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![]() A Step by Step Guide to Exporting Forages to Japan![]() January 2001 Agriculture and Agri-Food Canada Prepared in collaboration with Table of Contents 1.1 Manitoba Grown 2. CANADA'S INSPECTION, GRADING AND QUALITY CONTROL SYSTEM 2.1
Hay & Straw Certification Program - Manitoba Forage Council Inc. 3.1 Product form of
Pellets and Cubes 5. FOREIGN MARKET ANALYSIS - JAPAN 5.1 Market Profile 6. PRODUCTS FOR THE JAPANESE MARKET 6.1 Alfalfa Pellets 8. PREPARING THE PRODUCT FOR EXPORT 8.1 Financial Services The Manitoba Forage IndustryEXECUTIVE SUMMARYForage production and marketing lends itself well to Canadian agriculture where traditionally specialty cash crops have been limited by our growing season, moisture conditions, temperature and soil type. When the industry experiences depressed commodity prices, high quality forages sold in the export market have provided an alternative source of income. As demand for farm diversification increases, forages may provide an excellent source of growth opportunity in Manitoba. Japan, the United States and South Korea are some of our largest buyers. Though Mexico's economic importance is less, they too play an essential role in our export market. As market access improves in Mexico, one can expect to see a large growth potential there. Entering the global market place is not always easy to do but, through research and hard work, the results may be very rewarding. Before going global, there are several questions you should ask:
This book will provide practical information to guide you on your export journey. FORAGE INDUSTRY OVERVIEWAcross Canada, more than 26 million hectares annually are set aside for ruminant grazing and forage production. Of those acres, approximately 15 million hectares are native range, 4 million hectares are pasture and around 6 million hectares are cultivated forages for hay and pasture. With Canada's cool, moist climate lending itself well to quality hay and forage production, it is surprising that off-farm hay sales represent less than 15 percent of total production. Our reputation for quality forage products has allowed us to better position ourselves globally. With continued efforts, our export potential will grow. Nation-wide, alfalfa meal and pellets have been to date one of our largest export commodities with $41 million in sales being shipped in 1999 alone. However, as we have seen the demand for meal and pellets drop off, the hay market has stepped up to become our largest export market with $49 million in sales in 1999.
![]() ![]() Manitoba's exports of alfalfa and hay have been typically the larger portion of our export market. From 1998 to 1999, alfalfa baled exports declined by 50%, while hay (not elsewhere specified) numbers rose from approximately 4,000 to 6,800 tonnes.
![]() ![]() It should be noted that these numbers may be underestimated according to statistics reported by the importing countries. Alberta Agriculture's annual surveys also have shown larger quantities and export values. Part of this underestimation may be due to the fact that Canadian producers are not required to report exports of less than $2000. 1.1 Manitoba GrownManitoba's key forage producing regions exist in both North and Southwestern parts, as well as the Interlake, although production is scattered throughout the province. The excellent alfalfa and timothy produced, along with other forage crops, have been traditionally used for beef and dairy operations within the province. Of Canada's total tame hay production in 1998, Manitoba contributed 12.6 percent, which was up substantially from 10.2 in 1997.
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![]() 1.2 Manitoba Seed VarietiesNumerous varieties can be grown in Manitoba. Alfalfa, alfalfa/bromegrass mix, and timothy are among some of the most common hay and forage crops produced. By consulting the "Seed Manitoba - Variety Recommendations and Growers Directory" published by the Manitoba Cooperator, the Manitoba Seed Growers Association and Manitoba Agriculture and Food, one can select the most appropriate variety for a given region. 1.3 The Benefits of ForagesForage crops such as alfalfa can provide numerous agronomic and environmental benefits. Leguminous crops like alfalfa can provide substantial amounts of nitrogen, that can be broken down gradually and released over time. Nitrogen benefits of alfalfa can also be seen through nitrogen extraction up to 260 cm deep. Because of nitrogen fixation and breakdown, 71 percent of producers in Manitoba and Saskatchewan have indicated a yield increase in their traditional crops when forages are used in their crop rotation. Studies have shown that after a two or three year stand of a forage crop in rotation, weed stands can also be significantly reduced. With less weed pressure, fewer herbicides are required. Forages can use water from lower depths than most typical crops because of the extensive deep rooted system. For more information on the benefits of forages, check out this website:
