That's a bit exaggerated. My wife shops by phone via the local co-op because we both work and the co-op delivers. So I have access to a recent price list. They have a whole watermelon listed for just over 500 yen (which is $5, not $20). The corn in their listing is more like $1 per ear, not $2. I do believe that produce is more expensive here than in the US -- mostly because there's not as much land devoted to growing the stuff. I expect a significant portion is imported from elsewhere, which makes it even more expensive. Few places in the world produce food as cheaply as the US.

But there *are* local fruit and vegetable stores around where you can buy regular produce just like back home. That includes 4 or 5 regular size apples in a plastic bag, loose tomatoes and other veggies, potatoes in a sack, etc... The pampered stuff seems to be a Japanese-only specialty and while it's certainly not unusual to go into the basement of the local department store and find a bruise-free pampered melon, with the stems cut perfectly, packed in it's own protective foam, and selling for $50, of course -- these are meant as gifts, as far as I can tell. Nobody feeds their family from the basement of Odakyu. If Western countries had the same gift-giving focus as the Japanese, you could probably buy polished jumbo apples for $20 each there, too.

One thing to remember is that it will always be more expensive for an ex-pat in any country to eat the exact same things he or she is used to at home. The same almost certainly applies to a Japanese living in the US and expecting his usual fried fish, rice, and miso soup breakfast. If you buy local stuff, it's a lot cheaper (I can't speak to the peanut butter, though, because I never eat the stuff myself ;-).

I do agree that it's often cheaper to eat out here than in the US. My company has a $15 limit on business-trip lunches which does just fine here. However, when I go to California on business, I always end up over-limit unless I eat at McDonalds every day. But... of course... those cheap lunches and dinners consist of things that are local to Japan and not pop-tarts ;-)...