Thursday, July 7, 2022

NZ beef sales to Japan on line

Frozen beef exports to Japan might be affected by an automatic tariff safeguard hike on August 1.

If applied, the hike will last through next March and will likely dampen overall demand for beef, Beef + Lamb New Zealand Japan and South Korea market manager John Hundleby said.

"As the third largest overseas supplier of beef to the Japanese market, NZ, like the other offshore suppliers, would no doubt feel some impact from the triggering of the frozen beef safeguard," Hundleby said.

Imports of beef to Japan are hit with a 38.5% tariff.

Whenever total beef imports up to the end of a current fiscal year exceed a surplus of 17% of the volume in the corresponding period a year earlier, the Ministry of Finance automatically raises the tariff to 50%.

It is applied separately to chilled and frozen beef.

For example, final figures for the April-June quarter come in late July. Higher import figures than those in the corresponding quarter the previous year trigger the tariff hike on August 1.

If that doesn't happen, the ministry checks figures for April-September at the end of October for November 1 application and those for April-December at the end of January for February 1 application.

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.

Tariff hikes under this system struck frozen beef in 1995 and 1996 and chilled beef in 2003, all on August 1.

"As the third largest overseas supplier of beef to the Japanese market, NZ, like the other offshore suppliers, would no doubt feel some impact from the triggering of the frozen beef safeguard."

John Hundleby

Beef + Lamb New Zealand Japan and South Korea market manager

The government put the two-tiered system in place to protect Japanese beef producers against a surge of imports but the safeguard did not foresee the impact of BSE.

Japan banned imports of beef from Canada and the US in 2003, following the discovery of BSE cases in those countries. The beef started coming back in 2006, albeit limited to meat from cattle aged 20 months or less as an anti-BSE measure.

However, because Japan raised the anti-BSE beef age limit on US and Canadian beef from 20 to 30 months on February 1, also letting back in Dutch and French beef with age limits, imports have gone up, particularly of frozen beef.

Ministry figures show May-June total frozen beef imports rose 33% year-on-year to 57,780 tonnes. To avoid triggering the safeguard, no more than 25,000 tonnes could have come in June, the agricultural daily newspaper Nihon Nogyo Shimbun reported.

Japan Meat Traders Association (JMTA) executive director Tatsuo Iwama said his organisation's (30) members are all concerned about the safeguard taking effect.

Beef dish prices in the food service industry would rise and some beef items would be struck off menus and replaced by other food items, Iwama said.

"Beef consumption would be affected," he said.

JMTA members are striving to prevent the tariff hike taking effect by avoiding over-importing, Iwama said.

"Members individually report their monthly import figures and we add them up so members can make appropriate (import volume) decisions," he said.

Kiyoshi Tamura, manager at the 800-member Japan Food Service Association, echoed Iwama and offered an additional explanation for the import volume spike.

"As it is expected the yen will continue to depreciate, traders increased their purchases before prices would rise," he said.

"To avoid the tariff hike, each importer stores frozen beef in a bonded warehouse to delay customs clearance," Tamura said.

Still, Hundleby remains wary.

"While the trade is reported to have endeavoured to minimise the risk of the safeguard being triggered, there is no guarantee that those efforts will prove to have been successful."

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