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ECONOMY > Agriculture

Trading firms wary that gov’t will pressure them to purchase U.S. corn

  • September 24, 2019
  • , Asahi , p. 3
  • JMH Translation

By Hirobumi Ohinata

 

“I don’t understand why the matter of purchasing U.S. corn has been communicated in this way,” said a top Liberal Democratic Party official, shaking his head in disbelief. According to the Ministry of Agriculture, Forestry and Fisheries (MAFF), the additional purchase was not decided at the Japan-U.S. summit meeting but had already been decided on Aug. 8 and communicated to animal feed industry organizations, whose membership includes trading companies.

 

The reason [for the additional purchase] is “because fall armyworm [Spodoptera frugiperda] was found in Japan for the first time in July.” In its moth stage, the fall armyworm can fly 200 km a day. The UN’s Food and Agriculture Organization (FAO) has called for farmers to be on the alert.

 

There is a chance that Japan’s early-harvest corn, which is mainly eaten by dairy cows, will be damaged [by the pest], and the government decided to subsidize the warehouse storage fees and interest on the purchase price when trading companies perform emergency imports. The figure of 2.75 million tons, which was indicated to the U.S., is the upper limit on the imports.

 

The actual amount imported is up to the discretion of the trading companies. If the insect damage is less than estimated and some corn brought into Japan under the emergency imports is left over, the amount imported after that will decrease and the total amount imported will not increase [in the end].

 

At the joint press conference, however, Prime Minister Shinzo Abe did not mention this matter, which is an “inconvenient truth” for U.S. President Trump. Mr. Trump urged Prime Minister Abe at the press conference: “Would you say that Japan plans to import corn?” In response, the Prime Minister said: “I do think there is a possibility for us to cooperate as the private sector also thinks that Japan will have to purchase corn on an emergency basis.” This put President Trump in high spirits: “The Japanese private sector listens to the Japanese public sector very strongly.” 

 

“Japan put this topic [of corn imports] on the table at the Japan-U.S. summit meeting because it was something likely to please Mr. Trump,” people connected with the Japanese government conjecture. “Trump knew exactly what he was doing when he twisted the facts and played up the purchase. To make sure Trump did not lose face, the Prime Minister did not dare deny it.”

 

After the press conference, MAFF received phone calls one after the other from trading companies and others, asking, “Will we be forced to purchase the corn?” The MAFF official in charge frantically worked to put out these fires, saying, “No promise has been made between the two governments about an additional purchase.”

 

Some in the opposition parties are saying, however, “This is a trade-off for advancing the trade negotiations in a favorable way.” MAFF denies this, saying, “The two issues are entirely unrelated.” The reason for setting the upper limit at about 2.75 million tons, however, does not seem right.

 

As of Sept. 20, the damage caused by the pest has spread to 18 prefectures including Kyushu. However, the insect has not been found yet in Hokkaido, which produces 60% of the early-harvest corn. According to MAFF, the amount of imported corn necessary would be no more than slightly over 1 million tons annually even if all of Japan’s early-harvest corn were damaged.

 

MAFF said, “We have secured enough [corn] for farmers to be at ease.” MAFF continued: “Quite a few trading companies have the practice of purchasing three months’ worth. We set the volume at three months’ worth of last year’s import volume (about 11 million tons) so that all companies can participate. We will definitely not press the trading companies to purchase the imports.”

 

When the Asahi Shimbun contacted some major trading companies, however, all four companies that responded said they “have not heard of such a practice [at trading companies].” Trading companies continue to be wary: “Will the government really not press us to ‘understand’ [and buy the corn]?”

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