JIN-348 -- Where's the Beef?

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T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business, Technology and Cultural News
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Issue No. 348
Saturday December 17, 2005 TOKYO

+++ VIEWPOINT: Where's the Beef?

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+++ VIEWPOINT: Where's the Beef?

On December 12 the Japanese Government decided on a partial
lifting of the two-year-old ban on the import of North
American beef imposed after the discovery of bovine spongiform
encephalopathy (BSE) in a dairy cow in Washington state, USA. The
ban remains in effect for cows under 21 months, who are
believed to be too young to be susceptible to "mad-cow
disease," which is fatal in humans. According to the USMEF
(US Meat Export Federation), the first post-ban shipment of
US beef will arrive at Narita Airport, outside Tokyo, on
December 18.

The partial lifting of the ban came after considerable
browbeating of the Japanese government by the Bush Administration
and threats of retaliation from Congress. At stake was the
largest overseas market for US beef, worth $1.4 billion in 2003.

Prime Minister Junichiro Koizumi, who has made relations with
the US the linchpin of his foreign policy, desired a quick
resolution of the dispute. But the resolution met that Japan,
like other countries, has had to accept the less
stringent American screening methods for beef.

Trading companies are looking to begin purchases of US beef.
Mitsui & Co., Ltd. is now negotiating prices with US
meat-packing companies. The mammoth trading company expects
to begin supplying American beef to the restaurant industry
in mid- to late January of next year. However, since the
Japanese government will only permit the import of younger beef,
Mitsui anticipates some time will elapse before its
imports regain the pre-ban level of 20 tons. Rival Marubeni
has narrowed down its American beef suppliers to mid-sized
meat processors and is moving forward with negotiations.
Another large trading company, ITOCHU Corporation, is currently
talking with several US suppliers as it explores the
possibility of resuming imports of American beef.

Yoshinoya, a large restaurant chain, has indicated that the
return of its popular beef-on-rice dish will be delayed until
February. Furthermore, on account of a projected deficiency
in supply and jump in cost price, the company believes it
will not be able to avoid a hike in price or limited sales.

Matsuya Foods reports it is taking a conservative
approach in its procurement of US beef for its fast-food style
beef restaurants. Sukiya, which operates the Zensho chain,
has announced that it has no immediate plans to use American
beef because a fact-finding mission revealed its restaurants
cannot yet assure consumers of the meat's safety.

Some supermarkets are cautiously resuming imports of US beef.
Hanamasa, which operates wholesale supermarkets in the Tokyo
Metropolitan area, will import by air 10 tons of Canadian beef
this month. Aeon, the operator of 688 supermarkets, has
established its own safety standards and is considering the
relaunch of US beef sales.

Not so Ito Yokado. A company spokesperson remarked, "We have
taken into consideration the attitude of consumers, who are
sensitive to safety issues, and are not contemplating the sale
of American beef anytime soon." Ditto the Seiyu group, a
representative of which commented, "For the time being we will
sell Australian beef." Likewise Ito Ham will depend on
Australian and New Zealand suppliers for the foreseeable future.

Indeed American cattlemen must wrestle back share from ranchers
down under. The Agriculture Ministry reported that sales of
Australian beef shot up by a third, to 410,000 tons, 51 percent
of consumption, in the year after the ban on American beef.

Even if they win that battle, they face another challenge:
winning the minds and stomachs of Japanese consumers.

You can lead beef to sukiyaki and shabu-shabu restaurants,
but you can't make it be eaten by finicky Japanese consumers.
Slightly more than 75 percent of respondents to a Kyodo
News survey earlier this month said they would not eat
US beef. I took a survey of one person. Asked if she would eat
US beef, my wife said "No. It's frightening."

--Burritt Sabin

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EDITOR
Written and edited by Burritt Sabin (editors2@japaninc.com)

(C) Copyright 2005 Japan Inc Communications KK. All Rights Reserved.

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