p r i o r t o 1965; f o r a l l Japan i n l a t e r years. (b) Includes cerea l products. (c) Food eaten away from home. (d) Includes condiments, dr ied vegetables, cakes, sweets. (el Deflated by CPI f o r food items, 1965=100. na, not avai lable .

Souxce: See item 3 i n ~ ib l iog raphy .

A fu r the r dif ference between the two s e t s of data , one which is not so r ead i ly explained, i s the f a c t t h a t t h e r a t e of increase i n incomes derived from the nat ional accounts i s appreciably grea te r than t h a t applying t o members of workers' households. For instance, i n t he period 1955 t o 1973 average r e a l personal income derived from the na t iona l accounts rose from 'Y 118 000 t o Y 472 000, !$A300 t o $A1200) a four-fold increase compared with a three-fold increase i n workers' incomes ('Y 109 000 t o V 326 000 o r $A270 t o $A820).

Disposable incomes were na tu ra l ly lower than t h i s , but t he r a t e of increase was very similar, t he average incidence of taxat ion being f a i r l y s t ab l e . Increases i n the pr inc ipa l components of r e a l personal income a s revealed by the FIES a re shown i n Figure 111.

The above summary ind ica tes broadly the nature of income data avai lable i n Japan and the trends revealed by these data. However, i n t he analysis of the e f f e c t s of income on food consumption, t he MAF study uses personal consumption expenditure a s a proxy f o r income. No e x p l i c i t j u s t i f i c a t i o n f o r t h i s procedure can be found i n t he MAF repor t s on food demand analysis , but the reason probably l i e s i n the f a c t t h a t much more complete and consis tent da ta a r e ava i lab le f o r expenditure than f o r income. Personal consumption expenditure would be a s a t i s f a c t o r y proxy f o r income i f the average propensity t o consume was constant over t he period of the analysis . However, t h i s has not been the case, t he average propensity t o consume having f a l l e n qu i t e considerably over t he period - from 98% i n 1951 t o 76% i n 1974. Thus t h e use of expenditure r a the r than income can be expected t o r e s u l t i n a downward bias i n t he r e s u l t s obtained f o r 'income' e l a s t i c i t i e s .

From Tables No. 5 and No. 6 it is possible t o observe increases i n expenditures a s revealed by the re levant s t a t i s t i c a l s e r i e s s ince 1951. It w i l l be seen tha t r e a l expenditure on food increased much l e s s than t o t a l personal consumption expenditure. The r a t e of increase i n food consumption a s revealed by the na t iona l accounts is g rea t e r than is shown by the household survey. This is p a r t l y explained by the f a c t t h a t an increasing proportion of food consumption has taken place outs ide the home and hence i s not included among household expenditure on food items.

4. Data on Pr ices

The pr inc ipa l source of data on pr ice movements i n Japan i s t h e monthly Retai l Pr ice Survey.(lO) Data co l la ted by t h i s survey a r e used t o ca lcu la te the Consumer Pr ice Index as well a s index numbers f o r various commodities and groups of commodities. Some of the re levant s e r i e s a r e summarised i n Table No. 7 (food groups) and Table No. 8 (index numbers f o r individual food products).

While the published repor t s on the Retai l Pr ice Survey do not attempt t o give overa l l average p r i ce s , a good indicat ion of r e l a t i v e actual p r ices may be obtained from t h e Family Income and Expenditure Survey. This survey co l l ec t s data on both expenditure and quan t i t i e s purchased, and from these an average un i t cos t of items purchased by Japanese famil ies can be calculated. The average cos t s of selected food items obtained i n t h i s way are shown i n Table No. 9, while index numbers

(10) See items 3c and 3d i n the Bibliography.

FIGURE Ill

TRENDS IN INCOME AND EXPENDITURE PER FAMILY MEMBER

(City Workers' Households) 1965 Prices $A Y '000

I

Total income .- -,

Disposable income

Total expenditure

~ o o d expenditure

Table No. 5

TRENDS I N INCOME AND EXPENDITURE

NATIONAL ACCOUNTS DATA

%'000 Per Person(a) . . . . . . . . . . . . . .

. . . Fiscal Years . . . . . .

Item 1951. 1 9 5 5 . 1960 . 1965 . 1970 . 1 9 7 3 1974

1. At Current Prices a. Personal income

b. Disposable income

c. Consumption expenditure

d. Food and beverages

2. At 1965 Prices . . a . Personal income

b. Disposable " c. Consumption expenditure

d. Food and beverages

3 . Index Nwnbers a. Personal income

b. Disposable income

c. Consumption expenditure

d. Food and beverages

(a) Approximate average r a t e of exchange $ A l = Y400.

Source: See item 5 i n Bibliography.

Table No. 6

TRENDS I N INCOME AND EXPENDITURE

SURVEY DATA

Y1OOO Per Household Member(a)

Item

Calendar Years

A. Cit ies of 50 000 and over - Workers' HousehoZds

I . A t 1965 prices

a. Income b. Disposable income c. Consumption expenditure

2. Index Numbers a. Income b. Disposable income c. Consumption expenditure

B. Cit ies of 50 000 and over - AZZ HousehaZds

I . Conswnption expenditure a. At current p r i ces b. A t 1965 pr ices c. Index 1965 p r i ces

2. Expenditure on food a. A t current pr ices b. A t 1965 pr ices c. Index 1965 pr ices

C. AZZ Japan - Workers ' HousehoZds

1. A t 1965 prices a. Income b. Disposable income c. Consumption expenditure

2. I d a numbers

a. Income b. Disposable income c. Consumption expenditure

-

(a) Approxirate average r a t e of exchange $A1 = Y400.

Source: See item 3 i n Bibliography.

Table No. 7

RETAIL PRICE KIVEMENTS - PRINCIPAL FOOD GROUPS

Index Numbers . : 1965=100Ca)

Calendaryears

Item . . . 1951 . i 9 5 5 . 1960 1970 1973 1974

Cereals 58 75 75 130 151 187

Fresh f i s h and she l l f i sh) (48 57 177 246 321 1 45 C

Dried and sa l t ed f i s h ) (46 56 138 186 293

Meat

Milk and eggs

Fresh vegetables

Processed foods

Fresh f r u i t s

Alcoholic beverages

Other beverages

Gaishokum)

A l l food

Consumer Price Index

(a) Data p r io r t o 1965 r e f e r t o c i t i e s of 50 000 and above; l a t e r da t a r e fe r t o a l l non-farm households. (b) Food consumed away from home. na, not available. (e) Estimate.

. . . ..

Source: See item 3 i n Bibliography.

Table No. 8

RETAIL PRICE MOVEMENTS - SELECTED FOOD PRODUCTS

Index Numbers : 1965=100 ca)

Calendar Years

Item 1951

A. From FIES (b)

Rice Bread Beef Pork Chicken Fresh milk Powdered milk Butter Cheese Eggs IVhite sugar Mikan Apples

B. From Retaiz Price Survey

Rice (rationed) White bread Beef ( loin) Pork ( loin) Chicken Fresh milk (delivered) Butter Cheese Eggs White sugar M i kan Apples (Ralls Jane t )

(a) Data p r i o r t o 1965 r e f e r t o c i t i e s of 50 000 and above; l a t e r da ta r e f e r t o al l non-farm households. (b) Calculated from average un i t Costs a s s e t out in TableNo.9. (c) A s used i n ca lcu la t ing the Consumer Pr ice Index.

Source: See items 3 (for A) and 4 (for B) i n Bibliography.

Table No. 9

MOVEMENTS I N AVERAGE PRICES - SELECTED FOOD PRODUCTSCa)

CYen per Kg) Cb)

Calendar Years (c) Item

1951 1955 1960 1965 1970 1973 1974

Rice

Bread .

Beef

Pork

Chicken

Fresh milk

Powdered milk

Butter

Cheese

Eggs

White sugar

Mikan

Apples - - - - ---

(a) Average pr ices calculated by dividing average household expenditure on each product by quanti ty purchased. (b) Approximate average r a t e of exchange $Al='Y400. (c) Data f o r years p r io r t o 1965 apply t o households i n c i t i e s of 50 000 and above. Data f o r l a t e r years r e f e r t o a l l non-farm households. na, not avai lable .

Source: See item 3 i n Bibliography.

derived from these averages a r e shown i n Table No. 8 i n comparison with data from the Consumer Pr ice Index. A s may be expected; the two s e r i e s do not coincide exact ly , but the r e l a t i v e l y small differences can be 'explained i n terms of dif ferences i n coverage and def in i t ion .

