The pattern of Japanese food consumption has been undergoing dramatic changes over the last 30 years. While the consumption of meats, particularly beef, and dairy products has been increasing, that of rice, fish, fresh fruits and fresh and processed vegetables has decreased. Many economists have attributed these changes to such factors as higher household income, an ageing population and a more Westernized lifestyle. It is clear that many factors have influenced the Japanese food consumption pattern, and an understanding of these factors is very important for assessment of the agricultural products market in Japan. As Japan is one of the largest agricultural importing countries, changes to its food consumption pattern will directly affect world agricultural trade. Such questions as whether rice is an inferior good are important for evaluating the significance of Japanese domestic rice policy in the forthcoming World Trade Organization (WTO) negotiations. This report attempts to provide econometric evidence for answering such questions, using cross-sectional data analysis.
The objectives of the report are to analyse food consumption patterns and to conduct econometric analyses of the food demand structure in Japan. Specifically, the authors use household data from the Family Income and Expenditure Survey (FIES) of 1997, which they obtained from the Statistics Bureau of the Management and Coordination Agency in collaboration with the National Research Institute of Agricultural Economics (NRIAE) in Tokyo. The report is relatively unusual because it is based on household-level data, while most literature on the analysis of food demand in Japan uses aggregate data at the national level or data that is aggregated by demographic group. The use of household data makes it possible to analyse the impacts of important demographic variables that affect food consumption patterns in Japan. The large number of households surveyed by the FIES provides higher degrees of freedom in econometric estimation than many previous studies that use time series data. This is particularly important for estimating the income elasticities of such important staple foods as rice. The household data should be able to shed more light on such issues as whether or not rice is an inferior good or whether food demand in Japan changes according to age group.
Two specific food demand studies were undertaken for this report: 1) the demand for 11 aggregate food groups, including rice; and 2) the demand for seven meats. Figure 1.1 gives an overview of the two food demand subsystems and of various econometric models that were estimated for and are presented in this report. These models are discussed in detail in Chapter 3; descriptive statistics describing food consumption patterns in Japan, the survey, the models used, econometric estimation results, and estimated demand elasticities and their implications are also presented.
Figure 1.1: Modelling food demand in Japan
