Japan's radiation scare to hit beef output

Wed Aug 3, 2011 7:19am EDT

* Govt bans beef shipments from 4 prefectures

* Local govts yet to offer inspection plans needed to lift ban

* Scare hasn't boosted beef imports, ministry to keep eye

By Chikako Mogi

TOKYO, Aug 3 (Reuters) - Japan's widening ban on cattle shipments after the discovery of radiation-contaminated feed will reduce domestic beef output in the short term, but it remains unclear to what degree suppliers such as Australia and the United States could benefit.

Japan has extended its ban on beef cattle shipments to four prefectures in the northeast after discovering that some farmers had fed their cattle straw that was left outdoors following the March 11 earthquake and subsequently contaminated with radioactive cesium from the crippled Fukushima Daiichi nuclear plant.

In fiscal 2009/10, combined cattle shipments from the four prefectures -- Iwate, Miyagi, Fukushima and Tochigi -- had accounted for about 13 percent of total shipments in Japan.

A health, labour and welfare ministry official said no prefecture has yet provided detailed inspection plans for their cattle, which is a precondition for lifting the shipments ban, so it remains unclear when the government could lift the ban and allow farmers to restart production.

"Beef consumption in general has been declining, including domestic beef, and there are stocks, so we don't expect beef imports to jump immediately," a farm ministry official said.

"It's been just a couple of weeks since the ban on some shipments, so we will need to carefully monitor their impact on the market, although we do not foresee any major effect."

Japanese beef imports in the first six months of 2011 rose 5 percent from the first half of 2010 but were down 11 percent from the second half. Japan's beef production for January to May inched down about 1 percent from the same period a year ago.

Australia is by far the biggest beef exporter to Japan, but its share has been hurt by the strength of the Australian dollar, which increased costs relative to U.S. beef and helped boost U.S. market share.

IMPORTS STAGNANT

Japan imported 35,922 tonnes of beef in June, the latest farm ministry data showed, down from 40,197 tonnes in May and below levels seen before the March 11 earthquake and tsunami, which damaged wide areas of northeastern Japan.

In June, beef from Australia accounted for 63 percent of imports, with 27 percent from the United States. That compares with March figures of 72 percent from Australia and 18 percent from the United States.

"One reason is the Australian dollar's strength relative to the U.S. dollar, and the fact that the U.S. share had been low," another farm ministry official said.

Imports of chilled beef, which can be consumed immediately, amounted to 19,600 tonnes in June, recovering close to the March level of 20,870 tonnes, the highest so far this year. In both May and June, the Australian share of chilled beef imports was about 65 percent and the U.S. share was about 30 percent.

The beef radiation scare has heightened public anxiety over the safety of the food supply after excessive levels of radiation were found in vegetables, tea, milk, seafood and water in the wake of the March 11 disaster, which triggered the world's worst nuclear accident in 25 years.

Sales at Yoshinoya Holdings , which uses imported beef and runs a nationwide chain of fast-food restaurants serving bowls of beef and rice, saw a steady doubling in both May and June from year-ago levels, after taking a hit in April due to sluggish consumption following the earthquake.

"We aren't observing any correlation between our sales and worries about radiation contamination," a Yoshinoya official said, suggesting sales may have been linked more to people's preference for low prices.

Masayo Kondo, president of research firm Commodity Intelligence in Tokyo, said the beef scare was unlikely to be a major concern for most Japanese, although many with children might be worried.

"But in theory, if domestic beef production falls and demand remains steady, that will mean there is scope for imports to grow. The question is, by how much? Maybe consumers will stay away from beef altogether and eat chicken or pork." (editing by Jane Baird)

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