Japan targets farm export gains to blunt pain from weak yen

TOKYO - When Japanese Prime Minister Fumio Kishida vowed this week to wring more gains from the weak yen, which has become instead a source of economic pain, he was pinning his hopes on the likes of Mr Soichi Yoshimura and his strawberry farm north of the capital Tokyo.

Most Japanese farmers - like many other key players in the economy - are up in arms over the yen's 20 per cent slide this year, which has inflated costs for imported fuel, fertiliser and other production inputs.

But prospects are different for Japan's exporters of wagyu beef, green tea as well as premium fruit and vegetables, including the "Sky Berries" from Mr Yoshimura's greenhouses that can fetch up to 800 yen (S$7.90) or more apiece in the supermarkets of Hong Kong, Bangkok and Singapore.

"Everyone seems worried about a weak yen," Mr Yoshimura, 33, said. "But it's good for our exports of strawberries because it helps make our prices competitive at overseas markets."

Agriculture exports were among a clutch of sectors that Mr Kishida had targeted in a policy speech on Monday - along with tourism and the construction of foreign chip and battery plants in Japan - that could get a boost from the yen's steep fall, and offset some of the economic damage it has caused.

"We need to maximise earning power now that the weak yen raises the potential of exports," Chief Cabinet Secretary Hirokazu Matsuno, Mr Kishida's second-in-command, told a government meeting on Wednesday.

Mr Matsuno has instructed ministers to bring forward the government's target of nearly doubling agricultural exports to 2 trillion yen annually by 2025, and urged government ministries to find ways of leveraging the weak yen to boost farmers' earning power.

The government aims to boost farm exports further to 5 trillion yen by 2030, and Mr Kishida also set a 5 trillion yen target for annual revenue from tourism, which is expected to rebound after Covid-19-related border restrictions are lifted on Oct 11.

That would still be relatively modest compared with last year's 83 trillion yen in overall exports and roughly 550 trillion yen gross domestic product, but marks steady progress for agricultural exports, which totalled just 450 billion yen in 2012.

This is not Japan's first go at this sort of structural realignment - to diversify its manufacturing-dominated economy and revive its stagnant rural areas. Similar efforts have emerged from various Japanese policymakers since the early 2000s, including proposed reforms by former prime minister Shinzo Abe's government in the last decade.

But the yen's steep drop in 2022 to a 24-year low, triggering a surge in import-driven cost-push inflation that severely threatens both Japan's economic growth and Mr Kishida's popularity, has given new impetus to the campaign.

But export-oriented farmers in Japan say the sector will need more investment to increase productivity and produce higher-value goods, especially since the weak yen has become a double-edged sword that also boosts costs.

"The cost of fertiliser and shipping materials has risen a lot," said Mr Hideyuki Otsuki, 65, a peach farmer in Fukushima prefecture, north of Tokyo, who exports his produce to Thailand, Singapore, Indonesia and Hong Kong.

He added: "It's true the weak yen helps food exports. To maximise the positive impact, we must add more value to farm goods and boost output so that more of us make ends meet."

REUTERS