REFLECTING the tough economic conditions in Japan presently, domestically-produced Wagyu wholesale beef prices have slumped to four-year lows, reaching levels not seen since the depths of the COVID era.

Wholesale Wagyu beef prices in Japan are now at levels not seen since June 2020, due to cautionary consumer spending caused by high inflation, rising interest rates and energy prices, political issues and supply chain challenges.

With a low birthrate and aging population, Japan’s social security system is under strain and is suffering from labour shortages, the Japan Times said in a recent report on the economy.

Inflation in Tokyo picked up speed in August, supporting the case for the Bank of Japan to continue raising rates, the Times said in an article published on Friday. While some indicators suggest Japan’s economy is starting to recover, the rate of growth is slow, economic commentators said.

Frustration over rising costs of living was a factor that weighed persistently on approval ratings for Prime Minister Fumio Kishida, who decided earlier this month to step down. A leadership vote in the ruling Liberal Democratic Party will take place later this month to determine Kishida’s successor, who will have the option of calling a national election to secure a fresh mandate.

The tight economic conditions and flat market for Australian Wagyu beef in Japan were touched-on in Beef Central’s Wagyu feeder price report published on Monday.

An article last week from Japan’s financial press, Nikkei, said with domestic Wagyu prices showing no signs of rebuilding, local farmers were coming under pressure.

Greater emphasis on exports was seen as one solution to low domestic demand for Wagyu in Japan.

Japanese consumer demand for Wagyu beef was weak during at times of inflation, and some supermarkets had stopped selling Wagyu altogether, Nikkei said.

Wholesale weighted average carcase weight price for the highest ranked A5 Wagyu beef came to 2377 yen (US$16.13) per kg in the Tokyo market in July, down 7pc from a year earlier, according to the Japan Meat Market Wholesalers Association.

The price dropped year-on-year for the fifth consecutive month, to the lowest level in four years.

In 2020, wholesale prices for Wagyu beef shifted dramatically due to consumer responses during COVID. Having dropped early in the year because of weakened demand caused by the pandemic, they subsequently rose strongly on an increase in exports out of Japan to other Asian markets and the US, due to heightened demand for high-quality food products for stay-at-home consumption, Nikkei said.

“Prices for domestic Wagyu are slumping again due mainly to feeble demand, but those prices are still high for most Japanese consumers,” it said. A woman in her 50s, who bought minced beef at a supermarket in Kawaguchi, Saitama Prefecture, said she was reluctant to buy at prices of 1100 yen per 100 grams at her supermarket. In future she would probably buy Wagyu only for year-end and New Year celebrations, she told a Nikkei reporter.

Less expensive domestically-produced beef from dairy crossbreds or cows no longer used for milk production were more popular alternatives in the current consumer environment, Nikkei said.

Despite weak demand, production of Wagyu beef in Japan has continued to increase. The number of Wagyu slaughter cattle turned off by farmers increased for 18 months in a row (year-on-year) in June to 41,679 head, up 3pc, according to data from Japan’s Ministry of Agriculture, Forestry and Fisheries.

That trend was attributed to farmers wanting to raise Wagyu cattle, which can sell at high prices, at a time when feeding and other costs are rising.

At present, auction prices for Wagyu finished cattle are affected by low domestic demand, and often did not match the costs farmers accrue to produce it, Nikkei said.

Paralleling the weak prices for Wagyu slaughter cattle, trading prices of Wagyu calves are also showing a downward trend, it said. Black Wagyu calves, making up 90pc of all Wagyu cattle produced in Japan, were priced at an average 1733 yen per kilogram in June, down 8pc from the same month of last year, according to the Agriculture and Livestock Industries Corporation.

The agriculture ministry activated an aid program in July for beef calf raisers to cover Black Wagyu, accepting claims for calves traded in the April to June period. The program is designed to cover the difference when a three-month average of selling prices falls below the reference price.

Yen depreciation drives Japanese beef exports

On the back of a significant depreciation in the value of the Japanese Yen, Wagyu beef exports from Japan increased 11pc in the first half of 2024, to 4172 tonnes, an all-time high for the six-month period.

As of today, the Japanese currency is worth 145 Yen to the US dollar, down from more than 160 Yen in July – making exports more attractive. Similarly, an exchange rate of 97.5 Yen to the Aussie dollar today is down from 110 Yen in July.

Emphasis on export

Sales promotion by private and other parties has added to demand for Japanese-produced Wagyu beef in Europe and the US, on top of Asian markets such as Taiwan and Hong Kong.

Amid stagnant demand for Wagyu beef in Japan, new processing facilities dedicated to export are being constructed in various parts of the country, Nikkei said.

“With slaughterhouses increasingly being built with exports in mind, they usually clear hygiene and other requirements set by destination countries and regions and receive their approval,” it said.

As of July, 70 Japanese beef processing facilities were certified by overseas authorities, an increase of 75pc from 40 in July last year.

Brisbane hosted a large Japanese export Wagyu beef awareness seminar and cutting demonstration early last year. Attendees were told that in 2021, Japan produced about 480,000t of beef, of which about 11,000t was exported. Click here to view an earlier report on the seminar.

Master butcher Tomohiro Tanaka from Japan’s Federal Meat Academy with an array of products harvested from a knuckle primal as part of last year’s Japanese export Wagyu beef demonstration in Brisbane.