http://www.umanitoba.ca/faculties/afs/ 1.4 The Role of the Hog IndustryWith almost 5 million hogs in the province, manure handling and disposal has become an issue. Public concerns have focused on the threat of E. coli and water contamination. Forages can play a very important role when manure is applied in the appropriate manner, it can be an excellent source of fertilizer for crops. Different crops require distinctly different amounts of nitrogen. Forage crops like alfalfa can use substantially more nitrogen than most crops, especially cereals. Because they are deep rooted, they are capable of retrieving nutrients that would have otherwise been lost by leaching into groundwater. As well, preliminary trials in Saskatchewan have shown that one application of hog manure may provide adequate soil nutrients for up to three years. The ammonium part of the manure, which is readily available to plants, is used immediately while the organic portion is broken down over the growing season and subsequent growing seasons. Generally, 30 to 50 percent of the nitrogen will be mineralized during the first cropping season with the remainder mineralized during future years. 2. CANADA'S INSPECTION, GRADING AND QUALITY CONTROL SYSTEMCanada has been traditionally known for its top quality hay. However, in the past, there have been few standards put in place to ensure consistent quality. Since the export market requires quality and consistency, a few programs have been implemented to help producers meet the needs of their customers. 2.1 Hay & Straw Certification Program - Manitoba Forage Council Inc.The Hay Certification Program is voluntary. Through the program, a producer arranges to have their hay certified by a trained, unbiased inspector. The inspector randomly chooses bales and visually inspects them to determine the species and mixture as well as colour, odour, foreign materials, etc. A sample also is taken from each lot to determine the chemical analysis. A "lot" is defined as hay that is of the same species, from within the same field, at the same stage of maturity, cut within the same 48 hour period. Smaller lots from the same field may be required if rain damage has occurred, or there is variation in soil, weeds or hay species within the same field. Once the hay is inspected, it will be described according to several components, such as:
Through the Hay Certification Program, buyers will be able to determine exactly what they are getting without having to see the hay first. Prices will also be established more appropriately when the quality has been accurately recorded. Once the hay has been certified, it can be placed on the Manitoba Forage Council's Certified Haylisting accessible via the internet. For more information on the Hay Certification Program, please contact: Manitoba Forage Council Inc. 2.2 Manitoba Green Gold Program - Manitoba AgricultureThis program helps producers determine the best harvest date needed to maintain high quality forages. Manitoba Agriculture and Food, local producers and sponsors have been jointly developing this program for several years. Alfalfa fields are sampled in each region of the province two times a week throughout June. These samples are analyzed at Norwest Labs and the results are faxed back to Manitoba Agriculture and Food as well as the producers within 24 hours. Through this program, it has been determined that most alfalfa fields reach the optimum 150 relative feed value (RFV) at the early to mid-bud stage. It has also been seen that the RFV drops an average of five points per day. For every year this program has been implemented, optimal harvesting dates have been recorded in order to reach 150 RFV. This date will vary from region to region, so it is best to contact your regional forage specialist. In order to reach 150 RFV, producers must cut the crop at 165 RFV because one can expect to lose about 15 points during harvest due to leaf loss and continued respiration. The RFV is determined by a lab analysis that compares the acid detergent fibre (ADF) that indicates the forage digestibility, and neutral detergent fibre (NDF) that provides an indication of potential daily forage dry matter intake. RFV has become an industry standard for measurement with 150 RFV being optimal. For more information on Manitoba's Green Gold Program, visit the website
at: http://www.gov.mb.ca/agriculture/news/ Contact your nearest regional forage specialist:
2.3 The Canadian Phytosanitary CertificateA phytosanitary certificate is an official document issued by the plant protection organization of the exporting country to the plant protection organization of the importing country. It certifies that the specific shipment of the plants and plant products covered by the certificate are free from quarantine pests, practically free from other injurious pests and meets the importing country's requirements. With the completion of the document, including an authorizing stamp and signature, the responsibility rests with Agriculture and Agri-Food Canada and in particular the inspector. For each importing country, the phytosanitary document may be different. Check with the Canadian Food Inspection Agency for specific information at: 59 Camelot Dr. or contact Taras Happychuck, Mid-West Region: In order to apply for the phytosanitary certification process, a copy of the relevant hay inspection report must accompany each application form (Application for Export Inspection and Phytosanitary Certification). 2.4 Feed Testing Laboratories - Feed AnalysisBy providing a feed test and analysis of your forage or hay product, purchasers are able to more clearly determine the kind and content of the forage. A feed analysis will determine the moisture content, relative feed value (RFV), crude protein, phosphorous, total digestible nutrients, and others. Hay and Forage Grower, a publication made available to Manitoba Forage Council members, also provides a list of accredited labs in Canada and the U.S. For U.S. labs, you can visit a website called A2LA at www.a2la.org/ . This website is the American Association of Lab Accreditation in the United States. They can also be contacted at Tel: 1-301-670-1377 or Fax at: 1-301-869-1495. For a complete Canadian list, contact the Canadian Food Inspection Agency at: www.cfia-acia.agr.ca or call: (613) 225-2342 or Fax: (613) 228-6621. Locally there are a few Canadian Food Inspection Agency approved labs: Norwest Labs Agricultural Services 203-545 University Crescent Winnipeg, MB R3T 5S6 Enviro-Test Laboratories Complex (Saskatchewan Soil Testing Lab) University of Saskatchewan General Purpose Building Saskatoon, SK S7N 0W0 Central Testing Laboratory Ltd. (not SCC approved) 101-193 Dumoulin Street Winnipeg, MB R2H 0E4 There are several components that are used to measure quality in hay. Quality is very important in the export market. Without consistently high quality product, our exporters may lose interest. 