US BEEF EXPORTS TO JAPAN TO SOAR BUT US TARGET WON'T BE HIT

US BEEF EXPORTS TO JAPAN TO SOAR BUT US TARGET WON'T BE HIT

Total sales in Japan of U.S. beef products next year are expected to soar by nearly 50 percent to about $1.5 billion.

While fairly impressive, that's less than the $2 billion projected by the U.S. government.Officials of the Japanese government-controlled Livestock Industry Promotion Corp. predicted Thursday that when Japan completely lifts its strict import quotas in April 1991, there may be a sudden temporary spurt in sales of U.S. beef that later will taper off. A tariff of 70 percent will be one factor restraining the quantity.

At the end of March, Japan decontrolled imports of prepared beef products, such as boiled beef and roast beef, but so far there has been no rush into the market.

A corporation executive told The Journal of Commerce it would be surprising if Japanese consumption of U.S. beef skyrocketed, given that Japan will then be applying a 70 percent import tariff in place of the present quota system.

The large tariff is reportedly considered necessary to protect Japanese dairy farmers who sell their older milk cows to the local beef market.

The high duty was established by the Japanese government in accordance with the rules of the General Agreement on Tariffs and Trade and endorsed by the U.S. administration when the two countries signed an arrangement on beef in July 1988.

It is expected that the tariff will be reduced to 60 percent in 1992 and to 50 percent by 1993. A further decrease in the duty will depend upon future talks at the Uruguay Round of GATT. But for the moment, Marubeni Corp. and Nishimen Corp., two general trading houses, actually have cut down their imports of prepared U.S. beef products due to the tariff.

Even now, there exists a massive price difference between the prices of U.S. and other imported beef and the Japanese product. In comparison with U.S. beef, presently accounting for about half of Japan's imported beef, Japanese beef costs roughly three times that of its imported counterpart.

Meat specialists in Tokyo claim, however, that the price of U.S. beef will tend to rise in price to close the gap, presumably as the suppliers try to meet the taste requirements of the Japanese consumer. Local beef enjoys a traditional reputation among consumers for tenderness and flavor.

In addition, the corporation official pointed out that Japanese buyers, particularly the big supermarket chains and the large restaurant franchises, do not believe the nation's consumers will change their eating habits by ordering more foreign beef just because the quotas are removed.

One of the problems facing U.S. and other exporters of beef products hoping to sell much more in Japan's rich market is the relative limited capacity of Japanese warehouses required to build up inventories of the chilled variety. Importers insist that warehouse costs are too high for them to expand capacity.

Meanwhile, the Japanese meat packers and supermarket chains, such as Ito- Yokado Co. and Jusco Co., as well as Daiei Inc. and Seiyu Ltd., are covering themselves by buying up ranches and supplying corporations in the United States, Canada and Australia. The companies intend to import their own products if the estimates of limited market growth for foreign beef prove to be wrong.

The idea, as expressed by a Jusco executive, is that it should be possible to raise the type of cattle overseas that will provide meat more suitable for Japanese recipes and that this might remove the reluctance of many housewives to purchase the imported beef.

Indeed, since the end of last year, supermarkets in the Tokyo area have reported a 10 percent growth in beef sales, most of it high-quality and very expensive domestic meat. One supermarket buyer explained that the demand for top-of-the-line beef frequently overcomes the usual consumer desire for bargains.

Japanese beef producers are now stepping up their efforts to further improve the quality of their product, rather than simply concentrating on reducing costs in order to compete with imports. They appear to believe that quality will tell with the Japanese consumer and that U.S. suppliers won't grab so much of their market after all.