Rising Japanese Pork Imports Could Trigger Safeguard Duties
Rising Japanese Pork Imports Could Trigger Safeguard Duties
The growing appetite for pork in Japan, highlighted by the increasing popularity and value of U.S. pork, could trigger price safeguards if total Japanese pork imports during the April-June quarter exceed by more than 19 percent the average pork imports covering the same quarter over the past three years. Once the safeguard is triggered, it remains in place through March of the following year.
USMEF-Japan is closely monitoring the situation as government officials expect total pork imports to increase significantly. The question that remains is whether the increase will be large enough to trigger price safeguards.
“Because of the strong growth of pork imports in 2008, there are increased chances of triggering the pork safeguard this year,” said Greg Hanes, director of USMEF-Japan.
According to USMEF calculations based on MAFF (Japan’s Ministry of Agriculture, Forestry and Fisheries) and MOFA (Ministry of Finance) data, the higher rate of imports in 2008 means that the safeguard would be triggered if total pork imports during the first quarter of the Japanese fiscal year (April to June) increase more than 7 percent over last year’s total imports.
Should Japanese pork imports trigger price safeguards, the level of Japan’s Gate Price (GP) will rise by approximately 25 percent from the normal level. Currently the GP is 524 yen/kg or about $2.50/lb on a cut basis at current exchange rates ($1 = 95 yen). When the safeguard is triggered, this increases to 653 yen/kg ($3.12/lb). The GP increase is applied to all imported pork regardless of the exporting country.
The GP is the landed price before the 4.3 percent duty is imposed. The duty rate of 4.3 percent per cost of insurance and freight (CIF) is unchanged regardless of the regular or the safeguard situation.
“U.S. pork continues to penetrate Japan’s chilled pork market, further entrenching itself as the No. 1 imported pork while eroding the majority share held by domestic pork,” said Susumu (Sam) Harada, USMEF-Japan senior director, Trade Projects and Technical Services. “However, if the 25 percent safeguard is triggered, there is concern that Japanese retailers will be unable to pass along the higher price of U.S. chilled pork, which has been featured in EDLP (Every Day Low Price) and ‘yen appreciation’ promotions, because retailers are catering to consumers in the current economic downturn.”
In the first two months of 2009, exports of U.S. pork to Japan are up 23 percent in volume to 176.5 million pounds valued at $285.9 million – a 36 percent jump in value over pork exports in the first two months of 2008.
Japan’s pork safeguard was last triggered in August 2004, remaining in effect through the end of March 2005. Prior to this, there were three consecutive years when the safeguard was invoked. While the Japanese trade has experience managing the safeguard, it does make conditions more challenging for pork importers. Harada, however, expects that all major pork importers, including ham and sausage processors, trading houses and trade associations, will carefully monitor the situation.
One executive of a major meat processor told USMEF: “We know the damage to the business that the safeguard has caused in the past, and we will be careful to monitor the market situation.”
One factor in favor of Japanese pork importers this year is a current inventory that is nearly 30,000 metric tons (66 million pounds) larger than at the same time a year ago.
USMEF will continue to monitor the market situation and provide updates to members. Contact the USMEF-Japan office with any questions.
Rising Japanese Pork Imports Could Trigger Safeguard Duties
The growing appetite for pork in Japan, highlighted by the increasing popularity and value of U.S. pork, could trigger price safeguards if total Japanese pork imports during the April-June quarter exceed by more than 19 percent the average pork imports covering the same quarter over the past three years. Once the safeguard is triggered, it remains in place through March of the following year.
USMEF-Japan is closely monitoring the situation as government officials expect total pork imports to increase significantly. The question that remains is whether the increase will be large enough to trigger price safeguards.
“Because of the strong growth of pork imports in 2008, there are increased chances of triggering the pork safeguard this year,” said Greg Hanes, director of USMEF-Japan.
According to USMEF calculations based on MAFF (Japan’s Ministry of Agriculture, Forestry and Fisheries) and MOFA (Ministry of Finance) data, the higher rate of imports in 2008 means that the safeguard would be triggered if total pork imports during the first quarter of the Japanese fiscal year (April to June) increase more than 7 percent over last year’s total imports.
Should Japanese pork imports trigger price safeguards, the level of Japan’s Gate Price (GP) will rise by approximately 25 percent from the normal level. Currently the GP is 524 yen/kg or about $2.50/lb on a cut basis at current exchange rates ($1 = 95 yen). When the safeguard is triggered, this increases to 653 yen/kg ($3.12/lb). The GP increase is applied to all imported pork regardless of the exporting country.
The GP is the landed price before the 4.3 percent duty is imposed. The duty rate of 4.3 percent per cost of insurance and freight (CIF) is unchanged regardless of the regular or the safeguard situation.
“U.S. pork continues to penetrate Japan’s chilled pork market, further entrenching itself as the No. 1 imported pork while eroding the majority share held by domestic pork,” said Susumu (Sam) Harada, USMEF-Japan senior director, Trade Projects and Technical Services. “However, if the 25 percent safeguard is triggered, there is concern that Japanese retailers will be unable to pass along the higher price of U.S. chilled pork, which has been featured in EDLP (Every Day Low Price) and ‘yen appreciation’ promotions, because retailers are catering to consumers in the current economic downturn.”
In the first two months of 2009, exports of U.S. pork to Japan are up 23 percent in volume to 176.5 million pounds valued at $285.9 million – a 36 percent jump in value over pork exports in the first two months of 2008.
Japan’s pork safeguard was last triggered in August 2004, remaining in effect through the end of March 2005. Prior to this, there were three consecutive years when the safeguard was invoked. While the Japanese trade has experience managing the safeguard, it does make conditions more challenging for pork importers. Harada, however, expects that all major pork importers, including ham and sausage processors, trading houses and trade associations, will carefully monitor the situation.
One executive of a major meat processor told USMEF: “We know the damage to the business that the safeguard has caused in the past, and we will be careful to monitor the market situation.”
One factor in favor of Japanese pork importers this year is a current inventory that is nearly 30,000 metric tons (66 million pounds) larger than at the same time a year ago.
USMEF will continue to monitor the market situation and provide updates to members. Contact the USMEF-Japan office with any questions.