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Japan’s apple production hits record low; unsold housing hits new high

CHINO, Japan, May 20, 2024—What aging is doing to Japan is sketched graphically in two sets of high and low numbers: The farm ministry’s recent statistics showed Japan’s 2023 apple production fell 18 percent from 2022 to a record low of 603,800 tons. The number of vacant private houses totaled 8.46 million in the most recent government survey taken in 2018, a record high and up 3.2 percent from the previous survey year of 2013 with the number representing 13.6 percent of total private houses.

The common denominator of the two sets of date is rapid – and accelerating – population aging progressing faster than anybody expected that may make soft-landing of its impact difficult.

True to the growing public fear about the aging’s negative effects, apple growers reported to the ministry about labor shortages arising from difficulty finding next-generation growers and inevitable acreage reductions for inability to increase per capita production, as well as soaring fertilizer and pesticide costs and climate change.

Apple shipment in 2023 also fell 18 percent to 548,400 tons, also the smallest quantity on record. Wholesale and retail prices soared, lifting beyond what Japanese consumers can afford for the most popular fruit in the country.

Tangerine orange production was unchanged at 681,600 tons while shipment was up 1 percent at 617,000 tons on year, although both figures were down 10 percent from 2021. Prices were up 50 percent. Tangerines are known to be easier and less costly to grow than apples.

Unwanted, vacant houses

By 2024, real estate economists estimate the number of vacant houses topped well over 9 million units, probably representing 14 percent of total available private housing. Vacant houses have been steadily rising since 1963 in Japan.

TV Niigata, a local station based in the Japan Sea coast city of Niigata, reported May 20 that the city’s vacant houses accounted for 15.3 percent of total houses in 2023 and are still growing. The number was double of 1998.

Many vacant houses are being given free but aging owners are having a hard time selling them because prospective buyers need to shoulder repair costs, it said.

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Experts at planning, total failure at delivery – Japanese bureaucrats

TOKYO, May 9, 2024—At a May 1, 2024 meeting with Minamata mercury poisoning – widely known as one of the world’s first industrial pollution case – victims in Minamata City, Kyushu, a Japanese Ministry of the Economy bureaucrat abruptly turned off the mic of two victims speaking about their experiences and appealing for the state’s apologies and continuing support to the minister, Shintaro Ito, for exceeding their allotted 3 minutes each – clearly too short to explain their plight. (https://japannews.yomiuri.co.jp/politics/politics-government/20240508-184842/)

On May 8, Ito revisited Minamato to apologize to the victims but the name of the ministry official who disconnected the microphone or what kind of administrative punishment if any was taken about him was not available. A MOE Special Disease Policy Office official declined to comment when asked on the phone by The Prospect. The head of the MOE press office, Nobuyuki Konuma, told The Prospect May 9 in a phone conversation that the minister orally reprimanded vice MOE administrator and the Environment Insurance deputy director general for the incident. No penal action was leveled on the two bureaucrats, he said.

A classic bureaucracy work

At a Scout gathering, the leader might say a few words about a schedule and safety after introducing her/himself. That’s fill up 3 minutes. But the 1965 Minamata Disease case, which was globally known by photographer Eugene Smith’s work and continues to affect victims to this day, cannot possibly be explained in three minutes. It demands human voice from the victims’ souls and bodies. They needed at least 10 minutes each and perhaps more. Yet, for the MOE bureaucracy, who do not want the victims to refresh their painful memories and with it, make new demands, 3 minutes was the most given to the victims. Plus, once decided – in this case, 3 minutes for each – the Japanese bureaucracy proceeds rigidly on schedule, no matter what (unless someone gets killed).

That’s part of policy planning and execution that the Japanese bureaucracy had prided itself in engineering and guiding the nation over the past 175 years after japan opened its doors to the world.

But excluding perhaps during the first decades of those years, they have become experts at drawing what they think are best but poor at applications.

Case in point relating to the MOE are most of its greenhouse gas reduction programs written jointly with the Ministry of Economy, Trade and Industry and other government offices. They failed and Japan’s GHG emissions are overshooting targets to stem growth to less than 2 percent by 2030 compared with 2013 levels by slashing emissions by 46 percent.

