Japan Beef Imports Rise

Frozen Meat Shipments Increase Despite Aug. 1 Tariff Hike

Richard Smith
By  Richard Smith , DTN Tokyo Correspondent
Frozen U.S. beef particularly is the most important ingredient in many dishes in the food service sector here, especially at gyudon chains. (Photo by Lombroso, CC BY-SA 3.0)

TOKYO (DTN) -- Despite the Aug. 1 tariff hike from 38.5% to 50% on frozen beef, Japan's imports have continued rising year over year. While tariffs will hit U.S. beef shipments, recent trade agreements between Japan and Mexico and Australia will exempt supplies from those beef exporters.

Japan Ministry of Finance figures, currently available through October, show a 16.72% year-over-year rise for total imports of frozen beef in the August-to-October period, from 612,089.39 tons in 2016 to 714,437.89 tons this year. Imports of U.S. product rose 13.86%, from 211,824.78 tons to 241,185.98 tons.

The year-over-year increase shows up in the data every month since the tariff hike. From 182,694.39 tons in August 2016, total imports rose 12.65% to 207,413.57 the same month this year. The jump was 18.09% in September, from 205,813.08 to 243,037.68 tons, and 18.07% in October, from 223,581.91 to 263,986.64 tons.

For U.S. frozen beef only, the year-over-year leap was 13.71% in August, from 62,404.38 to 70,962.11 tons; 14.55% in September, from 71,034.8 to 81,037.07 tons; and 13.36% in October, from 78,385.61 to 88,856.81 tons.

It is precisely these constant rises in imports that trigger the Japanese tariff. Whenever overall beef imports in a fiscal year quarter exceed by more than 17% import volumes in the same period of the previous year, tariffs rise from 38.5 to 50%.

When excessive imports show up only in the final figures for the entire preceding year, which come out in late April, the higher tariffs strike only in May and June of the new fiscal year. The raise is applied separately to chilled and frozen beef.

Tariff hikes under this system previously struck frozen beef in 1995 and 1996, and hit chilled beef in 2003, all on Aug. 1. Under trade agreements with Japan, beef from Australia and Mexico are now exempt from this tariff snapback.

MEF Japan Director Takemichi Yamashoji said reasons for the import volume increase are several, one of them simply being higher demand for beef in Japan. "Japanese are learning that beef provides essential nutrients for healthy living, especially for the aging population," Yamashoji said.

Frozen U.S. beef particularly is the most important ingredient in many dishes in the food service sector here, especially at gyudon chains, Yamashoji said. Gyudon features rice topped with beef and onion simmered in a mildly sweet sauce.

The gyudon fast-food chains' formulas are developed to highlight the taste of grain-fed U.S. beef, so they are reluctant to switch to other products, he said.

As gyudon is a very low-profit-margin product, there may be some negative impacts of the tariff hike over the next few months because many of the gyudon chains have long-term contracts with their suppliers, but those contracts will be expiring this month and over the next few months, Yamashoji said.

"This may result in some substitution of U.S. product for others," he said.

Japan Meat Traders Association (30 trading companies) Executive Director Shiroh Ohashi echoed Yamashoji, saying demand for frozen beef has increased, especially for burger meat, which makes up the greater part of demand for the product.

Import volumes sharply increased in September, mainly from Australia, but that was primarily due to customs clearance of unmarked stocks that had accumulated because of the yen's exchange rate appreciation in September, with imports decreasing in October in reaction, Ohashi said.

Otherwise, not much has changed since the tariff hike. "Import volumes of chilled beef increased, but that is considered to be due to an increase in meat eating in recent years," Ohashi said.

From the standpoint of the Japan Foodservice Association (453 companies with 67,000 outlets) also, there is no direct causal relationship between the tariff hike and import volumes. Beef trading is basically a two-month unit, and for each transaction, contracts are made in June for July and August, and in August for September and October, the association's managing director, Kiyotoshi Tamura, said.

Also, since July-August is the busy season for barbecue chains and other beef-serving restaurants, imports naturally increase. "It is generally said that each trading company will adjust its inventory from November, and import volumes will go down," Tamura said.

For the Japan Chainstore Association (56 companies running 9,744 outlets), there is no significant change in its members' handling of their basically small volumes of frozen beef, customer purchases or shopfront price. "There is no major change," Executive Officer Akio Masuda said.

(AG)

Richard Smith