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Yet another domestic food scandal; Bush to lobby for US beef

It has been reported that yet another maker of traditional Japanese confectioneries has run into trouble due to its practice of falsifying the manufactured dates of its products. This time, the firm in question is Ofukumochi Honke, a dessert manufacturer in Ise, Mie Prefecture.

We won’t bother pointing out the connection between Ise and Shintoism. There’s nothing to be gained from reading in at such a symbolic level. If you’ve never been to the Ise Shrine in Mie Prefecture, where the goddess Amaterasu Omikami is enshrined, I recommend going in the autumn. It’s truly beautiful.

At any rate, Ofukumochi follows Akafuku Mochi, another confectionery maker who ran into trouble earlier this month for lying about dates. This follows labeling scandals at Fujiya, Meat Hope and chicken supplier Hinaidori…

Yet, there is still nervousness surrounding the importation of US beef, which currently can only come from cattle 20 months of age or younger (odd that the marketers haven’t started a veal boom, but that’s another story…).

Since Japan doesn’t export much meat to the US, it hardly needs to prove that its own meat (or candy) is safe to the Americans. Demonizing foreign meat is thus an easy game to play. I have written widely on why I think US cattlemen are to blame for their own troubles - and I still think they are - but at this point Japan is starting to look a bit silly.

At any rate, US President George W Bush, a man with the credibility of a broken thermostat, is set to discuss the issue of US beef imports with Prime Minister Yasuo “Sock Garters” Fukuda when the two meet next month in the US (no thanks to Kyodo for already removing the link to the story). It will be interesting to see if Bush, the man who asked former Prime Minister Shinzo Abe to describe what a ‘triangular merger’ is, presses Fukuda on Japan’s own food safety issues.

Disclaimer: I don’t know whether Yasuo Fukuda actually wears sock garters. I just imagined it and realized it must be true, or should be.

US Beef Negotiations to Continue this Week

A few short weeks ago, the Ministry of Agriculture, Farms and Fisheries announced that U.S. beef shipment facilities were up to par with Japanese import standards, and thus there is no longer a need for the requirement that every box of American beef shipped to Japan be opened and inspected upon arrival.

That decision surprised me, since I assumed the labeling mistakes would lead the inspectors to declare the facilities unsafe, but apparently they don’t mind that so much anymore.

We’ve now reached the next step: US negotiators are heading to Japan this week for talks on Wednesday and Thursday with officials from the Ministries of Agriculture, Farms and Fisheries and Health, Labor and Welfare. At issue will be whether or not Japan should lift the ban on US beef from cows aged over 20 months. The US has the World Organization for Animal Health (OIE) on its side (Imagine that! The US using a multilateral organization to lend itself credibility!). Back in May, the OIE ruled that the United States was a “controlled risk nation.” All countries with this designation can export beef irrespective of the animal’s age.

Japan does not want the US to make a complaint to the OIE, or even worse, the WTO. At the same time, Japan has thus far been adamant about keeping out beef from cows under the age of 20 months. Now it appears as though Japan is stuck in a position where it needs to save face; will the US allow it to lift the restriction up to 30 months, or will the US demand that all age restrictions be removed?

Domestically, of course, the Japanese side has little to worry about. Most markets still do not carry US beef, and consumers remain afraid of it. But will they stay scared long enough? When will it be time again to turn a small mis-labeling accident into an international incident?

US Meatpacking Facilities OK: Ministry of Agriculture

Yesterday, the Ministry of Agriculture released a report stating that U.S. beef shipment facilities are up to par with Japanese import standards, and thus there is no longer a need for the requirement that every box of American beef shipped to Japan be opened and inspected upon arrival.

Although the inspectors found more cases of mislabeled shipments during their tours of US meatpacking facilities, they determined there was no longer a risk that animal parts that could potentially carry BSE would be included in any shipments to Japan. Such parts usually include any brain matter or spinal cord tissue.

Negotiations between Japan and the US on this issue are expected to continue, as the World Health Organization has said that US beef of any age is fit for export, while Japan limits imports of US beef to cattle under 20 months of age.

Auto Exports to the US Fall in April; First Fall in 27 Months

Although Japan’s overall exports of new autos rose 2.3% in April, shipments headed to the US declined for the first time in 27 months. The Japan Automobile Manufacturers Association report stated that exports to the U.S. by Japan’s 12 carmakers fell 11 percent to 160,107 units in April.