In ca lcu la t ing pr ice e l a s t i c i t i e s , t he &IF study used data from the s e r i e s described above i n t he following ways:

(a) Pr ice s e r i e s f o r use i n ca lcu la t ing e l a s t i c i t i e s from aggregate supply da ta (Food Balance Sheets) were obtained by dividing p r i ce index numbers f o r individual products o r product groups by the Consumer Pr ice Index.

(b) Pr ice s e r i e s f o r groups of products used i n ca lcu la t ing group e l a s t i c i t i e s from FIES data were obtained by dividing pr ice indexes f o r these groups by the Consumer Pr ice Index. Data i n Table No. 7 were obtained i n t h i s way.

(c) Pr ice s e r i e s used i n ca lcu la t ing e l a s t i c i t i e s f o r individual products were obtained by de f l a t i ng the pr ices of these.products ( i n p rac t i ce t he average u n i t cos t of purchases) by the Consumer Pr ice Index (see Table No. 9 f o r examples).

Figure I V summarises p r i ce movements f o r several food products over the pas t 20 years. This i l l u s t r a t e s t he r e l a t i v e r i s e i n beef pr ices and the r e l a t i v e decl ine i n pr ices f o r chicken, eggs and sugar.

5. Other Determinants o f Food Consumption

I t i s generally acknowledged t h a t income and pr ice a r e by no means the so l e determinants of food consumption, although they are normally t he e a s i e s t t o measure. Additional f ac to r s influencing food consumption may be grouped under f i v e headings:

(a) Physical need, a s determined by body s i ze , age, environmental conditions and occupation.

(b) Avai lab i l i ty .

(c) Changes i n se rv ices e t c . incorporated i n foods a t the r e t a i l l eve l .

(d) 'Tastes ' - a ca tch-a l l term covering a var ie ty of f ac to r s , of ten unrelated.

( e ) Changes i n geographical d i s t r i b u t i o n of the population.

Demand analyses usually imp l i c i t l y assume physical need t o be constant over time. I f t h i s were so, consideration of t h i s f a c t o r could not be expected t o a f f ec t the r e s u l t s of the analysis . However, t he re has been a s ign i f i can t increase i n body s i z e among Japanese s ince the war. For instance, the average height of 15 year old males increased from l5Ocm i n 1948 t o 165cm i n 1972, an increase of 10%. Average weight f o r t he same age group rose from 43.4 kg t o 53.8 kg, t h a t i s by 24%. The difference i s not so great f o r o lder age groups, but t h e l a rge r physical s t a t u r e of the younger generation above has caused an increased need f o r food. This n e d , i n a s i t u a t i o n of increasing incomes and a v a i l a b i l i t y , has been

FIGURE I V

RELATIVE PRICES OF SELECTED FOODS

(Price + CPI , 1965 BASE) Yen per kg Aust. cents per kg

1000

800-

r - 300 - Beef - -

- - 4- -----__ -. /r---.-l.-, Pork _ _ _---------

200

-lso

-100 ' c. w I

50

25

600 -\ /' &. -. -----_-_ A' .

1954 '56 58 '60 '62 '64, '66 '68 '70 '72 174.

400

300

200-

100

---_ - - ------ Chicken ----.i- c- ---

-

....... . . . . . . . . . . .... .... .... ... ............ - ... . . ...................... ... ... '._ ... ....... .....................

'.. -.-.-. '.. ... ........................ .. ' _.-.

I._./. -... '. . . . ................ -.- .-.,.,. -.-.,, %mr ...... -

.... -.-._, /.A. .... ... -._.-. -. ....... Eggs \. .... ...... -. ...... ................................

\. \.

\.\. -.-. . . . .

\ Fresh milk I.-._. -.-.-, // . L- ,- - /-F--i--+ 1 - ,.c' \ ./. - .-.

t r ans l a t ed i n t o increases in consumption beyond those which might have been expected had income and p r i c e alone been responsible f o r changes i n consumption.

Occupation a l so influences physical need i n t ha t those engaged i n physical labour requi re more food than those engaged i n sedentary occupations. Further, i n a study published i n 1966, D r Yuize observed tha t t he more manual labour involved i n an occupation the smaller i s t he intake of animal foods, while the more Europeanised an occupation i s the grea te r i s the consumption of meat, milk and eggs a s opposed t o f i s h . ( l l ) This i s of course a pecul ia r Japanese genera l i sa t ion which i s probably not appl icable i n o the r countr ies .

Changes i n physical a v a i l a b i l i t y a l s o have an important i n f l~ i ence on consumption, and it cannot always be assumed t h a t lack of a v a i l a b i l i t y w i l l be f u l l y and automatically r e f l ec t ed i n pr ice . This i s p a r t i c u l a r l y so when competitive forces and the pr ice mechanism a r e subjec t t o physical o r economic r e s t r a i n t s . ( l 2 ) Restra ints of t h i s kind were important during the war and f o r several years thereaf te r , but have s ince become negl ig ib le . The removal of r e s t r a i n t s i n i t s e l f i s a f a c t o r l i k e l y t o influence the leve l and composition of consumption even i f no change takes place i n o ther f ac to r s .

Avai lab i l i ty i s espec ia l ly important when considering products h i t h e r t o unfamiliar t o most po ten t ia l consumers. For example, when the import of bananas was l i b e r a l i s e d i n the l a t e 1950s, consumption rose abrupt ly , then continued t o r i s e more slowly up t o 1970, even though t h e p r i c e of bananas rose by twice a s much a s pr ices f o r f r u i t a s a whole and three times a s much as the pr ice of mikan(l3), the heaviest s e l l e r among f r u i t s i n Japan. Income e l a s t i c i t i e s calculated f o r bananas i n the e a r l i e r years of a v a i l a b i l i t y exceed 5.0, while pr ice e l a s t i c i t i e s were pos i t i ve o r not s i g n i f i c a n t . In other words there can be instances (usual ly involving luxury r a the r than s t a p l e food items) where a v a i l a b i l i t y is a more important determinant of consumption than income o r pr ice .

Relative a v a i l a b i l i t y of products a l so var ies from place t o place within a country according t o the na tura l environment which influences production pa t t e rns . D r Yuize noted t h a t demand a l s o va r i e s i n accordance with environment' i n t h i s way and t h a t people tended t o consume more of what is most r ead i ly ava i lab le l oca l ly . ( l 4 )

(11) Yasuhiko Yuize, The Demand for Meat Milk and Gys i n Postwar Japan, Rural Economic Problems, Vol. 3, No. 1, May 1966, p. 17.

(12) See : Ministry of Agriculture and Forestry : Demand AnaZysis fo r Foods, March 1960 (p.201). This o f f i c i a l study points out t ha t 'food consumption does not necessar i ly mean food demand', consumption being l imi ted by domestic production and l icens ing of imports.

[13) The s c i e n t i f i c name f o r the c i t r u s va r i e ty known a s 'mikan' i n Japan, is c i t r u s aurantiwn, subsp. nobiZ<s, var. unshu. I t i s var iously described i n English as ' tangar ine ' 'satsuma orange' 'unshu orange', and 'mandarin orange' . The Japanesc name i s used here f o r t he sake of s impl ic i ty .

(14j Yasuhiko Yuize, op. cit. p. 20 .

There has been a s t rong tendency towards t he incorporation of increased ' se rv ices ' i n food items, and t h i s has caused expenditure on food t o r i s e more than the volume of consumption, with a g rea t e r proportion of the r e t a i l p r ice going t o manufacturing and d i s t r i b u t i v e industr ies . This r e l a t i v e l y g rea t e r increase i n expenditure than i n quanti ty a l s o r e f l e c t s an improvement i n qua l i ty i n many instances . ( l5)

The term ' t a s t e s ' is used t o cover a var ie ty of f ac to r s , most of which a r e t ime-related. Perhaps t h e most important of these i s hab i t o r t rad i t ion . Others include advances i n nu t r i t i ona l science and education, emulation of western ea t ing pa t t e rns and the e f f ec t s of adver t is ing.

The e f f e c t s of t r a d i t i o n a r e no doubt very far-reaching; i n f ac t , analysts i n the Food and Agriculture Organisation have gone so f a r a s t o a s s e r t t h a t , of a l l the f a c t o r s t h a t determine t h e pa t t e rn and leve l of food consumption, 'probably t h e most important i s t r a d i t i o n 1 . ( l 6 ) They t r e a t income and pr ice as addi t iona l fac tors within t he broad framework established by t r ad i t i on . One need not agree with t he r e l a t i v e emphasis given here t o recognise the importance of habi t , and the M4F study has gone some way towards assessing t h e e f fec t of t h i s f a c t o r by including consumption i n t he previous period as an explanatory var iab le i n one of the models used (see next Sect ion) .