It won’t happen: Japan generates only about 23 percent of total electricity consumption with solar and other renewable energy, while the world average is 29 percent, according to International Energy Agency data.

Japan also claims that it would accelerate the deployment of EVs, hydrogen fuel cell vehicles but it is woefully short of charging stations, which totaled less than 10,000 for quick charging and 23,000 for slow charging, a far cry from what the government trumpeted several years ago in voluminous policies papers that hundreds of bureaucrats spent months overtime to draft.

So what were those documents for? They gave work to government employees and politicians to read at international conferences. That’s policy planning. What happened at the Minamata meeting was the bureaucrats forgot about the consequence of delivery as they myopically concentrated on planning alone.

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If true Japan can resurge to top of the world

TOKYO, April 29, 2024—All solid state batteries are a global game changer for addressing climate change, at the same time accommodating human mobility and comfy lifestyle. Japan dominates the number of relevant patent applications of this technology, accounting for 48.6 percent during the 2013-2021, The Japan Patent Office said in its April 25 report. If the technology becomes a reality with Japanese patents, Japan can dominate the world’s EVs, co-generation, and other applications for dramatically sustainable energy management and savings.

Will it happen? 

Following Japan were Korea’s 17.6 percent, the United States’ 12.9 percent, the European Union’s 11.9 percent, China’s 5.8 percent, Taiwan’s 1.2 percent, and Canada’s 1.0 percent.

Japan also ranked third in quantum computer patent applications after the United States and the EU, as well as a few other vital science and industrial tech applications, including zero emission housing, though it lagged woefully behind in drone and photovoltaic patents.

An official of the JPO Intellectual Property Trend Office said that the data was taken based on patent applications and public disclosure rules, so he could not tell trends post-2021 – when global automotive and other scientific and engineering experts accelerated all solid state battery R&D.

Toyota, Nissan and other Japanese companies are making interim announcements of their research progress. Chinese, Korean and and other businesses are announcing that they would launch cars and other products powered by all solid state batteries in as early as 2026. 

Which entity will be the top runner!?

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Orange juice products disappear from Japan, indication of growing food shortages

TOKYO, April 29, 2024—Perhaps a first confirmation of tightening food supply, decreasing production and the eventual acute shortages that Japan would run into over the next decade: OJ products are fast disappearing from store shelves as imports are dwindling and prices go sky high because of shrinking production in the United States and other exporting countries that are being ravaged by climate change.

The April 30 Japan Agricultural News daily reported that three top orange juice and product packaging and distributing companies – Morinaga daily, Meiji Meg Milk, and Asahi Beverages have been or planning to indefinitely suspend deliveries to retail stores. Morinaga sold Sunkist OJ and Meiji Meg Dole products.

Imports account for 9/10th of Japan’s orange consumption.

Morinaga and other companies are asking domestic citrus growers to increase production and harvesting, yet many growers are failing to respond because of aging – a classic pattern of Japan’s disruptive food supply chain.

A Nagano farmers market in central Japan April 1, 2024 newsletter for its member farmers said its business is poised to become unviable as the number of visitors has plunged to half in 2023 to 10,767 from 20,850 in 2013 as supply volumes and varieties of farm goods dwindle corresponding to farmer population aging, rising fertilizer, pesticide and insecticide prices, and stagnating selling prices. The market decided to close twice a week to cope with the situation but if conditions don’t turn around for the better, it could fold in less than two years, a market employee told The Prospect.

Production of most other crops is facing the same challenges. In Kitami, Hokkaido, farmers had quit growing sugar beets, and they now are growing only potatoes – a disease risk they decided to take to raise a single crop for lack of young labor and costs. ‘Potatoes are easy,’ a farmer told The Prospect April 29.

High value crops are what entrepreneur farmers are growing such as $20 a pop strawberries and $300 melons – arbitrarily contributing to Japan’s declining food production and supply.

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Japan media revisit: Self-restraining getting out of control

TOKYO, April 29, 2024—On this second day of the ‘Golden Week’ holiday stretch, a morning radio show long known for unabashed comments caught my attention for restraining criticisms of the Bank of Japan, the central bank, and almost nonchalant views about rampant inflation bufett9ing Japanese taxpayers that resoundingly voted down all three candidates of prime minister Kishida’s Liberal Democratic Party in a lower house bi-election..