Analysts believe that two factors are behind the fall in shipments: 1) Toyota is believed to be exporting fewer cars to the US in preparation of its annual launch of new models, and 2) Toyota and Honda are both expected to step up capacity in the United States itself, in response to calls from US lawmakers who accuse the Japanese automakers of relying on the cheap yen and decreased capacity in the US to boost their profits.

Nissan CEO Carlos Ghosn has predicted a slowdown in US auto sales for financial 2007.

Autos in April: Production Down, Exports Up

It’s becoming a familiar story: Due to flagging domestic sales, Japan’s production of automobiles continues to decline. As that happens, the number of autos being exported each month continues to increase. Reports from the Japan Automobile Manufacturer’s Association show that Japan’s exports of cars, trucks and buses rose 2.3% in April from a year earlier, for the 21st consecutive monthly rise. In all, 484,702 vehicles were shipped to foreign shores, with Toyota leading the way in all categories. The global leader shipped 148,737 cars, 11,339 trucks and 598 buses overseas in April.

On the other hand, production of new vehicles dropped for the second straight month, declining 3.8% in April compared to the same month last year. 870,639 vehicles were built in Japan in April. Again, Toyota led the way, with 214,706 passenger cars having been built. It’s nearest competitor, Mazda, built 61,973 in Japan during the same month.

Ministry of Finance: Exports up 8.3% in April, cooled off slightly from March

This afternoon, the Ministry of Finance released provisional trade statistics for April 2007, and Japan’s exports increased 8.3% compared to April of last year. The rate, of increase, however, is lower than the 10.3% year-on-year growth seen in March. This is the first time that the growth rate has slowed in two years.

Although this has happened slightly earlier than we predicted, it is not completely out of the blue. A slowdown in spending in the US has been anticipated, and that contributed to the slower export growth in April. Exports to the US dropped 4.8%, their largest fall since May 2004.

According to the statistics, however, exports to all other regions increased, meaning that spending in Europe and China are continuing to support Japan’s export growth. Exports to Asia grew by 11.1%, with shipments to China rising 16.8. Exports to the European Union also grew at a strong pace, reaching 9.7%.

April and May, however, are not typically hot months for exports. The true test for Japan’s exporters will come this summer and fall. June, July, September and October tend to be amongst the busiest months for shipments, as is March.

Today’s question: Will export growth to China be maintained after next year’s Olympics are over?

Japan’s Foreign Reserves up to Record High for Third Straight Month

Someone asked: What was up with the chart showing Japanese exports out of the blue the other day? Was that in some sort of context?

It was. I was supporting David Andrew Taylor’s assertion that the Ministry of Finance’s announcement that week that Japan’s foreign reserves had hit all-time highs for three months in a row was related to the surge in exports that we have seen since at least January 2004.

As of April 30, Japan’s foreign reserves had hit $915.62 billion, which was up over $6 billion from the month before. Sure, there was an increase in Euro-denominated holdings, but I’m apt to think that as Japan’s exporters are bring home more and more foreign currency, the smoothing operations are just starting to pick up.

I’ll say it now: I don’t expect to see a cooling off in exports (defined here as matching or going below the same month in the previous year) until June or July, if it happens at all.

Japan’s Exports: January 2004-March 2007

Last week the Ministry of Finance published provisional trade statistics for the first 20 days of April, which revealed that yet another year-on-year monthly gain in exports is to be expected. 4,372,875,000 yen worth of exports were shipped in the first 20 days of April 2007, versus 3,901,768,000 yen in the first 20 days of April 2006.

We went back and made a chart of Japan’s exports from January 2004 onward. By clicking on the image, you can see the full-size chart, which reveals that since January 2004 there has been no decline in exports by a monthly year-on-year comparison. More on this to follow…

Japan’s Sake Exports Booming

Did you know?

Japan’s exports of sake have increased by 37% over the last five years. Over that time period, the United States has been the top export destination. Sales to the US comprised 33% of all sake exports in 2006.

Source: Japan National Tax Agency

Japan importing fewer diamonds; Girls to find new best friends?

The International Diamond Exchange is reporting that in March, Japan imported 193,765 carats worth $86.61 million, down 15.3 percent and 6.3 percent respectively from a year ago. March data shows that a downtrend in Japan’s diamond market has been continuing for a few months now.

The value of the average carat, however, has increased from $404.17 a year ago to $446.99 in March 2007.

As anyone who watches Japanese TV knows, diamond sellers have been making a big effort to appeal to customers, though their most aired commercial seems a bit misguided (you just have to see it…)

Based on experience, I would say that the number of men who buy diamond engagement rings in Japan is still low.

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