In Japan (and probably a l so i n other countries) t he re has t r ad i t i ona l ly been a marked difference i n food consumption pa t te rns between town and country. The high r a t e of urbanisation i n recent years has exposed la rge numbers of country people t o c i t y consumption pa t te rns , and t h i s has contributed t o some of the changes i n consumption per head of various food products.

6., Income and P r i c e E l a s t i c i t i e s

Having examined broadly the nature of t he da ta used by the MAF econometricians, it now seems appropriate t o look a t some of t he r e s u l t s obtained from t h e i r calculat ions .

The MAF study is very comprehensive, using up t o nine d i f f e r e n t models i n analysing time s e r i e s data and three i n analysing cross-section data. Three o r more of these models were applied t o a t l e a s t 100 products and groups of products f o r t h e th ree time periods. For many products, separate calculat ions were made using aggregate supply da ta (from the FBS) and household survey data (from the FIES).

Any attempt t o cover the f u l l range of r e s u l t s would make t h i s paper extremely unwieldy. Therefore, a small proportion of t he ava i lab le data has been selected t o bring out what appear t o be the most re levant d e t a i l s . The se lec t ion of models, products, periods and data sources was made a s follows:

(15) The concept of 'qua l i ty e l a s t i c i t y ' is re fe r red t o l a t e r i n t h i s paper.

(16) FAO, The State of Food and AgricuZture 1957, Chapter 111, Factors Influencing the Trend of Food Consumption. The e f f e c t of custom i s a l so discussed i n Yasuhiko Yuize, op. &t.

(a) Mode 2s

Below are listed the various formulae used in the MAF study. Those marked '(a)' were applied only to aggregate supply data while those marked '(s) ' were limited to survey data. ~ h r k e d formulae (time series) were used with data from both sources. Cross-section data are available only from the household survey. Some models use both income and price as explanatory variables; others use income only.

Time series data

(i) Double logarithm

log C = a + b log Y

log C = a + b log Y + c log P

(ii) Double logarithm, price determined

log P = a + b log Y + c log C (a)

(iii) Double logarithm, introducing 'habit'

log C = a + b log Y + c log P + d log C 1(~) - (iv) Double logarithm, introducing substitutes

log C = a + b log Y + c log P + d log S (s) log C = a + b log Y + c log P + d log S1 + e log S 2 ( s )

(v) Semi-logarithm

C = a + b log Y (a)

C = a + b l o g Y + c l o g P

(vi) Anti-logarithm (or log-inverse)

b l o g C = a + - Y

(vii) Double anti-logarithm (or double log-inverse)

b logC = a + - + c logy Y

(viii) Houthakker Model

c = a + b C-l + c(Y-Y - + dY-l

Cross-section data

(ix) Double logarithm

log C = a + b log Y

(x) Semi-logari thm

(x i ) Anti-logarithm (or log-inverse)

The symbols used above have the following meanings:

C . In most instances t h i s s i g n i f i e s average annual consumption per person i n quant i ty terms. For use with aggregate data , it is calculated by dividing the ne t quant i ty ava i lab le f o r consumption by t o t a l population. For use with survey data , it i s calculated by dividing t o t a l purchases per household i n a given year by the number of household members. However, when calculat ing e l a s t i c i t i e s f o r groups of products from survey data , expenditure (appropriately def la ted) is used instead of quanti ty.

Y. Annual personal consumption expenditure i n r e a l t e n s divided by population o r number of household members according t o t he nature of the data used.

P . Deflated p r i ce of t he product (or group of products) calculated a s explained i n sec t ion 4 above.

S,S1,S2 Pr ice of one (S) o r two (S1S2) s u b s t i t u t e products divided by the Consumer Pr ice Index.

Y P C - l s -1' -1 Consumption, income, p r i ce i n t he preceding period.

Of the models l i s t e d , t he double logarithm and semi-logarithm models generally gave the b e s t fit a s indicated by the value of t he multiple cor re la t ion coe f f i c i en t (R) and the t values f o r t he coef f ic ien ts , but ne i ther of these two was c l e a r l y superior t o the o ther . In t h i s paper, preference is given t o double logarithm models, s ince these are l i nea r i n the logarithms and hence y ie ld constant e l a s t i c i t i e s f o r t he period which a re equal t o t h e relevant coef f ic ien ts (b,c,d e t c . ) . E l a s t i c i t i e s calculated from semi-logarithm formulae tend downwards over the period and average e l a s t i c i t i e s o r e l a s t i c i t i e s f o r a p a r t i c u l a r year can be obtained only a s a r e s u l t of addi t ional ca lcu la t ions a f t e r t he coef f ic ien ts have been determined. However, e l a s t i c i t i e s from semi-logarithm models have been selected (and iden t i f i ed ) i n a few instances where they y ie ld s t a t i s t i c a l l y s ign i f i can t coe f f i c i en t s whereas the corresponding double logarithm models do not .

Results derived from models using income as t he so l e explanatory var iable have been recorded here only i n r e l a t i on t o cross-section analysis where p r i ce i s assumed t o be constant.

fb) Products

The products selected include those which a r e most important i n Japanese d i e t s and those which represent ac tua l o r po ten t ia l markets f o r Australian exports. One o r two other products of special i n t e r e s t i n making comparisons have a l so been included.

(el Periods

I n ca lcu la t ing e l a s t i c i t i e s from time s e r i e s data, t he MAF study used three d i f f e r e n t time periods: 1955-1962; 1963-1972; 1955-1972. I n some l e s s complete analyses, e l a s t i c i t i e s were calculated f o r a s e r i e s of staggered ten-year periods. This a r t i c l e concentrates on the period 1963-1972, but brings i n some of t he r e s u l t s of s tud ie s of other ten-year periods. A longer period would improve the r e l i a b i l i t y of t h e r e s u l t s by increasing t h e number of degrees of freedom, but consumption pa t te rns have changed t o such an extent t ha t averages ca lcu la ted f o r a period even a s shor t as t e n years may conceal important changes within t h a t period. For t h i s reason, l i t t l e use was made of averages f o r longer periods.

( d l Data Sources

E l a s t i c i t i e s calculated from both aggregate da ta and survey data have been shown i n Table No. 10 f o r comparative purposes. In in te rpre t ing the r e s u l t s , i t seems generally more appropria te t o give grea te r weight t o t he aggregate data , p a r t l y because it is more complete i n its coverage, and p a r t l y because some products (such as sugar and wheat) en t e r the d i s t r i b u t i v e system as s ing le items but emerge a t the r e t a i l end i n many d i f f e r e n t forms.

The r e s u l t s of the MAF study, which a r e i l l u s t r a t e d by the e l a s t i c i t i e s reproduced i n Table No. 10, cons t i t u t e a very in t e r e s t i ng body of information - one which was not ava i lab le t o authors of some e a r l i e r work which analysed Japanese food consumption pa t te rns and po ten t i a l markets.(l7) A major aim of the study was t o provide addi t ional da t a f o r t h e use of those MAF o f f i c e r s who were responsible f o r t h e preparat ion of long-term pro jec t ions of demand f o r foodstuffs i n Japan.(l8) A s both the e l a s t i c i t y study and t h e pro jec t ions have now been published, t h e r e has been a considerable addi t ion t o t he data ava i lab le t o outs ide research workers .who a r e i n t e r e s t ed i n assessing the po ten t ia l of t he Japanese market f o r various foods.

An e s sen t i a l fea ture of e l a s t i c i t i e s i s tha t they a r e not constant from year t o year, from place t o place o r from one soc ia l group t o another. Table No. 11 has been prepared t o i l l u s t r a t e some of the var ia t ions which have occurred through time in so fa r a s these a r e r e f l ec t ed i n a s e r i e s of t en year averages and a s e l ec t ion of cross sect ion data. Spa t i a l and personal var ia t ions cannot r ead i ly be deduced from ava i lab le da ta .

(17) 1 Roberts and P.R. Herington: 'Growth i n the Japanese Import Demand f o r Rural Products' , &uarterZy Review o f AgricuZturaZ Econcmics, Vol. MV No. 3 J u l y 1972.

P.B. Prosser : 'The Market f o r Beef i n Japan, &uarterZy Review of AgricuZtwraZ Econmics, Vol. XXVI No. 2 April 1973. This a r t i c l e quotes an FA0 est imate of 0.7 f o r the income e l a s t i c i t y f o r beef i n Japan. The MAP study yields estimates from 1.0 t o 1.6 (based on time s e r i e s ) .