The regular commentator of the show, hosted by Takero Morimoto, explained the BOJ’s monetary policy, devoid of representing the outcries from both consumers and businesses or criticisms of the bank’s governor about the tumbling yen’s value against the U.S. dollar and other currencies. At the end of the clip, host Morimoto, sounding irritated, expressed frustration and nipped at the bank’s policy of maintaining its lax policy.

What caught my attention about the commentator’s views was that he sounded like wanting to defend the BOJ and governor, prompting me to find out that he is an editorial board member of Jiji Press, one of two Japanese wire services that focuses on financial market and economic coverage, including the central bank, and that his views were aired by the TBS broadcasting company, which is a closely affiliated with the Mainichi daily newspaper. Both Jiji and Mainichi pride themselves as the champions of Japan’s monetary policy coverage.

The commentator offered analysis of the April 28 by-election of three lower house LDP and LDP-in-kind lawmakers that were forced out or resigned from parliament for campaign financing and other irregularities. Kishida’s LDP was defeated in the three races miserably, and the commentator attributed the results to the scandals only – while voters interviewed before casting ballots voiced loudly about rising consumer goods prices and soaring gasoline prices, especially those living in rural areas where cars are one of vital social infrastructure.

Businesses also have been urging the government and the central bank to shore up the yen’s value, only to be given deaf ears.

If Mr. Morimoto’s show has lost teeth, there’s hardly any media outlets that Japanese consumers can tune in to as they long ago abandoned Japanese television as news sources.

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Google stepped into Japanese browser firm, given an administrative slap

TOKYO, April 24, 2024—Google Inc.’s size and power have prevailed over Japan’s antirust agency, when the authority gave a light, ambiguous administrative order to the internet giant with no fine April 23, 2024.

The Japan Fair Trade Commission released a statement emphasized that the administrative order it termed a ‘commitment procedure’ issued to Google’ to correct its business restrictions on digital advertisement distributions of Line Yahoo Co. of Japan was the first time Japan has issued to a multinational internet giant.

JFTC said it did not slap a fine on Google because the company pledged to discontinue its restrictive business practice on LY and that it would supply relevant technology to LY during the next three years as well as that it would submit progress reports to JFTC.

LY had to use Google’s search engine for running on-line ads.

The latest episode is indicative that Japanese administrative authority are reluctant to challenge U.S. big tech companies head-on for fear of unpredictable reprisal and implicit political pressure to keep stable U.S.-Japan tech ties. U.S. big tech CEOs were seen at the recent White House state dinner President Biden hosted for PM Kishida.

So what was this JFTC slap on Google’s wrist about? It’s a small theater performance for the antitrust watchdog to show that it’s there among Japaneses government offices and doing some work.

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Japan set to double surcharges on Apple and Google antitrust violations

TOKYO, April 14, 2024—Coined after the EU digital markets act, the Japanese government is gearing to enact legislation that would penalize with double the current maximum surcharges on anti-monopoly acts of gatekeepers – effectively, Apple Inc. and Google Inc. alone – of their operating platforms’ market dominance.

The current surcharge is 1/10th of revenue identified connected to Anti-Monopoly Law violation acts. The surcharge on violations if committed and admitted by the two respective companies will be raised to 20 percent, and repeated violations will be subject to 30 percent.

The gatekeepers also would have to submit reports on their platform administration and activities to the Fair Trade Commission annually, and should suspected acts of violations were identified, JFTC would refer the cases to court.

In March, the U.S. Department of Justice sued Apple for violation of the antitrust act. The Japanese legislation is the second one after 2021, when it enforced the digital platform transaction transparency act that outlined detailed information disclosures on platforms.

The commission plans to have legislation adopted by the cabinet by the end of April for submitting the draft legislation to the Diet (parliament) immediately afterwards.

At issue that the JFTC is probing as potential antitrust problems is exclusivity of iOS and Android smart phone operation system-based applications developed and made public by third parties on their respective platforms. JFTC in the past pointed out to Apple about high fees the company collects from iOS application developers in selling them and exclusivity of not offering them on Android and other platforms of other gatekeepers.

JFTC also is expected to demand that consumers be given greater latitude in customizing the downloaded applications, as well as the two gatekeepers’ platform configurations to guide consumers to use the platforms and applications with priority.

