October 30, 2015 / 3:04 AM / 2 years ago

Hope fades that trade pact could melt Japan butter shortage

TOKYO (Reuters) - Hopes look set to be dashed that a regional trade pact could end a butter shortage in Japan which has left shelves in some supermarkets empty and prompted others to ration customers to one pack per visit.

The Transpacific Partnership (TPP) deal agreed this month between Japan and other Pacific Rim governments does not do enough to loosen curbs on butter imports, with Tokyo wary of upsetting farmers the controls were designed to protect, said industry officials and analysts.

The butter shortage, which typically intensifies towards year-end as people make cookies and cakes for Halloween and Christmas, has been fueled by a chronic lack of dairy farmers as the population ages and younger people move away from the countryside.

“I came here to buy butter to make Halloween cupcakes as I couldn’t find any at another store,” Yumi Kano, a mother of two small children, said at a supermarket in central Tokyo.”Since last year, I’ve been trying to keep two packs of butter in our refrigerator.”

A prolonged butter shortage would be an embarrassment to Prime Minister Shinzo Abe’s government which has been touting the benefits of TPP, saying it would allow consumers to buy diverse products from around the world at cheaper prices.

The latest butter deficit has already lasted around two years, with industry data showing consumers have been forking out roughly up to four times more than buyers abroad, while commercial users have been paying the highest prices in about three decades. A 200 gram pack cost about 450 yen ($3.70) this week in Tokyo.

And the shortage could prompt the government to repeat emergency imports, after it shipped in a total of around 20,000 tonnes of such supplies this year and last. That could be good news in the short term for key dairy exporters such as New Zealand and the Netherlands.

NOT ENOUGH?

Japan, the United States and 10 other Pacific Rim countries reached the most ambitious trade pact in a generation earlier in October, aiming to liberalize commerce in 40 percent of the world’s economy.

The deal allows Japan to keeps its complex import quota system under which about 3,000 tonnes of butter have been shipped in annually over the past three years at a low-duty rate, but adds a new quota of up to about 3,700 tonnes at a lower tariff still.

However, the new quota only represents about 5 percent of local consumption. Outside the quotas, the duty is so hefty that butter typically becomes too expensive for private buyers to import.

“Given the small volume of the new quota, the butter shortage won’t go away completely and the price impact will be limited,” said an official at a major dairy firm, who declined to be identified due to the sensitivity of the issue.

An agriculture ministry official said Tokyo would adjust supply and demand of butter through emergency imports.

But many butter buyers say Japan must do more to secure stable supply and bring down prices.

“Even after the government’s emergency imports, small businesses like us can’t secure enough butter when needed,” said Hironobu Takemura, owner of a cafe in Tokyo that serves waffles.

“We all know the state-controlled system doesn’t work. We want free trade.”

($1 = 121.0000 yen)

Reporting by Yuka Obayashi; Editing by Aaron Sheldrick and Joseph Radford

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