(18) See i tem 5 i n t h e Bibliography. The pro jec t ions a r e summarised i n an English language d r a f t e n t i t l e d Long Tern Prospects o f Production and Demand o f AgricuZtwaZ Products, prepared i n January 1975. The pro jec t ions a r e based on the year 1972 and look forward t o 1985. I

Table No. 10

INCOME AND PRICE ELASTICITIESCa)

~ ~ - - - ~ - -

Income E l a s t i c i t i e s Pr ice E l a s t i c i t i e s

Item Time ~eries(1963-72) cross-Section Time Ser ies (1963-72) Aggregate Survey 1973 Aggregate ~ .. Survey

fioduct Groups

Cereals (excl. r i c e ) -3.02 -0.73r 3.04

Vegetables 0.18r 0.45 -0.07rt

Fru i t 0.64 1.05 0.53 -0.35 -1.14

Meat 1.13 1.24 0.80 -1.02 -0.85

Freshfish and s h e l l f i s h 0. l o t 0.45 0.26t

Gaishoku (b) 1.42 1.05 0.42t

IndividuaZ Products

Rice (domestic)

Bread

Soybeans

Beef

Pork

Chicken

Eggs

Milk ( for drinking)

Powdered milk

Butter

Cheese

Sugar

Mikan

Apples

(a) Calculated using double-logaritrun formula. @) Fiscal years. (c) Calendar years. (d) Ideals eaten outs ide the home.

r : correla t ion coef f ic ien t below 0.8 t : t value below 1.0 s : calculated from semi-logarithm formula.

Source: See item 1 i n Bibliography.

Table No. 11

CHANGES I N INCOME AND PRICE ELASTICITIES THROUGH TIME(a)

Item

Income E l a s t i c i t i e s P r i c e E l a s t i c i t i e s

Time Ser ies (10 y r Averages) Cross-Section Data Time S e r i e s (10 yr Averages) 1955-64 1960-69 1964-73 1963 1969 1973 1955-64 1960-69 1964-73

Rice (domestic)

Other c e r e a l s

Bread

Beef

Pork

Chicken

Eggs

Milk

Butter

Cheese

Dried and s a l t e d f i s h

Mikan

Apples

Gaishoku(b)

0.06t -0.75

-4.58 -3.30

0.49rt 0.43

1.10r 1.02

2.78 2.54

3.10 2.21

1.42 O . l l t

2.12 1.77

0.77 -0.35t

na na

0.45 2.95r

1.67 1.49

0.58 0 . O O r t

(a) Based on d a t a from t h e FIES f o r calendar year . @) Calculated from household expenditure on food eaten away from home.

r , t a s f o r Table No. 10.

Source: See item 1 i n Bibliography (1974 i s s u e ) .

7. Cross-Elasticities

It has already been noted tha t the range of models used i n t h e MAF study includes some which explore the e f f ec t s of p r ices of subs t i t u t e s on the consumption of ce r t a in products. For example, a r i s e i n t he p r i ce of beef appears t o have been a fac tor contr ibut ing t o increased consumption of pork.

Table No. 12 summarises the r e s u l t s of some of t he ca lcu la t ions made using models incorporating pr ices of subs t i t u t e s a s explanatory var iables . This t ab l e shows t h a t while pr ices of pork and chicken had negl igible e f f ec t s on any of the e l a s t i c i t i e s f o r beef during the period 1963-1972, the pr ice of beef had a s ign i f i can t e f f e c t on the consumption of both pork and chicken. In the case of pork i n pa r t i cu l a r , t h e introduction of beef pr ices i n to the model had the e f f e c t of moving both pr ice and income e l a s t i c i t i e s c loser t o zero.

The c r o s s - e l a s t i c i t i e s between meat and f resh f i s h a r e r a the r lower than might have been expected, but p r ices of processed meat and dried and sa l t ed f i s h appear t o have had a strong e f f e c t on meat consumption.

Cross -e las t ic i ty calculat ions reveal l i t t l e usable information r e l a t i ng t o f r u i t s . Apple consumption does not appear t o have been s ign i f i can t ly re la ted to income, o r t o pr ices , e i t h e r of apples o r of other f r u i t s .

8. Some Comments on the Elas t ic i t ies

From the r e s u l t s of the MAF study which a r e summarised i n Tables No. 10 and No. 11, it i s poss ib le t o make some broad genera l i sa t ions . These su f f e r from the l imi ta t ions and dangers of a l l general isat ions of t h i s kind, but it i s hoped they may a s s i s t i n assessing the implication of the data provided.

(a) Over the period covered, incomes were r i s i n g s t e a d i l y while a t the same time, following postwar shortages, the a v a i l a b i l i t y of foods continued t o increase i n volume and var ie ty , both from domestic sources and from imports. A s a r e s u l t , consumers had increasing freedom of choice and both the means and the opportunity t o purchase preferred products. I n such circumstances, it was only t o be expected t h a t consumption of food, especial ly of preferred items, should be pos i t i ve ly cor re la ted with income.

(b) Since average d i e t s continued t o improve i n n u t r i t i v e and energy value over the period, and s ince consumption of some products was approaching o r had reached ' sa tura t ion l eve l ' by about 1973 (see following Section) the response of demand t o income changes decreased over time, sometimes t o a very marked degree. Thus, i n most ins tances , the.average income e l a s t i c i t i e s calculated from time s e r i e s da ta f o r the years 1964-1973 a re lower than the corresponding values f o r 1955-1964. Income e l a s t i c i t i e s calculated from cross-section data show a s imi la r t rend. However, the e f f ec t of time on pr ice e l a s t i c i t i e s is l e s s consis tent and it is not possible t o general ise on the bas i s of the da ta ava i lab le .

Table No. 12 GROSS ELASTICITIES AND EFFECTS OF

PRICES OF SUSSTITUTES ON OVCi ELASTICITIES(a)

Tine S e r i e s Dased on Period 1963-72 (calendar years)

Income P r i c e

Product and S u b s t i t u t e s Own Own Cross E l a s t i c i t y E l a s t i c i t y E l a s t i c i t y (b)

1. Beef : a lone 1.17 -1. 90 - with pork 1.17 -1.93 -0. 10 t with chicken 1.06 -1.91 -0.16 wi th ( i ) pork and 1.16 -1.95 -0. l o t

( i i ) chicken -0.13t Pork : a lone 1 . 5 3 -1.84 -

with beef 0.84 -1.34 1.06 with chicken 0.73t -1.56 -1.14t with ( i ) beef and 0.02t -1.05 1.07

( i i ) chicken -1.18 Chicken ; alone 0. O O t -3.39 -

with beef -0.14t -2.67 0.92 with pork 0.37t -2.82 -0.33t

Fresh meat : alone 1.24 -0.85 - with processed meat 1.37 -0.84 1 .00 wi th f r e s h f i s h 1.45 -0.87 -0 . l6 t with s a l t e d and d r i e d f i s h 0.91 -0.87 0 .37t with ( i ) f r e s h f i s h and 0.91 -0.97 -0.82

( i i ) s a l t e d and d r i e d f i s h 1 .51 5. Apples : a lone -0.41r 0.18t -

wi th mikan -0.18t 0 .05t 0.21 with bananas 0 .08r t 0 .09rt 0 .09r t

6. Mikan : alone 1.06 -0.96 - with apples 1.32 -0.79 -0.52

7. Bananas : a lone 3.05 -0.02t - with apples 3.02 -0.05t -0.12t

(a) Calcula ted us ing double logari thm formulae. (FIES d a t a ) . (b) Ifhere t h e r e a r e two s u b s t i t u t e s , c ros s - e l a s t i c i t i e s f o r each a r e shown i n t h e o r d e r given, r , t A s f o r Table No. 7.

Source: See i tem 1 i n Bibliography (1973 i s s u e ) .

(c) Cereals exhib i t t he c l a s s i ca l cha rac t e r i s t i c of i n f e r i o r goods - negative income e l a s t i c i t y . Negative e l a s t i c i t i e s a l so appear f o r a few o ther products i n some (e.g. apples, eggs, b u t t e r ) . However, few of these e l a s t i c i t i e s a r e s t a t i s t i c a l l y s ign i f i can t , suggesting tha t consumption of these products has been s t rongly influenced by fac tors other than income and p r i ce of the product i n question, e .g. the a v a i l a b i l i t y and pr ice of a l t e r n a t i v e products.

(d) There a r e a few instances of pos i t ive p r i ce e l a s t i c i t i e s , mostly i n t he e a r l i e r years when shortages were rapidly being eliminated. None o f these pos i t ive p r i ce e l a s t i c i t i e s proved t o be s t a t i s t i c a l l y s ign i f ican t , but they point t o spec i f ica t ion problems i n the models. Japanese consumers i n the l a s t t e n years o r so appear t o have been qu i t e responsive t o changes i n r e l a t i v e pr ices and have tended t o d ive r t demand to foods exhibi t ing lower r a t e s of p r i ce increase. This i s pa r t i cu l a r ly noticeable i n products such a s eggs, chicken and some fruits where improved production and d i s t r i b u t i o n methods have enabled r e l a t i v e costs t o be cu t .

