By Aya Takada
Oct. 2 (Bloomberg) -- Japan, Asia’s largest wheat importer, will ease control over imports and change the method of setting prices for millers as it moves to curb purchasing costs and risk.
The government will raise the volume it purchases under the so-called simultaneous buy and sell system, increasing opportunities for exporters other than the U.S., Canada and Australia to boost shipments to Japan, Shirara Shiokawa, director at the grain trade division of the Ministry of Agriculture, Forestry and Fisheries, said today in Tokyo.
The ministry is reducing its import role amid volatile markets and stricter food safety requirements and as Japan’s new government, elected Aug. 30, plans to boost spending on raising food self-sufficiency by cutting other costs. The nation relied on imports for 59 percent of its food in the year ended March 31, the highest rate among industrialized nations, according to ministry data.
“As global food supplies and prices are becoming increasingly unstable, the SBS system will play an important role,” Akio Shibata, director at Marubeni Research Institute, said at a panel meeting today that proposed the change. The change will increase grain purchasing flexibility, he said.
About 6 percent of Japan’s food wheat imports last fiscal year were through the SBS system, which was started in April 2007 and allows purchases from any country. Under the system, introduced to loosen the government’s grip on imports, Japanese food makers and trading companies jointly bid for the grains.
Most of Japan’s imports are bought through regular ministry tenders held almost every week, where the grain is only purchased from Australia, Canada and the U.S.
Russia, Argentina
The change could increase chances for exporters such as Russia, France and Argentina to sell to Japan, which buys almost 90 percent of its wheat overseas. Last fiscal year Japan bought 60 percent of its foreign milling wheat from the U.S., the world’s largest shipper.
The government will delay the change to as early as 2014 to allow millers time to prepare, Shiokawa said, without giving details of the likely size of the increase in SBS volumes.
Japan will also change the price calculation method for foreign wheat sold to domestic flour millers. The government has reviewed selling prices of imported milling wheat twice a year, based on average buying costs over eight months. It will shorten the period to six months to better reflect international market fluctuations, Shiokawa said.
The new method will be applied to the next price change. Selling prices of imported wheat dropped by 14.8 percent on average in April, the first cut in three years, after import costs fell on a higher yen and a slump in overseas markets.
The ministry bought 3.91 million tons of milling wheat through regular tenders in the year ended March 31. It purchased 258,754 tons of food wheat under the SBS system last fiscal year.
To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net
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