Suppliers in this country have been caught in the reaction to big shipments from Australia, and especially the United States this year, so that total volumes have reached a trigger point at which the Japanese government has decided it needs to protect domestic farmers.
The change was signalled last week, with the expectation it would be confirmed when official Japan trade statistics were released last Friday.
The standard tariff on imports from NZ is 38.5% – the 50% figure is also being placed on US frozen shipments. Australia has a free-trade agreement with Japan, with a tariff rate of about 27%, and is exempted from the higher figure.
Reporting on the tariff trigger, allowed under World Trade Organisation rules, the Nikkei Asia Review said it would be met with bewilderment and concern by businesses such as restaurants in Japan, and cause a backlash in the US.
Chilled beef shipments aren’t included in the increase, which is expected to be effective until March 31.
In the latest year, Australia provided 53% of Japan beef imports, the US 39%, and NZ only 3%.
NZ had already lost market share to Australia since their FTA came in in early 2015, with volumes having fallen from 2014 levels, the chief executive of the Meat Industry Association, Tim Ritchie said.
“The playing field is already very tilted – it’s hard enough for NZ.”
Anzco Foods chief executive Peter Conley thought the latest move could push NZ companies to work on putting more chilled product into Japan.
Only 23% of NZ exports to Japan are in chilled form, but it is our biggest chilled market, Ritchie said. The risk was that if US exporters refocused on to large volumes of chilled product, then Japan might trigger the higher tariff on that as well, hurting NZ further.
Anzco is about 82%-owned by Japanese interests, which helps with market access, and is the biggest NZ beef exporter to Japan. It puts in large volumes of chilled product – from its Ashburton feedlot, and for its retail restaurants in Japan – but doesn’t disclose whether these are frozen volumes.
The main effect of the tariff increase would be felt in the Japan market itself, Conley said.
“Exporters will pass the tariff increase on to the customer, as we look at a market return net of tariff. If Japan does not meet that return, then the product will go somewhere else.”
AgriHQ analyst Rachel Agnew said total beef imports into Japan for the five months to the end of May were 16% up on a year earlier, with US exports up 34% – driven by a big increase in production – and Australian volumes up 12%.
Most US beef is exported chilled, but the frozen volumes for the six months to the end of June were 90,000 tonnes, compared to NZ’s 18,000t.
Most of Australia’s exports were also in frozen form, exempt from the tariff increase.
The new tariff on US beef meant most of it would have to find new markets, Agnew said.
This would include the home US market, and if this was put under pressure from oversupply there would be an effect on NZ’s manufacturing beef trade there.
