JAPAN BEEF PRICE SUPPORT CUT WILL NOT RAISE DEMAND

  Japan's plan to cut beef intervention
  prices for the fiscal year starting April 1 will not boost
  demand because of strict supply controls and a complex
  distribution system, Japanese and U.S. Industry sources said.
      "Government beef policy protects farmers rather than meeting
  consumers' demands and the cutback ... Is too marginal," a
  Housewives Association of Japan official said.
      Despite mounting U.S. Pressure on Japan to open farm
  markets, beef is strictly controlled by the government, which
  maintains a price stabilisation zone to protect farmers.
      Under the plan, expected to be announced this month, the
  standard or bottom price of castrated wagyu -- known as marbled
  beef -- will be set at 1,370 yen per kilo for 1987/88 against
  1,400 now, and the ceiling at 1,780 yen against 1,820.
      The standard price of other beef, mainly produced from
  dairy steers, is set at 1,020 yen against 1,090 and the ceiling
  at 1,325 against 1,420.
      Ministry officials said the semi-government Livestock
  Industry Promotion Corp (LIPC) conducts buffer stock operations
  to help keep wholesale beef prices within the intervention
  price zone.
      The LIPC is allowed to import most beef, with the amount
  set by the government under a quota system. When wholesale
  prices go above the ceiling, the LIPC releases its beef stocks,
  both domestic and imported, and buys locally produced beef when
  prices are below.
      But the LIPC has often been criticised for releasing beef
  stocks when the prices are higher than the ceiling.
      Phillip Seng, Asian Director of the U.S. Meat Export
  Federation, told Reuters the two pct cut in prices is a step
  toward closing the gap with European Community prices, about
  half those in Japan.
      But Seng said the cut will not benefit consumers or U.S.
  Meat exporters because of Japan's rigid and complicated
  distribution system and strict supply control by the LIPC.
      The Housewives Association official said retail beef prices
  are high mainly because of distribution problems and high
  production costs, as well as poor operations by the LIPC.
      American meat packers see Japan as a promising market. F.C.
  Beatty, of U.S. Packer John Morrell and Co, told the Japan
  Times beef cuts, which sell for 1.20 to 3.00 dlrs a pound in
  the U.S., Are sold at 15 to 30 dlrs in Japan.
      But Seng said the cut will not benefit consumers or U.S.
  Meat exporters because of Japan's rigid and complicated
  distribution system and strict supply control by the LIPC.
      The Housewives Association official said retail beef prices
  are high mainly because of distribution problems and high
  production costs, as well as poor operations by the LIPC.
      American meat packers see Japan as a promising market. F.C.
  Beatty, of U.S. Packer John Morrell and Co, told the Japan
  Times beef cuts, which sell for 1.20 to 3.00 dlrs a pound in
  the U.S., Are sold at 15 to 30 dlrs in Japan.
      But industry sources said it is unclear how much demand
  will pick up if retail beef prices drop following any sharp
  reduction in intervention prices.
      U.S. Agriculture Secretary Richard Lyng said this week he
  will ask Japan to remove all beef import restrictions when he
  visits here next month.
      In 1984, Japan decided to increase its beef import quota by
  9,000 tonnes a year until March 31, 1988.
      In 1987/88, the quota will rise to 177,000 tonnes from
  168,000 in 1986/87, ministry officials said, adding Japan wants
  to keep self-sufficiency in beef at around 70 pct.
  