2.5 Relative Feed ValueOptimal relative feed values (RFV) can differ depending on your end market. For example, in the dairy industry an RFV of 150 is optimal. However, beef cow/calves or heifers may only require an RFV of 120. Knowing your market can be very important. Potential exporters also should be aware that timothy hay, unlike alfalfa is often valued more for its appearance. There are several guides that can help you determine the optimal RFV, like the Manitoba Green Gold Program and Manitoba Agriculture and Food. See also a brochure called Marketing Your Cash Hay, a publication funded by the Manitoba Farm Business Management Council, and distributed by the Manitoba Forage Council (MFC) and Manitoba Agriculture and Food. PEAQ sticks, available through Manitoba Agriculture and Food and the MFC are also useful in determining your RFV. 2.6 Moisture ContentMoisture content is an important consideration for hay quality. Most foreign markets want a moisture content of 12 percent or less, while domestic markets will allow for between 14 and 18 percent depending on the bale size and density. Most processors require 12 percent, however dryers have eliminated this problem for many. When marketing hay, moisture testing using a Koster or microwave tester is very important. Probes are useful, but not always accurate. Manitoba Agriculture and Food suggests the following process be used to measure forage dry matter:
In the field for a general idea, you can also use this method:
(Chart published in Hoard's Dairyman, 1987.) 3. VALUE ADDED PROCESSINGHay can be processed into a variety of forms, some of these include dehydrated alfalfa pellets, sun-cured alfalfa pellets, alfalfa cubes, and compacted bales. The specifications commonly used in Canada are as follows: 3.1 Product form of Pellets and CubesTypical nutrient specifications for the major alfalfa products are as follows:
These are typical specifications for Canadian Alfalfa Products (100% Dry Matter Basis). 3.2 Product Form of BalesHay is typically compressed into a 14" x 18" X 18" bale, weighing approximately 80 lbs, and banded with three to four poly straps. The densified bales are then loaded into 40 foot containers and shipped to an inland container yard, and moved to port by rail. Each individual processor may work with different sized bales, so it is best to determine the local requirements. Small square bales are most commonly used, however large round or square bales can also be rebaled. 3.3 Alfalfa Meal and PelletsIn 1996, alfalfa meal and pellets comprised one of the largest export markets for Manitoba. More recently, the market has dropped off and baled alfalfa and hay have stepped up to take the lead. In 1999 in Manitoba, approximately $31,000 of meal and pellets were exported, while Canada as a whole exported closer to $42,000,000 worth. Sun-cured pellet production has dropped the most substantially. Dehy pellets have dropped only slightly and are expected to rebound. In Canada, 32,400 tonnes of sun-cured alfalfa and 315,000 tonnes of dehy pellets were exported in 1998-99.
![]() Dehydrated and sun-cured alfalfa pellets are the most common. These pellets are finely chopped and dried and processed into small pellets. Because of the processing, dehydrated alfalfa has a higher crude protein level and lower crude fiber than sun-cured alfalfa. The main processing difference is that sun-cured alfalfa is wilted before processing, while dehydrated alfalfa is dried fresh from the swath. Pellets must by dried to 8 percent moisture for optimal storage and shipping. Japan has been by far the largest importer of Canadian alfalfa meal and pellets. In fact, we are the main supplier to Japan's pellet industry. The numbers have been gradually declining however. In 1994, 275,246 tonnes were exported, then in 1998 only 133,737 tonnes were exported. United States, South Korea and Taiwan are our next major importers. However, their imports from Canada have almost been cut in half over the same time period.
![]() 3.4 Alfalfa CubesAlfalfa cubes are coarsely shredded, field dried or high temperature dried alfalfa. The two most common sizes are 7/8" and 1". Canada supplies approximately one quarter of the Japanese import market, while the United States supplies around three quarters. Manitoba's exports, though minimal, have been growing over the past five years. Japan is consistently the largest importer of Canadian alfalfa cubes.
![]() Manitoba's two alfalfa processors are:
P.O. Box 90, Fort Whyte
P.O. Box 337, Keays Industrial Road 3.5 Compressed Bales of Alfalfa and Timothy HayCompressed hay has a bulk density of approximately 20 pounds per cubic foot or more, and is manufactured by mechanical or hydraulic compression from low density field baled forage in chopped, round or square bales. There has been a steady increase in exports of timothy hay to Japan from Canada. The United States is the second most important market for hay, followed by South Korea. The alfalfa hay industry has been maintaining production levels while timothy exports have risen significantly. Manitoba's hay processors are: Sunridge Forage Ltd.
