June 26, 2008

Japan gives US$415 million to subsidise corn imports for feed

Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) recently announced a 45 billion yen (US$415 million) feed price stabilization subsidy to help livestock producers cope with increasing feed prices, according to a USDA attache report posted Wednesday (June 25, 2008) on the Foreign Agricultural Services Web site.

The subsidy is expected to alleviate farmers' burdens after seeing corn prices double over the past two years.

Japan is expected to import 16 million tonnes of US corn this year, 12 million tonnes of which goes to the feed industry. Due to strict rules regarding feed, livestock producers are not allowed to switch to cheaper alternatives.

The new funding comes as the old funding, designed to absorb surges in feed prices, has nearly been depleted.

The previous programme in place was a combination of funds from both the MAFF and the industry.

The new funding is expected to last until March 2009 (the end of the Japanese fiscal year). This translates to an average subsidy of about US$46 per tonne or roughly one-sixth of the current landed price for feed corn.

Despite feed price rising, Japan's corn import have been stable due in part to subsidies which have helped absorb half the feed price increase since the second quarter of 2006.

Cumulative corn imports during the first four months of 2008 of 5.36 million tonnes was a slight increase over the same period in 2007.

Japan is likely to import about 9 million tonnes of corn for feed in the remainder of the current Japanese fiscal year (ending in March 2009).