Japan to locally buy pork to lift prices after demand slump

Japan, the world's largest pork importer, will purchase about 70,000 swine carcasses from local farms to boost prices as the recession slashed consumption and sent stockpiles to a 20-year high.

 

The government will earmark 292.9 million yen (US$3.3 million) for a support programme including assisting farmer groups and local companies to buy meat from Japanese wholesale markets, the Ministry of Agriculture, Forestry and Fisheries said.

 

Government data shows pork wholesale prices have plunged 26 percent from a year earlier to 380 yen a kilogramme on average this month in Tokyo. Consumers are eating less meat as the economic slump cut wages and boosted unemployment. Japan's price- support measure may benefit exporters such as the US, Canada and Denmark as the domestic premium over imports may widen.

 

Susumu Harada, senior director at the Tokyo office of the US Meat Export Federation said the government's action could raise the price advantage for imported pork as a stronger yen is already making it affordable to consumers.

 

The purchase, the first by the government in six years, would help boost wholesale prices above a domestic floor of 400 yen a kilogramme and assist farmers struggling with feed costs, Akihiro Fujii, commodities policies manager at the Central Union of Agricultural Co-Operatives, Japan's largest farmers' organization, said in an interview.

 

JA Zen-Noh Meat Foods Co., a meat sales company affiliated with the Central Union of Agricultural Co-Operatives, plans to participate in the proposed purchasing programme, he said.

 

Japan's pork imports slid 14 percent from yearago to 61,981 tonnes in July, according to data from the Finance Ministry. Purchases declined as demand shifted to cheaper food products such as chicken, Fujii said. In the year ended March 31, Japan imported 815,063 tonnes of pork, up 8 percent from a year earlier.

 

Purchases also dropped after an AH1N1 outbreak in April spurred import restrictions by China and Russia, leading to a slump in international prices and production cuts by foreign producers, Fujii said.

 

Swine flu will contribute to an 11 percent drop in global pork trade this year, even after scientists said the meat is safe to eat, United Nations data show. Hog futures in Chicago lost 17 percent this year as US exports plunged 20 percent in the first half and headed for the first annual decline since 1990 as the AH1N1 virus spread across the globe.

 

Pork consumption in Japan decreased 4 percent from a year earlier to 535,990 tonnes in the four months ended July 31, according to the Ministry of Agriculture, Forestry and Fisheries. The carcass purchase plan is equivalent to 3,780 tonnes.

 

Stockpiles of domestic pork topped 30,000 tonnes for the first time in two decades at the end of April because of weak consumption and increased supply from local farmers, Fujii said.

 

Japan's pork production increased 6 percent from a year earlier to 295,102 tonnes in the first four months of this fiscal year, according to the agriculture ministry. Farmers increased herds after food poisoning cases involving dumplings made in China last year boosted demand for domestic meat, Fujii said. Local production rose 1 percent to 882,192 tonnes in the fiscal year ended March 31.

 

 

US$1 = JPY89.91 (Sept 30)