![]() For more information on the Canadian processed forage industry, contact the Alberta Agriculture, Food and Rural Development, Markets and Economics, Market Analysis Unit at www.agric.gov.ab.ca and request a copy of The Canadian Processed Forage Industry Report. 4. FORAGE PRODUCTIONForage production for the export market is extremely different than typical forage acres. Foreign markets are looking for high quality product. "High quality" can be defined differently depending on the end market. It is particularly useful to select for your end market and understand their needs before you begin production. Several manuals have been published to walk you through from variety selection to weed control to harvest. Manitoba Agriculture and Food has numerous fact sheets and books. You
can access these directly by contacting your local agriculture office,
or by visiting: http://www.gov.mb.ca/agriculture/ Industry News is available by visiting: http://www.gov.mb.ca/agriculture/news/agmarks/agmarks.html Other publications include:
![]() 5. FOREIGN MARKET ANALYSIS - JAPAN5.1 Market ProfileIn Japan, there are two main regions responsible for most of the cattle production. In terms of total cattle production, Hokkaido and Kyushu are very comparable in numbers, (Hokkaido 1,280,400 head; Kyushu 1,135,000 head). These two regions have 53% of the total cattle production. Total cattle inventory as of February 1, 1999 was 4.6 million head of cattle. Beef production is roughly 62% of total production, while dairy production is about 38%. 5.2 Dairy ProductionThe three regions at the northeast end are responsible for 75% of the total dairy cattle production. These regions include Hokkaido (866,900 head), Tohoku (164,400 head), and Kanto (290,900 head). The other large dairy region is Kyushu with 157,700 head.
![]() 5.3 Beef ProductionKyushu, at the opposite end of the island, accounts for 35% of the beef production with 977,300 head as of February 1, 1999. The three northern regions combined, account for 44% of production, with 413,500 head in Hokkaido, 441,300 head in Tohoku, and 370,600 head in Kanto.
![]() 5.4 Forage ProductionThe Japan Ministry of Agriculture, Forestry and Fisheries (MAFF) reported 1,040,120 hectares of planted forage and manure crops during the 1999 year. Of that total, 80% of production was in the form of a grass (836,390 ha). Soiling maize contributed 10%, sorgo 4%, and Chinese milk vetch 4%.
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For grass production, Hokkaido was the number one producing region with 584,800 ha sown, Tohoku followed with 122,500 ha, and Kyushu with 64,900 ha. Hokkaido was also the number one producer for soiling maize (38,500 ha), Kyushu second (22,100 ha) and Kanto-Tosan third (17,800 ha). Other forage crops that are used for livestock production include sorgo and Chinese milk vetch. Sorgo seems to be predominantly grown in Kyushu with 21,000 ha accounting for 47% of the total crop produced. Chinese milk vetch is grown in the Kyushu, Okinawa and Tokai regions (each having between 8 and 9,000 ha).
![]() 6. PRODUCTS FOR THE JAPANESE MARKET6.1 Alfalfa PelletsCurrently, 90 percent of Canada's exported forage products go to Japan. Canada dominates the alfalfa pellet industry with approximately 94 percent of Japan's alfalfa pellet imports coming from Canada. In 1998, pellet exports amounted to 207,337 metric tons. The pellets largely serve the dairy industry, and are considered a useful feed supplement as the forage land in Japan is becoming limited. Beet pulp pellets have become a competitive product, especially around 1998 when China tried to off-load their excess supply by dropping their price. Since the supply and prices have recovered, Canada has still shown few signs of increased exports of alfalfa pellets. France and Germany consumed a portion of our market with alfalfa pellets during that year as well. The Hokkaido and Tohoku regions seem to be the most active users of alfalfa pellets, but the market has been relatively constant with no growth or a slight decline. Alfalfa dehy products are mainly used for their fiber content, though it seems bales have been replacing this market as importers search for long fiber. Bales also offer the purchaser the flexibility to visually inspect their product and know what they are buying, rather than trusting what has been used in making pellets. 6.2 Alfalfa CubesCanada's next alfalfa market is the cube sector. The sales potential is in the same regions as alfalfa pellets are sold. The same market restrictions have been expressed for cubes as with pellets. Generally cubes and pellets have been used in the same manner, have experienced similar marketing trends, and seem to be gradually replaced by bales for the long fiber. In 1998, Canada provided 25 percent of Japan's cubed alfalfa imports, while the United States supplied around 73 percent. In 1998 alone, Japan imported 588,000 metric tons of alfalfa cubes. 6.3 Baled Hay ImportsThe largest supplier of baled imports is the United States with 88 percent of the Japanese market share, totalling 1,371,318 metric tons in 1998. As earlier mentioned, this part of the market offers the most potential as the Japanese market searches for long fiber as a supplement to their feed. Canada as a supplier only provides 6-8 percent of this market. Timothy hay accounts for just 7 percent of Japan's baled hay imports. 