It’s now more than a month since the magnitude 9.0 earthquake and ensuing tsunami hit northeastern Japan. From rolling blackouts in the immediate aftermath of the quake to the radiation leak at the Fukushima Daiichi nuclear plant that has affected farm produce grown in surrounding areas, the impact for the fresh produce business has already been significant. It’s clear the effects will be felt for some time, but determining what those effects will be remains an exercise in speculation at this stage.
The deepest impact has been felt by farmers in the areas affected by the earthquake and tsunami, and by the radiation leak from the stricken Fukushima nuclear plant.
“We realise that Japan’s entire agricultural sector will never be the same again,” Hisao Takeda of agricultural consulting company Yamano & Associates told Fruitnet.com.
“Estimates of damage to the agriculture sector range from US$10-14bn. Over 23,000ha of agricultural land was damaged and forced out of production. These figures are set to rise as no decisions have yet been made regarding how to handle the land with higher than acceptable levels of radioactive contamination.
“It will be very difficult for the agricultural sector in Japan to shed the perception that the land, and the food it produces, is unsafe.”
The government has begun to ease the widespread restrictions it imposed on shipments of produce from the affected areas following the discovery of radioactive contamination on some farm produce. But producers are still facing problems to resume distribution, and farming in these regions will be disrupted for some time. As of 18 April, restrictions remain in place on the shipment of certain vegetables from Fukushima and Chiba and spinach from Ibaraki and Tochigi.
Forging a pathway to the disaster zone
On a more optimistic note, food delivery to the disaster zone is improving, and international fresh produce suppliers have also rallied to provide support and financial assistance. For instance, Florida grapefruit growers and shippers have donated US$66,000 to supply free grapefruit to earthquake victims, with Florida Department of Citrus (FDOC) representative Yamano & Associates coordinating the support and distribution.
“The key to recovery of food distribution in the area is the recovery of roads, rail, power and water infrastructure,” said Chuck Olson, head of fresh produce importer-marketer Goldspan. “Progress continues to be made, but it will be a long time before anyone uses the term normal.”
As with other produce suppliers, only a small percentage of Goldspan’s customer base (around 10 per cent) actually lies in the directly affected region, but Mr Olson said the company is watching closely the impact on the rest of Japan. Indeed, the disaster has shaken the whole country, where a sombre mood prevails. And questions hang over restoring power supplies to the whole of the Kanto region, which were badly affected by the quake.
Electrical shortages raise concerns
“The power shortage in eastern Japan is a cause for concern, both for its general effect on the economy and its impact on the food service sector supplying bars and restaurants,” said Mr Olson.
The entire Kanto area suffered daily three-hour blackouts in the immediate aftermath of the quake, which had a serious impact on fresh produce sales, according to Don Okazoe of major importer IPM Nishimoto.
“The supermarkets couldn’t open for three hours each day, so they cut back on the fresh produce items they were selling because they didn’t have refrigeration,” he said.
These blackouts have now ceased as the country has embarked on energy-saving measures and the weather has warmed up, reducing the requirement to use heating systems. But Mr Okazoe sounds concerns about the spectre of further blackouts as the hot summer weather approaches.
“Once the temperature goes up, people will start using air conditioners and there could be further blackouts for the Kanto area,' he told Fruitnet.com. 'If there are more blackouts like before, it will really screw up the perishable business. In the summertime, if you don’t have refrigeration for three hours in temperatures of 30oC-plus, the product will rot.”
Food service feels the effects
Overall demand for fresh produce has been lower than usual because of the earthquake, according to Mr Okazoe, who noted that the restaurant and hotel trade has been worst affected.
“March is the traditional end of the year for many companies, but almost all of them have cancelled their end of year parties,” he said. “In April, we should have parties to mark the start of the new year, but again no one feels like celebrating when so many people have suffered. Even Kansai has been affected in this respect.”
Mr Okazoe said that demand from the hotel and restaurant trade is currently only 40-50 per cent of normal levels. “There have been so many aftershocks it’s causing people to hold back. It’s made consumers very cautious, and many are staying in-doors at home. The restaurants and Izayakas are very quiet.”
Radiation raises food safety fears
Goldpsan is about to embark on its South African citrus campaign, and Mr Olson shares these concerns about the food service sector, which is a key consumer of lemons. “Figures show that foreigners coming into Japan during March are down 50 per cent in March and hotel occupancy is way down,” he noted.
Most citrus is sold through retail channels, however, and retail sales have been less affected. “Demand for oranges is still good and as the weather warms up, we hope for good grapefruit demand as well,” he said.
Other market sources have reported a spike in consumption of oranges and bananas, and some attribute this to consumer concerns over radiation-contaminated water.
“People are now worried about the `safety` of water,” noted Yutaka Kubota of California-based vegetable exporter Freitas Brothers Farms, who said that an initial uplift in demand for imported vegetables in the wake of the quake has now subsided. “Even if the produce is imported, you’re still going to wash it, but items like bananas and oranges don’t have to be washed.”
Indeed, the impact of the radiation leak and the associated food safety fears on consumer behaviour are another major factor, but again difficult to read.
“When radiation was first found on farm produce, consumers were so scared, but now everyone has started thinking we must support the growers,” said Mr Okazoe.
Consumers are still afraid of buying fresh produce from the affected areas, according to Mr Takeda, but the Japanese Agriculture Cooperatives (JA) and retailers from these prefectures have conducted a series of promotional and educational campaigns to reassure consumers about the safety of their produce, according to Mr Takeda. “Traders report that these efforts are beginning to pay off and may be preventing further erosion in consumer demand,” he said.
Several of the areas affected by the quake are important produce-growing regions, particularly for vegetables, but whether the quake and the radiation issues will translate to stronger demand for imports is uncertain.
“Will there be more demand for imports? Yes and no,” said Mr Okazoe. “There are so many other areas growing vegetables `in Japan` and this is the time when they start planting. Everyone knows there could be a shortage and areas like Hokkaido could try and plant more, so we may finish up with oversupply.”
Retailers have been keen to stock imports on selected products, such as broccoli and asparagus, Mr Okazoe said, especially where there was uncertainty over whether domestic production would exceed radiation levels, but he said there is no consistent pattern. “There is spot demand; it’s very difficult to predict,” he said.
With consumers in a cautious mindset, and many parties and festivities to mark the cherry blossoms and other spring events having been restricted or cancelled, questions remain as to the impact on sales of premium produce. “We’re worried about cherries next month,” said one importer, referring to the start on the US import season.
But Mr Takeda noted that consumers have begun to recognise that the nation cannot recover if they don’t support the economy. “This relies on consumer spending and while the demand for gifting fruit has depleted, imported produce items are still welcomed by retailers,” he concluded.
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