June 13, 2008

Japan to raise meat prices as grain costs escalate
   
  

Japan will raise floor prices for domestic meat for the second time this year and increase subsidies for livestock farmers as grain prices hit to a new record high.

Floor price for domestic pork would rise 5.3 percent to JPY 400 per kg starting in July while floor price for beef would increase 3.2 percent to JPY 815 per kg, according to the Ministry of Agriculture, Forestry and Fisheries (MAFF).

MAFF said subsidies for livestock farmers would rise JPY 73.8 billion (US$684.5 million).

Chino Nobuyuki, the president of Tokyo-based grain trading company Unipac Grain said the emergency measures may be not sufficient to help Japanese farmers, who are dependent on feed grain imports.

Corn has hit a new record high of US$7.2 per bushel as rain in the US Midwest cut forecast output.

Chino said more farmers may be forced out of the business, leading to a slump in feed demand as corn prices may reach US$8 per bushel by year-end.

Feed costs have also increased as freight rates surged on rising demand, shortage of ships and soaring fuel prices, Chino said, adding that the cost to import US corn has exceeded US$10 per bushel for July-September shipments from the Gulf of Mexico.

Japan imported 12.1 million tonnes of corn for feed last year, with US corn representing 93 percent of total imports.

US$1 = JPY 107.8 (June 13, 2008)