6.4 Feed Composition of Dairy Farms and Substitute ProductsFeed costs consume around 43.1 percent of the dairy farming operation, with concentrate feeds being the most costly portion. Domestic self-supplied feed accounts for about one-third of feed costs and only 13 percent of the entire raw milk production costs. Nearly 70 percent of the self-supplied feed is silage, mostly maize or corn silage. However, from 1987 until recently, there has been a significant decline in maize production due to the labour intensity. Work is currently being done to develop a round baler for maize ensiling. The recent trends have shown that purchased hay, mostly imported (though some domestic grasses are also used) have been approaching the percentage of silage used on-farm. The percentage of self-supplied hay and raw grass has been diminishing, along with tofu lees, as the import feed market provided a relatively inexpensive alternative, combined with the appreciation of the Japanese yen. Tofu wastes in Japan are estimated at around 677,000 mt per year (1989) and about 70 percent of this amount is used as feed for cattle and swine. The lees retain a high level of nutrients, have a water content over 80 percent and have a high protein content, though they are difficult to handle. The cost however is relatively low. Forty-nine percent of the waste is given free as the manufacturers are otherwise required to pay a disposal fee. Often these wastes are mixed with beet pulp and or rice straw and packed into drum silos. Beet pulp and rice straw also have played an important role in the Japanese market, though rice straw has been declining since the "disinfection of rice straw and hay" was included in the "Preventive measures taken against foot-and-mouth disease in Taiwan" that was implemented in 1997. Livestock in the Kyushu region had previously relied heavily upon this feed source. There are other reasons involved in the decline of rice straw used in Japan and those may be attributed to the labour intensity required for harvest and drying, the separation of rice regions and livestock regions, and the lightness of the straw (i.e. dry matter density can't be easily increased). Canada may be able to explore a replacement potential of this product with oat straw. Typically the rice straw has been used for Kobe meat production in order to marble the meat and lower the saturated fat content. Of the forage crops produced in Japan, approximately half is prepared as silage in the form of wrapped round bales. With the frequent rainfalls experienced in Japan, it gives producers the option of quickly converting from hay preparation to silage preparation. It should also be noted that different regions of Japan, due to differences in soil and climate produce different forage crops. For example, while Fukushima prefecture grows lots of Italian ryegrass, Hokkaido doesn't due to the cold weather in the winter. Okinawa prefecture on the other hand, produces a lot of tropical and subtropical grasses and legumes. As many farms increase the number of cattle when converting to free-stall barns, there will be in increasing dependency on imported hay to make up for the shortage of roughage. Timothy as a forage is grown extensively in Hokkaido (around 400,000 tonnes of timothy per year). 7. TRADE FAIRS AND MISSIONSTrade fairs are an excellent way to introduce your product to the foreign market, as well as for meeting important industry contacts. Below are just a few of the best dairy shows in Japan. Currently no forage or hay shows exist. Before displaying at one of these exhibitions, it would be a good idea to check the suitability of the show to your needs. All Japan Holstein Show (AJHS) - held every five years (Nov.2-5, 2000) Contact: The Holstein Association of Japan (HAJ) Attn: Mr. Hironori Ohtomo, Administrative Section Tel: 81-3-3564-8221 Fax 81-3-3564-3688 Address: c/o Ohno Bldg, 1-19-8 Kyobashi, Chuo-ku Tokyo 104-0031 Annual Hokkaido Holstein Show (HHS) Contact: the Hokkaido Holstein Agricultural Co-operative Attn: Administrative Section, Mr. Masaya Tel: 81-11-726-3111 Fax: 81-11-726-3135 Contact the Japan Feed Trade Association (Several dairy shows held in individual prefectures) Attn: Mr. Morio Morisaki, Executive Director c/o Koizumi Bldg, 4-3-13 Ginza, Chuo-ku Tokyo 104-0061 Tel: 03-3563-6441 In addition, the follow associations may be helpful: National Grasslands Research Institute Nishinasuno, Nasu-gun, Tochigi Pref. 329-27, Japan Tel: (81-287) 36-0111 Fax: (81-287) 36-6629 Japan Dairy Council JA Bldg. 1-8-3 Ohtemachi Chiyoda-ku, Tokyo 100, Japan Tel: (81-3) 3245-7621 Fax: (81-3) 3242-2423 8. PREPARING THE PRODUCT FOR EXPORTResource PlanningDepending on the level at which you want to export, your resource requirements may differ. You will specifically need to identify your production capacity (as an individual or a processor), the necessary equipment, materials or ingredients, labour, administration, marketing, translation services, storage, local representation in the foreign market, financial services, packaging and shipping capacity, and the time and cost requirements. Translation ServicesIf you plan to travel abroad, or even make connections in rural Japan, it is a good idea to use translator services. Correspondence via the internet has been made easier through the use of instant translators software tools, however in-person visits will require more extensive communication efforts. In Canada: In Japan: 8.1 Financial ServicesThis is one of the most import aspects of your export project. It is a good idea to explore several resources and options before you begin. There are government financing experts, as well as banking institutions. Several questions you should ask are:
For export credit insurance, which protects you in the case of insolvency or non-payment by the foreign buyer, it is a good idea to talk to the The Export Development Corporation Other sources of finance expertise include: Business Development Bank of Canada Also talk to your local banks with foreign representation. You may need