(e) Products with t he highest income e l a s t i c i t i e s (generally i n excess of uni ty f o r the periods covered) a r e meats (especial ly beef and pork), fruit a s a whole, mikan and food consumed outs ide the home (gaishoku). These products appeared t o be those most preferred by consumers.

( f ) The e l a s t i c i t i e s calculated from cross-section data show a progressive l eve l l i ng of consumption pa t te rns between income s t r a t a as r e a l incomes of a l l soc ia l c l a s se s increased, and more and more people i n r e l a t i ve ly low income brackets purchased increasing quan t i t i e s of foods which formerly only people on higher incomes could afford. I t w i l l be seen from Table No. 11 t h a t while r e l a t i v e leve l of income i s s t i l l an important f ac to r i n determining consumption of bu t t e r , cheese, beef and meals outs ide the home, i t no longer exer ts a strong influence on purchases of chicken, eggs, apples o r mikan. Rice consumption has tended t o be l i t t l e influenced by the r e l a t i v e income l eve l of the consumer.

(g) Data tabulated i n repor t s on the FIES show food purchased by grade of income i n terms of both expenditure and quan t i t i e s . From these data, two s e t s of cross-sect ion income e l a s t i c i t i e s were calculated i n the MAF study. In general, t he e l a s t i c i t i e s obtained using expenditure as the dependent var iable i s the higher of the two and the difference has

I been interpreted as a 'qua l i ty e l a s t i c i t y ' a s mentioned e a r l i e r . ( l 9 ) Some

I of the r e s u l t s o f calculat ions of t he two s e t s of e l a s t i c i t i e s a r e given i n Table No. 13. The qua l i t y e l a s t i c i t i e s a r e r e l a t i v e l y low f o r s t a p l e foods, dairy products and eggs, but higher f o r meat and f r u i t and

i pa r t i cu l a r ly so f o r vegetables and f i s h where qua l i ty can vary very considerably.

I 9. Satu ra t ion Levels

1 The concept of sa tura t ion leve ls may be applied with varying degrees of appropriateness t o a l l forms of consumption, but i t i s especial ly relevant i n t he case of food.

(19) See item 1 i n the Bibliography (1974 issue p . 14). The MAF study quotes Pra i s and Houthakker a s the source of t he concept of qua l i t y e l a s t i c i t y .

Table No. 13

QUALITY ELASTICITIES ESTII.!ATED FROM CXOSS-SECTION DATA(a]

1965 1973 Item

A B C A B C

Rice (domestic) -0.04 r -0.12 r 0.08 0.10 r -0.03 r 0.13

Bread 1.00 1.06 -0.06 0.54 0.46 0.08

Fresh f i s h and s h e l l f i s h 0.60 0.00 r. 0.60 0.45 0.02 r 0.43

Dried and s a l t e d f i s h 0.66 0.27 0.39 0.58 0.28 0.30

Beef 1.34 1.16 0.18 1.15 0.89 0.26

Pork 1.34 1.17 0.17 0.76 0.61 0.15

Chicken 0.96 0 .73 0.23 0.49 0.31 r 0.18

Milk 1.31 1.28 0.03 0.53 0.56 -0.03

B u t t e r 2.61 2.64 -0.03 1 .41 1.41 0

Cheese 2.68 2.69 -0.01 0.89 0.93 -0.04

Vegetables 0.71 0.38 0.33 0.46 0.33 0.13

White sugar -0.09 r -0.10 r 0.01 0.14 r 0.04 r 0.10

F r u i t 0.93 0.67 0.26 0.57 0.37 0.20

Mikan 0.95 0.82 0.13 0.48 0.27 0.21

Apples 0.37 0.17 r 0.20 0.38 0.24 r 0.14

(a) A s a sce r ta ined by t h e FIES f o r a l l non-farm households. A. Income e l a s t i c i t i e s c a l c u l a t e d from expenditure da ta . B. Income e l a s t i c i t i e s c a l c u l a t e d from q u a n t i t i e s purchased. C. 'Qual i ty E l a s t i c i t y ' . C = A-5. r : c o r r e l a t i o n c o e f f i c i e n t below 0.2.

Source: See i tem 1 i n Bibliography (1974 i s s u e ) .

Physical consumption of food is l imited by the capacity of the human digest ive system. Expenditure on food is not so s t r i c t l y l imited a s it is possible f o r well-fed people with s u f f i c i e n t purchasing pourer t o go on spending more and more i n order t o obtain a more desirable qua l i t y and var ie ty of food. Additionally t he re is a p o s s i b i l i t y of g rea te r wastage among such consumers.

The first evidence t h a t a people i s approaching o r has reached a level of sa tura t ion i n food consumption taken a s a whole is t o be found i n i ts t o t a l nu t r i en t intake as measured i n ca lo r i e s . The average ca lo r i e intake i n countries such a s Austral ia , United S ta t e s and most western European countries, while f l uc tua t ing from year t o year, has shown no c lear upward trend f o r a number of years, being general ly within the range 3000 t o 3300 k i loca lor ies per person per day i n these countries. In the United S ta tes , the average ca lo r i e intake i n 1972 was the same a s i n t he prewar years 1935-1939.(20) On the other hand, the average intake i n Japan, which was l i t t l e more than 2000 k i loca lor ies before t h e war, rose s tead i ly a f t e r the war, reaching 2526 i n 1973. However, t he r a t e of increase slowed appreciably a f t e r 1966 and it i s possible t h a t recent growth has been la rge ly i n response t o the continuing increase i n average body s i z e mentioned e a r l i e r . Thus, the consumption of food per person, as measured by energy vaZuue, appears t o have reached o r almost reached a level of saturat ion i n most economically advanced countr ies .

Even i f a sa tura t ion l eve l i n t h i s sense has been reached, t h i s does not mean tha t no fu r the r change i n food consumption w i l l take place, but it does mean tha t increased consumption of some foods w i l l be a t t h e expense of decreased consumption of others . Composition of food consumption i n western countries has been changing i n favour of higher qua l i ty foods, with grea te r emphasis on animal proteins , and t h i s t rend, as indicated e a r l i e r i n t h i s a r t i c l e , has been especial ly s t rong i n Japan. I t would not be r e a l i s t i c t o assume t h a t there i s a f ixed sa tura t ion l eve l f o r each and every food product i n a p a r t i c u l a r country, and t h a t once reached, consumption pa t te rns would remain f ixed . Yet growth i n consumption of even the more preferred foods cannot continue inde f in i t e ly , so that i t is possible t o think of an ul t imate maximum (o r minimum) leve l f o r each product, keeping i n mind t h a t these leve ls a r e unl ikely t o be reached simultaneously and t h a t t he sum of these conceptual sa tura t ion levels f o r individual products is l i k e l y t o exceed the sa tura t ion leve l for food a s a whole o r f o r groups of s imi la r foods.(21)

Any attempts t o es t imate these s a tu ra t ion leve ls must involve an element of subject ive judgment, but i n exercising such judgment it i s useful t o have some object ively determined data as a check. The MAF study has produced data of t h i s kind a s a by-product of i t s e l a s t i c i t y

b calculat ions by using the log-inverse formula log C = a + - (see Y

Section 6a above). While it is c l e a r t ha t a s income becomes very large, consumption of any product w i l l tend t o leve l out, t he re la t ionsh ip i s

-

(20) United S ta t e s Department of Agriculture, The NationaZ Food Situation, November 1972.

(21) This i s well i l l u s t r a t e d by the case of meat. On the basis of da ta from the FIES, the sum of the sa tura t ion l eve l s derived by the MAF as explained below for individual kinds of meat was 46 kg whereas the sa tura t ion leve l for meat a s a whole was 25 kg (period 1963-72).

unl ike ly t o be a s simple a s suggested by t h i s formula. In t he first place, it assumes t h a t income i s t h e s o l e explanatory var iable , and i n t he second place, sa tura t ion is only approached a s income approaches i n f i n i t y . (22)

Nevertheless, it was considered t h a t t h e sa tura t ion leve ls ca lcu la ted i n t he MAF study could be useful , i f used i n conjunction with o ther evidence, i n making some assessment of the l i ke ly growth (or contraction) i n t h e Japanese market f o r se lec ted food products. Table No. 14 shows the r e s u l t s of such ca lcu la t ions based on data from the Food Balance Sheets(23), together with t he ac tua l consumption f o r t he l a t e s t ava i lab le year and the average consumption i n developed countries a s estimated by FAO. Actual consumption, together with income e l a s t i c i t i e s f o r a recent period, give some ind ica t ion of approach t o sa tura t ion . For several food products i n Japan, income e l a s t i c i t i e s have f a l l e n below 0.2. This could mean t h a t consumption per person may not increase much fu r the r o r t h a t it may f a l l . Average consumption i n o ther countries i s i n i t s e l f no c l e a r guide a s t o what may happen i n Japan, but where, a s i n the case of eggs, Japanese consumption i s already near the world average and the income e l a s t i c i t y has f a l l e n below 0.2, prospects f o r fu r the r consumption increases cannot be considered favourable, even though the calculated sa tu ra t ion leve l i s still r a the r g rea t e r than ac tua l consumption.