Apple commands a lion’s share of both hardware and applications of Japan’s 2.2 trillion yen ($17 billion) smartphone hardware market, in which Apple iPhones accounts for nearly 51 percent. Google is a distant second with 14 percent.

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Tokyo’s population concentration accelerates; threatens food supply

TOKYO, April 13, 2024—Tokyo was the only prefecture of an increased population in 2023 as Japan’s total population decreased 595,000, or 0.48 percent from 2022, to 124.35 million, raising concerns about food supply that’s already is the lowest among developed economies and one of the lowest in the world, according to the Statistics Bureau of the Ministry of Internal Affairs and Communications April 12.

It was the the 13th consecutive year that the population shrank, with the pace accelerating from 2021 as baby boomers and older people enter life’s rainbow time. The total population includes approximately 3.5 million foreign nationals who were born outside Japan.

Tokyo’s total population grew 0.34 percent on year to 14 million, the only prefecture among 47 that registered growth.

As the shrinkage pace isn’t likely to slow, Japan’s total population would plunge 21.46 million in 2050, compared with 2020, according to projections of the National Institute of Social Security and Population published in December 2023. 

The projections were of little surprise as the number of baby boomers and older people is decreasing, while the ratio of people over 65 years old climbed 0.1 point to a record 29.1 percent and that of people over 75 years old rose 0.6 point to 16.1 percent. The share of people younger than 15 fell 0.2 point to a record low of 11.5 percent.

The data portends that, contrary to general views that young people are taking up agriculture and fisheries jobs, farmers, fishermen, cattle growers are aging rapidly, probably faster than urbanites, depleting those industries of much-needed workforces, analysts said.

The rapid population urbanization’s impact is showing up in steadily falling food self-sufficiency ratio, which the Ministry of Agriculture, Forestry and Fisheries put at 38 percent, though researchers say that the real number is far less than 30 percent on the basis of nutritions. Rice seems to account for a big share of the MAFF’s 38 percent calculation.

The MAFF is targeting the food self-sufficiency level of 45 percent, but the latest population data suggests that it is a pipe dream impossible to attain as Japanese people migrate to the greater Tokyo area, which now accounts for about 3/10 of the Japanese population and attracting migration from rural areas.

As many as 20 percent of the 47 Japanese prefecture would lose their respective populations to half in 2050, compared with 2020, the National Institute of Social Security and Population predicted. Those prefectures are expected to lose workers engaged in food production, meaning that Japan needs to further rely on imports — while the Japanese government is accelerating food exports programs.

Proactive immigration policy is among few remaining options for Japan, and out of desperation, the country is relaxing qualifications for foreign workers in such industries as trucking, taxing and other transportation, railway operations, forestry and lumber production, enlarging areas in which foreign nationals can work to 16 from 12. With it, the Japanese government has raised the number of foreign workers by an additional 820,000 over the next 5 years, starting this summer.

It’s clearly not enough and relaxation is not fast enough.

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It’s all up, up, up in Japan’s new business year, fanned faster by tourists

TOKYO, April 12, 2024–April 1 is the first day of Japan’s new business year. Young people starting work for the first time and students entering school are welcomed at entrance ceremonies against the backdrop of cherry flower pedals play in the spring breeze. People, fauna and flora and houses all look being uplifted and smiling.

Not this spring.

The weather was nasty. Strong, cold, typhoon-grade powerful winds with occasional downpour, clearly a climate change impact, ruthlessly whipped them all, disabling ceremonies and ubiquitous sakura (cherry) flower parties under the open skies. 

Even more chilling than the frigid spring for people was what economists termed a inflation third wave carrying goods and service prices of all conceivable items, from more than 2,800 groceries, parcel delivery fees, National Health Insurance premiums for people over 75 years, ending of government subsidies for Covid-19 vaccines, NHI premium surcharges to finance proactive child birth programs. Numerous other prices and fees have gone up, such as museum and park admissions.

The hike, which began two years ago, has roughly doubled Japan’s grocery inflation to date and restaurant prices even more, economist said.

The third wave rise coincided with the country’s most popular tourism season, though the fowl weather appeared to have preempted the over-crowing of popular tourist spots such as Kyoto. And yet, the tourist season just started, with more than 20 million Japanese people projected to travel during the late-April to May 5 Golden Week vacation period.