to talk to head offices in Canada, but they should be able to provide
you with the right resources. There are lists also available on the internet
at: http://www.globalsources.com/TNTLIST A list of Canadian banks abroad is in the appendix. When selecting a bank, make sure you know their credibility. If you venture beyond a Canadian bank, be careful, several Asian banks have experienced financial difficulties over the years. Banks may also be able to offer credit details on foreign buyers, foreign currency services, information on loans and lines of credit, among others. Methods of FinancingThere are a number of methods that can be used to settle payment in Japan, including cash in advance, letters of credit used in conjunction with a documentary draft, promissory note, documentary collection or draft, open account, or consignment sales. Letters of CreditLetters of credit offer the most security for both the exporter and the importer. This method of payment would be the easiest in a new market situation. Letters of credit (L/Cs) or documentary credits can be initialized through the importer and their issuing bank. Once the bank accepts the application, a letter of credit is drawn up, forwarded to the corresponding bank in the exporter's country (i.e.. Canada). Once the exporter has shipped the goods and met all necessary requirements stated in the letter of credit, the exporter presents the necessary documents as proof of completion to their bank and is able to collect payment. These documents are then sent to the issuing bank, which provides them to the importer. The importer will need these documents in order to claim the goods. Through letters of credit, the importer doesn't have to make payment until the goods are received, and the exporter doesn't lose possession of the goods until payment has been delivered. There are different kinds of letters of credit, though the most secure form is the secured, irrevocable letter of credit because it guarantees that the issuing bank will cover the costs regardless if the importer fails to do so and it also insures that the agreement can't be revoked once it has been finalized. To learn more about letters of credit, contact your nearest bank. There are several other professional services that can help you as well, including hay brokers, trading houses, and freight forwarders. Each has a special role to play. It is up to you to determine what services you as an individual can provide, and what resources you will require externally. 8.2 Product Suitability Export Requirements:A. Alfalfa Hay to Japan1. Freedom from Hessian Fly hosts
2. Colour
3. Moisture content
4. Crude Protein
5. Fibre
6. Spoilage
Note: Guidelines are available for optimal alfalfa production for export. B. Timothy Hay for Japan1. Freedom from Hessian fly hosts
2. Colour
3. Moisture content
4. Crude protein
5. Fibre
Some compromises in quality may be made if appearance is good. Note: Of the 27,400 horses that existed in Japan in 1997, approximately 15,000 were located in Hokkaido, of which most are raised as thoroughbreds for racing (around 80 percent). This industry has been regarded as risky however. 8.3 Choosing a Distribution ChannelA. Hay BrokersCheck the Manitoba Hay Directory as producers are often willing to broker for others. Regional extension forage agronomists may be of assistance as well. The Manitoba Forage Council can provide you with a Hay Directory. Manitoba Forage Council Manitoba Brokers
International Marketers of Canadian Dehydrated Alfalfa Products
B. Trading HousesTrading houses help to move your product abroad. They can be involved in market analysis and research, arranging transportation, appointing distributors or agents, exhibiting at trade fairs and preparing advertising and documentation. They can either buy the product outright from Canadian suppliers, or act as agents, performing sales for a commission. In Japan:UNICOOPJAPAN - a Japanese trading company established in 1961. It trades
in grains and livestock feed, livestock products, as well as many other
agricultural products. ZEN-NOH UNICO AMERICA CORP.- a Japanese International trading company
in feed grains and ingredients, fertilizer materials and other pertinent
operations. Collects, distributes, and markets for farmers via its international
channels. In Canada:XCAN Grain Pool Limited Cargill Limited James Richardson & Sons Ltd. Alfred C. Toepfer (Canada) Ltd. C. Freight ForwardersFreight forwarders can play a very important role for a first time exporter. Before you use a forwarder, you should determine what level of involvement you want. Some freight forwarders can provide a comprehensive package that takes care of all logistical requirements and paperwork, while others can simply negotiate a rate with a shipping company. There are freight forwarders for air and ocean, some specialize in certain products, or certain countries, while others are multi-faceted. Some freight forwarders will even help clarify the terms of the letter of credit. It is a good idea to chose a freight forwarder with at least five years of documentation experience. They should be experienced in air freight, ocean freight, standard documentation, banking documents, and consular documents. As you can see, choosing the right freight forwarder is very important. The more shopping around, the more apt you are to find the right freight forwarder for you. Some will work harder at price shopping than others, keep this in mind. Where can I find a freight forwarder?