10. Elast ici t ies and Probable Future Consumption Trends f o r Individual Commodities

This sec t ion aims t o br ing together i n summary form the r e s u l t s of e l a s t i c i t y ca lcu la t ions f o r selected food products, together with some observations on recent consumption changes.

b (22) An a l t e r n a t i v e formula introducing p r i c e a s a var iab le (log C = a +

+ cP) was t e s t e d by the wr i t e r using da ta from the FIES. As was expected, t h i s resu l ted i n higher mult iple cor re la t ion coef f ic ien ts and r a the r d i f f e r en t income e l a s t i c i t i e s , although both pr ice and income e l a s t i c i t i e s derived from t h i s formula were reasonably c lose t o those obtained by using the double logarithm formula. However, inclusion of p r i c e r e su l t ed i n higher sa tura t ion leve ls . In some cases, the s a tu ra t ion leve l calculated from t h i s a l t e rna t ive formula was many times the recent volume of consumption (25 times for beef, 20 times f o r pork).

A grea t e r degree of un rea l i t y i n the r e s u l t s obtained by using t h i s formula was not unexpected s ince i n approaching saturat ion leve l , not only must income become very grea t but p r i ce must approach zero. Thus, two u n r e a l i s t i c conditions a r e introduced as against one i n t he formula used i n t he h A F study. I n view of these considerations, no r e s u l t s obtained from t h i s formula have been used i n t h i s paper. There a r e more sophis t ica ted formulae which can be used t o estimate sa tura t ion l eve l s , but the bNF analysts do not appear t o have used them. Some of these are discussed and i l l u s t r a t e d i n Yasuhiko Yuize, op. cit., pp. 7-10.

(23) The MAF study applied the anti- logarithm formula t o FIES data a s well a s t o FBS data , but, as explained e a r l i e r , it was considered t h a t as the FBS data were more complete i n t h e i r coverage, they were b e t t e r su i ted t o the purposes of t h i s ana lys i s .

Table No. 14

COF.fPUTED 'SATURATION LEVELS' FOR SELECTED FOODS(a)

(Kg p e r Person Per Year)

Based on Data f o r Actual Average f o r

Item Level Developed 1963-72 1955-72 1973 Countr ies

(b) (b) (b 1970 (c)

Rice 64.0 84.3 90.9 16.6

Wheat 36.9 35.5 31.0 62.9 ,

Barley 0 .5 0.6 1 . 3 na

A l l c e r e a l s 102.4 121.4 124.6 91.9

Soybeans 3 . 1 5.2 5.8 na

Vegetables (d) 136.7 149.3 112.4 107.8

F r u i t 72.2 62.2 43.7 88.9

Mikan 51.1 24.0 17.9 22.6(f)

Apples

Milk and milk products

Milk f o r d r ink ing

Butter

Cheese

Fish and s h e l l f i s h

Sugar

Eleat (excl . whale)

Eggs

Tota l k i l o c a l o r i e s (per day) 2620 2629 . 2526 3039

Tota l p r o t e i n (g p e r day) 85.3 83.3 79.4 89.5

Tota l f a t s ( g p e r day) 88.2 79.8 58.8 121 .5

(a) Based on d a t a from Food Balance Sheets . (b) F i s c a l y e a r s (April-March). (c) P rov i s iona l FA0 d a t a . (d) F igures f o r Japan inc lude melons, s t r awber r i e s , e t c . (e l Based on c a l c u l a t i o n by au thor . (f) A l l oranges. na, n o t a v a i l a b l e .

Sources: (i) See i tems 1 and 2 i n Bibliography. ( i i ) FA0 A g r i c u l t u r a l Comodi ty P r o j e c t i o n s , 1970-1980, Vol. 11,

p. 130.

This background data , used i n conjunction with t he o f f i c i a l project ions(24) , should f a c i l i t a t e an assessment of l i k e l y fu tu re t rends i n consumption per head.

(a) Rice

The income e l a s t i c i t y f o r r i c e was still pos i t ive during t h e 1950s, but has s ince been negative. E l a s t i c i t i e s calculated from cross-section da ta a r e not s ign i f i can t ly d i f f e r e n t from zero, ind ica t ing t h a t l e v e l of income a t any given time has l i t t l e e f f e c t on demand. Pr ice e l a s t i c i t i e s over t h e pas t t en years o r so have averaged between -0.2 and -0.3.

Consumption per person of r i c e recovered t o about 87% of t he prewar leve l by t h e l a t e 1950s. I t remained f a i r l y constant up t o 1964 (116 kg) but has s ince f a l l e n s tead i ly , being 91 kg i n 1973. A f u r t h e r decl ine i s indicated, but t he sa tura t ion l eve l calculat ions described above suggest t h a t i t w i l l not go below 64 kg. The MAF demand pro jec t ion f o r 1985 i s 82 kg.

(b) Other Cereats and Cereal Products

The rapid decline i n t h e use of bar ley and other coarse grains f o r human consumption is re f lec ted i n la rge negative income e l a s t i c i t i e s f o r these products. Wheat, bread and most cerea l products have recent ly exhibi ted low income e l a s t i c i t i e s , but bread consumption i n pa r t i cu l a r has been q u i t e responsive t o pr ice .

Cereals o ther than r i c e , wheat and bar ley f o r beer a r e used mainly as l ives tock feed and t h e demand f o r them i s derived from t h e demand f o r l ivestock products which a r e dea l t with separately . Data i n Table No. 13 suggest l i t t l e f u r t h e r increase i n wheat consumption, with a continued decl ine i n human consumption of o the r cerea ls . The demand f o r a l l ce rea l s combined seems t o be tending downward towards the average f o r a l l developed countr ies (92 kg i n 1970) but it i s l i k e l y t o be some years before i t f a l l s below 100 kg. The MAF pro jec t ions ind ica te t h a t t o t a l demand i n 1985 w i l l be 111 kg a head.

(cl Meat

For meat a s a whole, income e l a s t i c i t i e s have been f a i r l y c lose t o 1 .2 during recent years , t he corresponding p r i ce e l a s t i c i t i e s being about -1.0. Consumption per person rose from 3.3 kg i n 1955 t o 16.2 kg i n 1973.(25) The calculated sa tu ra t ion l eve l i s more than twice ac tua l consumption i n 1973 which i n t u rn was l i t t l e more than 20% of t he average fo r developed countr ies . While i t is very r i s k y t o t r y t o pos tu la te a maximum demand, al l t he evidence po in ts t o a subs tan t ia l fu r the r r i s e before consumption begins t o leve l out. The speed of t h i s r i s e w i l l probably be determined more by r e l a t i v e p r i c e s and physical a v a i l a b i l i t y than by average incomes. In o ther words, with un res t r i c t ed a v a i l a b i l i t y

(24) See item 5 i n the Bibliography.

(25) See a l so BAE, Devetopne~zts i n the Japant:se Beef Nmket, Beef Research Report No. 17, Canberra, 1975.

and pr ices a t t r a c t i v e t o consumers, consumption could r i s e considerably even i n t he shor t term. The MAF project ions envisage only a 30% r i s e i n consumption from 1972 t o 1985 and t h i s suggests t h a t t he MAF i s continuing t o plan f o r l imited supplies ra t ioned by pr ice .

The pr incipal meats consumed i n Japan a r e pork, chicken and beef i n t ha t order . Mutton and lamb, whalemeat and horsemeat together amount t o a l i t t l e more than beef i n quant i ty . While beef is the preferred meat, the a l loca t ion of consumption between the various meats is determined mainly by p r i ce and a v a i l a b i l i t y .

The average income e l a s t i c i t y f o r pork was about 2.8 i n t he t en years ended 1964. However, suppl ies were increased rapidly i n response t o demand, and consumption rose from 0.8 kg i n 1955 t o 6.4 kg i n 1973. A s consumption rose, t he income e l a s t i c i t y f e l l , being about 1.5 i n t h e period 1963-1972 with a pr ice e l a s t i c i t y of -1.8. The c r o s s - e l a s t i c i t i e s i n Table No. 12 show tha t beef p r i ce s a l s o have an important influence on demand f o r pork.

