February 3, 2010

Japan looks at reducing dependency on corn imports

Japan, the world's largest corn buyer, may increase rice production for livestock feed in an attempt to reduce corn imports.

The country plans to boost output to 300,000 tonnes of feed rice from 23,264 tonnes last year, said Takuo Ichiya, production department manager for the Central Union of Agricultural Co-Operatives.

Japan, which relies on imports to meet most of its corn and wheat needs, is seeking to reduce its dependency on foreign food because of concern that growth in China, an expanding global population and improving diets will tighten supplies. The government plans to spend JPY217 billion (US$2.4 billion) in the year starting April 1 to support local output of soy, wheat and feed grain, including rice.

Feed rice output will increase as the government boosts incentives to growers, Ichiya said.

Feed manufacturers are willing to use the grain as a substitute for imported corn if it is affordable, he said.

Feed rice planting may increase to 50,000 hectares (124,000 acres) from 4,123 hectares last year, said Ichiya. The Ministry of Agriculture, Forestry and Fisheries will pay JPY80,000 (US$883) for every 10 ares to farmers who produce rice under a sales agreement with feed producers.

Japan imported 11 million tonnes of feed corn last year, buying 96% from the US. Japan's Vice Agriculture Minister Masahiko Yamada, who raised cattle and hogs before becoming a lawmaker in 1993, has said the nation can produce the same amount of feed rice if the government helps farmers restart output on idled paddies, using higher-yielding varieties. He quit farming after feed costs soared following the US embargo on soy exports in 1973.

The government will develop feed rice varieties in the next fiscal year that can yield about 30% more than existing ones, or 1 tonne per 10 ares. The government plans to spend JPY545 million for the project in the year from April 1, said Yasuo Sasaki, senior press counselor at the agriculture ministry.

Farmers are reluctant to grow feed grains as they cannot earn as much income as they do from food-rice production. The feed variety is sold at JPY20,000-30,000/  tonne (US$221-331) in Japan, or at similar levels to imported corn, according to Sasaki. Japanese food-rice is ten times more expensive.

The agriculture ministry, under pressure from farmers, has supported food rice prices by subsidising production cuts to balance supply with declining consumption. The government also imposes a 778% tariff on rice imports.

The feed rice subsidy of 80,000 yen per 10 ares will mostly compensate growers for the gap between production costs and sales, Sasaki said.

The country's feed corn imports dropped 7.7% last year from 2008, government figures show. Supplies from the US, the largest exporter, fell 10% to 10.6 million tonnes and Ukraine emerged as the second-largest supplier, with 212,458 tonnes.