talk to the Canadian International Freight Forwarders Association< They can provide a list of freight forwarders at the national or provincial level. 8.4 Pricing in the Japanese MarketThere are several Japanese agricultural cooperatives and newspapers that may provide access to current prices in their market. The Internet Hay Exchange at: www.hayexchange.com provides one internet source. By contacting JA-ZENCHU or the Central Union of Agricultural Co-operatives of Japan, you can be provided with a list of all of Japan's agricultural cooperatives, agricultural newspapers, friends abroad and related organizations. As well, JA-ZENCHU through one of its members (ZEN-NOH), can provide a list of major affiliated companies (i.e. feed companies, etc). JA-ZENCHU or the Central Union of Agricultural Co-operatives of Japan Japan Agricultural Cooperatives and Associations Japan Feed Trade Association Cooperatives:
8.5 TransportationThe Canadian economy is directly tied to its ability to trade in a constantly expanding global economy. Therefore, commercial shipping continues to be the mainstay for our exchange of goods internationally. Canada exports up to 80 percent of its agricultural production. The bulk of these products moves by water to China, Japan, Korea, US, Brazil, Mexico and other major importing countries. Japan is one of the world's largest importers of hay products. An increasing quantity of agri-food products is being transported in containers. Between 1993 and 1997, exports of agri-food products from Canada's major container ports almost doubled to 1.2 million tonnes (Mt). Agri-food products such as lentils, organic wheat, canola, soybeans, peas, flour, hay and malt are exported in significant quantities through Canada's port system. Most of agri-product movement to Japan is carried through the Port of Vancouver. The Port of Vancouver is Canada's largest grain port. It has 20 major cargo and other related terminals and in 1997, handled a record 73.5 Mt of cargo. There are two type of container in general usage in Canada. The first type, standard dry marine containers are 20 to 40 feet in length. These containers are standardized for use on ocean vessels and can be transferred to rail and trucks for inland transportation. The second type of container commonly used on Canada's rail and highway system is the domestic intermodal container. This container is designed to maximize payload on the domestic transportation system. They are longer than marine containers, ranging from 45 to 53 feet in length, and are not designed for use on ocean vessels. Canadian National and CPR have centralized their intermodal facilities in urban centres - Winnipeg, Regina, Saskatoon, Calgary and Edmonton. When a marine container is available for source loading on the prairies, the cost of having that container delivered to a remote farm, seed cleaning plant, country processing facility or alfalfa processors, then returned and loaded to the nearest intermodal terminal increases proportionately with the distance from the terminal. Despite periodic fluctuations in the cost of moving containers from Vancouver to international markets, costs have decreased significantly in the past few years.. The following chart shows the freight rates for both a 20 and 40 foot marine containers to |Osaka and Nagoya from two local international freight forwarders.
The Japanese distribution system is widely considered to be among the most complicated in the world. The Japanese system is marked by multiple layers of agents, distributors, and wholesalers providing services such as delivery, packaging, financing, warehousing, and sales promotion. However, Japan's recent economic troubles have forced many consumers to be increasingly price-conscious. This, in turn, has encouraged retailers to cut costs, and deliver lower priced products. Although the distribution system is gradually becoming cheaper, less complex and more efficient, exporters in the immediate future will simply have to accept the existing system. 8.6 Import Regulations In JapanThere are some good websites that walk the exporter through the customs procedures. The flow-chart of goods imported is clearly explained. For more information, contact: http://www.mof.go.jp/english/tariff/tariff.htm (this is the Customs and Tariff Bureau) or the Customs Counsellors and Information Officers at:
A person wishing to import goods must declare them to the Director-General of Customs and obtain an import permit after necessary examination of the goods concerned. The Import Declaration steps are as follows: Completion of Import Declarations - describe the quantity and value of goods and other relevant particulars. Declarant - Import declarations must be made by the person importing the goods, i.e. usually a customhouse broker files the declaration as a proxy for importers. Documents to be submitted -a customs duty payment declaration form (Customs Form C 5020) must be prepared in triplicate and submitted to Customs with the following: a) Shipping documents such as a commercial invoice and packing list Commercial Invoice requirements:
(More than one copy will be required....check with customs broker) Packing list (necessary when multiple packages are shipped unless the commercial invoice contains the necessary information)
(Between 4 and 7 copies of the packing list will be required) b) Bill of lading or air waybill
