JAPAN BEEF PRICE SUPPORT CUT WILL NOT RAISE DEMAND
Japan's plan to cut beef intervention
prices for the fiscal year starting April 1 will not boost
demand because of strict supply controls and a complex
distribution system, Japanese and U.S. Industry sources said.
    "Government beef policy protects farmers rather than meeting
consumers' demands and the cutback ... Is too marginal," a
Housewives Association of Japan official said.
    Despite mounting U.S. Pressure on Japan to open farm
markets, beef is strictly controlled by the government, which
maintains a price stabilisation zone to protect farmers.
    Under the plan, expected to be announced this month, the
standard or bottom price of castrated wagyu -- known as marbled
beef -- will be set at 1,370 yen per kilo for 1987/88 against
1,400 now, and the ceiling at 1,780 yen against 1,820.
    The standard price of other beef, mainly produced from
dairy steers, is set at 1,020 yen against 1,090 and the ceiling
at 1,325 against 1,420.
    Ministry officials said the semi-government Livestock
Industry Promotion Corp (LIPC) conducts buffer stock operations
to help keep wholesale beef prices within the intervention
price zone.
    The LIPC is allowed to import most beef, with the amount
set by the government under a quota system. When wholesale
prices go above the ceiling, the LIPC releases its beef stocks,
both domestic and imported, and buys locally produced beef when
prices are below.
    But the LIPC has often been criticised for releasing beef
stocks when the prices are higher than the ceiling.
    Phillip Seng, Asian Director of the U.S. Meat Export
Federation, told Reuters the two pct cut in prices is a step
toward closing the gap with European Community prices, about
half those in Japan.
    But Seng said the cut will not benefit consumers or U.S.
Meat exporters because of Japan's rigid and complicated
distribution system and strict supply control by the LIPC.
    The Housewives Association official said retail beef prices
are high mainly because of distribution problems and high
production costs, as well as poor operations by the LIPC.
    American meat packers see Japan as a promising market. F.C.
Beatty, of U.S. Packer John Morrell and Co, told the Japan
Times beef cuts, which sell for 1.20 to 3.00 dlrs a pound in
the U.S., Are sold at 15 to 30 dlrs in Japan.
    But Seng said the cut will not benefit consumers or U.S.
Meat exporters because of Japan's rigid and complicated
distribution system and strict supply control by the LIPC.
    The Housewives Association official said retail beef prices
are high mainly because of distribution problems and high
production costs, as well as poor operations by the LIPC.
    American meat packers see Japan as a promising market. F.C.
Beatty, of U.S. Packer John Morrell and Co, told the Japan
Times beef cuts, which sell for 1.20 to 3.00 dlrs a pound in
the U.S., Are sold at 15 to 30 dlrs in Japan.
    But industry sources said it is unclear how much demand
will pick up if retail beef prices drop following any sharp
reduction in intervention prices.
    U.S. Agriculture Secretary Richard Lyng said this week he
will ask Japan to remove all beef import restrictions when he
visits here next month.
    In 1984, Japan decided to increase its beef import quota by
9,000 tonnes a year until March 31, 1988.
    In 1987/88, the quota will rise to 177,000 tonnes from
168,000 in 1986/87, ministry officials said, adding Japan wants
to keep self-sufficiency in beef at around 70 pct.
 REUTER
