Prospects for U.S. Rice in Japanese Retail Markets Under COOL: A Sensory Experiment

ABSTRACT

Japanese policies leave its retail market closed to U.S. rice. This study examined prospects of U.S. rice if these markets opened, with required country-of-origin labeling (COOL). Data were from auction experiments examining preferences for U.S. and Japanese rice under two scenarios (COOL with observation and COOL with tasting) using Japanese female primary shoppers. Two segments were identified: those open to U.S. rice at prices equal or above domestic, as likely due to tariffs, and those closed to U.S. rice at any price. About 7% of subjects were in the first segment, while nearly 26% fell in the latter. Tasting failed to generate large changes. Frequent COOL readers were especially closed even after tasting. Tasting did change the profile of open consumers, with demographics mattering less afterward. Under any policy change, U.S. rice would need a discounted price relative to domestic rice; even then, a substantial market segment appears closed.

KEYWORDS:

• COOL
• Japan
• rice
• tasting
• willingness-to-pay

Contributors

John C. Bernard received his PhD in Agricultural Economics from Cornell University in 1999 and is a Professor in the Department of Applied Economics and Statistics at the University of Delaware.

Katie Gifford, MS, is a Research Associate in the Center for Community Research and Services and a Doctoral Candidate in the School of Public Policy and Administration at the University of Delaware.

Hikaru Hanawa Peterson, a Japanese native, is Professor of Food Marketing and Consumer Economics in the Department of Applied Economics at the University of Minnesota.

John A. Fox is a Professor of Agricultural Economics at Kansas State University whose research focuses on valuation of food attributes.

Lenna K. Schott received her Masters in Agricultural and Natural Resource Economics from the University of Delaware in 2012 and works as a Market Research Analyst at Transamerica.

Notes

U.S. rice production figures are typically quoted on a rough basis (from the field), while those for Japan are typically quoted on a brown basis (outer hull removed). Beyond the farm level, quantities are typically quoted on a milled basis (white rice).

Differences were even higher at the time of this study.

Stories in 2012 described plans by two supermarket chains to sell rice from China following price spikes after the 2011 earthquake and tsunami. It was to be priced at 1299 yen/5 kg (approx. US$3.25/kg), 20% lower than the cheapest domestic rice. See http://www.japanprobe.com/2012/03/10/supermarket-chain-begins-selling-chinese-rice/http://www.yomiuri.co.jp/dy/business/T120405005578.htm.

NHK Broadcasting Culture Research Institute, NHK (Japan Broadcasting Corp.) (1993) March 1, 1993, from a national adult sample with N = 1175.

Given the goals of this study, it was unclear how to classify subjects with no value for any version. Most likely, these consumers were not fully engaged in the experiment.

For additional details on recruitment, payment, and locations, see Peterson, Bernard, Fox, and Peterson (2013).

A copy of the experimental instructions is available from the authors. For additional detail and a comparison of the auction mechanisms, see Peterson et al. (2013). Results in this study did not vary by auction type. The focus here is on valuation of U.S. rice compared with Japanese rice under COOL, but experiments also included a blind taste test and bidding for Australian rice.

Japan also imports rice from Australia, China, and Thailand. In 2011, quota shares were U.S. 47%, Thailand 45%, Australia 5%, and China 2%. This two-country simplification allows a visualization of a best-case scenario for U.S. rice.

Recall that all findings refer to female consumers and not the general population.