At least three copies are required (one to keep on-file, one for the importer, and one for the customs broker) c) A Certificate of Origin- available at the local Chamber of Commerce or the International Trade Center d) Freight accounts, insurance certificates, etc. (where necessary) e) Phytosanitary certificate- See Canadian Food Inspection Agency (CFIA) Hay shipments must be free from noxious weeds and pests. Manitoba CFIA f) B13A Export Declaration form (from Canadian Government) for every shipment, which is presented to a Revenue Canada customs officer at the point of exit from Canada or in a monthly summary of shipments to be sent to Statistics Canada. (Apply at Revenue Canada). Records of exports must be kept for 6 years. For more information, see the brochure Exporting Goods From Canada, available through Revenue Canada at 269 Main Street You have to file an export declaration when exporting goods that are not controlled, prohibited or regulated if:
g) Detailed statement on reductions of, or exemption from customs duty and excise tax (when such reduction or exemption is applicable to the good). In Japan, there are no tariffs on alfalfa, hay or related products in terms of WTO tariffs. h) Authentication of Documents - certificates of sale and letters authorizing local agents or importers to act on behalf of the exporter must first be notarized in Canada. This can be done at no cost to the exporter by sending them to: Department of Foreign Affairs and International Trade Good resources:International Trade Logistics - Reference Manual Contact info:Agri-Food Country Profile - Japan The Agri-Food Market in Japan 8.7 Free Trade ZonesJapan doesn't have any free trade zones, however there are five different types of bonded areas: 1. Designated Bonded Areas - located near ports of entry, this public space, authorized by the Ministry of Finance, can be used to unload, transport, and store foreign cargo for up to one month. It is used for customs declaration and handling and can be used by anyone for a fee. 2. Bonded Shed - similar to a bonded area, however is authorized by the Director General of Customs Houses. 3. Bonded Warehouses - foreign cargo can be stored here for up to two years (and possibly longer). While cargo is stored here, custom duty is not applied. 4. Bonded Factories 5. Bonded Exhibition Sites 8.8 Import duty and Consumption TaxJapanese customers are sometimes taxed consumption and import duty taxes, but not always. Import duties are charged specifically for the product, while the consumption tax is taxed to all products at a rate of 3 percent. Import duties are calculated from the cost of goods plus insurance and shipping charges. Consumption taxes are calculated from the sum of the costs of goods, insurance, shipping charge and import duty. When selling large products to Japan, the freight company will usually notify the customer of the products arrival and that they have to clear it through customs. If your customer uses a professional customs clearance agent or Personal Import Custom Clearance Advisory Center, it will likely cost extra money. If you, as an exporter, use a Japanese freight company with nationwide delivery, you will likely save your customer and, ultimately, significant savings. It is often useful to get your importing partner to check into some of these freight rates. 8.9 Customs BrokersThe custom broker is a great resource for solving problems with customs documentation, transportation and even payment issues with the importer. They keep updated on regulations and new developments within the industry. If the shipment is complicated, it is a good idea to use a custom broker. Once again, make sure you check out several customs brokers, understand what services they are willing to provide as some often serve as freight forwarders and, last of all, recognize that some charge more than others. Do your homework and shop around. Once again, you can check the yellow pages in the phone book, or you can contact: Canadian Society of Customs Brokers 8.10 Tariffs in JapanMost alfalfa or hay products can enter Japan duty free. Oats for feed, however have an applicable 8.5% tariff.
8.11 Media and Advertising1) JA-ZENCHU News 2) Sowing the Seeds of the Future - Japan's Agricultural Cooperatives Country Paper Contact: JA-ZENCHU or Central Union of Agricultural Co-operatives of
Japan 3) National Press & Information Federation of Agricultural Co-operatives APPENDIX![]() Canadian Embassy Canadian Consulate- Fukuoka Canadian Consulate- Nagoya Canadian Consulate General- Osaka Department of Foreign Affairs and Agriculture and Agri-Food Canada DFAIT Canadian Commercial Corporation DFAIT Export Development Corporation Canada-Japan Trade Council Japanese External Trade Organization Japanese Government ContactsMinistry of Agriculture, Forestry and Fisheries (MAFF) JETRO - Business Support Centre JETRO Ministry of International Trade and Industry (MITI) Foreign Investment Promotion Development Ministry of Foreign Affairs (MOFA) Japanese Standards Association National Agriculture Research Centre JETRO - Standards Information Service Japanese Trade AssociationsThe Canadian Chamber of Commerce in Japan (CCCJ) Japan Foreign Trade Council, Inc. Japanese Phytosanitary ContactsMinistry of Agriculture, Forestry and Fisheries (MAFF) Yokohama Plant Protection Station Moji Plant Protection Station Japan Plant Quarantine Association Nagoya Plant Protection Station Kobe Plant Protection Station Naha Plant Protection Station Translation Services Abroad (Japan)Access Japan Inc. Berlitz Translation Service Forte Inc. Dynaword, K.K. I.S.S. Service Centre Inc. Inter Group Co. Ltd. Japan Onvention Service Inc. Linguabank Inc. Linx Inc. Sansei International Inc. Simul International Inc. Canadian Banks in JapanBank of Nova Scotia, Tokyo Branch Canadian Imperial Bank of Commerce Toronto Dominion Bank, Tokyo Branch Royal Bank of Canada, Tokyo Branch Bank of Montreal National Bank of Canada Japan Trade ShowsAll Japan Holstein Show (AJHS) Annual Hokkaido Holstein Show (HHS) Contact the Japan Feed Trade Association Or Japan Feed Trade Association
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