990252 Economic Turmoil Puts Bite on Japan Beef Imports

Tokyo - Japan's collapsing economy is likely to curb people's appetites for steaks and barbecues, with industry sources projecting beef imports in 1999 staying level with last year.

Beef eating has become big business in Japan, with the Agriculture Ministry saying consumption has risen steadily to 8.0 kg (17.6 pounds) per head in 1997 from 4.4 kg (9.68 pounds) in 1985, despite being checked in 1996 by fears of mad cow disease and E. coli bacteria.

Volume is expected to increase to about 11 kg (24.2 pounds) per capita or more in the next few years, industry sources said.

SPENDING CUTS SPELL LESS BEEF

Now, the recession has forced people to tighten their belts.

"I don't expect much of a rise (in imports this year), as sales have been falling," said a trader at a major Japanese trading house. "No matter how hard you try, you cannot expect consumer sentiment to recover unless there is an improvement in the economic situation."

Mitsuo Hasegawa, executive director of the Japan Meat Traders Association agreed, saying: "It's not that people don't have any money. It's just this feeling that makes people think they should cut down on spending."

Others expect beef imports to play an increasingly crucial role on the supply front in the long run.

Beef imports, which have surged after the liberalization of the Japanese market in 1991, are expected to reach around 670,000 metric tons in 1998 from 647,313 tons a year earlier, Hasegawa said.

About 53% of Japan's 1.3 million-ton beef market is supplied by foreign beef, mainly from the United States and Australia, an industry source said.

"The industry expects imports to grow to 62-63% in five or six years' time," the source said.

JAPANESE BEEF HAS SAFE IMAGE

Traders at major Japanese importers, which handle about 70% of the country's foreign beef, said last year's drop in consumption had been particularly evident in refrigerated beef, mostly sold at supermarkets.

A spokeswoman at Seiyu Ltd., Japan's fifth-largest supermarket operator, said while the drop in beef sales in general was negligible in 1998 compared to the previous year, Japanese beef sold better than imported beef, in a ratio of 7:3.

She said 60% of the beef Seiyu put in its stores was Japanese in origin, and the rest imported.

"Customers tend to feel more at ease eating domestic beef rather than imported beef," Hasegawa said. "There is this image that Japanese beef is safer."

The Seiyu spokeswoman also said pork sales in 1998 were brisk compared with beef, as customers were influenced by media reports which emphasized its health benefits.

Traders said refrigerated beef imports were likely to grow slightly in 1999 after a slow year, but that frozen beef imports could wane somewhat, since the rise during the past year had been greater than expected.

Some more optimistic industry players said they saw imports increasing another 10% or so this year compared to last.

Finance Ministry data showed refrigerated beef imports fell 4.3% to 289,186 tons between January and November last year from 302,063 tons a year earlier.

Imports of frozen beef, on the other hand, rose 11.6% to 325,857 tons during the first 11 months of 1998 from 291,937 a year earlier.

LIVESTOCK FARMERS DWINDLE

Demand for frozen beef, used mostly by inexpensive restaurants as well as food processing companies which sell ready-made and frozen foods, has been robust throughout 1998.

Sales are rapidly growing at Japanese barbecue houses, for instance, which target families and offer low-priced menu items that use imported frozen beef.

The Japanese beef industry has been hit by livestock farmers' inability to cut production costs, said to be more than twice those in the United States.

Some industry players saw steady demand, coupled with a waning number of Japanese livestock farmers, forcing more imports. Japan's livestock farmers fell to 133,400 by 1998, almost half the number from a decade earlier, the Agriculture Ministry said.

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