WASHINGTON, D.C., U.S. — Japan’s feed industry relies almost entirely on imported grains. The composition of ingredients in compound feed had been traditionally stable (with the exception of 2012-13 when corn prices soared), with only small adjustments made in the composition depending on the price and availability of ingredients, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service said in a March 15 report.

For the first time since market year 2005-06 (market year October – September), compound and mixed feed production fell below 24 million tonnes in market year 2013-14 in accordance with the declining livestock population. Production decreased an additional 1.4% in market year 2014-15. For 2016, the report expects that cattle numbers will decrease while swine numbers will recover slightly from the 2014 reduction caused by the Porcine Epidemic Diarrhea virus. The domestic poultry population is expected to remain unchanged. As a result, feed production is expected to stay at the same level as 2015. However, in accordance with the declining and aging Japanese population, overall food consumption is trending down, and therefore livestock numbers and feed production are forecast to decline in the future.

Use of rice in feed increased 60% in market year 2014-15, raising the utilization ratio from 3.1% to 5%, at the expense of corn, sorghum, and wheat. With an expected increase in the production and use of feed rice, a further reduction in the use of other ingredients in compound feed is expected in market year 2015-16. As shown in the table comparing the composition ratios of ingredients in the compound feed by livestock species between Japanese fiscal year 2012 (Japanese fiscal year, April – March) and Japanese fiscal year 2014, corn, sorghum, rice, wheat and DDGS for poultry and swine fluctuated within the 2% - 5.5% range, with feed millers changing the composition ratios of these ingredients based on prices.

Source: Ministry of International Affairs and Communications, National Institute of Population and Social Security Research

Japan maintains a feed price stabilization program that consists of a combination of a MAFF subsidy and an industry fund to help absorb sudden surges in compound feed prices. It is activated when the import cost of ingredients in a particular quarter exceeds the average import cost of ingredients in the previous year. No compensation payments were made for the first three quarters of Japanese financial year 2015, reflecting lower prices for corn, soy meal and freight.