Free Market Carnivore's Blog

Hopes for negotiating changes to the beef trading rules with Japan were dealt yet another setback Friday, as the Japanese prime minister indicated he will step down as party leader and, therefore, prime minister.  The U.S. beef industry had hoped that the 20-month rule could soon be negotiated to a near world-standard beef from 30-month-old animals, based on science regarding BSE.

 But political turmoil in Japan has now yielded six prime ministers in five years and even more agricultural ministers.  Even an aggressive effort by U.S. negotiators would have been hard pressed to deal with such constant change, much less an Obama administration that can’t even figure out who’s on first with the free trade agreements (FTA) already negotiated and ready for the President’s signature.  Last week two administration officials blamed the FTA’s delay on Congress, when the documents have languished on the president’s desk since inauguration.

 The Japanese Democratic Party of Japan (DPJ) will vote on a new party leader Monday and, most likely, a new prime minister will be confirmed Tuesday by the Japanese parliament, according to the Wall Street Journal (“Japan’s Kan Steps Down as Party Chief,” Sat./Sun 8/27-28/11).  Prime Minister Kan, who has held the office for 14 months, has been attacked on all sides for his handling of the triple disasters of earthquake, tsunami and nuclear disaster and confessed in his final speech that he knew his talents were unequal to the task of leadership during the nuclear crisis.  He got off to a rocky start to his term by proposing an increase in the consumption tax to pare down debt, a politically unpopular move.

 Five different men are expected to declare their candidacy for the prime minister’s post, so prognosticating on beef industry negotiating chances would be difficult now.  Paradoxically, one of the problems that beset Prime Minister Kan is being soft-pedaled by the candidates jockeying for position this weekend, the Journal said.  In a nation with few other means of generating electrical power, many Japanese citizens have turned against nuclear power since the disaster and a number of plants around the country have still not been restarted, starving industry for power.

 While U.S. beef exports to Japan have been steadily growing, they are still far below 2003 levels before the BSE scare and trade is hampered by the 20-month rule.  Packers can only ship beef from 20-month or younger cattle and, therefore, have to source and verify eligible animals for the Japanese trade.  That means many animals cannot be identified as eligible.

 Ironically, this writer thought eligibility for the lucrative Japanese market would be the incentive that would finally push many producers into the extra effort to individually identify and tag animals and keep the necessary records to qualify for Japan.  While some have made some extra money that way, many producers still view individual ID and traceability  — and the connected premiums  —  as something they are too busy to deal with.

 Meanwhile, the political revolving door whirls in Japan.