Chicken consumption increased rap id ly from 0.3 kg per person i n 1955 t o 5.1 kg i n 1973. A t the same time, t h e income e l a s t i c i t y f e l l from more than 3.0 t o well below 1.0 (see Table No. 11). Pr ices f o r chicken have declined r e l a t i v e t o the general p r ice leve l , so t h a t t h e calculat ions have produced highly s ign i f i can t p r i ce e l a s t i c i t i e s i n t he range -2.0 t o -2.4. Beef pr ices a l s o were s ign i f i can t i n determining demand f o r chicken. Thus i t appears t h a t t he r e l a t i v e l y high consumption of chicken can be a t t r i bu t ed i n la rge measure t o t he f a c t t ha t i t has now become the cheapest of the major meats i n Japan.

On the other hand, beef pr ices have r i s e n r e l a t i v e t o other pr ices and beef consumption appears t o have leve l led out a t about 2.3 t o 2.4 kg per head (Table No. 1 ) . Income e l a s t i c i t i e s over recent t en year periods have averaged 1.0 t o 1 . 2 , with pr ice e l a s t i c i t i e s s imilar t o those f o r pork (Tables No. 10, No. 11) . There is thus strong evidence tha t beef consumption could r i s e considerably i f grea te r supplies were ava i lab le and r e t a i l p r ices reduced, even without fu r the r increases i n income, while higher incomes could lead t o g rea t e r consumption so long as p r i ce increases were no more than 80% o r so of income increases .

( d ) MiZk and MiZk Products

Over the period since 1955, t he income e l a s t i c i t y f o r fresh miZk has f a l l en from more than 2.0 t o below 0.3. Consumption per head rose from 5.5 kg i n 1955 t o 26.9 kg i n 1973 and has recent ly leve l led out t o some extent . However, milk consumption is s t i l l much below t h e average for other developed countries and sa tura t ion leve ls calculated a s explained above suggest t h a t a considerable f u r t h e r increase i s possible .

The quanti ty of milk consumed o ther than as f r e sh milk has usually been r a the r l e s s than half t he t o t a l and has increased t o a r a the r smaller extent . Total milk consumption i n 1972 was about 52 kg per person and the o f f i c i a l projected quant i ty f o r 1985 is 65 kg.

Consumption of cheese has continued t o increase i n recent years , but increases i n purchases of b u t t e r and powdered milk appear t o have ceased. The reason f o r t h i s i s by no means c l ea r s ince pr ices f o r da i ry products have r i sen l e s s than f r e sh milk pr ices and considerably l e s s than

pr i ces fo r food a s a whole. E l a s t i c i t i e s calculated f o r these m i l k products have usual ly been of low s t a t i s t i c a l s ignif icance and it i s d i f f i c u l t t o assess the po ten t ia l f o r fu tu re increases .

(el Eggs

Consumption increased rapidly with grea te r a v a i l a b i l i t y and f a l l i n g r e a l p r ices , r i s i n g from 3.4 kg a head i n 1955 t o 14.8 kg i n 1970. Consumption has s ince decreased s l i g h t l y ; t h i s f a c t , taken i n associat ion with r i s i n g r e a l incomes and lower r e a l p r ices provides reasonable evidence of sa tura t ion . The MAF project ions support t h i s conclusion, giving an estimate of 15 kg f o r 1985.

These trends i n consumption and p r i c e r e s u l t i n some negative income e l a s t i c i t i e s f o r eggs, t he increases i n consumption over the pas t t en years or so apparently being a t t r i b u t a b l e t o pr ice decreases. Calculations f o r recent years produce income e l a s t i c i t i e s of low s t a t i s t i c a l s ignif icance.

If) Fruit

The consumption of f r u i t per person has increased almost four-fold i n the past 20 years o r so, income e l a s t i c i t i e s being variously estimated a t between 0.6 and 1.1. More recent ly , the r a t e of increase has slackened, but there s t i l l seems scope f o r f u r t h e r expansion. Consumption of a l l f r u i t (excluding melons, s t rawberr ies e t c . which a re included among vegetables) has recent ly been around 44 kg a head and the MAF expects t h i s t o reach 52 kg by 1985. The computed sa tura t ion level is higher again than t h i s , suggesting t h a t demand could eventually reach 60 kg.

The d i s t r i bu t ion of consumption between various v a r i e t i e s of f r u i t s i s determined by pr ice and a v a i l a b i l i t y . The most widely used f r u i t i n Japan is mikan, consumption of which rose from 3.1 kg a head i n 1955 t o 19.2 kg i n 1972, f a l l i n g t o some extent i n 1973 a s a r e s u l t of a smaller crop. The income e l a s t i c i t y f o r mikan a s calculated from time s e r i e s data has consis tent ly exceeded uni ty , although the cross-section e l a s t i c i t y is much lower, showing t h a t t h i s f r u i t is a favouri te with a l l income groups. The decline i n p r i ce of mikan r e l a t i v e t o other f r u i t s i n recent years (see Tables No. 7 t o No. 9) has no doubt contributed t o the popular i ty of t h i s f r u i t .

Consumption now approaches average consumption of a l l oranges i n developed countr ies as a whole (Table No. 13) and although l e s s than the s a tu ra t ion leve ls shown i n t h i s t ab l e , t he o f f i c i a l project ion f o r 1985 (21 kg a head) is not very much higher than recorded recent ly . However, a considerable increase i s expected i n mikan used f o r juice.

Production of appZes exceeded t h a t of mikan on average from 1948 t o 1963, but has s ince declined somewhat so t h a t a v a i l a b i l i t y f e l l and r e l a t i v e pr ices rose . Imports of apples a r e permitted from very few countr ies , os tensibly f o r quarantine reasons. In t h i s s i t ua t ion , e l a s t i c i t i e s calculated f o r apples have very l i t t l e meaning and i n any case have recent ly not been s ign i f i can t ly d i f f e r en t from zero. Unless imports a r e permitted, fu r the r decl ines i n consumption appear inev i tab le , t he area devoted t o apples having declined.

B u m s recorded very high income e l a s t i c i t i e s when they f i r s t came on the market following import l i be ra l i s a t i on , but these f e l l rapidly as supplies increased and bananas ceased t o be a novelty.

(gl Gaishoku

This Japanese term covers food eaten outside the home, f o r example, meals i n res taurants , company canteens and schools. With r i s i n g r e a l incomes, the Japanese have been devoting an increasing proportion of t h e i r expenditure on food t o gaishoku which has consequently exhibited a f a i r l y high income e l a s t i c i t y (around 1.4 from time s e r i e s data and 1.1 from cross-section da ta ) . These meals incorporate a wide range of products and the f a c t t ha t the volume of food used i n t h i s way has grown SO much means t h a t household purchases have r i s en l e s s than would otherwise have been the case.

(hl Other Products

Sugar consumption has grown s t ead i ly , r i s i n g from 12.3 kg per person i n 1955 t o 28.4 kg i n 1973. The income e l a s t i c i t y f o r the period 1963-72 was 0.8, but t h e p r i c e e l a s t i c i t y w a s c lose t o zero. The MAF project ion f o r 1985 (30.8 kg) represents only a moderate increase. Japanese consumption i s s t i l l below the average f o r t he developed world and appears t o be well below sa tura t ion leve l , so t h a t fu tu re increases could exceed the o f f i c i a l p ro jec t ions .

Some 80% of soybeans a r e used i n manufacture, t he p r inc ipa l products f o r human consumption being soy sauce, bean curd and miso. Average consumption per head of these products has tended t o f a l l s l i gh t ly , e l a s t i c i t i e s i n most cases not being s ign i f i can t . The major pa r t of soybeans used i n manufacture emerges a s residues which a r e used mainly f o r stockfeed. E l a s t i c i t i e s f o r soybeans f o r d i r e c t human consumption have been low (income 0.3, p r i c e -0.3) and t h i s market now appears t o have been sa tura ted . This view i s supported by the . 1985 project ions which show consumption per head f o r food (excluding o i l ) a s 5.7 kg, the same as i n 1972.

Vegetabtes loom very large i n Japanese d i e t s , although consumption has level led of f from about 1970 and both income and p r i ce e l a s t i c i t i e s f o r vegetables a s a group have become in s ign i f i can t . Japanese consumption has recent ly been close t o the average f o r developed countries, suggesting t h a t sa tura t ion is being approached, although t h e 1985 project ions envisage a fu r the r increase of about 10%.