Most starred hotels are filling up and the effect is rippling to so-called business hotels, the accommodations for local traveling workers, where rates have nearly doubled year-on-year.

The bottomline: combined with the yen’s fresh decent against the U.S. dollar and other key currencies, Japan’s CPI inflation is threatening to go sharply higher over the country’s target inflation of 2 percent.

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Risks of the falling yen against the U.S. dollar

TOKYO, April 11, 2024—The risk of the Japanese yen falling off the bed is growing as the currency April 10 slumped below what traders view is a major psychological barrier on selling sparked by a stronger-than-expected U.S. consumer price rise.

Vice minister of international finance Masato Kanda April 11 said Japan will ‘not exclude any available option’ to stem the yen’s slide against the U.S. dollar and other currencies. In New York overnight trading, the dollar rose above 153 yen, the highest in more than 34 years and up from the 150 yen level April 9, 2024.

Kanda’s warning, which was reported by financial media entities, did little to buoy the yen from the New York trading low of 153.10. At 11;00 a.m. Japan time, it was at 152.80 levels. In late March, the finance minister, Shunichi Suzuki, a widely-known finance amateur, effectively confirmed that Japan is without tools to stem the yen slide, saying that the ministry had no specific defense levels.

Analyzing Kanda’s language that he ‘would not exclude any available option,’ currency traders said available options are limited to Japan’s stand-alone intervention of selling dollars and buying yen in Tokyo, London, New York and other financial centers, and executing ‘moral suasion’ of commercial bank currency traders, such as inquiring them about their bid and offer levels. It had been known as ‘verbal intervention’ or rate checking.

Over the decades since the September 22, 1985 Plaza Accord, the Group of Five agreement to gradually readjust the U.S. dollar’s level against the yen and other currencies, through 2022, Japan conducted 319 times of interventions to sell yen and buy dollars, some of the executions joined by the United States and European countries, according to Japanese government data. In the same period, In the same period, yen buying-dollar selling interventions, some of them also participated by other currencies as ‘coordinated intervention,’ totaled 32 times.

June 1998 was the last yen buying-dollar selling joint intervention with the United States, and to date, the MoF has been deploying the rate checking and other moral suasion methods with the understanding that the United States and European countries would not participate in joint intervention that requires enormous fiscal mobilization resulting in investment losses.

The U.S. Treasury and the Federal Reserve as a rule do not conduct currency intervention unless the market experiences extremely disorderly conditions. It’s probably is the reason why vice minister Kanda used such a round-about expression in warning currency traders not to be overly aggressive in pushing the yen’s value lower rather than more explicit language like his predecessors had used.

What about other tools that Japan has? Among few remaining is a further Bank of Japan credit tightening. That’s not likely to happen soon as BOJ governor Ueda suggested to the Diet (parliament), nervously wedging between his comments the need to do so eventually. He told a House of Representative finance committee meeting that he could not ‘rule out the possibility’ that negative interest policy had a negative bearing on financial companies’ earnings – the reason why the central bank ended the policy in March. 

Ueda ignore to refer to taxpayers that have been squeezed by the zero rate policy, not only getting negative interest on savings but also suffering steady asset erosions and causing a wide divide between those that invest and don’t in financial instruments.

Ueda, who is under bureaucracy and political pressure not to hasten monetary policy change, said the central bank will continue its Japanese government long bond (10 years and longer maturities) purchases to inject credit into the money market. ‘Roughly speaking, we had no idea what would happen if we changed policy to zero too soon,’ he said. ‘We are thinking about moving to the phase of gradually reducing JGB purchases by observing the market conditions.’

The BOJ holds about 600 trillion yen ($4 trillion) worth of JGBs. Representing BOJ executives’ views that the central bank should start unloading its huge JGB holds on its balance sheet, Ueda said, ‘It’s not healthy (for the bank) to hold such a large sum of JGBs.’

The Ministry of Finance does not want the central bank to dispose of its JGBs and cause market interest rates to rise, forcing the ministry to sell new JGBs at higher costs. A one percent rate rise is estimated to raise the Japanese government’s JGB issuance 40 trillion yen ($270 billion) a year.

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