Within the vegetable group, there has been a t rend away from root crops towards leafy and western type vegetables, but s ince few vegetables a r e imported, the composition of consumption w i l l continue t o be determined mainly by a v a i l a b i l i t y and r e l a t i v e pr ices , which w i l l i n turn influence the composition of production. E l a s t i c i t i e s f o r f f s h tend t o be low as consumption per person i n Japan has long been one of t he highest i n the world and fu r the r subs tan t ia l increases do not appear l ike ly , except perhaps i f meat suppl ies f a l l well shor t of demand. Although f i s h consumption appears t o be approaching sa tura t ion l eve l , t he MAF project ions forecast a fu r the r increase of 19% t o 42.4 kg a head i n 1985. Whether supplies can be increased t o t h i s extent on a long-term bas i s i s open t o doubt, since t h e r e have been supply d i f f i c u l t i e s i n some years. A t t he same time, consumers have sought t o maintain t h e i r f i s h

consumption and supply shortages which have occurred from time t o time, have been r e f l e c t e d i n p r i ce increases f o r f i s h which considerably exceed the average f o r o ther foods.

11. L im i ta t ions and Imp1 ica t ions

Some of t he l imi ta t ions of s t a t i s t i c a l analyses of demand have al ready been mentioned, but it needs t o be emphasised t h a t t he e l a s t i c i t i e s derived f o r t he various food products merely cons t i t u t e a mathematically calculated s e t of re la t ionsh ips between specif ied var iab les during ce r t a in periods, the e f f ec t s o f o the r var iab les on the outcome not being taken i n t o account. The r e s u l t s of these calculat ions can be very useful i f employed with d i sc re t ion i n helping t o describe i n quant i ta t ive terms what has happened i n the past and t o help c l a r i f y t h e reasons f o r these developments. S t ruc tura l changes such a s t h e l i b e r a l i s a t i o n of t r ade and the phasing out of food ra t ion ing had profound e f f ec t s on food consumption and the pr ice of food products, and these e f f e c t s a r e n a t u r a l l y r e f l ec t ed i n the r e s u l t s of t he s t a t i s t i c a l analysis . Care is therefore needed t o avoid a t t r i bu t ing a l l t he observed changes t o the va r i ab l e s included i n the models. The normal t e s t s of s t a t i s t i c a l s ignif icance of ten give reasonable warnings of inadequate spec i f ica t ion i n the models, but t h i s cannot be taken f o r granted.

For reasons such as these, e l a s t i c i t i e s such a s those calculated i n the MAF study, i f used i n i so l a t i on , cannot reasonably be expected t o give an adequate guide t o the fu ture . A t most, t rends i n such s t a t i s t i c a l r e l a t i onsh ips may help i n an assessment of l i k e l y short-term fu tu re developments, but only i n t he absence of major economic changes o r disturbances such as t he recent severe f a l l i n t he r a t e of economic growth. In pa r t i cu l a r , i t cannot usual ly be assumed t h a t past trends a r e revers ib le , f o r example, it i s not va l id t o conclude t h a t e l a s t i c i t i e s r e f l e c t i n g the t rend away from cereals towards l ivestock products, f r u i t and vegetables which occurred during a period of r i s i n g incomes, w i l l apply i n reverse i f incomes f a l l .

A fu r the r l imi ta t ion l i e s i n t he a v a i l a b i l i t y and qua l i t y of data . Japanese s t a t i s t i c a l co l lec t ions have improved g rea t ly i n qua l i t y and coverage i n recent years and t h i s could be a source of b i a s a f f ec t ing the comparability of time s e r i e s . In some s i t ua t ions , no o f f i c i a l s t a t i s t i c s could be expected t o be r e l i a b l e , f o r instance when black markets were commonplace. Some of t h e e a r l i e r postwar data therefore need t o be t r ea t ed with caution. Further, s t a t i s t i c a l col lect ions i n a l l countr ies s u f f e r from many problems of d e f i n i t i o n and in t e rp re t a t i on and Japanese s t a t i s t i c s a r e no exception.

Bearing these l imi ta t ions i n mind, some of the implications of the ana lys i s described i n t h i s a r t i c l e and conclusions which may be drawn from it appear t o be:

(a) Food consumption w i l l become progressively l e s s influenced by f u r t h e r increases i n income.

(b) The t rend from starchy s t ap l e s t o products such a s f r u i t and l ives tock products i s l i k e l y t o continue a t a decreasing r a t e .

(c) Aggregate food intake i n terms of nu t r i en t s per person w i l l increase only slowly i n fu ture , t h e pr inc ipa l fac tor influencing

t o t a l consumption being population growth which i s expected t o continue a t about 1.1% a year f o r the next decade.

(d) Consumption per head of several food products appears t o be very c lose t o sa tura t ion l eve l and may not change grea t ly i n the fu ture . I n t h i s category a r e eggs, f i s h and many vegetables, consumption of which has already reached o r exceeded the average f o r developed countries.

(e) Consumption of some other commodities i s now probably approaching sa tura t ion leve l and the r a t e of increase i s f a l l i n g . Some f r u i t s , wheat and var ious cerea l products a r e examples. There s t i l l seems t o be a reasonable prospect f o r expansion of sugar consumption, although a t a lower r a t e .

( f ) In the case of meat, dairy products and a few f r u i t s , the . ana lys i s suggests t h a t consumption i s s t i l l well below sa tura t ion leve l and t h a t appreciable increases a r e s t i l l possible . Supply d i f f i c u l t i e s experienced with f i s h may d ive r t some demand towards meat i n the fu ture , although ava i lab le c r o s s - e l a s t i c i t i e s do not s t rongly suggest t h a t t h i s has occurred i n t he past . A s between meats, t he e l a s t i c i t i e s ind ica te a preference f o r beef, but with adminis t ra t ively r e s t r i c t e d supplies, beef p r i ce s have r i s e n more than other meat p r ices causing many po ten t i a l consumers t o d ive r t t h e i r demand t o a l t e rna t ive products.

A s mentioned e a r l i e r , an important purpose of t h e MAF study was t o provide data f o r other government o f f i c e r s who were required t o prepare, f o r policy purposes, demand project ions and production t a r g e t s f o r the pr incipal foodstuffs. The study was thus intended pr imari ly a s an o f f i c i a l information document, although it was released f o r t he bene f i t of un ive r s i t i e s and other organisations in te res ted i n research i n t o the food s i t ua t ion .

The material presented i n t he demand study w i l l no doubt be used, together with t h e r e s u l t s o f t he long-term project ions , t o help formulate po l i c i e s f o r ag r i cu l tu ra l ,'$reduction . i n Japan and po l i c i e s r e l a t i n g t o imports. I t i s propose& t o publish fu r the r papers i n t h i s s e r i e s dealing i n some d e t a i l with t he pro jec t ions and the l i k e l y gaps between d e k d and domestic supply.

Meanwhile i t is hoped tha t t he s t a t i s t i c a l mater ia l and in t e rp re t a t i ve notes i n t h i s paper w i l l provide background data usefu l t o English speaking people i n t e r e s t ed i n food and ag r i cu l tu ra l problems, po l i c i e s and developments i n Japan.

Bib1 iography

Note: Publications e n t i r e l y i n Japanese a r e l i s t e d f i r s t by t h e i r Japanese t i t l e s followed by an English t r ans l a t i on . Publications which a r e b i l ingua l a r e indicated by (B) a f t e r the t i t l e , but only the English ' t i t le is shown here .

1. Norin Dai j in ~ a n b o Chosaka:

Shokuryo Juyo Bmseki ~h6wa 48 Nendo ~howa 49 Nendo

Research Section of the Sec re t a r i a t of t he Minister f o r Agriculture and Forestry:

Food ema and Analysis 1973, 1974.

2 . Norin Daijin ~ a n b o Chosaka :

Slzokuryii Jukyiihyo ShEwa 45 - 50 Nendo

Research Section of the Sec re t a r i a t of t he Minister f o r Agriculture and Forestry:

Tables of Food Demand and Supply

(Annual publication. Issues f o r 1970 t o 1975 used i n preparing t h i s paper).

3. Bureau of S t a t i s t i c s , Office of the Prime Minister

(a) Annual Reports on the F a m i l y Income and Expenditure Survey (B)

(Various issues up t o 1973)

fb ) Monthly Reports on the Family Income and Ezpenditure Survey (B)

(Various issues up t o March 1975)

4. Bureau of S t a t i s t i c s , Office of t he Prime Minister

( a ) AnnuaZ Reports on the Retail Price Survey ( 5 )

(bl Monthly Reports on the Retail Price Survey ( B )

5. Economic Planning Agency, Office of the Prime Minister

l a ) Annual Reports on National Income S ta t i s t i c s (B)

f b ) Japanese Economic S taeis t ics (Monthly) (B)

(el Keizai Y&an

Economic Handbook (Annual)

N~sonbutsu no Juyo to Seisan no Ch5k-i M i s s h i (An) 50 . 4.

MAF Long-term Projections of Demand and Production of Agricultural Products (Draft) April 1975.